EXHIBIT 4.1
EXECUTION COPY
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2005
--------------------------------------
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-BC2
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................. 1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES. .............................................. 43
SECTION 2.01. Conveyance of Mortgage Loans....................... 43
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans........ 46
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor ....................................... 47
SECTION 2.04. Representations and Warranties of the Servicer..... 50
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans
Which Are Not "Qualified Mortgages" ............. 51
SECTION 2.06. Authentication and Delivery of Certificates........ 51
SECTION 2.07. REMIC Elections.................................... 52
SECTION 2.08. Covenants of the Servicer.......................... 56
SECTION 2.09. [RESERVED]......................................... 56
SECTION 2.10. [RESERVED]......................................... 56
SECTION 2.11. Permitted Activities of the Trust Fund............. 56
SECTION 2.12. Qualification of Special Purpose Entity............ 56
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.............. 56
SECTION 3.01. Servicer to Service Mortgage Loans................. 56
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer ......................... 58
SECTION 3.03. Rights of the Depositor and the Trustee in
Respect of the Servicer ......................... 59
SECTION 3.04. Trustee to Act as Servicer......................... 59
SECTION 3.05. Collection of Mortgage Loan Payments;
Collection Account; Certificate Account ......... 60
SECTION 3.06. Collection of Taxes, Assessments and Similar
Items; Escrow Accounts .......................... 63
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans .................... 63
SECTION 3.08. Permitted Withdrawals from the Collection Account
and Certificate Account ......................... 63
SECTION 3.09. [RESERVED]......................................... 66
SECTION 3.10. Maintenance of Hazard Insurance.................... 66
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements ...................................... 67
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds ................ 68
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.... 70
SECTION 3.14. Documents Records and Funds in Possession of
Servicer to be Held for the Trustee ............. 71
SECTION 3.15. Servicing Compensation............................. 71
SECTION 3.16. Access to Certain Documentation.................... 71
SECTION 3.17. Annual Statement as to Compliance.................. 72
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements ................. 72
SECTION 3.19. Rights of the NIM Insurer.......................... 72
SECTION 3.20. Periodic Filings................................... 72
SECTION 3.21. Annual Certificate by Trustee...................... 73
SECTION 3.22. Annual Certificate by Servicer..................... 74
SECTION 3.23. Prepayment Charge Reporting Requirements........... 74
SECTION 3.24. Statements to Trustee.............................. 75
SECTION 3.25. Indemnification.................................... 75
SECTION 3.26. Nonsolicitation.................................... 75
SECTION 3.27. Existing Servicing Agreement....................... 76
SECTION 3.28. High Cost Mortgage Loans........................... 76
ARTICLE IV DISTRIBUTIONS............................................... 76
SECTION 4.01. Advances........................................... 76
SECTION 4.02. Reduction of Servicing Compensation in Connection
with Prepayment Interest Shortfalls ............. 77
SECTION 4.03. Distributions on the REMIC Interests............... 77
SECTION 4.04. Distributions...................................... 77
SECTION 4.05. Monthly Statements to Certificateholders........... 83
ARTICLE V THE CERTIFICATES............................................ 85
SECTION 5.01. The Certificates................................... 85
SECTION 5.02. Certificate Register; Registration of Transfer
and Exchange of Certificates .................... 86
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.. 91
SECTION 5.04. Persons Deemed Owners.............................. 91
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses ....................................... 91
SECTION 5.06. Book-Entry Certificates............................ 91
SECTION 5.07. Notices to Depository.............................. 92
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 5.08. Definitive Certificates............................ 92
SECTION 5.09. Maintenance of Office or Agency.................... 92
ARTICLE VI THE DEPOSITOR AND THE SERVICER.............................. 93
SECTION 6.01. Respective Liabilities of the Depositor and the
Servicer ........................................ 93
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer ........................................ 93
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicer and Others ............................. 93
SECTION 6.04. Limitation on Resignation of Servicer.............. 94
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds..... 94
ARTICLE VII DEFAULT; TERMINATION OF SERVICER............................ 95
SECTION 7.01. Events of Default.................................. 95
SECTION 7.02. [RESERVED]......................................... 96
SECTION 7.03. Trustee to Act; Appointment of Successor........... 96
SECTION 7.04. Notification to Certificateholders................. 97
ARTICLE VIII CONCERNING THE TRUSTEE...................................... 97
SECTION 8.01. Duties of Trustee.................................. 97
SECTION 8.02. Certain Matters Affecting the Trustee.............. 99
SECTION 8.03. Trustee Not Liable for Mortgage Loans.............. 100
SECTION 8.04. Trustee May Own Certificates....................... 100
SECTION 8.05. Trustee's Fees..................................... 100
SECTION 8.06. Indemnification of Trustee; Expenses............... 100
SECTION 8.07. Eligibility Requirements for Trustee............... 101
SECTION 8.08. Resignation and Removal of Trustee................. 102
SECTION 8.09. Successor Trustee.................................. 102
SECTION 8.10. Merger or Consolidation of Trustee................. 102
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee...... 102
SECTION 8.12. Tax Matters........................................ 104
ARTICLE IX TERMINATION................................................. 106
SECTION 9.01. Termination upon Liquidation or Repurchase of
all Mortgage Loans .............................. 106
SECTION 9.02. Final Distribution on the Certificates............. 108
SECTION 9.03. Additional Termination Requirements................ 109
ARTICLE X MISCELLANEOUS PROVISIONS.................................... 110
SECTION 10.01. Amendment.......................................... 110
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 10.02. Counterparts....................................... 112
SECTION 10.03. Governing Law...................................... 112
SECTION 10.04. Intention of Parties............................... 112
SECTION 10.05. Notices............................................ 112
SECTION 10.06. Severability of Provisions......................... 113
SECTION 10.07. Assignment......................................... 113
SECTION 10.08. Limitation on Rights of Certificateholders......... 114
SECTION 10.09. Inspection and Audit Rights........................ 114
SECTION 10.10. Certificates Nonassessable and Fully Paid.......... 114
SECTION 10.11. Third Party Rights................................. 115
SECTION 10.12. Additional Rights of the NIM Insurer............... 115
SECTION 10.13. [RESERVED]......................................... 115
SECTION 10.14. Assignment; Sales; Advance Facilities.............. 115
iv
EXHIBIT A FORMS OF OFFERED CERTIFICATES AND CLASS B-4 CERTIFICATES
EXHIBIT B-1 MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
EXHIBIT B-2 MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3 MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE FOR CLASS P, CLASS C AND
CLASS B-4 CERTIFICATES
EXHIBIT G FORM OF INVESTMENT LETTER
EXHIBIT H FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT I REQUEST FOR RELEASE OF DOCUMENTS
EXHIBIT J FORM OF POWER OF ATTORNEY
EXHIBIT K FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M FORM OF TRANSFEREE'S LETTER
EXHIBIT N FORM OF AUCTION PROCEDURES
EXHIBIT O-1 FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT O-2 FORM OF CLASS A-2 CAP CONTRACT
EXHIBIT O-3 FORM OF SUBORDINATED CERTIFICATE CONTRACT
EXHIBIT P-1 ONE MONTH LIBOR CAP TABLE - CAP A-1 CONTRACT
EXHIBIT P-2 ONE MONTH LIBOR CAP TABLE - CAP A-2 CONTRACT
EXHIBIT P-3 ONE MONTH LIBOR CAP TABLE - SUBORDINATED CERTIFICATE CAP CONTRACT
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POOLING AND SERVICING AGREEMENT, dated as of May 1, 2005, among ▇▇▇▇▇▇▇
▇▇▇▇▇ MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor (the
"Depositor"), WILSHIRE CREDIT CORPORATION, a Nevada corporation, as servicer
(the "Servicer") and JPMORGAN CHASE BANK, N.A., a national banking association,
as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of (i) two real estate mortgage investment conduits in
a tiered structure, (ii) the right to receive the payments distributable to the
Class P Certificates pursuant to Section 4.04(b)(i) hereof, (iii) the grantor
trusts described in Section 2.07 hereof and (iv) each Cap Contract and the Cap
Contract Account. The Lower Tier REMIC will consist of all of the assets
constituting the Trust Fund (other than the assets described in clauses (ii),
(iii) and (iv) above and the Lower Tier REMIC Regular Interests) and will be
evidenced by the Lower Tier REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Lower Tier
REMIC) and the Class LTR Interest as the single "residual interest" in the Lower
Tier REMIC. The Trustee will hold the Lower Tier REMIC Regular Interests. The
Upper Tier REMIC will consist of the Lower Tier REMIC Regular Interests and will
be evidenced by the REMIC Regular Interests (which will represent the "regular
interests" in the Upper Tier REMIC) and the Residual Interest as the single
"residual interest" in the Upper Tier REMIC. The Class R Certificate will
represent beneficial ownership of the Class LTR Interest and the Residual
Interest. The "latest possible maturity date" for federal income tax purposes of
all interests created hereby will be the Latest Possible Maturity Date.
All covenants and agreements made by the Seller in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIM Insurer.
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions which service for their own account mortgage loans of the
same type as the Mortgages Loans in the jurisdictions in which the related
Mortgaged Properties are located.
Accrual Period: With respect to each Class of Certificates and the Lower
Tier REMIC Interests and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
such Distribution Date. All calculations of interest on each Class of
Certificates and the Lower Tier REMIC Interests will be made on the basis of the
actual number of days elapsed in the related Accrual Period and a 360 day year.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is adjustable.
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Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate of payments of
principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto;
provided, however, that with respect to any Mortgage Loan which is not a first
lien Mortgage Loan that is 150 days delinquent or more (whether or not the
Mortgage Loan has been converted to an REO Property), there will be no
obligation to make advances.
Advance Facility: A financing or other facility as described in Section
10.14(a).
Advance Facility Notice: As defined in Section 10.14(b).
Advance Financing Person: As defined in Section 10.14(a).
Advance Reimbursement Amounts: As defined in Section 10.14(a).
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A-1A Certificate Principal Balance, the Class A-2A
Certificate Principal Balance, the Class A-2B Certificate Principal Balance, the
Class A-2C Certificate Principal Balance, the Class R Certificate Principal
Balance, the Class M-1 Certificate Principal Balance, the Class M-2 Certificate
Principal Balance, the Class M-3 Certificate Principal Balance, the Class M-4
Certificate Principal Balance, the Class B-1 Certificate Principal Balance, the
Class B-2 Certificate Principal Balance, the Class B-3 Certificate Principal
Balance and the Class B-4 Certificate Principal Balance, in each case as of such
date of determination.
Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of the
origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.
2
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Auction Termination: The termination of the Trust Fund hereunder pursuant
to Section 9.01(a)(i) hereof.
Auction Termination Amount: The purchase price received by the Trustee in
connection with any purchase of all of the Mortgage Loans pursuant to Section
9.01(a) (i).
Auction Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is equal to or less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
Auction Termination Price: In the case of an Auction Termination, as of
the initial Distribution Date on or after the Auction Termination Date, an
amount equal to the sum of (A) the aggregate Stated Principal Balance of each
Mortgage Loan (other than any Mortgage Loan that has become an REO Property),
plus accrued interest thereon at the applicable Mortgage Rate through the Due
Date preceding distribution of the proceeds, the fair market value of any REO
Property, plus accrued interest thereon, (B) any unreimbursed out-of-pocket
costs and expenses owed to the Trustee or the Servicer (including any costs and
expenses incurred in connection with the Auction Termination) and any
unreimbursed Servicing Fees, Advances and Servicing Advances, (C) all interest
accrued on, as well as amounts necessary to retire the principal balance of, the
notes guaranteed by the NIM Insurer, (D) any and all amounts then owed to the
NIM Insurer and (E) any costs and damages incurred by the Trust Fund (or the
Trustee on behalf of the Trust Fund) in connection with any violation of any
anti-predatory or anti-abusive lending laws.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the Class
A-2 Available Funds Cap or the Subordinated Certificate Available Funds Cap.
Balloon Loan: A Mortgage Loan having an original term to stated maturity
of approximately 15 years which provides for level monthly payments of principal
and interest based on a 30-year amortization schedule, with a balloon payment of
the remaining outstanding principal balance due on such Mortgage Loan at its
stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-2C, Class M-1, Class M-2, Class
M-3, Class M-4, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates
constitutes a Class of Book-Entry Certificates.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of Oregon or in the City of New York,
New York are authorized or obligated by law or executive order to be closed.
3
Cap Contract: Any of the Class A-1 Cap Contract, the Class A-2 Cap
Contract or the Subordinated Certificate Cap Contract.
Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(j) in the name of the Trustee for the
benefit of the Trust Fund and designated "JPMorgan Chase Bank, N.A., as trustee,
in trust for registered holders of Specialty Underwriting and Residential
Finance Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-BC2." Funds
in the Cap Contract Account shall be held in trust for the Trust Fund for the
uses and purposes set forth in this Agreement.
Cap Contract Counterparty: Credit Suisse First Boston International.
Cap Contract Notional Balance: Any of the Class A-1 Cap Contract Notional
Balance, the Class A-2 Cap Contract Notional Balance or the Subordinated
Certificate Cap Contract Notional Balance.
Cap Contract Termination Date: Any of the Class A-1 Contract Termination
Date, the Class A-2 Cap Contract Termination Date or the Subordinated
Certificate Cap Contract Termination Date.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(f) in the name of the Trustee for the
benefit of the Certificateholders and designated "JPMorgan Chase Bank, N.A., as
trustee, in trust for registered holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2005-BC2." Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Group: Either of Certificate Group One or Certificate Group
Two.
Certificate Group One: The Class A-1A and Class R Certificates. For
purposes of Section 2.07 hereof, Certificate Group One shall be related to Group
One.
Certificate Group Two: The Class A-2A, Class A-2B and Class A-2C
Certificates. For purposes of Section 2.07 hereof, Certificate Group Two shall
be related to Group Two.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(h). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-Off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the foregoing on any Distribution Date relating to a Due Period
in which a Subsequent Recovery has been received by the Servicer, the
4
Certificate Principal Balance of any Class of Certificates then outstanding for
which any Applied Realized Loss Amount has been allocated will be increased, in
order of seniority, by an amount equal to the lesser of (i) the Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders (reduced by the
amount of the increase in the Certificate Principal Balance of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee and the NIM Insurer are entitled to rely conclusively on
a certification of the Depositor or any Affiliate of the Depositor in
determining which Certificates are registered in the name of an Affiliate of the
Depositor.
Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1A Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance and the Class
A-2C Certificate Principal Balance.
Class A Certificates: Any of the Class R, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇
▇-▇▇ and Class A-2C Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for such
Distribution Date and (2) on or after the Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the Certificate Principal Balance of the
Class A and Class R Certificates immediately prior to such Distribution Date
over (B) the lesser of (1) 54.50% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period, and (2)
the excess of the Stated Principal Balances of the Mortgage Loans as of the end
of the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount; provided, however, that in no event will the Class
A Principal Distribution Amount with respect to any Distribution Date exceed the
aggregate Certificate Principal Balance of the Class A and Class R Certificates.
Class A-1 Available Funds Cap: With respect to a Distribution Date, the
per annum rate equal to the product of (i) 12, (ii) the quotient of (x) the
total scheduled interest on the Mortgage Loans in Group One based on the Net
Mortgage Rates in effect on the related Due Date divided by (y) the aggregate
Stated Principal Balance of the Mortgage Loans in Group One as of the first day
of the related Accrual Period (or, in the case of the first Distribution Date,
as of the Cut-off Date) and (iii) a fraction, the numerator of which is 30, and
the denominator of which is the actual number of days in the related Accrual
Period.
5
Class A-1 Cap Contract: The amended confirmation and agreement and any
related confirmation thereto, between the Trust Fund or Trustee and the Cap
Contract Counterparty (in the form of Exhibit O-1 hereto).
Class A-1 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-1 One Month LIBOR Cap Table attached hereto as
Exhibit P-1.
Class A-1 Cap Contract Termination Date: The day after the Distribution
Date in January 2008.
Class A-1 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate, adjusted to reflect the length of the related Accrual Period, equal
to the weighted average of the maximum lifetime Net Mortgage Rates on the
Adjustable Rate Mortgage Loans in Group One and the Net Mortgage Rates on the
Fixed Rate Mortgage Loans in Group One. The Class A-1 Maximum Rate Cap shall
relate to the Class A-1 and Class R Certificates.
Class A-1 Upper Collar: With respect to each Distribution Date with
respect to which payments are received on the Class A-1 Cap Contract, a rate
equal to the lesser of One-Month LIBOR and 9.780% per annum.
Class A-1A Certificate: Any Certificate designated as a "Class A-1A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-1A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1A Certificates.
Class A-1A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1A Pass-Through Rate on
the Class A-1A Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-1A
Current Interest or a Class A-1A Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-1A
Certificates.
Class A-1A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1A Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-1A Pass-Through Rate for the
related Accrual Period.
Class A-1A Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.220% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.440% per annum.
Class A-1A Pass-Through Rate: For the first Distribution Date, 3.310% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class A-1A Margin and (2) the Class A-1 Available Funds Cap for such
Distribution Date.
Class A-2 Available Funds Cap: With respect to a Distribution Date, the
per annum rate equal to the product of (i) 12, (ii) the quotient of (x) the
total scheduled interest on the Mortgage Loans in Group Two based on the Net
Mortgage Rates in effect on the related Due Date divided by (y) the aggregate
Stated Principal Balance of the Mortgage Loans in Group Two as of the first day
of the related Accrual
6
Period (or, in the case of the first Distribution Date, as of the Cut-off Date)
and (iii) a fraction, the numerator of which is 30, and the denominator of which
is the actual number of days in the related Accrual Period.
Class A-2 Cap Contract: The amended confirmation and agreement and any
related confirmation thereto, between the Trust Fund or Trustee and the Cap
Contract Counterparty (in the form of Exhibit O-2 hereto).
Class A-2 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-2 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-2 One Month LIBOR Cap Table attached hereto as
Exhibit P-2.
Class A-2 Cap Contract Termination Date: The day after the Distribution
Date in January 2008.
Class A-2 Certificates: The Class A-2A, Class A-2B and Class A-2C
Certificates.
Class A-2 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate, adjusted to reflect the length of the related Accrual Period, equal
to the weighted average of the maximum lifetime Net Mortgage Rates on the
Adjustable Rate Mortgage Loans in Group Two and the Net Mortgage Rates on the
Fixed Rate Mortgage Loans in Group Two. The Class A-2 Maximum Rate Cap shall
relate to the Class A-2 Certificates.
Class A-2 Upper Collar: With respect to each Distribution Date with
respect to which payments are received on the Class A-2 Cap Contract, a rate
equal to the lesser of One-Month LIBOR and 9.320% per annum.
Class A-2A Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2A Certificates.
Class A-2A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2A Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2A
Current Interest or a Class A-2A Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2A
Certificates.
Class A-2A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2A Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2A Pass-Through Rate for the
related Accrual Period.
Class A-2A Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.100% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.200% per annum.
7
Class A-2A Pass-Through Rate: For the first Distribution Date, 3.190% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class A-2A Margin and (2) the Class A-2 Available Funds Cap for such
Distribution Date.
Class A-2B Certificate: Any Certificate designated as a "Class A-2B
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2B Certificates.
Class A-2B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2B Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2B
Current Interest or a Class A-2B Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2B
Certificates.
Class A-2B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2B Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2B Pass-Through Rate for the
related Accrual Period.
Class A-2B Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.220% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.440% per annum.
Class A-2B Pass-Through Rate: For the first Distribution Date, 3.310% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class A-2B Margin and (2) the Class A-2 Available Funds Cap for such
Distribution Date.
Class A-2C Certificate: Any Certificate designated as a "Class A-2C
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2C Certificates.
Class A-2C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2C Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2C
Current Interest or a Class A-2C Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2C
Certificates.
Class A-2C Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2C Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2C Pass-Through Rate for the
related Accrual Period.
8
Class A-2C Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.330% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.660% per annum.
Class A-2C Pass-Through Rate: For the first Distribution Date, 3.420% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class A-2C Margin and (2) the Class A-2 Available Funds Cap for such
Distribution Date.
Class B Certificates: Any of the Class B-1, Class B-2, Class B-3 or Class
B-4 Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-1
Current Interest or a Class B-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-1
Certificates.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-1 Pass-Through Rate for the
related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.200% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.800% per annum.
Class B-1 Pass-Through Rate: For the first Distribution Date, 4.290% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class B-1 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R and Class M Certificates have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the sum of the Certificate Principal Balances of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class M-3 Certificate Principal Balance (after
taking into account distributions
9
of the Class M-3 Principal Distribution Amount on such Distribution Date), (E)
the Class M-4 Certificate Principal Balance (after taking into account
distributions of the Class M-4 Principal Distribution Amount on such
Distribution Date) and (F) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 89.00% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of the Class A Certificates,
Class R Certificate and Class M Certificates has been reduced to zero, the Class
B-1 Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class B-1 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A,
Class R and Class M Certificates and (II) in no event will the Class B-1
Principal Distribution Amount with respect to any Distribution Date exceed the
Class B-1 Certificate Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.
Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-2-Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-2
Current Interest or a Class B-2 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-2
Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-2 Pass-Through Rate for the
related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.300% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.950% per annum.
Class B-2 Pass-Through Rate: For the first Distribution Date, 4.390% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class B-2 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
10
Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M and Class B-1 Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the sum of the Certificate Principal
Balances of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class M-3 Certificate Principal Balance
(after taking into account distributions of the Class M-3 Principal Distribution
Amount on such Distribution Date), (E) the Class M-4 Certificate Principal
Balance (after taking into account distributions of the Class M-4 Principal
Distribution Amount on such Distribution Date), (F) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1
Principal Distribution Amount on such Distribution Date) and (G) the Class B-2
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 91.30% of the Stated Principal Balances of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period over the Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of the
Class A Certificates, Class R Certificate, Class M Certificates and Class B-1
Certificates has been reduced to zero, the Class B-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R, Class M and
Class B-1 Certificates and (II) in no event will the Class B-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-2
Certificate Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-3 Certificates.
Class B-3 Certificate: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-3-Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3 Certificates.
Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-3
Current Interest or a Class B-3 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-3
Certificates.
11
Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-3 Pass-Through Rate for the
related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.700% per annum and, as of any
Distribution Date after the Auction Termination Date, 2.550% per annum.
Class B-3 Pass-Through Rate: For the first Distribution Date, 4.790% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class B-3 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M, Class B-1 and Class B-2 Certificates have been reduced to zero
and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the excess of (1) the sum of (A) the sum of the Certificate Principal
Balances of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class M-3 Certificate Principal Balance
(after taking into account distributions of the Class M-3 Principal Distribution
Amount on such Distribution Date), (E) the Class M-4 Certificate Principal
Balance (after taking into account distributions of the Class M-4 Principal
Distribution Amount on such Distribution Date), (F) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1
Principal Distribution Amount on such Distribution Date), (G) the Class B-2
Certificate Principal Balance (after taking into account distributions of the
Class B-2 Principal Distribution Amount on such Distribution Date) and (H) the
Class B-3 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 93.30% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the
excess of the Stated Principal Balances of the Mortgage Loans as of the end of
the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates, Class R Certificate, Class M
Certificates, Class B-1 and Class B-2 Certificates has been reduced to zero, the
Class B-3 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class B-3 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class R, Class M, Class B-1 and Class B-2 Certificates and (II) in
no event will the Class B-3 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-3 Certificate Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
12
Class B-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-4 Certificates.
Class B-4 Certificate: Any Certificate designated as a "Class B-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-4-Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-4 Certificates.
Class B-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-4 Pass-Through Rate on
the Class B-4 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-4
Current Interest or a Class B-4 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-4
Certificates.
Class B-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-4 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-4 Pass-Through Rate for the
related Accrual Period.
Class B-4 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 3.500% per annum and, as of any
Distribution Date after the Auction Termination Date, 5.250% per annum.
Class B-4 Pass-Through Rate: For the first Distribution Date, 6.590% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class B-4 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class B-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M, Class B-1, Class B-2 and Class B-3 Certificates have been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the sum of the
Certificate Principal Balances of the Class A and Class R Certificates (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal Balance (after taking into account distributions of the Class M-3
Principal Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date), (F) the
Class B-1 Certificate Principal Balance (after taking into account distributions
of the Class B-1 Principal Distribution Amount on such Distribution Date), (G)
the Class B-2 Certificate Principal Balance (after taking into account
distributions of the Class B-2 Principal Distribution Amount on such
Distribution Date), (H) the Class B-3 Certificate Principal Balance (after
taking into account distributions of the Class B-3 Principal Distribution Amount
on such Distribution Date) and (I) the Class B-4 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 95.30% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
13
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (J) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of the Class A Certificates,
Class R Certificate, Class M Certificates, Class B-1, Class B-2 and Class B-3
Certificates has been reduced to zero, the Class B-4 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-4 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R, Class M,
Class B-1, Class B-2 and Class B-3 Certificates and (II) in no event will the
Class B-4 Principal Distribution Amount with respect to any Distribution Date
exceed the Class B-4 Certificate Principal Balance.
Class B-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-4 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class C Certificates.
Class C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C Distributable Interest
Rate on a notional amount equal to 99.95% of the aggregate principal balance of
the Lower Tier REMIC Regular Interests immediately prior to such Distribution
Date (such amount of interest representing a "specified portion" (within the
meaning of Treasury Regulations Section 1.860G-1(a)(2)(i)(C)) of interest
payments on the Lower Tier REMIC Regular Interests (other than the Class LTII1B
Interest and the Class LTII2B Interest)), plus the interest portion of any
previous distributions on such Class that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class C Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of the interest rates on the Lower Tier
REMIC I Marker Interests and the Class LTIX Interest (treating for purposes of
this clause (b) the interest rate on each of the Lower Tier REMIC I Marker
Interests as being subject to a cap and a floor equal to the interest rate of
the Corresponding Certificates and treating the Class LTIX Interest as being
capped at zero). The averages described in the preceding sentence shall be
weighted on the basis of the respective principal balances of the Lower Tier
REMIC Regular Interests immediately prior to any date of determination.
Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates.
14
Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amount on all
previous Distribution Dates and (y) all increases in the Certificate Principal
Balance of such Class C Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
Class LTA-1A Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/4 of the initial
principal balance of its Corresponding Certificates and an interest rate equal
to the Net Rate.
Class LTA-2A Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/4 of the initial
principal balance of its Corresponding Certificate and an interest rate equal to
the Net Rate.
Class LTA-2B Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/4 of the initial
principal balance of its Corresponding Certificate and an interest rate equal to
the Net Rate.
Class LTA-2C Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 1/4 of the initial
principal balance of its Corresponding Certificate and an interest rate equal to
the Net Rate.
Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTII1A Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 0.05% of the excess of (i)
the aggregate Cut-off Date Principal Balance of the Group One Mortgage Loans
over (ii) the aggregate of the initial Certificate Principal Balances of
Certificate Group One, and with an interest rate equal to the Net Rate.
Class LTII1B Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 0.05% of the excess of (i)
the aggregate Cut-off Date Principal Balance of the Group One Mortgage Loans,
and with an interest rate equal to the Class A-1 Available Funds Cap.
Class LTII2A Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 0.05% of the excess of (i)
the aggregate Cut-off Date Principal Balance of the Group Two Mortgage Loans
over (ii) the aggregate of the initial Certificate Principal Balances of
Certificate Group Two, and with an interest rate equal to the Net Rate.
15
Class LTII2B Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to 0.05% of the aggregate
Cut-off Date Principal Balance of the Group Two Mortgage Loans, and with an
interest rate equal to the Class A-2 Available Funds Cap.
Class LTIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC I Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTIIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC II Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3 and Class
M-4 Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-1
Current Interest or a Class M-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-1
Certificates.
16
Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-1 Pass-Through Rate for the
related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.420% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.630% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 3.510% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class M-1 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A
and Class R Certificates have been reduced to zero and a Stepdown Trigger Event
exists, or as long as a Stepdown Trigger Event does not exist, the excess of (1)
the sum of (A) the sum of the Certificate Principal Balances of the Class A and
Class R Certificates (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date) and (B) the Class M-1
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 63.90% of the Stated Principal Balances of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of the end of the
immediately preceding Due Period over the Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of the
Class A Certificates and Class R Certificate has been reduced to zero, the Class
M-1 Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class M-1 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A
Certificates and Class R Certificate and (II) in no event will the Class M-1
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-1 Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-
17
2 Current Interest or a Class M-2 Interest Carry Forward Amount that is
recovered as a voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution Date to the
Class M-2 Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-2 Pass-Through Rate for the
related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.440% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.660% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 3.530% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class M-2 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R and Class M-1 Certificates have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the sum of the Certificate Principal Balances of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date) and
(C) the Class M-2 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 70.80% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances of the Mortgage Loans
as of the end of the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates, Class R Certificate and the Class
M-1 Certificates has been reduced to zero, the Class M-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R and Class M-1
Certificates and (II) in no event will the Class M-2 Principal Distribution
Amount with respect to any Distribution Date exceed the Class M-2 Certificate
Principal Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
18
Class M-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-3 Certificates.
Class M-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3 Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-3
Current Interest or a Class M-3 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-3
Certificates.
Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-3 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-3 Pass-Through Rate for the
related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.650% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.975% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 3.740% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class M-3 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1 and Class M-2 Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the sum of the Certificate Principal
Balances of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date) and (D) the Class M-3 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 82.70% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances for the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of the Class A Certificates, the
Class R Certificate, the Class M-1 Certificates and the Class M-2 Certificates
has been reduced to zero, the Class M-3 Principal Distribution Amount will equal
the lesser of (x) the outstanding Certificate Principal Balance of the Class M-3
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class R, Class M-1 and Class M-2 Certificates
and (II) in no event will the Class M-3 Principal Distribution Amount with
respect to any Distribution Date exceed the Class M-3 Certificate Principal
Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
19
Class M-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-4 Certificates.
Class M-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4 Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-4
Current Interest or a Class M-4 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-4
Certificates.
Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-4 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-4 Pass-Through Rate for the
related Accrual Period.
Class M-4 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.710% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.065% per annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 3.800% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class M-4 Margin and (2) the Subordinated Certificate Available Funds
Cap for such Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2 and Class M-3 Certificates have been reduced to
zero and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event
does not exist, the excess of (1) the sum of (A) the sum of the Certificate
Principal Balances of the Class A and Class R Certificates (after taking into
account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class M-3 Certificate Principal
Balance (after taking into account distributions of the Class M-3 Principal
Distribution Amount on such Distribution Date) and (E) the Class M-4 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 86.00% of the Stated Principal Balances of the Mortgage Loans as
of the end of the immediately preceding Due Period and (B) the excess of the
Stated Principal Balances for the Mortgage Loans as of the end of the
immediately preceding Due Period over the Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of the
Class A Certificates, the Class R Certificate, the Class M-1 Certificates, the
Class M-2 and the Class M-3 Certificates has been reduced to zero, the Class M-4
Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class M-3 Certificates and (y) 100% of the
Principal Distribution
20
Amount remaining after any distributions on such Class A, Class R, Class M-1,
Class M-2 and Class M-3 Certificates and (II) in no event will the Class M-4
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-4 Certificate Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-4 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a Class P Certificate
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate: The Class R Certificate executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.
Class R Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of such Distribution Date plus the
portion of any previous distributions on such Class in respect of Class R
Current Interest or a Class R Interest Carry Forward Amount that is recovered as
a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class R
Certificate.
Class R Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to Current Interest or Interest Carry Forward Amounts
on such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class R Pass-Through Rate for the related
Accrual Period.
Class R Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.220% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.440% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 3.310% per
annum. As of any Distribution Date thereafter, the lesser of (1) One-Month LIBOR
plus the Class R Margin and (2) the Class A-1 Available Funds Cap for such
Distribution Date.
Clean Up Call: The termination of the Trust Fund hereunder pursuant to
Section 9.01(a)(ii).
Clean Up Call Date: The second Distribution Date immediately following the
Auction Termination Date.
Clean Up Call Price: An amount equal to the sum of (a) the aggregate
Stated Principal Balance of each Mortgage Loan (other than any Mortgage Loan
that is an REO Property), plus accrued interest thereon at the applicable
Mortgage Rate through the Due Date preceding distribution of the proceeds, the
fair market value of any REO Property, plus accrued interest thereon, (b) any
unreimbursed out-of-pocket expenses owed to the Trustee or the Servicer
(including the costs and expenses of conducting the auction
21
described in Section 9.01(a)) and any unreimbursed Servicing Fees, Advances or
Servicing Advances, (c) all interest accrued on, as well as amounts necessary to
retire the principal balance of the notes guaranteed by the NIM Insurer, (d) any
amounts owed to the NIM Insurer at the time the Clean Up Call is exercised and
(e) any costs and damages incurred by the Trust Fund (or the Trustee on behalf
of the Trust Fund) in connection with any violation by the affected Mortgage
Loan of any anti-predatory or anti-abusive lending laws.
Closing Date: May 19, 2005.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "Wilshire
Credit Corporation, in trust for registered holders of Specialty Underwriting
and Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2005-BC2". Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged Property and
(B) the sales price of the related Mortgaged Property at time of origination.
Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released either to a Mortgagor in accordance with the terms of the related
mortgage loan documents or to the holder of a senior lien on the Mortgaged
Property.
Corresponding Certificates: With respect to the Class LTA-1A Interest, the
Class A-1A and Class R Certificates. With respect to the Class LTA-2A Interest,
the Class A-2A Certificates. With respect to the Class LTA-2B Interest, the
Class A-2B Certificates. With respect to the Class LTA-2C Interest, the Class
A-2C Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTM-3 Interest, the Class M-3
Certificates. With respect to the Class LTM-4 Interest, the Class M-4
Certificates. With respect to the Class LTB-1 Interest, the Class B-1
Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates. With respect to the Class LTB-3 Interest, the Class B-3
Certificates. With respect to the Class LTB-4 Interest, the Class B-4
Certificates.
Current Interest: Any of the Class A-1A Current Interest, the Class A-2A
Current Interest, the Class A-2B Current Interest, the Class A-2C Current
Interest, the Class R Current Interest, the Class M-1 Current Interest, the
Class M-2 Current Interest, the Class M-3 Current Interest, the Class M-4
Current Interest, the Class B-1 Current Interest, the Class B-2 Current
Interest, the Class B-3 Current Interest, the Class B-4 Current Interest and the
Class C Current Interest.
22
Cut-off Date: May 1, 2005.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates on and
after the Cut-off Date.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."
Depositor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., a Delaware corporation,
or its successor in
Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single family residential, multi-family residential, commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax
23
imposed by Section 511 of the Code and (3) any organization described in Section
1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in June 2005.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the NIM Insurer and each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account and a perfected first security interest
against any collateral (which shall be limited to Permitted Investments)
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such account is maintained,
or (v) maintained at an eligible institution whose commercial paper, short-term
debt or other short-term deposits are rated at least A-1+ by S&P and F-1+ by
Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein,
or (vii) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity, that is acceptable to the Rating Agencies, or (viii) otherwise
acceptable to each Rating Agency, as evidenced by a letter from each Rating
Agency to the Trustee and the NIM Insurer.
ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of any
applicable underwriter's exemption granted by the United States Department of
Labor, except, in relevant part, for the requirement that the certificates have
received a rating at the time of acquisition that is in one of the three (or
four, in the case of a "designated transaction") highest generic rating
categories by at least one of the Rating Agencies.
ERISA Restricted Certificate: The Class B-4, Class C, Class P and Class R
Certificates and any other Certificate, unless the acquisition and holding of
such other Certificate is covered by and exempt under any applicable
underwriter's exemption granted by the United States Department of Labor.
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Event of Default: As defined in Section 7.01 hereof.
Excess Interest: On any Distribution Date, for the Class A-1A
Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C
Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates and Class B-4
Certificates, the excess, if any, of (1) the amount of interest such Class of
Certificates is entitled to receive on such Distribution Date at its
Pass-Through Rate over (2) the amount of interest such Class of Certificates
would have been entitled to receive on such Distribution Date had the
Pass-Through Rate for such Class been the REMIC Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Existing Servicing Agreement: The Servicing Agreement between ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Lending, Inc., as Owner and Wilshire Credit Corporation, as
Servicer, dated as of January 1, 2005, as at any time amended and in effect.
Extra Principal Distribution Amount: Prior to the Stepdown Date, the
excess of (A) the sum of (i) the Aggregate Certificate Principal Balance
immediately preceding such Distribution Date reduced by the Principal Funds with
respect to such Distribution Date and (ii) $19,740,013 over (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date and (2) on
and after the Stepdown Date, (A) the sum of (i) the Aggregate Certificate
Principal Balance immediately preceding such Distribution Date, reduced by the
Principal Funds with respect to such Distribution Date and (ii) the greater of
(a) 4.70% of the Pool Stated Principal Balances of the Mortgage Loans and (b)
the Minimum Required Overcollateralization Amount less (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date; provided,
however, that if on any Distribution Date a Stepdown Trigger Event is in effect,
the Extra Principal Distribution Amount will not be reduced to the applicable
percentage of the then-current Stated Principal Balance of the Mortgage Loans as
of the Due Date immediately prior to the Stepdown Trigger Event until the next
Distribution Date on which the Stepdown Trigger Event is not in effect.
▇▇▇▇▇▇ Mae: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FIFO: As defined in Section 10.14(e).
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a Class of Offered Certificates or
Class B-4 Certificates is based upon the related
25
Available Funds Cap, the excess of (1) the amount of interest that such Class
would have been entitled to receive on such Distribution Date had the
Pass-Through Rate for that Class not been calculated based on the related
Available Funds Cap, up to but not exceeding greater of (x) the related Maximum
Rate Cap or (y) the sum of (i) the related Available Funds Cap and (ii) the
product of (A) a fraction, the numerator of which is the actual number of days
in the related Accrual Period and (B) the quotient obtained by dividing (I) an
amount equal to the proceeds, if any, payable under the related Cap Contract by
the aggregate Certificate Balance of each Class of Certificates to which such
Cap Contract relates for such Distribution Date, over (2) the amount of interest
such Class was entitled to receive on such Distribution Date based on the
applicable Available Funds Cap, together with (i) the unpaid portion of any such
excess from prior Distribution Dates (and interest accrued thereon at the then
applicable Pass-Through Rate, without giving effect to the applicable Available
Funds Cap) and (ii) any amount previously distributed with respect to Floating
Rate Certificate Carryover for such Class that is recovered as a voidable
preference by a trustee in bankruptcy.
▇▇▇▇▇▇▇ Mac: A corporate instrumentality of the United States created and
existing under Title III of the Emergency Home Finance Act of 1970, as amended,
or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan at any time identified in the
Group One Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-1 and Class R Certificates and (ii) the product of (x) the Group One
Principal Distribution Percentage and (y) the Class A Principal Distribution
Amount; provided, however, that with respect to any Distribution Date on which
the Class A-1 and Class R Certificates are outstanding and the Certificate
Principal Balance of the Class A-2 Certificates has been reduced to zero, the
Group One Principal Distribution Amount will equal the Class A Principal
Distribution Amount.
Group One Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group One and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Group Two: The portion of the Mortgage Pool identified as "Group Two" in
the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan at any time identified in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-2 Certificates and (ii) the product
26
of (x) the Group Two Principal Distribution Percentage and (y) the Class A
Principal Distribution Amount; provided, however, that with respect to any
Distribution Date on which the Class A-2 Certificates are outstanding and the
Certificate Principal Balances of the Class A-1 and Class R Certificates have
been reduced to zero, the Group Two Principal Distribution Amount will equal the
Class A Principal Distribution Amount.
Group Two Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group Two and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Indenture: An indenture relating to the issuance of notes guaranteed by
the NIM Insurer.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate
(other than the Class P Certificates), the Certificate Principal Balance of such
Certificate or any predecessor Certificate on the Closing Date as set forth in
Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect with respect to such Mortgage Loan, including any replacement policy or
policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to
either the Mortgagor or to the holder of a senior lien on the related Mortgage
Property in accordance with the procedures that the Servicer would follow in
servicing mortgage loans held for its own account, in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: Any of the Class A-1A Interest Carry
Forward Amount, the Class A-2A Interest Carry Forward Amount, the Class A-2B
Interest Carry Forward Amount, the Class A-2C Interest Carry Forward Amount, the
Class R Interest Carry Forward Amount, the Class M-1 Interest Carry Forward
Amount, the Class M-2 Interest Carry Forward Amount, the Class M-3 Interest
Carry Forward Amount, the Class M-4 Interest Carry Forward Amount, the Class B-1
Interest Carry Forward Amount, the Class B-2 Interest Carry Forward Amount, the
Class B-3 Interest Carry Forward Amount or the Class B-4 Interest Carry Forward
Amount, as the case may be.
Interest Determination Date: With respect to the Offered Certificates and
the Class B-4 Certificates, for any Accrual Period, the second LIBOR Business
Day preceding the commencement of such Accrual Period.
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Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, (2) all Advances
relating to interest with respect to the Mortgage Loans, (3) all Compensating
Interest with respect to the Mortgage Loans, (4) Liquidation Proceeds with
respect to the Mortgage Loans (to the extent such Liquidation Proceeds relate to
interest) collected during the related Prepayment Period, (5) proceeds of any
purchase pursuant to Sections 2.02, 2.03 or 9.01 (to the extent such proceeds
relate to interest) and (6) prepayment charges received with respect to the
Mortgage Loans during the related Prepayment Period less (A) all Non-Recoverable
Advances relating to interest and (B) other amounts reimbursable to the Servicer
and the Trustee pursuant to this Agreement and allocable to interest.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the Distribution Date in December 2035.
Latest Possible Maturity Date: The first Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
Lender: As defined in Section 10.14(a).
LIBOR Business Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and conducting transactions in foreign
currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) pursuant to Section 3.12 has been realized upon or
liquidated through deed-in-lieu of foreclosure, foreclosure sale, trustee's sale
or other realization as provided by applicable law governing the real property
subject to the related Mortgage and any security agreements and as to which the
Servicer has certified (in accordance with Section 3.12) in the related
Prepayment Period that it has received all amounts it expects to receive in
connection with such liquidation or (b) as to which is not a first lien Mortgage
Loan and is delinquent 180 days or longer, the Servicer has certified in a
certificate of an officer of the Servicer delivered to the Depositor and the
Trustee that it does not believe that there is a reasonable likelihood that any
further net proceeds will be received or recovered with respect to such Mortgage
Loan.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this
Agreement or otherwise or amounts received in connection with any condemnation
or partial release of a Mortgaged Property and any other proceeds received in
connection with an REO Property, less the sum of related unreimbursed Advances,
Servicing Fees, Servicing Advances and any other expenses related to such
Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (x) the Appraised Value of the related Mortgaged Property and (y) the sales
price of the related Mortgaged Property at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses collectively.
Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.
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Lower Tier REMIC I Marker Interests: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTIX Interest, the Class LTIIX
Interest, the Class LTII1A Interest, the LTII1B Interest, the Class LTII2A
Interest and the Class LTII2B Interest.
Lower Tier REMIC II Marker Interests: Each of the Class LTII1A Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class LTII2B
Interest.
Lower Tier REMIC Interests: Each of the Class LTA-1A Interest, the Class
LTA-2A Interest, the Class LTA-2B Interest, the Class LTA-2C Interest, the Class
LTM-1 Interest, the Class LTM-2 Interest, the Class LTM-3 Interest, the Class
LTM-4 Interest, the Class LTB-1 Interest, the Class LTB-2 Interest, the Class
LTB-3 Interest, the Class LTB-4 Interest, the Class LTII1A Interest, the Class
LTII1B Interest, the Class LTII2A Interest, the Class LTII2B Interest, the Class
LTIX Interest, the Class LTIIX Interest and the Class LTR Interest.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Lower Tier REMIC Subordinated Balance Ratio: The ratio of (i) the
principal balance of the Class LTII1A Interest to (ii) the principal balance of
the Class LTII2A Interest that is equal to the ratio of (i) the excess of (A)
the aggregate Stated Principal Balance of Group One over (B) the current
Certificate Principal Balance of the Class A-1 and Class R Certificates to (ii)
the excess of (A) the aggregate Stated Principal Balance of Group Two over (B)
the current Certificate Principal Balance of the Class A-2 Certificates.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class A-2
Maximum Rate Cap or the Subordinated Certificate Maximum Rate Cap.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.
Minimum Required Overcollateralization Amount: The product of (x) 0.50%
and (y) the Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
Monthly Excess Interest Amount: With respect to each Distribution Date,
the amount, if any, by which the Interest Funds for such Distribution Date
exceeds the aggregate amount distributed on such Distribution Date pursuant to
Section 4.04(b) (other than the last clause thereof).
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Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a first or second lien or a first or second priority
ownership interest in an estate in fee simple in real property securing a
Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Any of Group One or Group Two.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to time
amended by the Seller to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits ▇-▇, ▇-▇, ▇-▇ and
B-4, setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the unpaid principal balance of the Mortgage Loans;
(iii) the Initial Mortgage Rate;
(iv) the maturity date and the months remaining before maturity date;
(v) the original principal balance;
(vi) the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Loan-to-Value Ratio at origination with respect to a first lien
Mortgage Loan or the Combined Loan-to-Value Ratio with respect to a
second lien Mortgage Loan;
(ix) a code indicating whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(x) a code indicating the property type;
30
(xi) with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin;
(xiii) the location of the related Mortgaged Property; and
(xiv) a code indicating whether a prepayment charge is applicable and, if
so, the term of such prepayment charge.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the Servicing Fee Rate.
Net Rate: With respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the Mortgage Loans calculated based on
the Net Mortgage Rates and the Stated Principal Balances of the Mortgage Loans
as of the preceding Distribution Date, (or, in the case of the first
Distribution Date, as of the Cut-off Date) and (y) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days in the
related Accrual Period.
NIM Notes: The notes to be issued pursuant to the Indenture.
NIM Insurer: Any of the one or more insurers that is guaranteeing certain
payments under any NIM Notes.
NIM Insurer Default: A default by each of the NIM Insurers as such default
is defined in the Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current
31
delinquency, would not, be ultimately recoverable by the Servicer from the
related Mortgagor, related Liquidation Proceeds or otherwise with respect to the
related Mortgage Loan.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-2C,
Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2, Class B-3 and
Class R Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate determined
by the Trustee on the related Interest Determination Date on the basis of (a)
the offered rates for one-month United States dollar deposits, as such rates
appear on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall be
the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of
0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall be
the higher of (i) One-Month LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve
Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor and the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any affiliate of
either, and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
OTS: The Office of Thrift Supervision.
32
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).
Ownership Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided
beneficial ownership interest evidenced by such Class
which shall be equal to the Certificate Principal Balance
of such Class divided by the aggregate Certificate
Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced
thereby of the related Class shall equal the percentage
obtained by dividing the Denomination of such Certificate
by the aggregate of the Denominations of all Certificates
of such Class; except that in the case of any Class P
Certificates, the Percentage Interest with respect to
such Certificate shown on the face of such Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the trust created pursuant
to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and
other assets of the Trust Fund, including the Cap Contracts
and any credit enhancement and passive derivative financial
instruments that pertain to beneficial interests issued or
sold to parties other than the Depositor, its Affiliates, or
its agents;
(ii) issuing Certificates and other interests in the assets of the
Trust Fund;
(iii) receiving collections on the Mortgage Loans and the Cap
Contracts and making payments on such Certificates and
interests in accordance with the terms of this Agreement; and
33
(iv) engaging in other activities that are necessary or incidental
to accomplish these limited purposes, which activities cannot
be contrary to the status of the Trust Fund as a qualified
special purpose entity under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and
credit of the United States;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial or
finance company paper issued by the Depositor, the Trustee or
any of its Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of
the United States or of any state thereof and subject to
supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long
term unsecured debt obligations of such depository institution
or trust company are then rated one of the two highest
long-term and the highest short-term ratings of each such
Rating Agency for such securities;
(v) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent
that such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation rated in the two
highest long-term or the highest short-term ratings of each
Rating Agency containing, at the time of the issuance of such
agreements, such terms and conditions as will not result in
the downgrading or withdrawal of the rating then assigned to
the Certificates by any such Rating Agency as evidenced by a
letter from each Rating Agency;
(vii) repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as
principal) described in clause (v) above;
(viii)securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by any corporation, other than the Trustee or any of
its Affiliates, incorporated under the laws of the United
States or any state thereof which, at the time of such
investment, have one of the two highest long term ratings of
each Rating Agency;
(ix) interests in any money market fund (including those managed or
advised by the Trustee or its affiliates) which at the date of
acquisition of the interests in such fund and throughout the
time such interests are held in such fund has the highest
applicable long term rating by each such Rating Agency; and
34
(x) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of
the United States or any state thereof, other than the Trustee
or any of its Affiliates, which on the date of acquisition has
been rated by each such Rating Agency in their respective
highest applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer and/or the Trustee, shall receive an Opinion of
Counsel acceptable to the Servicer and/or the Trustee, at the expense of the
party requesting that such investment be made, to the effect that such
investment will not adversely affect the status of the any REMIC provided for
herein as a REMIC under the Code or result in imposition of a tax on the Trust
Fund or any REMIC provided for herein and (II) any such investment must be a
"permitted investment" within the meaning of Section 860G(a)(5) of the Code.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to the
Class R Certificate, (iv) rural electric and telephone cooperatives described in
section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor, the Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
35
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balance, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Preference Claim: The meaning set out in Section 4.04(l) hereof.
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Certificates.
Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a Principal
Prepayment in full on a Mortgage Loan received during the period from and
including the first day to and including the 14th day of the month of such
Distribution Date), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period beginning with
the opening of business on the 15th day of the calendar month preceding the
month in which such Distribution Date occurs (or in the case of the first
Distribution Date, beginning with the opening of business on the Cut-off Date)
and ending on the close of business on the 14th day of the month in which such
Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution Date, the
sum of (1) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
collected in the related Prepayment Period, (3) the Stated Principal Balance of
each Mortgage Loan that was purchased by the Depositor or the Servicer during
the related Prepayment Period or, in the case of a purchase pursuant to Section
9.01, on the Business Day prior to such Distribution Date, (4) the amount, if
any, by which the aggregate unpaid principal balance of any Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the Seller in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c), (5) all Liquidation Proceeds collected during
the related Prepayment Period (to the extent such Liquidation Proceeds related
to principal), (6) Subsequent Recoveries received during the related Due Period
and (7) all other collections and recoveries in respect of principal during the
related Prepayment Period less (A) all Non-Recoverable Advances relating to
principal with respect to the Mortgage Loans and (B) other amounts reimbursable
to the Servicer and the Trustee pursuant to this Agreement and allocable to
principal.
36
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof) that is
received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated May 17, 2005
relating to the public offering of the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class
A-2C, Class R, Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2
and Class B-3 Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof, an amount
equal to the sum of (i) 100% of the unpaid principal balance of the Mortgage
Loan as of the date of such purchase together with any unreimbursed Servicing
Advances, (ii) accrued interest thereon at the applicable Mortgage Rate from (a)
the date through which interest was last paid by the Mortgagor to (b) the Due
Date in the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any costs and damages incurred by the Trust Fund
(or the Trustee on behalf of the Trust Fund) in connection with any violation by
the affected Mortgage Loan of any anti-predatory or anti-abusive lending laws.
Rating Agency: Any of Fitch, ▇▇▇▇▇'▇ or S&P . If any such organization or
its successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).
Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs.
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., and NatWest, N.A.; provided that if any of the foregoing banks are not
suitable to serve as a Reference Bank, then any leading banks selected by the
Trustee with the consent of the NIM Insurer which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, England and (ii) whose quotations
appear on the Reuters Screen LIBO Page on the relevant Interest Determination
Date.
Regular Certificate: Any one of the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇,
Class A-2C, Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2,
Class B-3 and Class B-4 Certificates.
Relief Act: The Servicemembers Civil Relief Act or any similar state laws.
37
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any of or, as the context requires, both of the Lower Tier REMIC and the
Upper Tier REMIC.
REMIC Pass-Through Rate: The Class A-1 Available Funds Cap (in the case of
a Class included in Certificate Group One), the Class A-2 Available Funds Cap
(in the case of a Class included in Certificate Group Two) or the Subordinated
Certificate Available Funds Cap (in the case of the Subordinated Certificates).
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate and
the Class C Certificates) other than the rights in interest rate cap contracts
described in Section 2.07 and (ii) the Uncertificated Class C Interest.
Remittance Report: The meaning specified in Section 4.04(k) hereof.
REO Property: A Mortgaged Property acquired by the Servicer, on behalf of
the Trustee for the benefit of the Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or a
Combined Loan-to-Value Ratio, in the case of Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in the form of Exhibit I hereto.
38
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Required Percentage: With respect to any Distribution Date following a
Stepdown Date, the quotient of (1) the excess of (A) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date, over (B)
the Certificate Principal Balance of the most senior Class of Certificates
outstanding as of such Distribution Date, prior to giving effect to
distributions to be made on such Distribution Date and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.
Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
Residual Certificate: The Class R Certificate.
Residual Excess Interest Amount: With respect to any Distribution Date,
the excess of (x) 0.05% of the Monthly Excess Interest Amount for such
Distribution Date and all prior Distribution Dates over (y) all payments
previously made to the Class R Certificate in respect of the Residual Excess
Interest Amount.
Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than (i) distributions in respect of the Class LTR Interest, and (ii)
distributions on the Class R Certificate in respect of Excess Interest.
Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.
S&P: Standard & Poor's Ratings Services, a Division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated as
of May 1, 2005 between the Depositor and the Seller.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan.
Section 302 Requirements: Any rules or regulations promulgated pursuant to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
39
Seller: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending, Inc., a Delaware corporation, or
its successor in interest.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the later
of (x) the date that is two Business Days after the 15th day of the month in
which the related Distribution Date occurs and (y) the 18th day (or, if such day
is not a Business Day, the next succeeding Business Day) of the month in which
the related Distribution Date occurs.
Servicer's Assignee: As defined in Section 10.14(a).
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments, (2)
any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations, (3) the conservation,
management, sale and liquidation of any REO Property (4) executing and recording
instruments of satisfaction, deeds of reconveyance or assignments of mortgage to
the extent not otherwise recovered from the related Mortgages or payable under
this Agreement, (5) correcting errors of prior servicers; tax tracking; title
research; flood certification and lender paid mortgage insurance, (6) obtaining
or correcting any legal documentation required to be included in the Mortgage
Files and reasonably necessary for the Servicer to perform its obligations under
this Agreement and (7) compliance with the obligations under Sections 3.01 and
3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.500% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such
lists may from time to time be amended.
Servicing Rights Pledgee: One or more lenders, selected by the Servicer,
to which the Servicer may pledge and assign all of its right, title and interest
in, to and under this Agreement.
Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under the this Agreement, all costs associated with the
transfer of servicing from the predecessor Servicer, including, without
limitation, any costs or expenses associated with the termination of the
predecessor Servicer, the appointment of a successor servicer, the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Trustee or any successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or successor servicer to service the Mortgage Loans properly
and effectively.
40
SFAS 140: Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
SPV: As defined in Section 10.14(a).
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (A) the principal portion of the Scheduled Payments
(x) due with respect to such Mortgage Loan during each Due Period ending prior
to such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on the Servicer Advance Date prior to
such Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The later to occur of (1) the Distribution Date in June
2008 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance and Class R Certificate Principal Balance (reduced by the
Principal Funds with respect to such Distribution Date) are less than or equal
to (B) 54.50% of the aggregate Stated Principal Balance of the Mortgage Loans as
of such Distribution Date.
Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------ ---------------------------------
June 2008 - May 2009 3.25% with respect to June 2008, plus an additional 1/12th of 2.00% for
each month thereafter
June 2009 - May 2010 5.25% with respect to June 2009, plus an additional 1/12th of 1.25% for
each month thereafter
June 2010 - May 2011 6.50% with respect to June 2010, plus an additional 1/12th of 1.00% for
each month thereafter
June 2011 and thereafter 7.50%
Stepdown Trigger Event: With respect to the Certificates on or after
the Stepdown Date, a Distribution Date on which (1) the quotient of (A) the
aggregate Stated Principal Balance of all Mortgage Loans which are 60 or more
days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure, REO Properties and
Mortgage Loans with respect to which the applicable Mortgagor is in bankruptcy)
and (B) the Stated Principal Balance of the Mortgage Loans as of the preceding
Servicer Advance Date, equals or exceeds the product of (i) 34.50% and (ii)
Required Percentage or (2) the quotient (expressed as a percentage) of (A) the
aggregate Realized Losses incurred from the Cut-off Date through the last day of
the calendar month preceding such
41
Distribution Date and (B) the aggregate principal balance of the Mortgage Loans
as of the Cut-off Date exceeds the Stepdown Required Loss Percentage.
Subordinated Certificate Available Funds Cap: With respect to a
Distribution Date, the per annum rate equal to the weighted average (weighted in
proportion to the results of subtracting the current Certificate Principal
Balance of the related Class A Certificates from the aggregate Stated Principal
Balance of the Mortgage Loans in each Mortgage Group as of the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, as
of the Cut-off Date)) of the Class A-1 Available Funds Cap and the Class A-2
Available Funds Cap.
Subordinated Certificate Cap Contract: The amended confirmation and
agreement and any related confirmation thereto, between the Trust Fund or
Trustee and the Cap Contract Counterparty (in the form of Exhibit O-3 hereto).
Subordinated Certificate Cap Contract Notional Balance: With respect to
any Distribution Date, the Subordinated Certificate Cap Contract Notional
Balance set forth for such Distribution Date in the Subordinated Certificate One
Month LIBOR Cap Table attached hereto as Exhibit P-3.
Subordinated Certificate Cap Contract Termination Date: The day after
the Distribution Date in January 2008.
Subordinated Certificate Maximum Rate Cap: With respect to a
Distribution Date, the per annum rate equal to the weighted average (weighted in
proportion to the results of subtracting from the aggregate Stated Principal
Balance of the Mortgage Loans in each Mortgage Group as of the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, as
of the Cut-off Date) the current Certificate Principal Balance of the related
Class A Certificates) of the Class A-1 Maximum Rate Cap and the Class A-2
Maximum Rate Cap.
Subordinated Certificate Upper Collar: With respect to each
Distribution Date with respect to which payments are received on the
Subordinated Certificate Cap Contract, a rate equal to the lesser of One-Month
LIBOR and 8.820% per annum.
Subordinated Certificates: The Class M-1, Class M-2, Class M-3, Class
M-4, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates.
Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Loan with respect to which a Realized Loss has been
incurred after liquidation and disposition of such Mortgage Loan.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Tax Matters Person: The Person designated as "tax matters person" in
the manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust (the "Specialty Underwriting and
Residential Finance Trust, Series 2005-BC2") created hereunder consisting of (i)
the Mortgage Loans and all interest and principal received on or with respect
thereto on and after the Cut-off Date to the extent not applied in computing
42
the Cut-off Date Principal Balance thereof, exclusive of interest not required
to be deposited in the Collection Account; (ii) the Collection Account and the
Certificate Account and all amounts deposited therein pursuant to the applicable
provisions of this Agreement; (iii) property that secured a Mortgage Loan and
has been acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv)
the mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loans and/or the related Mortgaged Properties; (v) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property; and (vi) the Cap Contracts and the Cap Contract Account.
Trustee: JPMorgan Chase Bank, N.A., a national banking association, not
in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders under this Agreement, and any successor
thereto, and any corporation or national banking association resulting from or
surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee as may from time to time be serving as successor
trustee hereunder.
Uncertificated Class C Interest: An uncertificated interest having (i)
the same rights to payments as the Class C Certificates, other than the rights
to payments of amounts with respect to the Cap Contracts, and (ii) the rights to
the payments treated as distributed to the Class C Certificates under Section
2.07(d), provided, however, that such interest shall have no obligation to make
any payments treated as paid by the Class C Certificates pursuant to interest
rate cap agreements under Section 2.07(d).
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-2 Unpaid Realized Loss Amount,
Class B-3 Unpaid Realized Loss Amount, Class B-4 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
Upper Collar: Any of the Class A-1 Upper Collar, the Class A-2 Upper
Collar or the Subordinated Certificate Upper Collar.
Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.
USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 98% to the Offered Certificates and the Class B-4
Certificates, 2% to the Class C and Class P Certificates, with the allocation
among the Offered Certificates and the Class B-4 Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or
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with respect to the Mortgage Loans on or after the Cut-off Date (other than
Scheduled Payments due on the Mortgage Loans on or before the Cut-off Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(A) The Original Mortgage Note, together with all riders thereto,
endorsed, "Pay to the order of JPMorgan Chase Bank, N.A., as trustee - SURF
2005-BC2, without recourse" together with all riders thereto. The Mortgage Note
shall include all intervening endorsements showing a complete chain of the title
from the originator to the Seller.
(B) Except as provided below and for each Mortgage Loan that is not a
MERS Loan, the original recorded Mortgage together with all riders thereto, with
evidence of recording thereon, or, if the original Mortgage has not yet been
returned from the recording office, a copy of the original Mortgage together
with all riders thereto certified by the Seller to be a true copy of the
original of the Mortgage that has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged Property
is located and in the case of each MERS Loan, the original Mortgage together
with all riders thereto, noting the presence of the MIN of the Loan and either
language indicating that the Mortgage Loan is a MOM Loan or if the Mortgage Loan
was not a MOM Loan at origination, the original Mortgage and the assignment
thereof to MERS, with evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which such Mortgage has
been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of each Mortgage, to "JPMorgan Chase Bank, N.A., as trustee
- SURF 2005-BC2."
(D) The original policy of title insurance (or a preliminary title
report, commitment or binder if the original title insurance policy has not been
received from the title insurance company).
(E) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment has not
yet been returned from the recording office, a copy of such assignment certified
to be a true copy of the original of the assignment which has been sent for
recording in the appropriate jurisdiction in which the Mortgaged Property is
located.
(F) Originals of all assumption and modification agreements, if any.
If in connection with any Mortgage Loan, the Depositor cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon, if
applicable, concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage, Assignments of Mortgage or assumption, consolidation or modification,
as the case may be, has been delivered for recordation, the Depositor shall
deliver or cause to be delivered to the Trustee written notice stating that such
Mortgage or assumption, consolidation or modification, as the case may be, has
been delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording indicated thereon,
if applicable, upon receipt thereof from the public recording office. To the
extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.
With respect to any Mortgage Loan, none of the Depositor, the Servicer
or the Trustee shall be obligated to cause to be recorded the Assignment of
Mortgage referred to in this Section 2.01. In the
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event that any Assignment of Mortgage is not recorded or is improperly recorded,
the Servicer shall have no liability for its failure to receive or act on
notices related to such Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor nor
the Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and interests under
the Sale Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage Loans
or any other agreement or instrument relating thereto.
The parties hereto agree and understand that it is not intended that
any Mortgage Loan be included in the Trust that is, without limitation, a
"High-Cost Home Loan" as defined by the Home Ownership and Equity Protection Act
of 1994 or any other applicable anti-predatory lending laws, including but not
limited to (i) a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership
45
Act effective November 27, 2003; (ii) a "High-Cost Home Loan" as defined in the
New Mexico Home Loan Protection Act effective January 1, 2004; (iii) a
"High-Cost Home Loan" as defined in the Massachusetts Predatory Home Loan
Practices Act effective November 7, 2004 or (iv) a "High-Cost Home Loan" as
defined by the Indiana High Cost Home Loan Law effective January 1, 2005.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the three Cap Contracts (forms of
which are attached hereto as Exhibits O-1, O-2 and O-3), the Transfer Agreement
and the Sale Agreement.
The Trustee agrees, for the benefit of Certificateholders and the NIM
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIM Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B that have been conveyed to it. If the
Trustee finds any document or documents constituting a part of a Mortgage File
to be missing or defective (that is, mutilated, damaged, defaced or unexecuted)
in any material respect, the Trustee shall promptly (and in any event within no
more than five Business Days) after such finding so notify the Servicer, the
Seller, the Depositor and the NIM Insurer. In addition, the Trustee shall also
notify the Servicer, the Seller, the Depositor and the NIM Insurer, if the
original Mortgage with evidence of recording thereon with respect to a Mortgage
Loan is not received within 70 days of the Closing Date; if it has not been
received because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation, the Depositor shall deliver or
cause to be delivered to the Trustee written notice stating that such Mortgage
has been delivered to the appropriate public recording officer for recordation
and thereafter the Depositor shall deliver or cause to be delivered such
Mortgage with evidence of recording thereon upon receipt thereof from the public
recording office. The Trustee shall request that the Seller correct or cure such
omission, defect or other irregularity, or substitute a Mortgage Loan pursuant
to the provisions of Section 2.03(c), within 90 days from the date the Seller
was notified of such omission or defect and, if the Seller does not correct or
cure such omission or defect within such period, that the Seller purchase such
Mortgage Loan from the Trust Fund within 90 days from the date the Trustee
notified the Seller of such omission, defect or other irregularity at the
Purchase Price of such Mortgage Loan. The Purchase Price for any Mortgage Loan
purchased pursuant to this Section 2.02 shall be paid to the Servicer and
deposited by the Servicer in the Collection Account promptly upon receipt, and,
upon receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee, upon receipt of a Request for Release, shall
promptly release to the Seller the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment, without
recourse, representation or warranty, as shall be necessary to vest in the
Seller or its designee, as the case may be, any Mortgage Loan released pursuant
hereto, and the Trustee shall have no further responsibility with regard to such
Mortgage Loan. It is understood and agreed that the obligation of the Seller to
purchase, cure or substitute any Mortgage Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIM Insurer. The
46
preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor, the Trustee or the NIM Insurer pursuant to
the Sale Agreement. The Trustee shall be under no duty or obligation to inspect,
review and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, recordable or appropriate to the
represented purpose, or that they have actually been recorded, or that they are
other than what they purport to be on their face. The Trustee shall keep
confidential the name of each Mortgagor and the Trustee shall not solicit any
such Mortgagor for the purpose of refinancing the related Mortgage Loan. It is
understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the
list of Mortgagors and data relating to their Mortgages shall be retained by the
Servicer.
Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor, the Servicer and the NIM Insurer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Servicer, the
Trustee and the NIM Insurer as follows, as of the date hereof
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or
hold its properties and to conduct its business as now conducted by it and
to enter into and perform its obligations under this Agreement and the
Sale Agreement.
(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and the Sale Agreement and
has duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the Sale
Agreement; and this Agreement and the Sale Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject,
as to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and (ii) general principles of equity, regardless of whether enforcement
is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale Agreement, and the fulfillment
of or compliance with the terms hereof are in the ordinary course of
business of the Depositor and will not (A) result in a material breach of
any term or provision of the charter or by-laws of the Depositor or (B)
materially conflict with, result in a violation or acceleration of, or
result in a material default under, the terms of any other material
agreement or instrument to which the Depositor is a party or by which it
may be bound or (C) constitute a material violation of any statute, order
or regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of
any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair the Depositor's ability to
perform or meet any of its obligations under this Agreement.
47
(iv) No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement and the Sale Agreement or the ability of the Depositor to
perform its obligations under this Agreement and the Sale Agreement in
accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement and the Sale Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same. The Depositor
hereby represents and warrants to the Trustee with respect to each
Mortgage Loan as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets, claims,
liens, mortgage, pledge, charge, security interest, defenses or
counterclaims.
(b) To the extent that any fact, condition or event with respect to a
Mortgage Loan constitutes a breach of a representation or warranty of the Seller
under the Sale Agreement, the only right or remedy of the Trustee, the NIM
Insurer or of any Certificateholder shall be the Trustee's right to enforce the
obligations of the Seller under any applicable representation or warranty made
by it. The Trustee acknowledges that the Depositor shall have no obligation or
liability with respect to any breach of any representation or warranty with
respect to the Mortgage Loans (except as set forth in Section 2.03(a)(v)) under
any circumstances.
(c) Upon discovery by any of the Depositor, the Servicer, the NIM
Insurer, or the Trustee of a breach of any of representations and warranties set
forth in the Sale Agreement that adversely and materially affects the value of
the related Mortgage Loan, prepayment charges or the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties. Within 90 days of the discovery of a breach of any
representation or warranty given to the Trustee by the Depositor, the Seller and
assigned to the Trustee, the Depositor, or the Seller shall either (a) cure such
breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Replacement Mortgage Loan for the affected Mortgage Loan. In the event of
discovery of a breach of any representation and warranty of the Seller or the
Depositor, the Trustee shall enforce its rights under the Sale Agreement or
thereunder for the benefit of Certificateholders and the NIM Insurer. If a
breach of the representations and warranties set forth in the Sale Agreement
hereof exists solely due to the unenforceability of a prepayment charge, the
Trustee shall notify the NIM Insurer thereof and not seek to enforce the
repurchase remedy provided for herein unless directed in writing to do so by the
NIM Insurer. In the event of a breach of the representations and warranties with
respect to the Mortgage Loans set forth in a Sale Agreement, the Trustee shall
at the request of the NIM Insurer enforce the right of the Trust Fund and the
NIM Insurer to be indemnified for such breach of representation and warranty. In
the event that such breach relates solely to the unenforceability of a
prepayment charge, amounts received in respect of such indemnity up to the
amount of such prepayment charge shall be distributed pursuant to Section
4.04(b)(i)(B). As provided in the Sale Agreement, if the Seller substitutes for
a Mortgage Loan for which there is a breach of any representations and
warranties which adversely and materially affects the value of such Mortgage
Loan and such substitute mortgage loan is not a Replacement Mortgage Loan, under
the terms of the Sale Agreement, the Seller will, in exchange for such
substitute Mortgage Loan, (i) provide the applicable Purchase Price for the
affected Mortgage Loan or (ii) within two years of the Closing Date, substitute
such affected Mortgage Loan with a Replacement Mortgage Loan. Any such
substitution shall not be effected prior to the additional delivery to the
Trustee of a Request for Release substantially in the form of Exhibit I and
shall not be effected unless it is within two years of the Startup
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Day. As provided in the Sale Agreement, the Seller indemnifies and holds the
Trust Fund, the Trustee, the Depositor, the NIM Insurer, the Servicer and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Depositor,
the NIM Insurer, the Servicer and any Certificateholder may sustain in
connection with any actions of the Seller relating to a repurchase of a Mortgage
Loan other than in compliance with the terms of this Section 2.03 and the Sale
Agreement, to the extent that any such action causes (i) any federal or state
tax to be imposed on the Trust Fund or any REMIC provided for herein, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup day" under
Section 860G(d)(1) of the Code, or (ii) any REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
With respect to any Mortgage Loan repurchased by the Depositor pursuant
to this Agreement or by the Seller pursuant to the Sale Agreement, the principal
portion of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Certificate Account pursuant to Section 3.05. The
Trustee, upon receipt of the full amount of the Purchase Price for a Deleted
Mortgage Loan, or upon receipt of the Mortgage File for a Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan, shall release or cause to be
released and reassign to the Depositor or the Seller, as applicable, the related
Mortgage File for the Deleted Mortgage Loan and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or its
designee or assignee title to any Deleted Mortgage Loan released pursuant
hereto, free and clear of all security interests, liens and other encumbrances
created by this Agreement, which instruments shall be prepared by the Trustee,
and the Trustee shall not have any further responsibility with respect to the
Mortgage File relating to such Deleted Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the Seller, as applicable, must deliver to
the Trustee the Mortgage File for the Replacement Mortgage Loan containing the
documents set forth in Section 2.01 along with a written certification
certifying as to the delivery of such Mortgage File and containing the granting
language set forth in the first sentence of Section 2.01; and (ii) the Depositor
will be deemed to have made, with respect to such Replacement Mortgage Loan,
each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage Loan and certify to the NIM Insurer and the
Depositor that all documents required by Section 2.01 have been executed and
received.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment charges of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Seller to the
Servicer for deposit into the Collection Account on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
The Seller shall give or cause to be given written notice to the
Certificateholders and the NIM Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
49
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIM Insurer and the Trustee. Upon
such substitution by the Seller, such Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject
in all respects to the terms of this Agreement and the Sale Agreement, including
all applicable representations and warranties thereof included in the Sale
Agreement as of the date of substitution.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the NIM Insurer an Opinion of Counsel addressed to the Trustee
and the NIM Insurer to the effect that such substitution will not (a) cause any
federal tax to be imposed on the Trust Fund or any REMIC provided for herein,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup day" under Section 860G(d)(1) of the Code or (b) adversely affect
the status of any REMIC provided for herein as a REMIC. If any such Opinion of
Counsel can not be delivered, then such substitution may only be effected at
such time as the required Opinion of Counsel can be given.
(d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03 and (ii) of the Seller
and the Depositor set forth in the Sale Agreement and assigned to the Trustee by
the Depositor hereunder shall each survive delivery of the Mortgage Files and
the Assignment of Mortgage of each Mortgage Loan to the Trustee and shall
continue throughout the term of this Agreement.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof
(i) The Servicer is a duly formed corporation and is validly
existing and in good standing under the laws of the state of its
formation and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Servicer
in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any such
state, to the extent necessary to ensure its ability to enforce each
Mortgage Loan, to service the Mortgage Loans in accordance with the
terms of this Agreement and to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(ii) The Servicer has the power and authority to service each
Mortgage Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and has
duly authorized by all necessary corporate action on the part of the
Servicer the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except that (a) the enforceability hereof
may be limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in
50
the ordinary course of business of the Servicer and will not (A) result
in a material breach of any term or provision of the charter or by-laws
of the Servicer or (B) materially conflict with, result in a material
breach, violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument to which
the Servicer is a party or by which it may be bound, or (C) constitute
a material violation of any statute, order or regulation applicable to
the Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Servicer; and the
Servicer is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Servicer's ability to perform or
meet any of its obligations under this Agreement.
(iv) The Servicer is an approved servicer of mortgage loans
for ▇▇▇▇▇▇ ▇▇▇ and is an approved servicer of mortgage loans for
▇▇▇▇▇▇▇ Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans
or to perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, the Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish
(for the period it serviced the Mortgage Loans), in accordance with the
Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit
Information Company on a monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which Are
Not "Qualified Mortgages".
Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon
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the order of the Depositor, in exchange for the Mortgage Loans, Certificates
duly authenticated by the Trustee in authorized denominations evidencing
ownership of the entire Trust Fund. The Trustee agrees to hold the Trust Fund
and exercise the rights referred to above for the benefit of all present and
future Holders of the Certificates and to perform its duties set forth in this
Agreement in accordance with the provisions hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the Lower Tier REMIC and the Upper Tier
REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the Lower Tier REMIC
and the Upper Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day," as defined in Section 860G(a)(9) of the Code, for
purposes of the REMIC Provisions shall be the Closing Date. Each REMIC's fiscal
year shall be the calendar year.
The Lower Tier REMIC shall consist of all of the assets of the Trust
Fund (other than (i) the right to receive the payments distributable to the
Class P Certificates pursuant to Section 4.04(b)(i) hereof, (ii) the interests
issued by the Lower Tier REMIC, (iii) the grantor trusts described in this
Section 2.07 and (iv) the Cap Contracts and the Cap Contract Account). The Lower
Tier REMIC shall issue the Lower Tier REMIC Regular Interests which shall be
designated as regular interests of such REMIC and shall issue the Class LTR
Interest that shall be designated as the sole class of residual interest in the
Lower Tier REMIC. Each of the Lower Tier REMIC Regular Interests shall have the
characteristics set forth in its definition.
The assets of the Upper Tier REMIC shall be the Lower Tier REMIC
Regular Interests. The REMIC Regular Interests shall be designated as the
regular interests in the Upper Tier REMIC and the Residual Interest shall be
designated as the sole class of residual interest in the Upper Tier REMIC. For
federal income tax purposes, the pass-through rate on each REMIC Regular
Interest (other than the Uncertificated Class C Interest) and on the sole class
of residual interest in the Upper Tier REMIC shall be subject to a cap equal to
the Net Rate.
The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.
(c) The "tax matters person" with respect to each REMIC for purposes of
the REMIC Provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of the Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee as its agent and attorney-in-fact to
act as "tax matters person" with respect to each such REMIC for purposes of the
REMIC Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.
(d) It is intended that the rights of the Class A-1A Certificates,
Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class
R Certificate, Class M-1 Certificates, Class M-2 Certificates, Class M-3
Certificates, Class M-4 Certificates, Class B-1 Certificates, Class B-2
Certificates,
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Class B-3 Certificates and Class B-4 Certificates to receive payments in respect
of Excess Interest shall be treated as a right in interest rate cap contracts
written by the Class C Certificateholders in favor of the holders of the Class
A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C
Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates and Class B-4
Certificates, and such shall be accounted for as property held separate and
apart from the regular interests in the Upper Tier REMIC held by the holders of
the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class M-1 Certificates, Class M-2 Certificates, Class
M-3 Certificates, Class M-4 Certificates, Class B-1 Certificates, Class B-2
Certificates, Class B-3 Certificates and Class B-4 Certificates and the residual
interest in the Upper Tier REMIC held by the holder of the Class R Certificate.
This provision is intended to satisfy the requirements of Treasury Regulations
Section 1.860G-2(i) for the treatment of property rights coupled with REMIC
interests to be separately respected and shall be interpreted consistently with
such regulation. On each Distribution Date, to the extent that any of the Class
A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C
Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates and Class B-4
Certificates receive payments in respect of Excess Interest, such amounts, to
the extent not derived from payments on the Cap Contracts, will be treated as
distributed by the Upper Tier REMIC to the Class C Certificates pro rata in
payment of the amounts specified in Section 4.04(f) and then paid to the
relevant Class of Certificates pursuant to the related interest rate cap
agreement.
(e) The parties intend that the portion of the Trust Fund consisting of
the Uncertificated Class C Interest, the Cap Contract Account, the Cap Contracts
and the obligation of the holders of the Class C Certificates to pay amounts in
respect of Excess Interest to the holders of the Class A-1A Certificates, Class
A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class R
Certificate, Class M-1 Certificates, Class M-2 Certificates, Class M-3
Certificates, Class M-4 Certificates, Class B-1 Certificates, Class B-2
Certificates, Class B-3 Certificates and Class B-4 Certificates shall be treated
as a "grantor trust" under the Code, for the benefit of the holders of the Class
C Certificates, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Trustee shall (i) furnish
or cause to be furnished to the holders of the Class C Certificates information
regarding their allocable share, if any, of the income with respect to such
grantor trust, (ii) file or cause to be filed with the Internal Revenue Service
Form 1041 (together with any necessary attachments) and such other forms as may
be applicable and (iii) comply with such information reporting obligations with
respect to payments from such grantor trust to the holders of Class A-1A
Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C
Certificates, Class R Certificate, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates, Class B-4
Certificates and Class C Certificates as may be applicable under the Code.
(f) The parties intend that the portion of the Trust Fund consisting of
the right to receive the payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a "grantor trust"
under the Code, for the benefit of the holders of the Class P Certificates, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class P Certificates information regarding their
allocable share of the income with respect to such grantor trust and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041 (together with
any necessary attachments) and such other forms as may be applicable.
(g) The parties intend that the portion of the Trust Fund consisting of
the Class R Certificate and the right of the Class C Certificates to receive the
amounts described in Section 9.01(f) hereof shall be treated as a "grantor
trust" under the Code, for the benefit of the holder of the Class R Certificate
and
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the Class C Certificates, and the provisions hereof shall be interpreted
consistent with this intention. In furtherance of this intention, the Trustee
shall (i) furnish or cause to be furnished to the holders of the Class R
Certificate and the Class C Certificates information regarding their allocable
share of the income with respect to such grantor trust, (ii) file or cause to be
filed with the Internal Revenue Service Form 1041 (together with any necessary
attachments) and such other forms as may be applicable and (iii) comply with
such information reporting obligations with respect to payments from such
grantor trust as may be applicable under the Code.
(h) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans (other than payments distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received from the Mortgage
Loans shall be paid to the Lower Tier REMIC Regular Interests until the
principal balance of all such interests have been reduced to zero and any losses
allocated to such interests have been reimbursed. Any excess amounts shall be
distributed to the Class LTR Interest. On each Distribution Date, payments and
losses shall be allocated among the Lower Tier REMIC Regular Interests so that
(i) each of the Lower Tier REMIC I Marker Interests shall have a principal
balance equal to 25% of the principal balance of the Corresponding Certificates,
(ii) the Class LTIX Interest has a principal balance equal to the excess of (x)
50% of the remaining principal balance of the Mortgage Loans over (y) the
aggregate principal balance of the Lower Tier REMIC I Marker Interests (if
necessary to reflect an increase in overcollateralization, accrued and unpaid
interest on the Class LTIX interest may be added to its principal amount to
achieve this result) and (iii) the aggregate principal amount of the Class
LTII1A Interest, Class LTII1B Interest, Class LTII2A Interest, Class LTII2B
Interest and Class LTIIX Interest shall equal 50% of the remaining principal
balance of the Mortgage Loans. Distributions and losses allocated to the Lower
Tier REMIC Regular Interests described in clause (iii) of the preceding sentence
will be allocated among such Lower Tier REMIC Regular Interests in the following
manner: (x) such distributions shall be deemed made to such Lower Tier REMIC
Regular Interests first, so as to keep the principal balance of the each such
Lower Tier REMIC Regular Interest with "B" at the end of its designation equal
to 0.05% of the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at the end of its designation so that the uncertificated principal
balance of each such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group over (II) the aggregate principal balance of
Certificate Group One, in the case of the Class LTII1A Interest, or Certificate
Group Two, in the case of the Class LTII2A Interest (except that if 0.05% of any
such excess is greater than the principal amount of the related Lower Tier REMIC
II Marker Interest with "A" at the end of its designation, the least amount of
principal shall be distributed to each Lower Tier REMIC II Marker Interest with
"A" at the end of its designation such that the Lower Tier REMIC Subordinated
Balance Ratio is maintained) and finally, any remaining distributions of
principal to the Class LTIIX Interest and (y) such losses shall be allocated
among the Lower Tier REMIC Regular Interests described in clause (iii) of the
preceding sentence first, so as to keep the principal balance of the each such
Lower Tier REMIC Regular Interest with "B" at the end of its designation equal
to 0.05% of the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at the end of its designation so that the uncertificated principal
balance of each such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group over (II) the aggregate principal balance of
Certificate Group One, in the case of the Class LTII1A Interest, or Certificate
Group Two, in the case of the Class LTII2A Interest (except that if 0.05% of any
such excess is greater than the principal amount of the related Lower Tier REMIC
II Marker Interest with "A" at the end of its designation, the least amount of
losses shall be allocated to each Lower REMIC II Marker Interest with "A" at the
end of its designation such that the Lower Tier REMIC Subordinated Balance Ratio
is maintained) and finally, any remaining losses to the Class LTIIX Interest.
Notwithstanding the preceding two sentences, however, losses not allocated to
any Class of Certificates
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will not be allocated to any Lower Tier REMIC Regular Interests. All
computations with respect to the Lower Tier REMIC Regular Interests shall be
taken out to ten decimal places.
Any available funds remaining in the Lower Tier REMIC on a
Distribution Date after distributions to the Lower Tier REMIC Regular Interests
shall be distributed to the Class R Certificate in respect of the Class LTR
Interest.
If on any Distribution Date the Certificate Principal Balance
of any Class of Certificates is increased pursuant to the last sentence of the
definition of "Certificate Principal Balance", then there shall be an equivalent
increase in the principal amounts of the Lower Tier REMIC Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the Lower Tier REMIC Regular Interests on such
Distribution Date) among the Lower Tier REMIC Regular Interests so that, to the
greatest extent possible, (i) each of the Lower Tier REMIC I Marker Interests
has a principal balance equal to 25% of the principal balance of the
Corresponding Certificates, (ii) the Class LTIX Interest has a principal balance
equal to the excess of (x) 50% of the remaining principal balance of the
Mortgage Loans over (y) the aggregate principal balance of the Lower Tier REMIC
I Marker Interests and (iii) the aggregate principal amount of the Lower Tier
REMIC II Marker Interests and the Class LTIIX Interest shall equal 50% of the
remaining principal balance of the Mortgage Loans. Allocations in connection
with clause (iii) shall be made so that, to the greatest extent possible, (a)
the principal balance of each Lower Tier REMIC II Marker Interest with "B" at
the end of its designation equals 0.05% of the aggregate scheduled principal
balance of the Mortgage Loans in related Mortgage Group, (b) the principal
balance of each Lower Tier REMIC II Marker Interest with "A" at the end of its
designation equals 0.05% of the excess of (x) the aggregate scheduled principal
balance of the Mortgage Loans in related Mortgage Group over (y) the aggregate
principal balance of Certificate Group One in the case of the Class LTII1A
Interest, or Certificate Group Two in the case of the Class LTII2A Interest and
(c) any remaining allocations are made to the Class LTIIX Interest.
For purposes of this Section 2.07, (i) the Class LTII1A
Interest and Class LTII1B Interest shall be related to Group One, and (ii) the
Class LTII2A Interest and Class LTII2B Interest shall be related to Group Two.
(i) In the event that any REMIC provided for herein fails to qualify as
a REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as
a result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the NIM Insurer, the
Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of the Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of the Class R Certificate
on which the Servicer has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of the Class R Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing, however,
in no event shall the Servicer have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Servicer of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
(j) In the event that any REMIC provided for herein fails to qualify as
a REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as
a result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the NIM Insurer and
the Trust Fund
55
against any and all Losses resulting from such negligence; provided, however,
that the Trustee shall not be liable for any such Losses attributable to the
action or inaction of the Servicer, the Depositor or the Holder of the Class R
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of the Class R Certificate on which the
Trustee has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of the Class R Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Trustee of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the Trustee
or the NIM Insurer, any affiliate of the Depositor, the Trustee or the NIM
Insurer and prepared by the Servicer pursuant to this Agreement will be
inaccurate in any material respect, provided, however, that the Servicer shall
not be responsible for inaccurate information provided to it by third parties.
SECTION 2.09. [RESERVED].
SECTION 2.10. [RESERVED].
SECTION 2.11. Permitted Activities of the Trust Fund. The Trust Fund is
created for the object and purpose of engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee is hereby authorized and directed to
execute and deliver, on behalf of the Trust Fund, the Cap Contracts, and to
execute and deliver on behalf of the Trust Fund, and to perform the duties and
obligations of the Trustee under an insurance and indemnity agreement with a NIM
Insurer and any other agreement or instrument related thereto, in each case in
such form as the Depositor shall direct or shall approve, the execution and
delivery of any such agreement by the Depositor to be conclusive evidence of its
approval thereof.
SECTION 2.12. Qualification of Special Purpose Entity. For purposes of
SFAS 140, the parties hereto intend that the Trust Fund shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 of SFAS 140.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers
56
as provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. The Servicer shall represent and protect the interest of the Trust Fund in
the same manner as it currently protects its own interest in mortgage loans in
its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. Notwithstanding anything in
this Agreement to the contrary, the Servicer shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which would
cause any of the REMICs provided for herein to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860G(a) or 860G(d) of the
Code. Without limiting the generality of the foregoing, the Servicer, in its own
name or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall prepare and deliver to the Depositor
and/or the Trustee such documents requiring execution and delivery by any or all
of them as are necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans. If reasonably required by the Servicer, the
Trustee shall furnish the Servicer with a reasonable number of powers of
attorney in the form attached hereto as Exhibit J and execute such other
documents delivered to it by the Servicer that are necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement. Upon receipt of such documents, the Depositor and/or the Trustee
shall execute such documents and deliver them to the Servicer. The Trustee shall
have no liability with respect to any misuse of such power of attorney and shall
be indemnified by the Servicer for any costs, liabilities or expenses incurred
by the Trustee in connection therewith.
In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on any first lien
Mortgaged Properties, which advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.06, and
further as provided in Section 3.08. To the extent that a Mortgage does not
provide for escrow payments, (i) the Servicer shall determine whether any such
payments are made by a first lien Mortgagor in a manner and at a time that is
necessary to avoid the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien and (ii) the Servicer shall ensure that
all insurance required to be maintained on a first lien Mortgaged Property
pursuant to this Agreement is maintained. If any such payment has not been made
and the Servicer receives notice of a tax lien with respect to the Mortgage Loan
being imposed, the Servicer will, to the extent required to avoid loss of the
Mortgaged Property, advance or cause to be advanced funds necessary to discharge
such lien on the Mortgaged Property subject to the Servicer's determination that
such advances will be recoverable. All costs incurred by the Servicer, if any,
in effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated
57
Principal Balance under the related Mortgage Loans, notwithstanding that the
terms of such Mortgage Loans so permit.
The Servicer shall deliver a list of Servicing Officers and specimen
signatures to the Trustee by the Closing Date.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 97-02 and for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
The Servicer shall have at least 30 days' notice of the appointment of
a NIM Insurer prior to being required to deliver any notices pursuant to this
Agreement to such NIM Insurer.
With respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage Loan, provided
that the following requirements are met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan is
no higher than the Combined Loan-to-Value Ratio prior to such refinancing; and
(b) the interest rate for the loan evidencing the refinanced senior
lien is no more than 2.0% higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer"), pursuant to
a subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIM Insurer and (iii) the NIM Insurer shall have consented to such subservicing
agreement which consent shall not unreasonably be withheld. Notwithstanding the
provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
subservicer or reference to actions taken through a subservicer or otherwise,
the Servicer shall remain obligated and liable to the Depositor, the Trustee and
the Certificateholders for the servicing and administration of the Mortgage
Loans in accordance with the provisions of this Agreement without diminution of
such obligation or liability by virtue of such subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. Every subservicing
agreement entered into by the Servicer shall contain a provision giving any
successor servicer the option to terminate such agreement with the consent of
the NIM Insurer in the event a successor servicer is appointed. All actions of
the each subservicer performed pursuant to the related subservicing agreement
shall be performed as an agent of the Servicer with the same force and effect as
if performed directly by the Servicer. The Servicer shall deliver to the NIM
Insurer and the Trustee copies of all subservicing agreements.
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(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor Servicer
hereunder, (ii) obligated to make Advances or Servicing Advances if it is
prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02 or 2.03 hereof, (iv) responsible for any expenses of the Servicer
pursuant to Section 2.03 or (v) deemed to have made any representations and
warranties hereunder, including pursuant to Section 2.04 or the first paragraph
of Section 6.02 hereof; provided, however that the Trustee (subject to clause
(ii) above) or its designee, in its capacity as the successor servicer, shall
immediately assume the terminated or resigning Servicer's obligation to make
Advances and Servicing Advances. No such termination shall affect any obligation
of the Servicer to pay amounts owed under this Agreement and to perform its
duties under this Agreement until its successor assumes all of its rights and
obligations hereunder. If the Servicer shall for any reason no longer be the
Servicer (including by reason of any Event of Default), the Trustee (or any
other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to assume such obligations of the Servicer
thereunder; and the Servicer shall not thereby be relieved of any liability or
obligations under the subservicing agreement arising prior to the date of such
succession. To the extent any costs or expenses, including without limitation
Servicing Transfer Costs incurred by the Trustee in connection with this Section
3.04 are not paid by the Servicer pursuant to this Agreement within 30 days of
the date of the Trustee's invoice therefor, such amounts shall be payable out of
the Certificate Account; provided that the terminated Servicer shall reimburse
the Trust Fund for any such expense incurred by the Trust Fund upon receipt of a
reasonably detailed invoice evidencing such expenses. If the Trustee is
unwilling or unable to act as servicer, or if the NIM Insurer so directs the
Trustee, the Trustee shall seek to appoint a successor servicer that is eligible
in accordance with the criteria specified this Agreement and reasonably
acceptable to the NIM Insurer.
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within 10 Business Days or delivery to the Trustee by the
Servicing Rights
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Pledgee of a letter signed by the Servicer whereby the Servicer shall resign as
Servicer under this Agreement, the Servicing Rights Pledgee or its designee
shall be appointed as successor servicer (provided that at the time of such
appointment the Servicing Rights Pledgee or such designee meets the requirements
of a successor servicer set forth above) and the Servicing Rights Pledgee agrees
to be subject to the terms of this Agreement.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing and subject to Section
3.01 hereof, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below; provided, further, that the NIM
Insurer's prior written consent shall be required for any modification, waiver
or amendment since the Cutoff Date if the aggregate number of outstanding
Mortgage Loans which have been modified, waived or amended exceeds 5% of the
number of Mortgage Loans as of the Cut-Off Date. In the event of any such
arrangement pursuant to clause (ii) above, subject to Section 4.01, the Servicer
shall make any Advances on the related Mortgage Loan during the scheduled period
in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
(any and all such waivers, modifications, variances, forgiveness of principal or
interest, postponements, or indulgences collectively referred to herein as
"forbearance"), provided, however, that in no event shall the Servicer grant any
such forbearance (other than as permitted by the second sentence of this
Section) with respect to any one Mortgage Loan more than once in any 12 month
period or more than three times over the life of such Mortgage Loan, and
provided, further, that in determining which course of action permitted by this
sentence it shall pursue, the Servicer shall adhere to the standards of Section
3.01. The Servicer's analysis supporting any forbearance and the conclusion that
any forbearance meets the standards of Section 3.01 shall be reflected in
writing in the Mortgage File.
(b) The Servicer will not waive any prepayment charge or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the prepayment of the
Mortgage Loan is made in connection with the voluntary sale of the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment as described
in Section 3.01 hereof, (x) such waiver relates to a default or a reasonably
foreseeable default, (y) such waiver would maximize recovery of total proceeds
taking into account the value of such prepayment charge and related Mortgage
Loan and (z) the collection of such prepayment charge or portion thereof, or of
a similar type of prepayment charge, would be considered "predatory" or
"illegal" pursuant to written guidance published by any applicable federal,
state or local regulatory authority having jurisdiction over such matters or has
been challenged by any such authority, or there is a
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certificated class action in which a similar type of prepayment charge is being
challenged, or (v) if sufficient information is not made available to enable it
to collect the prepayment charge. Except as provided in the preceding sentence,
in no event will the Servicer waive a prepayment charge in connection with a
refinancing of a Mortgage Loan that is not related to a default or a reasonably
foreseeable default. If the Servicer waives or does not collect all or a portion
of a prepayment charge relating to a Principal Prepayment in full or in part due
to any action or omission of the Servicer, other than as provided above, the
Servicer shall deposit the amount of such prepayment charge (or such portion
thereof as had been waived for deposit) into the Collection Account for
distribution in accordance with the terms of this Agreement.
(c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf of
the Trustee for the benefit of the Certificateholders, the Collection Account.
The Servicer shall deposit into the Collection Account daily, within two
Business Days of receipt thereof, in immediately available funds, the following
payments and collections received or made by it on and after the Cut-Off Date
with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans net
of the related Servicing Fee permitted under Section 3.15, other than
interest due on the Mortgage Loans on or prior to the Cut-off Date;
(iii) all Liquidation Proceeds, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to
either the Mortgagor or the holder of a senior lien on the Mortgaged
Property in accordance with the Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
(vii) any amounts required to be deposited by the Servicer pursuant
to Section 3.10 hereof;
(viii) the Purchase Price and any Substitution Adjustment Amount;
(ix) all Advances made by the Servicer pursuant to Section 4.01;
(x) all prepayment charges; and
(xi) any other amounts required to be deposited hereunder.
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The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property) and other similar ancillary fees (other than
prepayment charges) if collected, need not be remitted by the Servicer. In the
event that the Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time withdraw or direct the Trustee, or such other institution maintaining
the Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
(e) [RESERVED].
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from the
Collection Account and required to be deposited in the Certificate
Account;
(ii) any amount required to be deposited by the Trustee pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
and
(iii) the Auction Termination Amount or Clean Up Call Price payable
pursuant to Section 9.01.
Any amounts received by the Trustee prior to 2:00 p.m. New York City
time (or such earlier deadline for investment in the Permitted Investments
designated by the Trustee) which are required to be deposited in the Certificate
Account by the Servicer shall be invested in Permitted Investments on the
Business Day on which they were received. The foregoing requirements for
remittance by the Servicer and deposit by the Servicer into the Certificate
Account shall be exclusive. In the event that the Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
All funds deposited in the Certificate Account shall be held by the Trustee in
trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the
Trustee incur liability for withdrawals from the Certificate Account at the
direction of the Servicer.
(g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or a fund for which such
institution serves as custodian or is otherwise immediately available, then such
Permitted Investment shall mature not later
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than such Distribution Date) and, in each case, shall not be sold or disposed of
prior to its maturity. All such Permitted Investments shall be made in the name
of the Servicer or the Trustee, as applicable, for the benefit of the
Certificateholders. All income and gain net of any losses realized from amounts
on deposit in the Collection Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
The amount of any losses incurred in the Collection Account in respect of any
such investments shall be deposited by the Servicer in the Collection Account
out of the Servicer's own funds immediately as realized. All income and gain net
of any losses realized from amounts on deposit in the Certificate Account shall
be for the benefit of the Trustee and shall be remitted to or withdrawn by it
monthly as provided herein. The amount of any losses incurred in the Certificate
Account in respect of any such investments shall be deposited by the Trustee, in
the Certificate Account out of the Trustee's own funds immediately as realized.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by a related first lien Mortgage Note, the
Servicer shall establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the Mortgagors.
Nothing herein shall require the Servicer to compel a Mortgagor to establish an
Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
The Servicer may from time to time provide the Depositor, and any
Person designated by the Depositor, with certain reports and reasonable access
to information and documentation regarding the Mortgage Loans.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
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(i) to pay to the Servicer (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest
payment was made, and, as additional servicing compensation, those
other amounts set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances and Servicing Advances
(to the extent such Servicing Advances would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein)
occurring after the Cut-off Date made by it with respect to the
Mortgage Loans, such right of reimbursement pursuant to this subclause
(ii) being limited to amounts received on particular Mortgage Loan(s)
(including, for this purpose, Condemnation Proceeds, Insurance Proceeds
or Liquidation Proceeds) that represent late recoveries of payments of
principal and/or interest on such particular Mortgage Loan(s) in
respect of which any such Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and, to the extent that such Non-Recoverable Servicing
Advances would constitute "unanticipated expenses" within the meaning
of Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the
REMICs provided for herein, any Non-Recoverable Servicing Advance;
(iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(vi) to pay to the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, the Servicer's
right to reimbursement of Servicing Advances pursuant to this subclause
(vi) with respect to any Mortgage Loan being limited to amounts
received on particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds and purchase and repurchase proceeds and including
any Subsequent Recoveries related to any liquidated Mortgage Loan) that
represent late recoveries of the payments for which such advances were
made pursuant to Section 3.01 or Section 3.06;
(vii) to pay to the Servicer any unpaid Servicing Fees for any
Mortgage Loan upon such Mortgage Loan being charged off and upon
termination of the obligations of the Servicer;
(viii) to pay to the Depositor, with respect to each Mortgage Loan
or property acquired in respect thereof that has been purchased
pursuant to Section 2.02 or 2.03, all amounts received thereon and not
taken into account in determining the related Stated Principal Balance
of such repurchased Mortgage Loan;
(ix) to reimburse the Servicer or the Depositor for expenses
incurred by either of them in connection with the Mortgage Loans or the
Certificates and reimbursable pursuant to Section 3.25 or Section 6.03
hereof;
(x) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach or defect giving rise to the purchase
obligation in Section 2.03 that were incurred in the Purchase Price of
the Mortgage Loans including any expenses arising out of the
enforcement of the purchase obligation; provided that any such expenses
will be reimbursable under this
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subclause (x) only if such expenses would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein;
(xi) to withdraw pursuant to Section 3.05 any amount deposited in
the Collection Account and not required to be deposited therein;
(xii) to clear and terminate the Collection Account upon termination
of this Agreement pursuant to Section 9.01 hereof; and
(xiii) to reimburse itself for Advances or Servicing Advances from
amounts in the Collection Account held for future distributions that
were not included in Available Funds for the preceding Distribution
Date. An amount equal to the amount withdrawn from the Collection
Account pursuant to this subclause (xiii) shall be deposited in the
Collection Account by the Servicer on the next succeeding Distribution
Date that funds are to be distributed to Certificateholders.
In addition, no later than 2:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.
The Servicer shall provide written notification to the Trustee and the
NIM Insurer on or prior to the next succeeding Servicer Remittance Date upon
making any withdrawals from the Collection Account pursuant to subclauses (iii)
and (viii) above.
In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any P&I Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at the "prime rate" (as specified in the New York edition of the Wall Street
Journal) until such failure is remedied.
(b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to withdraw any amount deposited in the Certificate Account and
not required to be deposited therein;
(ii) to pay the Trustee any indemnification amounts owed it and to
clear and terminate the Certificate Account upon termination of the
Agreement pursuant to Section 9.01 hereof (including paying all amounts
necessary to the Trustee or the Servicer in connection with any such
termination);
(iii) to reimburse the Trustee for expenses incurred by the Trustee
and reimbursable pursuant to Section 8.06 hereof; and
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(iv) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 3.09. [RESERVED].
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each first lien Mortgage
Loan, hazard insurance with extended coverage in an amount, to the extent
permitted by applicable law, that is at least equal to the lesser of (i) the
replacement value of the improvements that are part of such Mortgaged Property,
or (ii) the greater of (a) the outstanding principal balance of the Mortgage
Loan and (b) an amount such that the proceeds of such policy shall be sufficient
to prevent the related Mortgagor and/or mortgagee from becoming a co-insurer or
(iii) the amount required under applicable HUD/FHA regulations. Each such policy
of standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. The Servicer shall also cause flood
insurance to be maintained on property acquired upon foreclosure or deed in lieu
of foreclosure of any Mortgage Loan, to the extent required under the standards
described below. Pursuant to Section 3.05 hereof, any amounts collected by the
Servicer under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Servicer's
normal servicing procedures) shall be deposited in the Collection Account. Any
cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal balance
of the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Servicer out of late payments by
the related Mortgagor or out of Liquidation Proceeds to the extent and as
otherwise permitted by Section 3.08 hereof. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If a first lien Mortgaged Property is
located at the time of origination of the Mortgage Loan in a federally
designated special flood hazard area and such area is participating in the
national flood insurance program, the Servicer shall cause flood insurance to be
maintained with respect to such Mortgage Loan. Such flood insurance shall be in
an amount equal to the lesser of (i) the original principal balance of the
related Mortgage Loan, (ii) the replacement value of the improvements that are
part of such Mortgaged Property, or (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the Flood Disaster Protection
Act of 1973, as amended.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
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SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Servicer shall to the extent that it has knowledge of such
conveyance or prospective conveyance, enforce any due-on-sale clause contained
in any Mortgage Note or Mortgage, but only to the extent that such enforcement
will not adversely affect or jeopardize coverage under any Required Insurance
Policy; provided, however, that the Servicer shall not exercise any such right
if the due-on-sale clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. An opinion of counsel, which shall be
reimbursable as a Servicing Advance to the extent provided in Section
3.08(a)(ii) hereof, delivered to the Trustee and the Depositor to the foregoing
shall conclusively establish the reasonableness of such belief, but which shall
not be required. Notwithstanding the foregoing, the Servicer is not required to
exercise such rights with respect to a Mortgage Loan if the Person to whom the
related Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies the terms and conditions contained in the Mortgage Note and Mortgage
related thereto and the consent of the mortgagee under such Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that the Servicer is prohibited by law
from enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.11(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
3.11(a) by reason of any transfer or assumption that the Servicer reasonably
believes it is restricted by law from preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a) hereof, in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or if
an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with
the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the Periodic Rate
Cap, the Adjustment Date, any prepayment charge and any other term affecting the
amount or timing of payment on the Mortgage Loan) may be changed. The Servicer
shall notify the Trustee and the NIM Insurer that any such substitution or
assumption agreement has been completed by forwarding to the Trustee (with a
copy to the NIM Insurer) the original of such substitution or assumption
agreement, which in the case of the original 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. Any fee collected by the Servicer for entering into an assumption
or substitution of liability agreement will be retained by the Servicer as
additional servicing compensation.
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SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds.
(a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 3.08 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Servicer has knowledge that a Mortgaged Property that the Servicer is
contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous
waste risks known to the Servicer, the Servicer will, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance with
Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee or its nominee. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer or an affiliate may receive usual and customary real estate referral
fees for real estate brokers in connection with the listing and disposition of
REO Property. The Servicer shall prepare a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Servicer to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Collection
Account no later than the close of business on each Determination Date. The
Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, obtain more than 60 days prior
to the day on which such three-year period would otherwise expire, an extension
of the three-year grace period unless the Trustee and the NIM Insurer shall have
been supplied with an Opinion of Counsel addressed to the Trustee and the NIM
Insurer (such Opinion of Counsel not to be an expense of the Trustee or the NIM
Insurer) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of the Trust Fund or any of
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the REMICs provided for herein as defined in section 860F of the Code or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding, in which case the Trust Fund may continue
to hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be held, rented (or allowed
to continue to be rented) or otherwise used for the production of income by or
on behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii) subject the Trust
Fund or any REMIC provided for herein to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged Property under
section 860G(c) of the Code or otherwise, unless the Servicer or the Depositor
has agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes. The Servicer shall have no liability for any
losses resulting from a foreclosure on a second lien Mortgage Loan in connection
with the foreclosure of the related first lien mortgage loan that is not a
Mortgage Loan if the Servicer does not receive notice of such foreclosure
action.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds, will be applied as between
the parties in the following order of priority: first, to reimburse the Servicer
for any related unreimbursed Servicing Advances and unpaid Servicing Fees,
pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse the
Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this
Section 3.12; third, to accrued and unpaid interest (to the extent no Advance
has been made for such amount) on the Mortgage Loan, at the Net Mortgage Rate to
the Due Date occurring in the month in which such amounts are required to be
distributed; fourth, as a recovery of principal of the Mortgage Loan; and fifth,
to any Prepayment Charges.
The proceeds of any net income from an REO Property will be applied as
between the parties in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and unpaid Servicing
Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse
the Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or
this Section 3.12; third, as a recovery of principal; and fourth, to accrued and
unpaid interest (to the extent no
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Advance has been made for such amount) on the related REO Property, at the
applicable Net Mortgage Rate to the Due Date occurring in the month in which
such amounts are required to be distributed.
(b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of such request, the Trustee or its designee shall
promptly release the related Mortgage File to the Servicer, and the Trustee or
its designee shall at the Servicer's written direction execute and deliver to
the Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the Mortgage
in each case provided by the Servicer, together with the Mortgage Note with
written evidence of cancellation thereon. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the Collection Account, the Certificate Account or the related subservicing
account. From time to time and as shall be appropriate for the servicing or
foreclosure of any Mortgage Loan, including for such purpose, collection under
any policy of flood insurance, any fidelity bond or errors or omissions policy,
or for the purposes of effecting a partial release of any Mortgaged Property
from the lien of the Mortgage or the making of any corrections to the Mortgage
Note or the Mortgage or any of the other documents included in the Mortgage
File, the Trustee or its designee shall, upon delivery to the Trustee or its
designee of a Request for Release in the form of Exhibit I signed by a Servicing
Officer, release the Mortgage File to the Servicer. Subject to the further
limitations set forth below, the Servicer shall cause the Mortgage File or
documents so released to be returned to the Trustee or its designee when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the Collection Account.
Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Servicer and the Trustee or its designee shall mutually agree. The Trustee
or its designee shall promptly release the related Mortgage File(s) within five
(5) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents in a timely manner, the Trustee or its
designee, shall be liable for such penalties or damages directly caused by it
and shall have no liability for penalties or damages attributable to the
Servicer's actions or inactions.
If the Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this Agreement, the
Servicer shall deliver or cause to be delivered to the Trustee or its designee,
for signature, as appropriate, any court pleadings, requests for trustee's sale
or other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to
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enforce any other remedies or rights provided by the Mortgage Note or the
Mortgage or otherwise available at law or in equity. Notwithstanding the
foregoing, the Servicer shall cause possession of any Mortgage File or of the
documents therein that shall have been released by the Trustee or its designee
to be returned to the Trustee promptly after possession thereof shall have been
released by the Trustee or its designee unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account, and the Servicer shall have delivered to
the Trustee or its designee a Request for Release in the form of Exhibit I or
(ii) the Mortgage File or document shall have been delivered to an attorney or
to a public trustee or other public official as required by law for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property and the Servicer shall have delivered to the Trustee or
its designee an Officer's Certificate of a Servicing Officer certifying as to
the name and address of the Person to which the Mortgage File or the documents
therein were delivered and the purpose or purposes of such delivery.
SECTION 3.14. Documents Records and Funds in Possession of Servicer to
be Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or Certificate Account or in any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds,
Prepayment Interest Excess, late payment fees, assumption fees (i.e. fees
related to the assumption of a Mortgage Loan upon the purchase of the related
Mortgaged Property) and similar fees payable by the Mortgagor, and all income
and gain net of any losses realized from Permitted Investments in the Collection
Account shall be retained by the Servicer to the extent not required to be
deposited in the Collection Account pursuant to Section 3.05 or 3.12(a) hereof.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder (including payment of any premiums for
hazard insurance, as required by Section 3.10 hereof and maintenance of the
other forms of insurance coverage required by Section 3.10 hereof) and shall not
be entitled to reimbursement therefor except as specifically provided in
Sections 3.08 and 3.12 hereof.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC
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and such other authorities, access to the documentation regarding the Mortgage
Loans required by applicable regulations of the OTS and the FDIC. Such access
shall be afforded without charge, but only upon reasonable and prior written
request and during normal business hours at the offices of the Servicer
designated by it provided, that the Servicer shall be entitled to be reimbursed
by each such Certificateholder for actual expenses incurred by the Servicer in
providing such reports and access. Nothing in this Section shall limit the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
SECTION 3.17. Annual Statement as to Compliance.
Pursuant to this Agreement, the Servicer shall deliver to the Depositor,
the Trustee and the NIM insurer on or before March 15 beginning in 2006 or such
other date that the Depositor gives the Servicer at least 30 days prior notice
of in order to remain in compliance with the Section 302 Requirements, an
Officer's Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Servicer during the preceding calendar year and of
performance under this Agreement has been made under such officer's supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officers and the nature
and status thereof. The Trustee shall forward a copy of each such statement
received by it to each Rating Agency. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon written request at the
Certificateholder's expense, provided such statement has been delivered by the
Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
On or before March 15 of each year, beginning in 2006 or such other date
in order to remain in compliance with the Section 302 Requirements, the Servicer
at its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any Affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a USAP Report to the Trustee, the NIM Insurer and the
Depositor. Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee. In addition, at the
NIM Insurer's written request, the Servicer shall deliver copies of evidence of
the Servicer's fidelity bond or errors and omissions insurance coverage to the
NIM Insurer.
SECTION 3.19. Rights of the NIM Insurer. Each of the rights of the NIM
Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIM Insurer is owed amounts
in respect of its guarantee of payment on such notes.
SECTION 3.20. Periodic Filings.
(a) Promptly upon receipt of (i) any report of the independent public
accountants required pursuant to Section 3.18, and (ii) the Officer's
Certificate delivered by the Servicer pursuant to Section 3.17 relating to the
Servicer's performance of its obligations under this Agreement, the Trustee
shall include such report and such certificate as part of the Form 10-K required
to be filed pursuant to the terms of this Agreement.
(b) The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust Fund, and file with the
Securities and Exchange Commission, (i)
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within 15 days after each Distribution Date in each month, each Monthly
Statement on Form 8-K under the Exchange Act executed by the Trustee, (ii) on or
before March 31 of each year beginning in 2006 or such other date in order to
remain in compliance with the Section 302 Requirements, a Form 10-K under the
Exchange Act executed by the Depositor, including any certification (the
"Certification") required by the Section 302 Requirements, and (iii) any and all
reports, statements and information respecting the Trust Fund and/or the
Certificates required to be filed on behalf of the Trust Fund under the Exchange
Act executed by the Trustee. The Certification shall be executed by a senior
officer of the Depositor. Upon such filing with the Securities and Exchange
Commission, the Trustee shall promptly deliver to the Depositor a copy of any
such executed report, statement or information. Prior to making any such filings
and certifications, the Trustee shall comply with the provisions set forth in
this Section. If permitted by applicable law and unless the Depositor otherwise
directs, the Trustee shall file a Form 15 under the Exchange Act on or before
January 30, 2006 or as soon as it is able to do so pursuant to applicable law.
The Depositor hereby grants to the Trustee a limited power of attorney to
execute (other than the Form 10-Ks and the Certification) and file each such
document on behalf of the Depositor. Such power of attorney shall continue until
either the earlier of (i) receipt by the Trustee from the Depositor of written
termination of such power of attorney and (ii) the termination of the Trust
Fund. The Depositor agrees to promptly furnish to the Trustee, from time to time
upon request, such further information, reports, and financial statements within
its control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file all necessary reports with the
Commission. The Trustee shall have no responsibility to file any items other
than those specified in this section.
(c) [RESERVED].
(d) The obligations set forth in paragraphs (a) through (c) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) through (c)
of this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).
SECTION 3.21. Annual Certificate by Trustee.
(a) Within 15 days prior to the date on which a Form 10-K is to be filed
with a Certification by the Depositor, an officer of the Trustee shall execute
and deliver an Officer's Certificate, signed by a Responsible Officer of the
Trustee or any officer to whom that officer reports, to the Depositor for the
benefit of such Depositor and its officers, directors and affiliates, certifying
as to the matters described in the Officer's Certificate attached hereto as
Exhibit K.
(b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.
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SECTION 3.22. Annual Certificate by Servicer.
(a) By February 28 beginning in 2006 or such other date specified in a
written notice within 15 days prior to the date on which a Form 8-K is required
to be filed with a Certification by the Depositor, the Servicer shall execute
and deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee, the NIM Insurer and
Depositor for the benefit of the Trustee and Depositor and their respective
officers, directors and affiliates, certifying as to the following matters:
(i) The Servicer has reviewed the information required to be
delivered to the Trustee pursuant to the Pooling and Servicing Agreement
(the "Servicing Information").
(ii) Based on the Servicer's knowledge, the information in the
Annual Statement of Compliance and the Servicing Information does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make any such reports, certificates or other
information, in light of the circumstances under which such statements
were made, not misleading as of the last day of the period covered by the
Annual Statement of Compliance;
(iii) Based on the Servicer's knowledge, the Servicing Information
required to be provided to the Trustee by the Servicer under this
Agreement has been provided to the Trustee; and
(iv) Based upon the review required under this Agreement, and except
as disclosed in the Annual Statement of Compliance, the Annual Independent
Certified Public Accountant's Servicing Report and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans submitted to the Trustee by the Servicer, the Servicer
has, as of the last day of the period covered by the Annual Statement of
Compliance fulfilled its obligations under this Agreement.
(b) The Servicer shall indemnify and hold harmless the Depositor and their
respective officers, directors, agents and affiliates from and against (i) any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.22, (ii) any allegation that
the Officer's Certificate required under this Section contains a misstatement of
a material fact or omits or omitted to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading or (iii) the negligence, bad faith or willful
misconduct of the Servicer in connection therewith. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the
Depositor, then the Servicer agrees that it shall contribute to the amount paid
or payable by the Trustee and the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Depositor on the one hand and the Servicer on
the other in connection with a breach of the Servicer's obligations under this
Section 3.22, any alleged material misstatement or omission in the Officer's
Certificate required under this Section or the Servicer's negligence, bad faith
or willful misconduct in connection therewith.
SECTION 3.23. Prepayment Charge Reporting Requirements.
(a) Promptly after each Distribution Date, the Servicer shall provide to
the Depositor and the NIM Insurer the following information with regard to each
Mortgage Loan that has prepaid during the related Prepayment Period:
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(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) prepayment charge amount due;
(vi) prepayment charge amount collected; and
(vii) reason why full prepayment charge amount was not collected, if
applicable.
SECTION 3.24. Statements to Trustee. Not later than the Servicer
Remittance Date, the Servicer shall furnish to the Trustee and the NIM Insurer
an electronic file providing loan level accounting data for the period ending on
the last Business Day of the preceding month in the format mutually agreed upon
between the Servicer and the Trustee, including but not limited to information
described in Section 4.05(a).
SECTION 3.25. Indemnification.
The Servicer shall indemnify the Seller, the Trust Fund, Trustee, the
Depositor and the NIM Insurer and hold each of them harmless against any and all
claims, losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and any other costs, fees and expenses
that any of such parties may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement by reason of breach of representations of the
Servicer or willful misfeasance, bad faith or negligence, or by reason of
reckless disregard of obligations and duties hereunder. The Servicer promptly
shall notify the Seller, the Trustee, the Depositor and the NIM Insurer or any
other relevant party if a claim is made by a third party with respect to such
party and this Agreement or the Mortgage Loans and, if subject to this
indemnification obligation, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall provide the Trustee, the Depositor and the NIM Insurer
with a written report of all expenses and advances incurred by the Servicer
pursuant to this Section 3.25, and the Servicer from the assets of the Trust
Fund in the Collection Account promptly shall reimburse itself for all amounts
advanced by it pursuant to the second sentence of this Section 3.25 except when
the claim in any way relates to the gross negligence, bad faith or willful
misconduct of the Servicer. The provisions of this paragraph shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
SECTION 3.26. Nonsolicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.
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SECTION 3.27. Existing Servicing Agreement.
The Servicer acknowledges the transfer on the Closing Date of the
servicing of the Mortgage Loans from the Existing Servicing Agreement to this
Agreement pursuant to the Existing Servicing Agreement.
SECTION 3.28. High Cost Mortgage Loans.
In the event that the Servicer reasonably determines that a Mortgage Loan
may be a "high cost mortgage loan," "high cost home," "covered," "high cost,"
"high risk home," "predatory," or similarly classified loan under any applicable
state, federal or local law, the Servicer may notify the Depositor and the
Trustee, and if the Servicer so notifies such parties, the Servicer may cease
its initiation of collection efforts thereon; and such determination shall be
deemed to materially and adversely affect the interests of the
Certificateholders in such Mortgage Loan and the Seller will repurchase the
Mortgage Loan within a 90 day period from the date of the notice in the manner
described in Section 2.05.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 2:00
p.m. New York City time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, the NIM Insurer, each
Rating Agency and the Trustee an Officer's Certificate setting forth the basis
for such determination. The Servicer may, in its sole discretion, make an
Advance with respect to the principal portion of the final Scheduled Payment on
a Balloon Loan, but the Servicer is under no obligation to do so; provided,
however, that nothing in this sentence shall affect the Servicer's obligation
under this Section 4.01 to Advance the interest portion of the final Scheduled
Payment with respect to a Balloon Loan as if such Balloon Loan were a fully
amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled
Payment on a Balloon Loan for a first lien Mortgage when due, the Servicer shall
Advance (unless it determines in its good faith judgment that such amounts would
constitute a Non Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage
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Loan shall continue until such Mortgage Loan is paid in full or the related
Mortgaged Property or related REO Property has been liquidated or until the
purchase or repurchase thereof (or substitution therefor) from the Trust Fund
pursuant to any applicable provision of this Agreement, except as otherwise
provided in this Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Servicer shall, from amounts in respect of the Servicing
Fee for such Distribution Date, deposit into the Collection Account, as a
reduction of the Servicing Fee for such Distribution Date, no later than the
Servicer Advance Date immediately preceding such Distribution Date, an amount up
to the Prepayment Interest Shortfall; provided that the amount so deposited with
respect to any Distribution Date shall be limited to the product of (x)
one-twelfth of 0.25% per annum and (y) the aggregate Stated Principal Balance of
the Mortgage Loans. In case of such deposit, the Servicer shall not be entitled
to any recovery or reimbursement from the Depositor, the Trustee, the Trust Fund
or the Certificateholders. With respect to any Distribution Date, to the extent
that the Prepayment Interest Shortfall exceeds Compensating Interest (such
excess, a "Non-Supported Interest Shortfall"), such Non-Supported Interest
Shortfall shall reduce the Current Interest with respect to each Class of
Certificates, pro rata based upon the amount of interest each such Class would
otherwise be entitled to receive on such Distribution Date. Notwithstanding the
foregoing, there shall be no reduction of the Servicing Fee in connection with
Prepayment Interest Shortfalls related to the Relief Act and the Servicer shall
not be obligated to pay Compensating Interest with respect to Prepayment
Interest Shortfalls related to the Relief Act.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in the Lower Tier REMIC in an amount sufficient to make the
distributions on the respective Certificates on such Distribution Date in
accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) [RESERVED].
(b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:
(i) to the Class P Certificates, any prepayment charges collected on
the Mortgage Loans and (A) any amounts paid by the Seller or the Servicer
in respect of prepayment charges pursuant to this Agreement or (B) any
amounts received in respect of any indemnification paid as a result of a
prepayment charge being unenforceable in breach of the representations and
warranties set forth in the Sale Agreement received during the related
Prepayment Period;
(ii) to each Class of the Class R and Class A Certificates, the
Current Interest and any Interest Carry Forward Amount with respect to
each such Class; provided, however, if such amount is not sufficient to
make a full distribution of the Current Interest and the aggregate
Interest Carry Forward Amount to each of the Class R and Class A
Certificates, such amount will be distributed pro rata among each Class of
the Class R and Class A Certificates based on the ratio of (x) the Current
Interest and Interest Carry Forward Amount for such Class to (y) the total
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amount of Current Interest and any Interest Carry Forward Amount for the
Class R and Class A Certificates in the aggregate;
(iii) to the Class M-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(iv) to the Class M-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(v) to the Class M-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(vi) to the Class M-4 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(vii) to the Class B-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(viii) to the Class B-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(ix) to the Class B-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(x) to the Class B-4 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class; and
(xi) any remainder pursuant to Section 4.04(e) hereof.
On each Distribution Date, subject to the proviso in (b)(ii) above, Interest
Funds received on the Group One Mortgage Loans will be deemed to be distributed
to the Class R and Class A-1 Certificates and Interest Funds received on the
Group Two Mortgage Loans will be deemed to be distributed to the Class A-2
Certificates, in each case, until the related Current Interest and Interest
Carry Forward Amount of each such Class of Certificates for such Distribution
Date has been paid in full. Thereafter, Interest Funds not required for such
distributions are available to be applied to if necessary, to the Class or
Classes of Certificates that are not related to such group of Mortgage Loans.
(c) All amounts representing prepayment charges in respect of the Mortgage
Loans, and amounts paid by the Servicer in respect of prepayment charges
pursuant to this Agreement will be distributed by the Trustee to the Holders of
the Class P Certificates pursuant to Section 4.04(b).
(d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:
(i) to the Class A Certificates, the Class A Principal Distribution
Amount shall be distributed as follows:
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(1) the Group One Principal Distribution Amount shall be distributed
sequentially as follows: first, to the Class R Certificate until its
Certificate Principal Balance has been reduced to zero, and second,
to the Class A-1A Certificates until the Certificate Principal
Balance of the Class A-1A Certificates has been reduced to zero;
(2) the Group Two Principal Distribution Amount shall be distributed
sequentially to the Class A-2A, Class A-2B and Class A-2C
Certificates, in that order, until the Certificate Principal Balance
of each such Class has been reduced to zero; provided, however, that
on and after the Distribution Date on which the aggregate
Certificate Principal Balance of the Class M, Class B and Class C
Certificates have been reduced to zero, any principal distributions
allocated to the Class A-2A, Class A-2B and Class A-2C Certificates
are required to be allocated pro rata among such Classes of
Certificates, based on their respective Certificate Principal
Balances, until their Certificate Principal Balances have been
reduced to zero;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(iv) to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount;
(v) to the Class M-4 Certificates, the Class M-4 Principal
Distribution Amount;
(vi) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;
(vii) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount;
(viii) to the Class B-3 Certificates, the Class B-3 Principal
Distribution Amount;
(ix) to the Class B-4 Certificates, the Class B-4 Principal
Distribution Amount; and
(x) any remainder pursuant to Section 4.04(e) hereof.
(e) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(xi) and 4.04(d)(x) hereof, and each such
distribution shall be made only after all distributions pursuant to Sections
4.04(b) and (d) above shall have been made until such remainders shall have been
fully distributed for such Distribution Date:
(i) for distribution as part of the Principal Distribution Amount,
the Extra Principal Distribution Amount;
(ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized
Loss Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Unpaid Realized
Loss Amount;
(iv) to the Class M-3 Certificates, the Class M-3 Unpaid Realized
Loss Amount;
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(v) to the Class M-4 Certificates, the Class M-4 Unpaid Realized
Loss Amount;
(vi) to the Class B-1 Certificates, the Class B-1 Unpaid Realized
Loss Amount;
(vii) to the Class B-2 Certificates, the Class B-2 Unpaid Realized
Loss Amount;
(viii) to the Class B-3 Certificates, the Class B-3 Unpaid Realized
Loss Amount;
(ix) to the Class B-4 Certificates, the Class B-4 Unpaid Realized
Loss Amount;
(x) to the Class R Certificateholder, the Residual Excess Interest
Amount;
(xi) to the Class A, Class M and Class B Certificates, on a pro rata
basis, the Floating Rate Certificate Carryover for each such Class; and
(xii) the remainder pursuant to Section 4.04(f) hereof.
(f) on each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(e)(xii) as follows:
(i) to the Class C Certificates in the following order of priority,
(I) the Class C Current Interest, (II) the Class C Interest Carry Forward
Amount, (III) as principal on the Class C Certificate until the
Certificate Principal Balance of the Class C Certificates has been reduced
to zero and (IV) the Class C Unpaid Realized Loss Amount; and
(ii) the remainder pursuant to Section 4.04(g) hereof.
(g) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(f)(ii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.06 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.
(h) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C and Subordinated Certificates in the following order of priority:
(i) to the Class C Certificates until the Class C Certificate
Principal Balance is reduced to zero;
(ii) to the Class B-4 Certificates until the Class B-4 Certificate
Principal Balance is reduced to zero;
(iii) to the Class B-3 Certificates until the Class B-3 Certificate
Principal Balance is reduced to zero;
(iv) to the Class B-2 Certificates until the Class B-2 Certificate
Principal Balance is reduced to zero;
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(v) to the Class B-1 Certificates until the Class B-1 Certificate
Principal Balance is reduced to zero;
(vi) to the Class M-4 Certificates until the Class M-4 Certificate
Principal Balance is reduced to zero;
(vii) to the Class M-3 Certificates until the Class M-3 Certificate
Principal Balance is reduced to zero;
(viii) to the Class M-2 Certificates until the Class M-2 Certificate
Principal Balance is reduced to zero; and
(ix) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(i) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective Initial Certificate Principal Balances (or Percentage
Interests).
(j) The Trustee is hereby directed by the Depositor to execute the Cap
Contracts on behalf of the Trust Fund in the forms presented to it by the
Depositor and shall have no responsibility for the contents of such Cap
Contracts, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contracts, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts. Any payments
received under the terms of the related Cap Contract will be available to pay
the holders of the related Classes of Certificates up to the amount of any
Floating Rate Certificate Carryovers remaining after all other distributions
required under this Section 4.04 are made on such Distribution Date, other than
Floating Rate Certificate Carryovers attributable to the fact that Applied
Realized Loss Amounts are not allocated to the Class A and Class R Certificates.
Any amounts received under the terms of any Cap Contract on a Distribution Date
that are not used to pay such Floating Rate Certificate Carryovers will be
distributed to the holders of the Class C Certificates. Payments in respect of
such Floating Rate Certificate Carryovers from proceeds of the Cap Contracts
shall be paid to the related Classes of Certificates, pro rata based upon such
Floating Rate Certificate Carryovers for each such Class of Offered
Certificates.
(i) The Trustee shall establish and maintain, for the benefit of the
Trust Fund and the Certificateholders, the Cap Contract Account. On or
prior to the related Cap Contract Termination Date, amounts, if any,
received by the Trustee for the benefit of the Trust Fund in respect of
any Cap Contract shall be deposited by the Trustee into the Cap Contract
Account and will be used to pay Floating Rate Certificate Carryovers on
the related Classes of Certificates as
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provided in this Section 4.04(j). With respect to any Distribution Date on
or prior to the related Cap Contract Termination Date, the amount, if any,
payable by the Cap Contract Counterparty under the applicable Cap Contract
will equal the product of (i) the excess of (x) One-Month LIBOR (as
determined by the Cap Contract Counterparty and subject to a cap equal to
the rate with respect to such Distribution Date as shown under the heading
"1ML Upper Collar" in the schedule to the applicable Cap Contract), over
(y) the rate with respect to such Distribution Date as shown under the
heading "1ML Lower Collar" in the schedule to the applicable Cap Contract,
(ii) an amount equal to the lesser of (A) the related Cap Contract
Notional Balance for such Distribution Date and (B) the Certificate
Principal Balance of (I) in the case of the Class A-1 Cap Contract, the
Class A-1 and Class R Certificates, (II) in the case of the Class A-2 Cap
Contract, the Class A-2 Certificates and (III) in the case of the
Subordinated Certificate Cap Contract, the Subordinated Certificates
(excluding the Class B-4 Certificates), and (iii) the number of days in
such Accrual Period, divided by 360. If a payment is made to the Trust
Fund under a Cap Contract and the Trustee is required to distribute excess
amounts to the holders of the Class C Certificates as described above, the
Trustee shall, on the monthly statement to Certificateholders described in
Section 4.05 below, report the amounts paid with respect to Floating Rate
Certificate Carryovers and the amount due to the holders of the Class C
Certificates.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
(iii) Each Cap Contract is scheduled to remain in effect until its
respective Cap Contract Termination Date and will be subject to early
termination only in limited circumstances. Such circumstances include
certain insolvency or bankruptcy events in relation to the Cap Contract
Counterparty (after a grace period of three Local Business Days, as
defined in the applicable Cap Contract, after notice of such failure is
received by the Cap Contract Counterparty) to make a payment due under the
applicable Cap Contract, the failure by the Cap Contract Counterparty
(after a cure period of 20 days after notice of such failure is received)
to perform any other agreement made by it under the applicable Cap
Contract, the termination of the Trust Fund and the applicable Cap
Contract becoming illegal or subject to certain kinds of taxation.
(k) In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee and the NIM Insurer in
the form of a computer readable magnetic tape (or by such other means as the
Servicer, the Trustee and the NIM Insurer may agree from time to time)
containing such data and information such as to permit the Trustee to prepare
the Monthly Statement to Certificateholders and make the required distributions
for the related Distribution Date.
(l) The Trustee shall promptly notify the NIM Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class C Certificates or the
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates and the Trustee hereby agree
that the NIM Insurer may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim, including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Claim and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the NIM Insurer shall be subrogated to the rights
of the Trustee and each Holder of the Class C Certificates and the Class P
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIM
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Insurer will not have any rights with respect to any Preference Claim set forth
in this paragraph unless the indenture trustee with respect to the NIM Notes or
the holder of any NIM Notes has been required to relinquish a distribution made
on the Class C Certificates, the Class P Certificates or the NIM Notes, as
applicable, and the NIM Insurer made a payment in respect of such relinquished
amount.
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based on information provided by
the Servicer, the Trustee shall prepare and make available on its website
located at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇ to each Holder of a Class of Certificates of the
Trust Fund, the Servicer, the NIM Insurer, the Rating Agencies and the Depositor
a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each Class
of Certificates allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein, (B) the
aggregate amount of all scheduled payments of principal included therein
and (C) any Extra Principal Distribution Amount, in the aggregate and with
respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(ii) the amount of such distribution to Holders of each Class of
Certificates allocable to interest, together with any Non-Supported
Interest Shortfalls allocated to each Class;
(iii) with respect to each Class of Certificates, any Interest Carry
Forward Amount with respect to such Distribution Date for each such Class,
any Interest Carry Forward Amount paid for each such Class and any
remaining Interest Carry Forward Amount for each such Class;
(iv) the Certificate Principal Balance of each Class of Certificates
after giving effect to all distributions allocable to principal on such
Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution Date;
(vi) the amount of the Servicing Fee paid to or retained by the
Servicer and the amount of investment income earned on funds on deposit in
the Certificate Account for the related Due Period;
(vii) the Pass-Through Rate for each Class of Certificates for such
Distribution Date;
(viii) the amount of Advances included in the distribution on such
Distribution Date;
(ix) the cumulative amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts to date, in the aggregate;
(x) the amount of (A) Realized Losses and (B) Applied Realized Loss
Amounts with respect to such Distribution Date, in the aggregate;
(xi) the number and aggregate principal amounts of Mortgage Loans
(A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60
days, (2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure
and Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, in each case as of the close of business on the last day of the
calendar month preceding such Distribution Date, in the aggregate and with
respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
83
(xii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan as of the close of business on the
Determination Date and the date of acquisition thereof, in the aggregate;
(xiii) whether a Stepdown Trigger Event has occurred and is in
effect;
(xiv) the total number and principal balance of any REO Properties
as of the close of business on the related Determination Date, in the
aggregate;
(xv) the aggregate Stated Principal Balance of all Liquidated Loans
as of the preceding Distribution Date, in the aggregate
(xvi) any Floating Rate Certificate Carryover paid and all Floating
Rate Certificate Carryover remaining on each Class of the Offered
Certificates and the Class B-4 Certificates on such Distribution Date and
Stated Principal Balance (as of the preceding Distribution Date) of any
Mortgage Loans which were purchased or repurchased during the preceding
Due Period and since the Cut-off Date;
(xvii) the number and amount of prepayment charges and the amount of
late payment fees received during the related Prepayment Period in the
aggregate;
(xviii) as of each Distribution Date, the amount, if any, received
pursuant to each Cap Contract and the amount thereof, if any, to be paid
to each Class of Certificates;
(xix) the number of Mortgage Loans with respect to which (i) a
reduction in the Mortgage Rate has occurred or (ii) the related borrower's
obligation to repay interest on a monthly basis has been suspended or
reduced pursuant to the Servicemembers Civil Relief Act or the California
Military and Veterans Code, as amended; and (iii) the amount of interest
not required to be paid with respect to any such Mortgage Loans during the
related Due Period as a result of such reductions in the aggregate and
with respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(xx) the number of Mortgage Loans for which prepayment charges were
received during the related Prepayment Period and, for each such Mortgage
Loan, the amount of prepayment charges received during the related
Prepayment Period and in the aggregate of such amounts for all such
Mortgage Loans since the Cut-off Date;
(xxi) the amount and purpose of any withdrawal from the Collection
Account pursuant to Section 3.08(a)(iv); and
(xxii)the amount of any payments to each Class of Certificates that
are treated as payments received in respect of a REMIC Regular Interest or
REMIC "residual interest" and the amount of any payments to each Class of
Certificates that are not treated as payments received in respect of a
REMIC Regular Interest or REMIC "residual interest".
(b) The Servicer shall deliver to the NIM Insurer a copy of any report
delivered by the Servicer to the Trustee.
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(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to the NIM Insurer and each Person
who at any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i) and (a)(ii) of this
Section 4.05 aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holder of the Class R Certificate and the NIM Insurer each Form
1066 and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of a Class R Certificate with
respect to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows
described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the REMICs with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMICs; and
(vii) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or
local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall be
provided by the Depositor pursuant to Section 8.12.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must
85
be in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ ----------------- -----------------
A-1A $25,000.00 $1.00 $410,861,000.00
A-2A $25,000.00 $1.00 $155,721,000.00
A-2B $25,000.00 $1.00 $87,802,000.00
A-2C $25,000.00 $1.00 $14,256,000.00
M-1 $25,000.00 $1.00 $39,480,000.00
M-2 $25,000.00 $1.00 $28,980,000.00
M-3 $25,000.00 $1.00 $49,980,000.00
M-4 $25,000.00 $1.00 $13,860,000.00
B-1 $25,000.00 $1.00 $12,600,000.00
B-2 $25,000.00 $1.00 $9,660,000.00
B-3 $25,000.00 $1.00 $8,400,000.00
B-4 $25,000.00 $1.00 $8,400,000.00
C (1) 1% (1)
R $100.00 N/A $100.00
P (2) 1% (2)
----------
(1) The Class C Certificates shall not have minimum dollar denominations as
the Certificate Principal Balance thereof shall vary over time as
described herein and shall be issued in a minimum percentage interest of
10% and an aggregate percentage interest of 100%. The initial
Overcollateralization Amount is $ 1,319.26.
(2) The Class P Certificates shall not have minimum dollar denominations or
Certificate Principal Balance and shall be issued in a minimum percentage
interest of 10% and an aggregate percentage interest of 100%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of Transfers and exchanges of Certificates
as herein
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provided. Upon surrender for registration of Transfer of any Certificate, the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Certificates of the same Class and of like
aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to a Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
(b) No Transfer of a Class B-4, Class C or Class P Certificate shall be
made unless such Transfer is made pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws or
is exempt from the registration requirements under the Securities Act and such
state securities laws. In the event that a Transfer is to be made in reliance
upon an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder desiring
to effect such Transfer and such Certificateholder's prospective transferee
shall (except with respect to the initial transfer of a Class B-4, Class C or
Class P Certificate by ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. or, in connection with the transfer
of a Class B-4, Class C or Class P Certificate to the indenture trustee under an
Indenture pursuant to which NIM Notes are issued, whether or not such notes are
guaranteed by the NIM Insurer) each certify to the Trustee in writing the facts
surrounding the Transfer in substantially the forms set forth in Exhibit F (the
"Transferor Certificate") and (i) deliver a letter in substantially the form of
either Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter")
or (ii) there shall be delivered to the Trustee an Opinion of Counsel addressed
to the Trustee that such Transfer may be made pursuant to an exemption from the
Securities Act, which Opinion of Counsel shall not be an expense of the
Depositor or the Trustee. The Depositor shall provide to any Holder of a Class
B-4, Class C or Class P Certificate and any prospective transferee designated by
any such Holder, information regarding the related Certificates and the Mortgage
Loans and such other information as shall be necessary to satisfy the condition
to eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee shall cooperate with
the Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information in the
possession of the Trustee regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Class B-4,
Class C or Class P Certificate desiring to effect such Transfer shall, and does
hereby agree to, indemnify the Depositor and the Trustee against any liability
that may result if the Transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of an ERISA Restricted Certificate that is a Class R
Certificate may be made to any Person that is an employee benefit plan or other
arrangement subject to Title I of ERISA, a plan subject to Section 4975 of the
Code or a plan subject to any state, local, federal, non-U.S. or other law
substantively similar to the foregoing provisions of ERISA or the Code ("Similar
Law") (collectively, "Plan"), or to any Person directly or indirectly acquiring
the Class R Certificate for, on behalf of, or with
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any assets of any such Plan. Each Person to whom a Class R Certificate is to be
transferred shall be required or deemed to represent that it is not a Plan.
No transfer of an ERISA Restricted Certificate (other than the Class
R Certificate) shall be made to any Person unless the Trustee has received (A) a
representation that the transferee is not a Plan and is not acquiring the
Certificate directly or indirectly for, on behalf of or with any assets of any
such Plan, (B) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, a representation that such transferee is an insurance company that
is acquiring the Certificate with assets of an "insurance company general
account," as defined in Section V(e) of Prohibited Transaction Class Exemption
("PTCE") 95-60, and the acquisition and holding of the Certificate are covered
and exempt under Sections I and III of PTCE 95-60, or (C) solely in the case of
any such Certificate that is a Definitive Certificate, an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee and the NIM Insurer
shall be entitled to rely, to the effect that the acquisition and holding of
such Certificate will not constitute or result in a nonexempt prohibited
transaction under Title I of ERISA or Section 4975 of the Code, or a violation
of Similar Law, and will not subject the Trustee, the NIM Insurer, the Servicer
or the Depositor to any obligation in addition to those expressly undertaken in
this Agreement, which Opinion of Counsel shall not be an expense of the Trustee,
the NIM Insurer, the Servicer or the Depositor.
For purposes of the two immediately preceding paragraphs of this
Subsection 5.02(b), other than clause (C) in the immediately preceding
paragraph, the representations as set forth therein shall be deemed to have been
made to the Trustee by the transferee's acceptance of an ERISA Restricted
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any Class of ERISA Restricted Certificates). Notwithstanding any other
provision herein to the contrary, any purported transfer of an ERISA Restricted
Certificate to or on behalf of a Plan without the delivery to the Trustee of a
representation or an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect. Neither the Trustee nor the NIM Insurer
shall be under any liability to any Person for any registration of transfer of
any ERISA Restricted Certificate that is in fact not permitted by this Section
5.02(b) nor shall the Trustee be under any liability for making any payments due
on such Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements. The Trustee and the NIM Insurer shall be entitled, but not
obligated, to recover from any Holder of any ERISA Restricted Certificate that
was in fact a Plan and that held such Certificate in violation of this Section
5.02(b) all payments made on such ERISA Restricted Certificate at and after the
time it commenced such holding. Any such payments so recovered shall be paid and
delivered to the last preceding Holder of such Certificate that is not a Plan.
No Transfer of a Class C Certificate may be made to a person that is
either (i) not a "United States person" (as defined for purposes of Section 7701
of the Code) or (ii) a Disqualified Organization or a Person acquiring such
Certificate on behalf (as a broker, agent, nominee or otherwise) of a
Disqualified Organization. No Transfer (including the initial issuance) of a
Class C Certificate shall be registered unless the Trustee shall have been
furnished with a Transferee Letter from the proposed transferee in the form
attached as Exhibit M. Any Transfer of a Class C Certificate in violation of the
provisions of this Section 5.02(b) shall be absolutely null and void and the
purported Transferee shall acquire absolutely no rights in such Class C
Certificate.
(c) Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
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(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
purchased, transferred or sold, directly or indirectly, except in
accordance with the provisions hereof. No Ownership Interest in a Class R
Certificate may be registered on the Closing Date or thereafter
transferred, and no Transfer of any Class R Certificate shall be
registered unless, in addition to the certificates required to be
delivered to the Trustee under subparagraph (b) above, the Trustee shall
have been furnished with an affidavit (a "Transfer Affidavit") of the
initial owner or the proposed transferee in the form attached hereto as
Exhibit E-1 and an affidavit of the proposed transferor in the form
attached hereto as Exhibit E-2. In the absence of a contrary instruction
from the transferor of a Class R Certificate, declaration (11) in Appendix
A of the Transfer Affidavit may be left blank. If the transferor requests
by written notice to the Trustee prior to the date of the proposed
transfer that one of the two other forms of declaration (11) in Appendix A
of the Transfer Affidavit be used, then the requirements of this Section
5.02(c)(ii) shall not have been satisfied unless the Transfer Affidavit
includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee. Further, no transfer, sale or other disposition of any
Ownership Interest in a Class R Certificate may be made to a person who is
not a U.S. Person (within the meaning of section 7701 of the Code) unless
such person furnishes the transferor and the Trustee with a duly completed
and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other
disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit. The Trustee
shall be entitled but not obligated to recover from any Holder of a Class
R Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) At the option of the Holder of the Class R Certificate, the
Class LTR Interest, and the Residual Interest may be severed and
represented by separate certificates (with the separate certificate that
represents the Residual Interest also representing all rights of the
Class R
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Certificate to distributions attributable to a Pass-Through Rate on the
Class R Certificate in excess of the Net Rate); provided, however, that
such separate certification may not occur until the NIM Insurer and the
Trustee receive an Opinion of Counsel addressed to the Trustee (at the
expense of the Holder of the Class R Certificate) to the effect that
separate certification in the form and manner proposed would not result in
the imposition of federal tax upon the Trust Fund or any of the REMICs
provided for herein or cause any of the REMICs provided for herein to fail
to qualify as a REMIC; and provided further, that the provisions of
Sections 5.02(b) and (c) will apply to each such separate certificate as
if the separate certificate were a Class R Certificate. If, as evidenced
by an Opinion of Counsel, it is necessary to preserve the REMIC status of
any of the REMICs provided for herein, the Class LTR Interest, and the
Residual Interest shall be severed and represented by separate
Certificates (with the separate certificate that represents the Residual
Interest also representing all rights of the Class R Certificate to
distributions attributable to a Pass-Through Rate on the Class R
Certificate in excess of the Net Rate).
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee and the NIM Insurer of an Opinion of Counsel
addressed to the Trustee, which Opinion of Counsel shall not be an expense of
the Trust Fund, the Trustee or the Depositor, to the effect that the elimination
of such restrictions will not cause any of the REMICs provided for herein to
fail to qualify as a REMIC at any time that the Certificates are outstanding or
result in the imposition of any tax on the Trust Fund, any REMIC provided for
herein, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment
of this Agreement that, based on an Opinion of Counsel addressed to and
furnished to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Class R
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The transferor of the Class R Certificate shall notify the Trustee in
writing upon the transfer of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Trust Fund, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIM Insurer such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
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SECTION 5.04. Persons Deemed Owners.
The NIM Insurer, the Trustee and any agent of the NIM Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the NIM
Insurer nor the Trustee, nor any agent of the NIM Insurer or the Trustee shall
be affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the NIM
Insurer or the Depositor shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the NIM Insurer, the Depositor or such Certificateholders
at such recipients' expense the most recent list of the Certificateholders of
the Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Trustee and the NIM Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by
the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
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(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Book-Entry Certificates and the NIM Insurer,
through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of such Class
requesting the same. The Depositor shall provide the Trustee with an adequate
inventory of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon surrender to the Trustee of any such Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
Institutional Trust Services/Transfer Department as offices for such purposes.
The Trustee will give prompt written notice to the Certificateholders of any
change in such location of any such office or agency.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or Servicer, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense (i) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or (ii) which does not constitute
an "unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii). None of the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that any of the
Depositor or the Servicer may, in its discretion undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Servicer and the
Certificateholders hereunder.
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In such event, the legal expenses and costs of such action and any liability
resulting therefrom shall be, expenses, costs and liabilities of the Trust Fund,
and the Depositor and the Servicer shall be entitled to be reimbursed therefor
out of the Collection Account as provided by Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIM Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIM Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Sections 7.01, 7.02 and 7.03 as obligations that survive the resignation or
termination of the Servicer.
The Trustee, the Depositor and the NIM Insurer hereby specifically (i)
consent to the pledge and assignment by the Servicer of all the Servicer's
right, title and interest in, to and under this Agreement to the Servicing
Rights Pledgee, for the benefit of certain lenders, and (ii) provided that no
Event of Default exists, agree that upon delivery to the Trustee by the
Servicing Rights Pledgee of a letter signed by the Servicer whereby the Servicer
shall resign as Servicer under this Agreement, the Trustee shall appoint the
Servicing Rights Pledgee or its designee as successor servicer but only if such
successor servicer meets the requirements of a successor servicer under this
Agreement and agrees to be subject to the terms of this Agreement. If, pursuant
to any provision hereof, the duties of the Servicer are transferred to a
successor servicer, the entire amount of the Servicing Fee and other
compensation payable to the Servicer pursuant hereto shall thereafter be payable
to such successor servicer.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy and bond shall, together, meet the requirements of
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, unless the Servicer has obtained a waiver of such
requirements from the Seller. The Servicer shall provide the Trustee and the NIM
Insurer, upon request with reasonable notice, with copies of such policies and
fidelity bond or a certification from the insurance provider evidencing such
policies and fidelity bond. The Servicer may 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. In the event
that any such policy or bond ceases to be in effect, the Servicer shall use its
reasonable commercial efforts to obtain a comparable replacement policy or bond
from an insurer or issuer meeting the requirements set forth above as of the
date of such replacement. The Servicer shall ensure that any such policy or
fidelity bond shall by its terms not be cancelable without thirty days' prior
written notice to the Trustee. Upon request of the NIM Insurer, the Servicer
shall ensure that any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the NIM Insurer.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
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(i) any failure by the Servicer to make any Advance to deposit in
the Collection Account or the Certificate Account or remit to the Trustee
any payment (excluding a payment required to be made under Section 4.01
hereof) required to be made under the terms of this Agreement, which
failure shall continue unremedied for three Business Days and, with
respect to a payment required to be made under Section 4.01 hereof, for
one Business Day, after the date on which written notice of such failure
shall have been given to the Servicer by the Trustee or the Depositor, or
to the Trustee and the Servicer by the NIM Insurer or the Holders of
Certificates evidencing not less than 50% of the Voting Rights evidenced
by the Certificates; or
(ii) any failure by the Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement or any representation or warranty
shall prove to be untrue, which failure or breach shall continue
unremedied for a period of 60 days after the date on which written notice
of such failure shall have been given to the Servicer by the Trustee or
the Depositor, or to the Trustee by the NIM Insurer or the Holders of
Certificates evidencing not less than 50% of the Voting Rights evidenced
by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 consecutive days; or
(iv) consent by the Servicer to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
(v) admission by the Servicer in writing of its inability to pay its
debts generally as they become due, file a petition to take advantage of,
or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIM Insurer, except after a NIM Insurer
Default), or at the direction of the NIM Insurer or the Holders of Certificates
evidencing not less than 50% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIM Insurer, except after a NIM Insurer
Default), shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, subject to and in accordance with Section 6.04 hereof, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee as successor servicer. To the extent the Event of Default resulted from
the failure of the Servicer to make a required Advance, the Trustee, in its
capacity as successor servicer, shall thereupon make any Advance described in
Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any
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obligation of the Servicer to pay amounts owed pursuant to Article VIII. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Collection Account, or thereafter be received with
respect to the Mortgage Loans. The Servicer and the Trustee shall promptly
notify the Rating Agencies of the occurrence of an Event of Default or an event
that, with notice, passage of time, other action or any combination of the
foregoing would be an Event of Default, such notice to be provided in any event
within two Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.
SECTION 7.02. [RESERVED]
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, as
applicable, the Trustee shall be entitled to all compensation and reimbursement
for costs and expenses that the Servicer would have been entitled to hereunder
if the Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Servicer in accordance with
Section 7.01 hereof, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant to
Section 4.01 hereof or if it is otherwise unable to so act, appoint, or petition
a court of competent jurisdiction to appoint, any established mortgage loan
servicing institution the appointment of which successor shall be approved by
the NIM Insurer and which does not adversely affect the then current rating of
the Certificates by each Rating Agency as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Any successor servicer shall be an
institution that is acceptable to the NIM Insurer and is a ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac approved seller/servicer in good standing, that has a net worth of
at least $15,000,000, and that is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer (other than liabilities of the Servicer under Section 6.03 hereof
incurred prior to termination of the Servicer under Section 7.01), with like
effect as if originally named as a party to this Agreement; and provided further
that each Rating Agency acknowledges that its rating of the Certificates in
effect immediately prior to such assignment and delegation will not be qualified
or reduced as a result of such assignment and delegation. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee and the
NIM Insurer shall have consented thereto, prior written consent of the NIM
Insurer is obtained and written notice of such proposed appointment shall have
been provided by the Trustee to each Certificateholder. The Trustee shall not
resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Servicer
hereunder, the
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Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.04 hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer hereunder. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within 10 Business Days or delivery to the Trustee by the
Servicing Rights Pledgee of a letter signed by the Servicer whereby the Servicer
shall resign as Servicer under this Agreement, the Servicing Rights Pledgee or
its designee shall be appointed as successor servicer (provided that at the time
of such appointment the Servicing Rights Pledgee or such designee meets the
requirements of a successor servicer set forth above) and the Servicing Rights
Pledgee agrees to be subject to the terms of this Agreement.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.04. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders, the
NIM Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIM Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIM
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIM Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
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counsel, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIM Insurer and the
Certificateholders.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform on their
face, to the requirements of this Agreement. If any such instrument is found not
to conform, on its face, to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such Agreement of such
non-conformance, and if the instrument is not corrected to the Trustee's
satisfaction, the Trustee will provide notice thereof to the NIM Insurer and the
Certificateholders and take such further action as directed by the NIM Insurer
and the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable,
individually or as Trustee, except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement that it reasonably believed in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(ii) the Trustee shall not be liable, individually or as Trustee,
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was negligent or
acted in bad faith or with willful misfeasance;
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the NIM Insurer or the
Holders of each Class of Certificates evidencing not less than 50% of the
Voting Rights of such Class relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Agreement; and
(iv) except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under
any Permitted Investment, the Trustee may and, subject to Section 8.01 and
Section 8.02, upon the request of the NIM Insurer or the Holders of the
Certificates representing more than 50% of the Voting Rights allocated to
any Class of Certificates, shall take such action as may be appropriate to
enforce such payment or performance, including the institution and
prosecution of appropriate proceedings.
The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or
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other document (i) which is delivered to the Trustee, (ii) of which a
Responsible Officer has actual knowledge and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document related to is a Mortgaged Property.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(iii) the Trustee shall not be liable, individually or as Trustee,
for any action taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by the NIM Insurer
or the Holders of each Class of Certificates evidencing not less than 50%
of the Voting Rights of such Class;
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is
not assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee,
for any loss on any investment of funds pursuant to this Agreement (other
than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have received
written notice thereof,
(ix) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the NIM Insurer or the Certificateholders,
pursuant to the provisions of this Agreement, unless the NIM Insurer or
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may
be incurred therein or thereby; and
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(x) if requested by the Servicer, the Trustee may appoint the
Servicer as the trustee's attorney-in-fact in order to carry out and
perform certain activities that are necessary or appropriate for the
servicing and administration of the Mortgage Loans pursuant to this
Agreement. Such appointment shall be evidenced by a power of attorney in
such form as may be agreed to by the Trustee and the Servicer. The Trustee
shall have no liability for any action or inaction of the Servicer in
connection with such power of attorney and the Trustee shall be
indemnified by the Servicer for all liabilities, costs and expenses
incurred by the Trustee in connection with the Servicer's use or misuse of
such powers of attorney.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIM Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or Certificate
Account by the Depositor or the Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights as it would have if it were not
the Trustee.
SECTION 8.05. Trustee's Fees.
The Trustee shall be entitled to earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 8.06. Indemnification of Trustee; Expenses.
(a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor and the Holders written notice thereof promptly after the
Trustee shall have knowledge thereof; provided that failure to so notify
shall not relieve the Trust Fund of the obligation to indemnify the
Trustee; however, any reasonable delay by the Trustee to provide written
notice to the Depositor and the
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Holders promptly after the Trustee shall have obtained knowledge of a
claim shall not relieve the Trust Fund of the obligation to indemnify the
Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such
defense;
(iii) notwithstanding anything to the contrary in this Section 8.06,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld; and
(iv) any such loss, liability or expense to be indemnified by the
Trust Fund must constitute an "unanticipated expense" of the Trust Fund
within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).
The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
(b) The Trustee shall be entitled to all reasonable expenses,
disbursements and advancements incurred or made by the Trustee in accordance
with this Agreement (including fees and expenses of its counsel and all persons
not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).
(c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs and any
auction expenses incurred by the Trustee in connection with Section 9.01(a)(i),
in the aggregate in any calendar year; provided, however, that such cap shall
apply only if NIM Notes have been issued and are outstanding and shall cease to
apply after the date on which any NIM Notes are paid in full and all amounts
which the NIM Insurer is entitled to be paid or reimbursed shall have been paid
or reimbursed. Any amounts not in excess of this cap may be withdrawn by the
Trustee from the Certificate Account at any time.
(d) The Trustee shall be further indemnified by the Trust Fund for and
held harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01
hereof, including, without limitation, all costs, liabilities and expenses
(including reasonably legal fees and expenses) of investigating and defending
itself against any claim, action or proceeding, pending or threatened, relating
to the provisions of such paragraph.
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction) and reasonably acceptable to the NIM Insurer. If such corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 8.07 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set
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forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.07, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.08 hereof. The corporation or national banking
association serving as Trustee may have normal banking and trust relationships
with the Depositor and the NIM Insurer and their respective Affiliates;
provided, however, that such corporation cannot be an Affiliate of the Servicer
other than the Trustee in its role as successor to the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the NIM Insurer and by mailing notice of resignation by first class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.09, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee
acceptable to the NIM Insurer in accordance with Section 8.09 and meeting the
qualifications set forth in Section 8.07. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIM Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIM
Insurer may remove the Trustee and the Depositor with the consent of the NIM
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIM Insurer, or the NIM Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIM Insurer), one complete
set of which instruments shall be delivered by the successor Trustee to the
Servicer, one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
the NIM Insurer and each Rating Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIM Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance,
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shall become fully vested with all the rights, powers, duties and obligations of
its predecessor hereunder, with the like effect as if originally named as
trustee herein.
No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee and the NIM Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. Any
such co-trustee or separate trustee shall be subject to the written approval of
the Servicer and the NIM Insurer. The Trustee shall not be liable for the
actions of any co-trustee appointed at the request of the Trustee provided that
such co-trustee has been appointed with due care. If the Servicer and the NIM
Insurer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.07 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Servicer, shall be conferred
or imposed upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without
the Trustee joining in such act), except to the extent that
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under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) The Trustee with the consent of the NIM Insurer may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer, the NIM Insurer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. It is also intended
that each of the grantor trusts provided for in Section 2.07 hereof shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each of the REMICs
provided for herein and that in such capacity it shall: (a) prepare and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by
the Internal Revenue Service) and prepare and file or cause to be prepared and
filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each of the REMICs and grantor trusts provided for herein, containing such
information and at the times and in the manner as may be required by the Code or
state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at such
times and in such manner as may be required thereby; (b) within thirty days of
the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as
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may be required by such Form, and update such information at the time or times
in the manner required by the Code for each of the REMICs provided for herein;
(c) make or cause to be made elections, on behalf of each of the REMICs provided
for herein to be treated as a REMIC on the federal tax return of such REMICs for
their first taxable years (and, if necessary, under applicable state law); (d)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions or other applicable tax
law, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) provide information necessary for
the computation of tax imposed on the transfer of a Class R Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
and grantor trusts provided for herein at all times that any Certificates are
outstanding so as to maintain the status of each of the REMICs provided for
herein as a REMIC under the REMIC Provisions and the status of each of the
grantor trusts provided for herein as a grantor trust under Subpart E, Part I of
Subchapter J of the Code; (g) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of
any of the REMICs provided for herein or result in the imposition of tax upon
any such REMIC; (h) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the grantor trust status
under Subpart E, Part I of Subchapter J of the Code of any of the grantor trusts
provided for herein or result in the imposition of tax upon any such grantor
trust; (i) pay, from the sources specified in the last paragraph of this Section
8.12, the amount of any federal, state and local taxes, including prohibited
transaction taxes as described below, imposed on each of the REMICs provided for
herein prior to the termination of the Trust Fund when and as the same shall be
due and payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings); (j) sign or cause to be signed
federal, state or local income tax or information returns; (k) maintain records
relating to each of the REMICs and grantor trusts provided for herein, including
but not limited to the income, expenses, assets and liabilities of each of the
REMICs and grantor trusts provided for herein, and the fair market value and
adjusted basis of the Trust Fund property determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; and (l) as and when necessary and
appropriate, represent each of the REMICs and grantor trusts provided for herein
in any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative adjustment
as to any taxable year of any of the REMICs provided for herein, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result
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from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of any
of the REMICs provided for herein as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of any of such REMICs as defined
in Section 860G(c) of the Code, on any contribution to the Trust Fund after the
Startup Day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax shall be paid by
(i) the Trustee, if any such other tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement or as a result of the
location of the Trustee, (ii) any party hereto (other than the Trustee) to the
extent any such other tax arises out of or results from a breach by such other
party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts (other than amounts
derived by the Trust Fund from a payment on any Cap Contract) otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts (other than amounts derived by the Trust Fund from
a payment on any Cap Contract) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class C
Certificates (pro rata), second, to the Class B-4 Certificates (pro rata),
third, to the Class B-3 Certificates (pro rata), fourth, to the Class B-2
Certificates (pro rata), fifth, to the Class B-1 Certificates (pro rata), sixth,
to the Class M-4 Certificates (pro rata), seventh, to the Class M-3 Certificates
(pro rata), eighth, to the Class M-2 Certificates (pro rata), ninth, to the
Class M-1 Certificates (pro rata), and tenth, to the Class A Certificates (pro
rata). Notwithstanding anything to the contrary contained herein, to the extent
that such tax is payable by the Class R Certificate, the Trustee is hereby
authorized pursuant to such instruction to retain on any Distribution Date, from
the Holders of the Class R Certificate (and, if necessary, from the Holders of
all other Certificates in the priority specified in the preceding sentence),
funds otherwise distributable to such Holders in an amount sufficient to pay
such tax. The Trustee agrees to promptly notify in writing the party liable for
any such tax of the amount thereof and the due date for the payment thereof.
(b) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earliest of (i) the successful completion of the
auction referred to in Section 9.01(b), (ii) the exercise by the NIM Insurer (or
the Servicer) of the Clean Up Call on any Distribution Date on or after the
Clean Up Call Date and (iii) the later of (x) the maturity or other liquidation
(or any Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (y) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement, as applicable. In no event shall the trusts created hereby
continue beyond the earlier of (i) the expiration of 21 years from the death of
the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador
of the United States to the Court of St. James's, living on the date hereof and
(ii) the Latest Possible Maturity Date.
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(b) (i) Any termination pursuant to Section 9.01(a)(i) shall be effected
by the auction by the Trustee of all of the Mortgage Loans and REO Properties
via a solicitation of bids in accordance with the auction procedures set forth
in Exhibit N. The Trustee shall accept the highest such bid, provided that such
bid equals or exceeds the amount described in the definition of "Auction
Termination Price." Any sale pursuant to such auction process must occur no
earlier than the second day of the calendar month that includes the Distribution
Date on which the proceeds of such sale will be distributed to the
Certificateholders.
(ii) If no sale under Section 9.01(a)(i) occurs, the NIM Insurer (or
the Servicer as provided in clause (e) below) may, at its option, terminate the
Trust Fund on any Distribution Date by purchasing all of the Mortgage Loans and
REO Properties at the price equal to the Clean Up Call Price.
Notwithstanding anything to the contrary herein, the Auction Termination Amount
received by the Trustee or the Clean Up Call Price paid by the NIM Insurer or
the Servicer shall be deposited by the Trustee directly into the Certificate
Account promptly upon receipt of such amount by the Trustee. Any Clean Up Call
Price to be paid by the NIM Insurer or the Servicer shall be paid by the NIM
Insurer or the Servicer to the Trustee for deposit into the Certificate Account.
(c) If the Trustee receives a bid meeting the conditions specified in
Section 9.01(b)(i) or there is a Clean Up Call pursuant to Section 9.01(b)(ii),
then the Trustee's written acceptance of such bid shall constitute a plan of
complete liquidation within the meaning of Section 860F of the Code, and the
Trustee shall release to the winning bidder of the auction or the purchaser
pursuant to the Clean Up Call, upon the Trustee's receipt of the Auction
Termination Price or the Clean Up Call Price and the distribution by the Trustee
of such amounts in accordance with Section 4.04 hereof, the Mortgage Files
pertaining to the Mortgage Loans being purchased and take such other actions as
the winning bidder or such purchaser may reasonably request to effect the
transfer of the Mortgage Loans to the winning bidder or such purchaser.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Certificate Account all amounts then on
deposit in the Collection Account (less amounts permitted to be withdrawn by the
Servicer pursuant to Section 3.08), which deposit shall be deemed to have
occurred immediately preceding such purchase.
Any purchase shall be accomplished by deposit into the Certificate Account
of the amount paid by the winning bidder if an Auction Termination has occurred
or the amount described in the definition of "Clean Up Call Price" and only
following the delivery of an Opinion of Counsel in form and substance acceptable
to the Trustee that such termination is a "Qualified Liquidation" under Section
860F of the Code.
(d) The right of the Depositor to direct the Trustee to effect an Auction
Termination or of the NIM Insurer or the Servicer to effect a Clean Up Call
pursuant to clause (a)(i) or (a)(ii) above shall be conditioned upon the
aggregate Stated Principal Balance of the Mortgage Loans, at the time of any
such repurchase, aggregating ten percent (10%) or less of the Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date.
(e) In the event that the Trustee is unable to complete a sale at the
Auction Termination and the NIM Insurer does not exercise a Clean Up Call, the
Servicer may terminate the Trust Fund by purchasing all the Mortgage Loans, and
REO Properties at a price equal to the Clean Up Call Price on any Distribution
Date on or after the Clean Up Call Date, by exercising a Clean Up Call.
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(f) The Class R Certificateholder hereby assigns to the Class C
Certificateholders that portion of any amount received by the Class R
Certificate upon an Auction Termination or Clean Up Call of the Trust Fund that
is attributable to clause (C) of the definition of Auction Termination Price or
clause (c) of the definition of Clean Up Call Price and required to cover what
would otherwise be a shortfall in the amounts described in clause (C) of the
definition of Auction Termination Price or clause (c) of the definition of Clean
Up Call Price.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIM Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee specified in such notice. If the Trustee is able to terminate the Trust
Fund pursuant to Section 9.01(a)(i), or if the NIM Insurer or the Servicer
conducts a Clean Up Call and terminates the Trust Fund pursuant to Section
9.01(a)(ii) or 9.01(e), at least 10 days prior to the date notice is to be
mailed to the affected Certificateholders, the Trustee shall notify the
Depositor and the Servicer of the date such electing party intends to terminate
the Trust Fund and of the applicable repurchase price of the Mortgage Loans and
REO Properties.
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 10th day and no
later than the 15th day of the month immediately preceding the month of such
final distribution. Any such notice shall specify (a) the Distribution Date upon
which final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the location of
the office or agency at which such presentation and surrender must be made, and
(c) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such notice
to the NIM Insurer and each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIM
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation
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and receive the final distribution with respect thereto. If within six months
after the second notice all the applicable Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholder
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholder of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Trustee is able to effect an Auction Termination or
the NIM Insurer or the Servicer conducts a Clean Up Call as provided in Section
9.01, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee has been supplied with an Opinion of
Counsel addressed to the Trustee, at the expense of the NIM Insurer or the
Servicer, as applicable, to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 9.03 will not (i) result in the
imposition of taxes on "prohibited transactions" of any of the REMICs provided
for herein as defined in section 860F of the Code, or (ii) cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, which shall in turn specify the first day of
such period in a statement attached to the final tax returns of each of
the REMICs provided for herein pursuant to Treasury Regulation Section
1.860F-1. The Depositor shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder,
as evidenced by an Opinion of Counsel obtained at the expense of the Trust
Fund or the NIM Insurer, as applicable;
(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Depositor as
agent of the Trustee shall sell all of the assets of the Trust Fund for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholder all cash on hand
(other than cash retained to meet outstanding claims known to the
Trustee), and the Trust Fund shall terminate at that time, whereupon the
Trustee shall have no further duties or obligations with respect to sums
distributed or credited to the Class R Certificateholder.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and sign a
plan of complete liquidation prepared and delivered to it by the Depositor upon
the written request of the Depositor, and the receipt of Opinion of Counsel
referred to in Section 9.03(a)(i) and to take such other action in connection
therewith as may be reasonably requested by the Depositor.
(d) Notwithstanding any other terms of this Agreement, prior to
termination of the Trust Fund, the Servicer may prepare a reconciliation of all
Advances and Servicing Advances made by it for which it has not been reimbursed
and a reasonable estimate of all additional Servicing Advances and other costs
for which it would be entitled to be reimbursed if the Trust Fund were not being
terminated,
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including without limitation, any Servicing Advances and other costs arising
under Section 6.03, and the Servicer may recover these Advances, Servicing
Advances and estimated Servicing Advances and other costs from the Collection
Account (to the extent that such recovery of Servicing Advances, estimated
Servicing Advances and other costs constitutes "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
(e) Notwithstanding any other terms of this Agreement, unless the Servicer
previously has notified the Trustee that it has entered into a servicing
agreement for the servicing after the termination date of the Trust Fund assets,
at least 20 days prior to any termination of the Trust Fund, the Depositor shall
notify the Servicer in writing to transfer the assets of the Trust Fund as of
the termination date to the person specified in the notice, or if such person is
not then known, to continue servicing the assets until the date that is 20 days
after the termination date and on the termination date, the Depositor shall
notify the Servicer of the person to whom the assets should be transferred on
that date. In the latter event the Servicer shall be entitled to recover its
servicing fee and any advances made for the interim servicing period from the
collections on the assets which have been purchased from the Trust and the new
owner of the assets, and the agreements for the new owner to obtain ownership of
the assets of the Trust Fund shall so provide.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIM Insurer and without the
consent of any of the Certificateholders,
(i) To cure any ambiguity or correct any mistake,
(ii) To correct, modify or supplement any provision therein which
may be inconsistent with any other provision herein,
(iii) To add any other provisions with respect to matters or
questions arising under this Agreement, or
(iv) To modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement, provided, however, that, in the
case of clauses (iii) and (iv), such amendment will not, as evidenced by
an Opinion of Counsel addressed to the Trustee to such effect, adversely
affect in any material respect the interests of any Holder; provided,
further, however, that such amendment will be deemed to not adversely
affect in any material respect the interest of any Holder if the Person
requesting such amendment obtains a letter from each Rating Agency stating
that such amendment will not result in a reduction or withdrawal of its
rating of any Class of the Certificates, it being understood and agreed
that any such letter in and of itself will not represent a determination
as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final
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redemption of the Certificates, provided that the Trustee and the NIM Insurer
have been provided an Opinion of Counsel addressed to the Trustee, which opinion
shall be an expense of the party requesting such amendment but in any case shall
not be an expense of the Trustee or the Trust Fund, to the effect that such
action is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, with the consent of the
NIM Insurer, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the consent
of the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66 2/3% or more of the Voting Rights of such Class or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee or the Trust Fund, to the effect that such amendment
is permitted hereunder and will not cause the imposition of any tax on the Trust
Fund, any of the REMICs provided for herein or the Certificateholders or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding. A copy of such Opinion of Counsel shall
be provided to the NIM Insurer.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIM Insurer and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
111
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIM Insurer with respect to each of the following of
which a Responsible Officer of the Trustee has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Trustee or the Servicer
and the appointment of any successor;
112
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 and 2.03;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account or the
Certificate Account.
The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following:
(vii) Each report to Certificateholders described in Section 4.05;
(viii) Each annual statement as to compliance described in Section
3.17; and
(ix) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, JPMorgan Chase Bank, N.A., 4 New York
Plaza, 6th Floor, New York, New York 10004, Attention: Institutional Trust
Services/Global Debt, SURF Series 2005-BC2; (c) in the case of the Rating
Agencies, (i) Fitch, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Surveillance Group, (ii) Standard and Poor's Ratings Services,
a division of the McGraw Hill Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, (iii) ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (d) in the case of the NIM Insurer, if any, an address to be
specified; (e) in the case of the Servicer, Wilshire Credit Corporation, ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and in the case of any of
the foregoing persons, such other addresses as may hereafter be furnished by any
such persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or
113
to take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIM
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIM Insurer or to enforce any right under this Agreement,
except in the manner herein provided and for the common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the NIM Insurer, the Depositor or the Trustee during the
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the NIM Insurer, Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the NIM
Insurer, Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
114
SECTION 10.11. Third Party Rights.
The NIM Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.
SECTION 10.12. Additional Rights of the NIM Insurer.
(a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIM Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIM Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIM Insurer to be an
addressee of any report furnished pursuant to this Agreement.
(b) Wherever in this Agreement there shall be a requirement that there be
no downgrade, reduction, withdrawal or qualification of or other effect on the
rating of any Class of Certificates by any Rating Agency as of any date, there
also shall be deemed to be a requirement that there be no such effect on any
Class of notes issued pursuant to the Indenture and guaranteed by the NIM
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIM Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIM Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIM Insurer, which approval shall not be unreasonably withheld or delayed.
SECTION 10.13. [RESERVED].
SECTION 10.14. Assignment; Sales; Advance Facilities.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
115
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 10.05 hereof a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 10.14(c)
hereof, have the right to make withdrawals from the Collection Account pursuant
to Section 3.08(a) hereof to reimburse previously unreimbursed Advances and/or
Servicing Advances ("Advance Reimbursement Amounts"). Advance Reimbursement
Amounts (i) shall consist solely of amounts in respect of Advances and/or
Servicing Advances for which the Servicer would be permitted to reimburse itself
in accordance with Section 3.08 hereof, assuming the Servicer had made the
related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 10.14(e) below.
(c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of Advances and/or Servicing Advances in
accordance with Section 4.01 hereof, which entitlement may be terminated by the
Advance Financing Person pursuant to a written notice to the Trustee in the
manner set forth in Section 10.05 hereof. Upon receipt of such written notice,
the Servicer shall no longer be entitled to receive reimbursement for any
Advance Reimbursement Amounts and the Servicer's Assignee shall immediately have
the right to receive from the Collection Account all Advance Reimbursement
Amounts. Notwithstanding the foregoing, and for the avoidance of doubt, (i) the
Servicer and/or the Servicer's Assignee shall only be entitled to reimbursement
of Advance Reimbursement Amounts hereunder from withdrawals from the Collection
Account pursuant to Section 4.01 of this Agreement and shall not otherwise be
entitled to make withdrawals or receive amounts that shall be deposited in the
Distribution Account pursuant to Section 4.01 hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 4.01
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
10.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor servicer, as the case may be, or
failure by the successor servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this Agreement. The Servicer shall maintain and provide to any successor
servicer and, upon request, the Trustee a detailed accounting on a loan-by-loan
basis as to amounts advanced by, pledged or assigned to, and reimbursed to any
Advance Financing Person. The successor servicer shall be entitled to rely on
any such information provided by the predecessor Servicer, and the successor
servicer shall not be liable for any errors in such information.
(d) [RESERVED]
116
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor servicer and its Advance Financing Person, if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" basis. In the event the Servicer's Assignee shall have received some or all
of an Advance Reimbursement Amount related to Advances and/or Servicing Advances
that were made by a Person other than such predecessor Servicer or its related
Advance Financing Person in error, then such Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.
(f) For purposes of any Officer's Certificate of the Servicer made
pursuant to Section 4.01, any Non-Recoverable Advance or Non-Recoverable
Servicing Advance referred to therein may have been made by such Servicer or any
predecessor Servicer. In making its determination that any Advance or Servicing
Advance theretofore made has become a Non-Recoverable Advance or Non-Recoverable
Servicing Advance, the Servicer shall apply the same criteria in making such
determination regardless of whether such Advance or Servicing Advance shall have
been made by the Servicer or any predecessor Servicer.
(g) Any amendment to this Section 10.14 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.14, including amendments to
add provisions relating to a successor servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 10.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
117
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 as of the day and year first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC., as
Depositor
By: ________________________________________
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Vice-President
WILSHIRE CREDIT CORPORATION,
as Servicer
By: ________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By: ________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
118
EXHIBIT A
FORMS OF OFFERED CERTIFICATES AND CLASS B-4 CERTIFICATES
[Intentionally Omitted]
A-1
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
[Intentionally Omitted]
B-1-1
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
[Intentionally Omitted]
B-2-1
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
[Intentionally Omitted]
B-3-1
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
FORM OF TRUSTEE CERTIFICATION
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Wilshire Credit Corporation
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement dated as of May 1, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors, Inc., as depositor, Wilshire Credit Corporation, as servicer and JPMorgan
Chase Bank, N.A., as trustee, relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-BC2
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan as to which documentary
evidence of recording was not received on the Closing Date, it has received
evidence of such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(A) through (E), inclusive, of Section 2.01 in the Agreement and documents
listed in clause (F) to the extent the Trustee has received written notice of
the existence of such documents from the Depositor or the Seller. The Trustee
makes no representations or warranties as to the validity, legality,
recordability, sufficiency, recordability, enforceability or genuineness of any
of the documents contained in each Mortgage Loan or the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
D-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, as
Trustee
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services-Transfer Department - SURF 2005-BC2
Ladies and Gentlemen:
We propose to purchase the Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-BC2, Class R
Certificate, described in the Prospectus Supplement, dated May 19, 2005, and
Prospectus, dated January 19, 2005.
1. We certify that (a) we are not a disqualified organization and (b)
we are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they
became due, (b) we intend, and believe that we will be able, to continue to pay
our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class R Certificate, we may incur tax liabilities in
excess of any cash flows generated by the Class R Certificate, and (d) we intend
to pay any taxes associated with holding the Class R Certificate as they become
due and (e) we will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:1
___ The Class R Certificate will be registered in our name.
___ The Class R Certificate will be held in the name of our nominee
____________, which is not a disqualified organization.
----------
1 Check appropriate box and if necessary fill in the name of the
Transferee's nominee.
E-1-1
4. We certify that we are not an employee benefit plan or other
arrangement subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), a plan subject to Section 4975 of the Code or a plan
subject to state, local, federal, non-U.S. or other law substantively similar to
the foregoing provisions of ERISA or the Code (each, a "Plan"), and are not
directly or indirectly acquiring the Class R Certificate for, on behalf of or
with any assets of a Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons. We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to
transfer any interest in the Class R Certificate, we will transfer such interest
in the Class R Certificate only (a) to a transferee that (i) is not a
disqualified organization and is not purchasing such interest in the Class R
Certificate on behalf of a disqualified organization, (ii) is a U.S. person or
will hold the Class R Certificate in connection with the conduct of a trade or
business within the United States and will furnish us and the Trustee with a
duly completed and effective Internal Revenue Service Form W-8ECI or successor
form at the time and in the manner required by the Code and (iii) has delivered
to the Trustee and the Trustee a letter in the form of this letter (including
the affidavit appended hereto) and, we will provide the Trustee a written
statement substantially in the form of Exhibit E-2 to the Agreement.
E-1-2
7. We hereby designate ___________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Agreement.
Very truly yours,
[PURCHASER]
By:___________________________
Name:
Title:
Accepted as of _________ __, 200_.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
By:_______________________________
Name:
Title:
E-1-3
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4)
of the Internal Revenue Code of 1986, as
amended, and (ii) certain provisions of the
Pooling and Servicing Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of _______________________ (the "Transferee"),
(2) the Transferee's Employer Identification number is _________________,
(3) the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and is
not acquiring any of its interest in the Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2005-BC2, Class R Certificate on behalf of a disqualified organization or
any other entity,
(4) unless ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.("MLMI") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed
as Appendix A, the Transferee is a "U.S. person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue to
pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the
Class R Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors, Inc. (upon advice of counsel) to constitute a reasonable
arrangement to ensure that the Class R Certificate will not be owned
directly or indirectly by a disqualified organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
is not a direct or indirect transfer of the Class R Certificate to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Transferee, and as to each of the
residual interests represented by the Class R Certificate, the present
value of the anticipated tax liabilities associated with holding such
residual interest does not exceed the sum of:
(A) the present value of any consideration given to the Transferee to
acquire such residual interest;
(B) the present value of the expected future distributions on such
residual interest; and
E-1-4
(C) the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates
losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax
at a rate equal to the highest rate of tax specified in Section 11(b)(1) of
the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code may
be used in lieu of the highest rate specified in Section 11(b)(1) of the
Code if the Transferee has been subject to the alternative minimum tax
under Section 55 of the Code in the preceding two years and will compute
its taxable income in the current taxable year using the alternative
minimum tax rate, and (ii) present values are computed using a discount
rate equal to the Federal short-term rate prescribed by Section 1274(d) of
the Code for the month of the transfer and the compounding period used by
the Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year
of transfer, the Transferee's gross assets for financial reporting
purposes exceed $100 million and its net assets for financial
reporting purposes exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
any subsequent transfer of the Class R Certificate will be to
another eligible corporation in a transaction that satisfies
Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E1(c)(5) and such transfer will not be
a direct or indirect transfer to a foreign permanent establishment
(within the meaning of an applicable income tax treaty) of a
domestic corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.
E-1-5
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
______________________________
By: __________________________
__________________________
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
____________________________________
____________________________________, Secretary
E-1-6
Personally appeared before me the above-named ____________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
____________ of the Investor, and acknowledged to me that he executed the same
as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ____ day of _______, 200_.
___________________________
Notary Public
County of ___________________________
State of ___________________________
My commission expires the ___________ day of _______
By: ________________________
Name: ___________________
Title: __________________
Dated: ____________________________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF TRANSFEROR'S AFFIDAVIT
[DATE]
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services -Transfer Department - SURF 2005-BC2
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-BC2
_________________ (the "Transferor") has reviewed the attached affidavit
of _________________________(the "Transferee"), and has no actual knowledge that
such affidavit is not true, and has no reason to believe that the Transferee has
the intention to impede the assessment or collection of any federal, state or
local taxes legally required to be paid with respect to the Class R Certificate
referred to in the attached affidavit. In addition, the Transferor has conducted
a reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
___________________________
Name:
Title:
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS P, CLASS C AND CLASS B-4 CERTIFICATES
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services -Transfer Department - SURF 2005-BC2
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-BC2
Ladies and Gentlemen:
In connection with our disposition of the Class [C, P or B-4] Certificate,
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act and
(c) if we are disposing of a Class C Certificate, we have no knowledge the
Transferee is not a Permitted Transferee. All capitalized terms used herein but
not defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of May 1, 2005, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage, Inc.,
as depositor, Wilshire Credit Corporation, as servicer and JPMorgan Chase Bank,
N.A., as trustee.
Very truly yours,
______________________________
Name of Transferor
By: __________________________
Name:
Title
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
[DATE]
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services -Transfer Department - SURF 2005-BC2
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-BC2 [CLASS C, P OR B-4]
Ladies and Gentlemen:
_____________________ (the "Purchaser") intends to purchase from
__________ (the "Transferor") $ ________ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
2005-BC2, [CLASS C, P OR B-4(the "Certificates"), issued pursuant to a Pooling
and Servicing Agreement, dated as of May 1, 2005 (the "Pooling and Servicing
Agreement"), among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the
"Depositor"), Wilshire Credit Corporation, as servicer (the "Servicer") and
JPMorgan Chase Bank, N.A., as trustee (the "Trustee"). [THE PURCHASER INTENDS TO
REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF _____________, AS NOMINEE
FOR ____________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (1) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR
INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH
TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER
OF THIS CERTIFICATE SHALL BE MADE UNLESS
G-1
THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE
TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE
CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED (A) A REPRESENTATION FROM THE TRANSFEREE THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
PLAN SUBJECT TO ANY STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE
CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING
THE CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT," AS
DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
95-60, AND THE ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT
UNDER SECTIONS I AND III OF PTCE 95-60, OR (C) SOLELY IN THE EVENT THE
CERTIFICATE IS A DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE, AND UPON WHICH THE TRUSTEE AND NIM INSURER SHALL BE ENTITLED TO
RELY, TO THE EFFECT THAT THE ACQUISITION AND HOLDING OF THE CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF
ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND WILL NOT
SUBJECT THE TRUSTEE, THE NIM INSURER, THE SERVICER OR THE DEPOSITOR TO ANY
OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE POOLING AND
SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE
TRUSTEE, THE NIM INSURER, THE SERVICER OR THE DEPOSITOR. IF THE CERTIFICATE IS
NOT A DEFINITIVE CERTIFICATE, THE TRANSFEREE IS DEEMED TO HAVE MADE THE
REPRESENTATION IN (A) OR (B) ABOVE.
3. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule 501
(a) promulgated pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition
----------
**/ Not required of a broker/dealer purchaser.
G-2
or other transfer of any Certificate, any interest in any Certificate or any
other similar security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner, or (e) take
any other action, that would constitute a distribution of any Certificate under
the Securities Act or the Investment Company Act of 1940, as amended (the "1940
Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Securities Act or any state securities law, or that would
require registration or qualification pursuant thereto. Neither the Purchaser
nor anyone acting on its behalf has offered the Certificates for sale or made
any general solicitation by means of general advertising or in any other manner
with respect to the Certificates. The Purchaser will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions of
the Pooling and Servicing Agreement.
6. The Purchaser (A) is not an employee benefit plan or other arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or a plan subject to any state, local,
federal, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") (collectively, "Plan"), and is not directly
or indirectly acquiring the Certificate for, on behalf of, or with any assets of
any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, is an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in
Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (C) solely in the case of any such Certificate that
is a Definitive Certificate, will deliver herewith an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee and the NIM Insurer
shall be entitled to rely, to the effect that the acquisition and holding of the
Certificate will not constitute or result in a nonexempt prohibited transaction
under Title I of ERISA or Section 4975 of the Code, or a violation of Similar
Law, and will not subject the Trustee, the NIM Insurer, the Servicer or the
Depositor to any obligation in addition to those expressly undertaken in the
Pooling and Servicing Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the NIM Insurer, the Servicer or the Depositor.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit G to the Pooling and Servicing Agreement.
G-3
8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[PURCHASER]
By: _____________________________
Name:
Title:
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services -Transfer Department - SURF 2005-BC2
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-BC2
[CLASS C, P OR B-4]
--------------------------------------------------------
Ladies and Gentlemen:
________________ (the "Purchaser") intends to purchase from
______________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
2005-BC2, [CLASS C, P OR B-4] (the "Certificates"), issued pursuant to a Pooling
and Servicing Agreement, dated as of May 1, 2005 (the "Pooling and Servicing
Agreement'), among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the
"Depositor"), Wilshire Credit Corporation, as servicer (the "Servicer"), and
JPMorgan Chase Bank, N.A., as trustee (the "Trustee"). [THE PURCHASER INTENDS TO
REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF ________________ AS NOMINEE
FOR ________________.] All terms used and not otherwise defined herein shall
have the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act'), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Transferred
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferred Certificates, (d)
we (A) are not an employee benefit plan or other arrangement subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a
plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or a plan subject to any state, local, federal, non-U.S. or other
law substantively similar to the foregoing provisions of ERISA or the Code
("Similar Law") (collectively, "Plan"), and are not directly or indirectly
acquiring the Certificate for, on behalf of, or with any assets of any such
Plan, (B) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, are an insurance company that is acquiring the Certificate with
assets of an "insurance company general account," as defined in Section V(e) of
Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition and
holding of the Certificate are covered and exempt under Sections I and III of
PTCE 95-60,
H-1
or (C) solely in the event the Certificate is a Definitive Certificate, shall
herewith deliver an Opinion of Counsel satisfactory to the Trustee, and upon
which the Trustee and NIM Insurer shall be entitled to rely, to the effect that
the acquisition and holding of the Certificate will not constitute or result in
a nonexempt prohibited transaction under Title I of ERISA or Section 4975 of the
Code, or a violation of Similar Law, and will not subject the Trustee, the NIM
Insurer, the Servicer or the Depositor to any obligation in addition to those
expressly undertaken in the Pooling and Servicing Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the NIM Insurer, the Servicer or
the Depositor, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed one of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale of the Transferred Certificates to us is being made in
reliance on Rule 144A. We are acquiring the Transferred Certificates for our own
account or for resale pursuant to Rule 144A and further understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
We agree to indemnify the Trustee, the Servicer and the Depositor
against any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
______________________________
Name:
Title:
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________* in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation
(other than a bank, savings and loan
association or similar institution),
Massachusetts or similar business trust,
partnership, or charitable organization
described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or
banking institution organized under the laws
of any State, territory or the District of
Columbia, the business of which is
substantially confined to banking and is
supervised by Federal, State or territorial
banking commission or similar official or is
a foreign bank or equivalent institution, and
(b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest
annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings
and loan association, building and loan
association, cooperative bank, homestead
association or similar institution, which is
supervised and examined by a State or Federal
authority having supervision over such
institution or is a foreign savings and loan
association or equivalent institution and
(b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest
annual financial statements, a copy of which
is attached hereto.
___ Broker-dealer. The Buyer is a dealer
registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Buyer is an insurance
company whose primary and predominant
business activity is the writing of insurance
or the reinsuring of risks underwritten by
insurance companies and which is
----------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
H-3
subject to supervision by the insurance
commissioner or a similar official or agency
of the State, territory or the District of
Columbia.
___ State or Local Plan. The Buyer is a plan
established and maintained by a State its
political subdivisions, or any agency or
instrumentality of the State or its political
subdivisions, for the benefit of its
employees.
___ ERISA Plan. The Buyer is an employee benefit
plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as
amended.
___ Investment Advisor. The Buyer is an
investment advisor registered under the
Investment Advisors Act of 1940, as amended.
___ Small Business Investment Company. Buyer is
a small business investment company licensed
by the U.S. Small Business Administration
under Section 301 (c) or (d) of the Small
Business Investment Act of 1958, as amended.
___ Business Development Company. Buyer is a
business development company as defined in
Section 202(a)(22) of the Investment Advisors
Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
H-4
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By:
________________________
Name:
Title:
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (1) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $ securities (other than the
excluded securities referred to below) as of
the end of the Buyer's most recent fiscal
year (such amount being calculated in
accordance with Rule 144A).
___ The Buyer is part of a Family of Investment
Companies which owned in the aggregate
$_______ in securities (other than the
excluded securities referred to below) as of
the end of the Buyer's most recent fiscal
year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
H-6
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:
________________________
Name:
Title:
IF AN ADVISER:
______________________________
Print Name of Buyer
Date:
________________________
H-7
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: JPMorgan Chase Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Document Management Services
Re: Pooling and Servicing Agreement dated as of May 1, 2005 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, Wilshire Credit
Corporation, as servicer and JPMorgan Chase Bank, N.A., as trustee,
relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-BC2
----------------------------------------------------------------------
In connection with the administration of the Mortgage Loans held by
you, as Trustee, pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______1. Mortgage Paid in Full
_______2. Foreclosure
_______3. Substitution
_______4. Other Liquidation (Repurchases, etc.)
_______5. Nonliquidation
_______6. Other Reason:
-------------------------------
Address to which the Trustee should deliver the Mortgage File:
By:
_____________________________
(authorized signer)
Address:
_______________________
Date:
__________________________
I-1
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Trustee
JPMorgan Chase Bank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
___________________________________________ _________________________________
Signature Date
Documents returned to Trustee:
___________________________________________ _________________________________
Trustee Date
I-2
EXHIBIT J
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
WILSHIRE CREDIT CORPORATION
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
_________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JPMorgan Chase Bank, N.A., having
its principal place of business at Four ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, as Trustee (the "Trustee") pursuant to that Pooling and Servicing
Agreement among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc. (the "Depositor"),
Wilshire Credit Corporation (the "Servicer"), and the Trustee, dated as of May
1, 2005 (the "Pooling and Servicing Agreement"), hereby constitutes and appoints
the Servicer, by and through the Servicer's officers, the Trustee's true and
lawful Attorney-in-Fact, in the Trustee's name, place and stead and for the
Trustee's benefit, in connection with all mortgage loans serviced by the
Servicer pursuant to the Pooling and Servicing Agreement for the purpose of
performing all acts and executing all documents in the name of the Trustee as
may be customarily and reasonably necessary and appropriate to effectuate the
following enumerated transactions in respect of any of the mortgages or deeds of
trust (the "Mortgages" and the "Deeds of Trust", respectively) and promissory
notes secured thereby (the "Mortgage Notes") for which the undersigned is acting
as Trustee for various certificateholders (whether the undersigned is named
therein as mortgagee or beneficiary or has become mortgagee by virtue of
endorsement of the Mortgage Note secured by any such Mortgage or Deed of Trust)
and for which the Servicer is acting as servicer, all subject to the terms of
the Pooling and Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance was
issued and said modification or re-recording, in either instance, does not
adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to a lien that
is replacing a lien existing as of the date of the Mortgage or Deed of Trust
or an easement in favor of a public utility company of a government agency
or unit with powers of eminent domain; this section shall include, without
limitation, the execution of partial satisfactions/releases, partial
reconveyances or the execution or requests to trustees to accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or conveyance
of title to real estate owned.
4. The completion of loan assumption agreements.
J-1
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such
foreclosure, including, without limitation, any and all of the following
acts:
(a) the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
(b) the preparation and issuance of statements of breach or
non-performance;
(c) the preparation and filing of notices of default and/or notices of
sale;
(d) the cancellation/rescission of notices of default and/or notices of
sale;
(e) the taking of a deed in lieu of foreclosure; and
(f) the preparation and execution of such other documents and
performance of such other actions as may be necessary under the terms of
the Mortgage, Deed of Trust or state law to expeditiously complete said
transactions in paragraphs 8(a) through 8(e), above.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
J-2
IN WITNESS WHEREOF, JPMorgan Chase Bank, N.A., as Trustee pursuant to
that Pooling and Servicing Agreement among the Depositor, the Servicer, and the
Trustee, dated as of May 1, 2005 (Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-BC2), has caused its
corporate seal to be hereto affixed and these presents to be signed and
acknowledged in its name and behalf by its duly elected and authorized
____________ this _____ day of ____________, 200__.
JPMORGAN CHASE BANK, N.A.
as Trustee for Specialty Underwriting and
Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates,
Series 2005-BC2
By
______________________________________
Name:
Title:
STATE OF
_________
COUNTY OF
________
On ____________, 200__, before me, the undersigned, a Notary Public in
and for said state, personally appeared ____________, ____________ of JPMorgan
Chase Bank, N.A. as Trustee for Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-BC2, personally
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/she executed that same in his/her authorized
capacity, and that by his/her signature on the instrument the entity upon behalf
of which the person acted and executed the instrument.
WITNESS my hand and official seal.
(SEAL)
_____________________________________
Notary Public
My Commission Expires
_________________________
J-3
EXHIBIT K
FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Agreement") dated as of
May 1, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor,
Wilshire Credit Corporation, as servicer and JPMorgan Chase Bank, N.A.,
as trustee, relating to Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-BC2
-----------------------------------------------------------------------
The Trustee hereby certifies to the Depositor, and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1. The Trustee has reviewed the Monthly Statements delivered pursuant to
the Agreement since the last Officer's Certificate executed pursuant to
Section 4.02 of the Agreement [or in the case of the first
certification, since the Cut-off Date] (the "Trustee Information");
2. Based on the Trustee's knowledge, the information in the Monthly
Statement, taken as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact required by the
Agreement to be included therein and necessary to make the statements
made, in light of the circumstances under which such statements were
made, not misleading as of the date hereof; and
3. Based on the Trustee's knowledge, the Monthly Statements required to be
prepared by the Trustee under the Agreement has been prepared and
provided in accordance with the Agreement.
Date:
JPMorgan Chase Bank, N.A., as Trustee
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
K-1
EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial Center, 10th Floor
New York, New York 10080
JPMorgan Chase Bank, N.A.
4 New York ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Worldwide Securities Services-Transfer Department - SURF 2005-BC2
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2005-BC2
---------------------------------------------------------------------
Reference is made to the Pooling and Servicing Agreement, dated as of May 1,
2005 (the "Agreement"), by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, Wilshire Credit Corporation, as servicer (the "Servicer") and
JPMorgan Chase Bank, N.A., as trustee. The Servicer hereby certifies to the
Trustee and the Depositor, and its officers, directors and affiliates, and with
the knowledge and intent that they will rely upon this certification, that:
1. The Servicer has reviewed the information required to be delivered to
the Trustee pursuant to the Agreement (the "Servicing Information").
2. Based on the Servicer's knowledge, the information in the Annual
Statement of Compliance, and all servicing reports, officer's
certificates and other information relating to the servicing of the
Mortgage Loans submitted to the Trustee by the Servicer taken as a
whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by the Annual
Statement of Compliance;
3. Based on the Servicer's knowledge, the Servicing Information required
to be provided to the Trustee by the Servicer under this Agreement has
been provided to the Trustee; and
L-1
4. Based upon the review required under this Agreement, and except as
disclosed in the Annual Statement of Compliance, the Annual Independent
Certified Public Accountant's Servicing Report and all servicing
reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Trustee by the
Servicer, the Servicer has, as of the last day of the period covered by
the Annual Statement of Compliance fulfilled its obligations under this
Agreement.
Date:
Wilshire Credit Corporation, as Servicer
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
L-2
EXHIBIT M
FORM OF TRANSFEREE'S LETTER
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services /Transfer Department - SURF 2005-BC2
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2005-BC2: Class C Certificates
-----------------------------------------------------------------------
The undersigned represents to the Trustee that (i) it is a United
States person (as such term is defined for purposes of Section 7701 of the
Code), (ii) it is not a Disqualified Organization, (iii) it is not acquiring an
interest in a Class C Certificate on behalf of a Person that is (x) not a United
States person (as defined for purposes of Section 7701 of the Code) or (y) a
Disqualified Organization, (iv) it will not Transfer an interest in a Class C
Certificate to any Person unless such Person provides it and the Trustee with a
Transferee Letter in the form of this letter and (v) it is not, for United
States federal income tax purposes, an entity whose separate existence from its
owners is disregarded, or, if it is so treated, each of the representations made
in clauses (i) through (iv) would be true if made with respect to each person
that is treated as the owner of the undersigned for United States federal income
tax purposes.
By: ________________________________
Name: ______________________________
Title: _____________________________
M-1
EXHIBIT N
FORM OF AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with Pooling and Servicing Agreement (the "Agreement") among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., JPMorgan Chase Bank, N.A. as trustee and
Wilshire Credit Corporation, dated May 1, 2005. Capitalized terms used herein
that are not otherwise defined shall have the meanings described thereto in the
Agreement.
1. Upon notice that the aggregate Stated Principal Balance of the Mortgage
Loans is equal to ten percent (10%) or less of the Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date (which notice will
also be sent to the Servicer), the Trustee will initiate the general
auction procedures consisting of the following: (i) prepare a general
solicitation package along with a confidentiality agreement; (ii) derive a
list of bidders which shall include (x) the Holders of the Class C and
Class P Certificates (other than the Seller or any Affiliate of the
Seller) and (y) a minimum of three (3) bidders including the Holders of
the Class C Certificates but not including the holders of the Class P
Certificates, each of whom shall be a nationally recognized participant in
mortgage finance; (iii) initiate contact with all bidders, (iv) send a
confidentiality agreement to all bidders; and (v) upon receipt of a signed
confidentiality agreement, send the general bid solicitation package to
all bidders.
2. The general solicitation package will include (i) the Agreement; (ii) a
copy of all monthly trustee reports or electronic access thereto; (iii) a
form of a Mortgage Loan Purchase Agreement acceptable to the Trustee, the
Servicer and Depositor (the Mortgage Loans and other property included in
the Trust Fund will be offered and sold on an "as is, where is" basis,
without any representation or warranty, expressed or implied, of any kind
and without recourse to, or guaranty by, the Trustee); (iv) a description
of the minimum price as set forth in the Agreement; (v) a formal bid sheet
as determined by the Depositor and accepted by the Trustee; (vi) a
detailed timetable (which shall include, but not be limited to, the
provisions and dates preliminary bids, due diligence and final bids); and
(vii) a data tape of the Mortgage Loans as of the related Remittance
Period reflecting substantially the same data attributes used in the
Prospectus Supplement dated May 17, 2005.
3. A detailed timetable will be determined approximately ten (10) days prior
to each auction sale and shall be determined by the Depositor with the
consent of the Trustee, which consent shall not be unreasonably withheld,
within reasonable market conditions at the time of the auction sale.
4. All bids will be submitted directly to the Trustee. Upon acceptance of a
bid which meets or exceeds the conditions set forth in Section 9.01, the
Trustee will complete the auction by selling the Mortgage Loans and the
other property included in the Trust Fund and distribute the proceeds from
the auction to the holders of the Certificates on the next succeeding
Distribution Date as set forth in the Agreement. In the event the Trustee
receives two (2) or more bids from bidders above the Auction Termination
Price and at equal bids (a "Tie Event"), the Trustee shall notify such
bidders to resubmit a bid to break the Tie Event.
5. Upon determination that the minimum price was not met, the Trustee shall
cancel such auction sale and notify the Servicer, Depositor and NIM
Insurer immediately.
6. The Trustee, the Servicer and the Depositor may mutually agree to revise
or supplement these provisions as necessary, provided that the purchase
price is at all times required to be at least the Auction Termination
Price.
N-1
EXHIBIT O-1
FORM OF CLASS A-1 CAP CONTRACT
[Intentionally Omitted]
O-1-1
EXHIBIT O-2
FORM OF CLASS A-2 CAP CONTRACT
[Intentionally Omitted]
O-2-1
EXHIBIT O-3
FORM OF SUBORDINATED CERTIFICATE CAP CONTRACT
[Intentionally Omitted]
O-3-1
EXHIBIT P-1
ONE-MONTH LIBOR CAP TABLE - CAP A-1 CONTRACT
PERIOD BEGINNING ENDING NOTIONAL BALANCE ($) LOWER COLLAR (%) UPPER COLLAR (%)
ACCRUAL ACCRUAL
1 5/19/05 6/25/05 410,861,000 5.353 9.780
2 6/25/05 7/25/05 403,927,950 6.654 9.780
3 7/25/05 8/25/05 396,997,740 6.446 9.780
4 8/25/05 9/25/05 388,958,756 6.447 9.780
5 9/25/05 10/25/05 379,827,230 6.669 9.780
6 10/25/05 11/25/05 369,636,146 6.448 9.780
7 11/25/05 12/25/05 358,448,455 6.671 9.780
9 1/25/06 2/25/06 333,702,622 6.464 9.780
10 2/25/06 3/25/06 321,322,418 7.183 9.780
11 3/25/06 4/25/06 309,295,568 6.469 9.780
12 4/25/06 5/25/06 297,611,837 6.694 9.780
13 5/25/06 6/25/06 286,261,329 6.473 9.780
14 6/25/06 7/25/06 275,234,435 6.698 9.780
15 7/25/06 8/25/06 264,521,825 6.489 9.780
16 8/25/06 9/25/06 254,114,951 6.491 9.780
17 9/25/06 10/25/06 244,004,496 6.717 9.780
18 10/25/06 11/25/06 234,177,872 6.495 9.780
19 11/25/06 12/25/06 224,331,594 6.723 9.780
20 12/25/06 1/25/07 207,896,679 6.533 9.780
21 1/25/07 2/25/07 192,314,602 8.388 9.780
22 2/25/07 3/25/07 177,626,546 9.306 9.780
23 3/25/07 4/25/07 163,728,106 8.377 9.780
24 4/25/07 5/25/07 150,747,139 8.654 9.780
25 5/25/07 6/25/07 142,450,971 8.365 9.780
26 6/25/07 7/25/07 134,453,149 8.655 9.780
27 7/25/07 8/25/07 126,722,734 9.027 9.780
28 8/25/07 9/25/07 119,263,844 9.023 9.780
29 9/25/07 10/25/07 112,053,463 9.325 9.780
30 10/25/07 11/25/07 105,083,060 9.011 9.780
31 11/25/07 12/25/07 98,344,433 9.314 9.780
32 12/25/07 1/25/08 91,829,675 9.074 9.780
P-1-1
EXHIBIT P-2
ONE-MONTH LIBOR CAP TABLE - CAP A-2 CONTRACT
PERIOD BEGINNING ENDING NOTIONAL BALANCE ($) LOWER COLLAR (%) UPPER COLLAR (%)
ACCRUAL ACCRUAL
1 5/19/05 6/25/05 257,779,000 5.252 9.320
2 6/25/05 7/25/05 253,488,836 6.520 9.320
3 7/25/05 8/25/05 249,188,396 6.306 9.320
4 8/25/05 9/25/05 244,188,826 6.324 9.320
5 9/25/05 10/25/05 238,501,700 6.541 9.320
6 10/25/05 11/25/05 232,146,195 6.325 9.320
7 11/25/05 12/25/05 225,159,278 6.543 9.320
8 12/25/05 1/25/06 217,649,960 6.327 9.320
9 1/25/06 2/25/06 209,692,382 6.331 9.320
10 2/25/06 3/25/06 201,946,244 7.044 9.320
11 3/25/06 4/25/06 194,420,932 6.347 9.320
12 4/25/06 5/25/06 187,109,622 6.567 9.320
13 5/25/06 6/25/06 180,006,158 6.352 9.320
14 6/25/06 7/25/06 173,104,565 6.572 9.320
15 7/25/06 8/25/06 166,399,038 6.358 9.320
16 8/25/06 9/25/06 159,883,988 6.372 9.320
17 9/25/06 10/25/06 153,554,226 6.592 9.320
18 10/25/06 11/25/06 147,400,880 6.376 9.320
19 11/25/06 12/25/06 141,101,793 6.597 9.320
20 12/25/06 1/25/07 130,827,387 6.395 9.320
21 1/25/07 2/25/07 121,006,177 8.312 9.320
22 2/25/07 3/25/07 111,733,391 9.244 9.320
23 3/25/07 4/25/07 102,959,766 8.327 9.320
24 4/25/07 5/25/07 94,841,750 8.602 9.320
25 5/25/07 6/25/07 89,575,715 8.316 9.320
26 6/25/07 7/25/07 84,546,258 8.599 9.320
27 7/25/07 8/25/07 79,685,087 8.992 9.320
28 8/25/07 9/25/07 74,992,879 9.002 9.320
29 9/25/07 10/25/07 70,457,363 9.303 9.320
30 10/25/07 11/25/07 66,072,961 8.992 9.320
31 11/25/07 12/25/07 61,834,504 9.294 9.320
32 12/25/07 1/25/08 57,737,026 9.115 9.320
P-2-1
EXHIBIT P-3
ONE-MONTH LIBOR CAP TABLE - SUBORDINATED CERTIFICATE CAP CONTRACT
PERIOD BEGINNING ENDING NOTIONAL BALANCE ($) LOWER COLLAR (%) UPPER COLLAR (%)
ACCRUAL ACCRUAL
1 5/19/05 6/25/05 162,960,000 4.839 8.820
2 6/25/05 7/25/05 162,960,000 6.127 8.820
3 7/25/05 8/25/05 162,960,000 5.916 8.820
4 8/25/05 9/25/05 162,960,000 5.924 8.820
5 9/25/05 10/25/05 162,960,000 6.144 8.820
6 10/25/05 11/25/05 162,960,000 5.925 8.820
7 11/25/05 12/25/05 162,960,000 6.146 8.820
8 12/25/05 1/25/06 162,960,000 5.927 8.820
9 1/25/06 2/25/06 162,960,000 5.938 8.820
10 2/25/06 3/25/06 162,960,000 6.654 8.820
11 3/25/06 4/25/06 162,960,000 5.947 8.820
12 4/25/06 5/25/06 162,960,000 6.170 8.820
13 5/25/06 6/25/06 162,960,000 5.951 8.820
14 6/25/06 7/25/06 162,960,000 6.174 8.820
15 7/25/06 8/25/06 162,960,000 5.963 8.820
16 8/25/06 9/25/06 162,960,000 5.970 8.820
17 9/25/06 10/25/06 162,960,000 6.194 8.820
18 10/25/06 11/25/06 162,960,000 5.974 8.820
19 11/25/06 12/25/06 162,960,000 6.199 8.820
20 12/25/06 1/25/07 162,960,000 6.004 8.820
21 1/25/07 2/25/07 162,960,000 7.883 8.820
22 2/25/07 3/25/07 162,960,000 8.807 8.820
23 3/25/07 4/25/07 162,960,000 7.882 8.820
24 4/25/07 5/25/07 162,960,000 8.159 8.820
25 5/25/07 6/25/07 162,960,000 7.871 8.820
26 6/25/07 7/25/07 162,960,000 8.158 8.820
27 7/25/07 8/25/07 162,960,000 8.538 8.820
28 8/25/07 9/25/07 162,960,000 8.540 8.820
29 9/25/07 10/25/07 162,960,000 8.820 8.820
30 10/25/07 11/25/07 162,960,000 8.528 8.820
31 11/25/07 12/25/07 162,960,000 8.820 8.820
32 12/25/07 1/25/08 162,960,000 8.614 8.820
P-3-1