EXHIBIT 99.1
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6
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CWMBS, INC.,
Depositor
BELVEDERE TRUST FINANCE CORPORATION,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
-----------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2004
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MORTGAGE PASS-THROUGH TRUST 2004-HYB1
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-HYB1
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Table of Contents
Page
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ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans....................................................................30
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.....................................................34
SECTION 2.03. Representations, Warranties and Covenants of the Seller and Master Servicer.....................36
SECTION 2.04. Representations and Warranties of the Depositor as to the Mortgage Loans........................38
SECTION 2.05. Delivery of Opinion of Counsel in Connection with Substitutions.................................39
SECTION 2.06. Execution and Delivery of Certificates..........................................................39
SECTION 2.07. REMIC Matters...................................................................................39
SECTION 2.08. Covenants of the Master Servicer................................................................40
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans.......................................................41
SECTION 3.02. Subservicing; Enforcement of the Obligations of Subservicers....................................42
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the Master Servicer.......................42
SECTION 3.04. Trustee to Act as Master Servicer...............................................................43
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate Account; Distribution Account.................43
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts.............................46
SECTION 3.07. Access to Certain Documentation and Information Regarding the Mortgage Loans....................47
SECTION 3.08. Permitted Withdrawals from the Certificate Account and the Distribution Account.................47
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of Primary Insurance Policies......................49
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption Agreements.......................................50
SECTION 3.11. Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans.................51
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files.................................................55
i
SECTION 3.13. Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee.........................................................................................55
SECTION 3.14. Servicing Compensation..........................................................................56
SECTION 3.15. Access to Certain Documentation.................................................................56
SECTION 3.16. Annual Statement as to Compliance...............................................................57
SECTION 3.17. Annual Independent Public Accountants' Servicing Statement; Financial Statements................57
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds..................................................57
SECTION 3.19. Notification of Adjustments.....................................................................58
ARTICLE IV
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances........................................................................................59
SECTION 4.02. Priorities of Distribution......................................................................60
SECTION 4.03. [Reserved]......................................................................................63
SECTION 4.04. Allocation of Realized Losses...................................................................63
SECTION 4.05. Cross-Collateralization; Adjustments to Available Funds.........................................65
SECTION 4.06. Monthly Statements to Certificateholders........................................................65
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates................................................................................68
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange of Certificates.....................68
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...............................................73
SECTION 5.04. Persons Deemed Owners...........................................................................73
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.......................................73
SECTION 5.06. Maintenance of Office or Agency.................................................................74
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Master Servicer.................................75
SECTION 6.02. Merger or Consolidation of the Depositor or the Master Servicer.................................75
SECTION 6.03. Limitation on Liability of the Depositor, the Seller, the Master Servicer and Others............75
SECTION 6.04. Limitation on Resignation of Master Servicer....................................................76
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default...............................................................................77
SECTION 7.02. Trustee to Act; Appointment of Successor........................................................78
SECTION 7.03. Notification to Certificateholders..............................................................80
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee...............................................................................81
SECTION 8.02. Certain Matters Affecting the Trustee...........................................................82
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans...........................................83
SECTION 8.04. Trustee May Own Certificates....................................................................83
SECTION 8.05. Trustee's Fees and Expenses.....................................................................83
SECTION 8.06. Eligibility Requirements for Trustee............................................................84
SECTION 8.07. Resignation and Removal of Trustee..............................................................84
SECTION 8.08. Successor Trustee...............................................................................85
SECTION 8.09. Merger or Consolidation of Trustee..............................................................86
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...................................................86
SECTION 8.11. Tax Matters.....................................................................................87
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all Mortgage Loans..................................90
SECTION 9.02. Final Distribution on the Certificates..........................................................90
SECTION 9.03. Additional Termination Requirements.............................................................91
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.......................................................................................93
SECTION 10.02. Recordation of Agreement; Counterparts..........................................................94
SECTION 10.03. Governing Law...................................................................................94
SECTION 10.04. Intention of Parties............................................................................95
SECTION 10.05. Notices.........................................................................................95
SECTION 10.06. Severability of Provisions......................................................................96
SECTION 10.07. Assignment......................................................................................96
SECTION 10.08. Limitation on Rights of Certificateholders......................................................96
SECTION 10.09. Inspection and Audit Rights.....................................................................97
SECTION 10.10. Certificates Nonassessable and Fully Paid.......................................................98
SECTION 10.11. [Reserved]......................................................................................98
SECTION 10.12. Protection of Assets............................................................................98
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SCHEDULES
Schedule I: Mortgage Loan Schedule............................................................................S-I-1
Schedule II: Representations and Warranties of the Seller.....................................................S-II-1
Schedule III: Representations and Warranties of the Master Servicer...........................................S-III-1
Schedule IV: Representations and Warranties as to the Mortgage Loans..........................................S-IV-1
Schedule V: Principal Balances Schedule [if applicable].......................................................S-V-1
Schedule VI: Form of Monthly Master Servicer Report...........................................................S-VI-1
EXHIBITS
Exhibit A: Form of Senior Certificate (excluding Notional Amount Certificates).................................A-1
Exhibit B: Form of Subordinated Certificate....................................................................B-1
Exhibit C: Form of Class A-R Certificate.......................................................................C-1
Exhibit D: Form of Notional Amount Certificate.................................................................D-1
Exhibit E: Form of Reverse of Certificates.....................................................................E-1
Exhibit F: Form of Initial Certification of Trustee............................................................F-1
Exhibit G: Form of Delay Delivery Certification of Trustee.....................................................G-1
Exhibit H: Form of Final Certification of Trustee..............................................................H-1
Exhibit I: Form of Transfer Affidavit..........................................................................I-1
Exhibit J-1: Form of Transferor Certificate (Residual)...........................................................J-1
Exhibit J-2: Form of Transferor Certificate (Private)............................................................J-2
Exhibit K: Form of Investment Letter [Non-Rule 144A]...........................................................K-1
Exhibit L: Form of Rule 144A Letter............................................................................L-1
Exhibit M: Form of Request for Release (for Trustee)...........................................................M-1
Exhibit N: Form of Request for Release (Mortgage Loan) Paid in Full, Repurchased and Replaced).................N-1
Exhibit O: [Reserved]..........................................................................................O-1
Exhibit P: [Reserved]..........................................................................................P-1
iv
THIS POOLING AND SERVICING AGREEMENT, dated as of February 1, 2004, among
CWMBS, INC., a Delaware corporation, as depositor (the "Depositor"), BELVEDERE
TRUST FINANCE CORPORATION, a Delaware corporation, as seller (in such
capacity, the "Seller"), COUNTRYWIDE HOME LOANS SERVICING LP, as master
servicer (in such capacity, the "Master Servicer"), and THE BANK OF NEW YORK,
a banking corporation organized under the laws of the State of New York, as
trustee (the "Trustee").
WITNESSETH THAT
In consideration of the mutual agreements contained in this Agreement,
the parties to this Agreement agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. For federal income tax purposes,
the Trust Fund, will consist of three real estate mortgage investment conduits
(each a "REMIC" or, in the alternative, the "Lower Tier REMIC," the "Middle
Tier REMIC" and the "Master REMIC," respectively). Each Certificate, other
than the Class A-R Certificate, will represent ownership of one or more
regular interests in the Master REMIC for purposes of the REMIC Provisions.
The Class A-R Certificate represents ownership of the sole class of residual
interest in the Lower Tier REMIC, the Middle Tier REMIC and the Master REMIC.
The Master REMIC will hold as assets the several classes of uncertificated
Middle Tier REMIC Interests (other than the Class MT-A-R Interest). The Middle
Tier REMIC will hold as assets the several classes of uncertificated Lower
Tier REMIC Interests (other than the Class LT-A-R Interest). The Lower Tier
REMIC will hold as assets all property of the Trust Fund. Each Middle Tier
REMIC Interest (other than the Class MT-A-R Interest) is hereby designated as
a regular interest in the Middle Tier REMIC. Each Lower Tier REMIC Interest
(other than the Class LT-A-R Interest) is hereby designated as a regular
interest in the Lower Tier REMIC. The latest possible maturity date of all
REMIC regular interests created in this Agreement shall be the Latest Possible
Maturity Date.
The following table set forth characteristics of the Interests in the
Lower Tier REMIC:
Initial Principal Corresponding
The Lower Tier REMIC Interests Balance Interest Rate Loan Group
----------------------------------- ----------------- --------------- -------------------
LT-A-1............................. (1) (2) 1
LT-B-1............................. (1) (2) 1
LT-C-1............................. (1) (2) 1
LT-A-2............................. (1) (2) 2
LT-B-2............................. (1) (2) 2
LT-C-2............................. (1) (2) 2
LT-A-R............................. (3) (3) N/A
---------------
(1) Each Class A Lower Tier REMIC Interest will have an Initial Principal
Balance equal to 0.9% of the Subordinated Portion of its Corresponding
Loan Group. Each Class B Lower Tier REMIC Interest will have an Initial
Principal Balance equal to 0.1% of the Subordinated Portion of its
Corresponding Loan Group. Each Class C Lower Tier
REMIC Interest will have an Initial Principal Balance equal to the
excess of its Corresponding Loan Group over the initial aggregate
principal balances of the Class A and Class B Lower Tier REMIC Interests
corresponding to such Loan Group.
(2) This Lower Tier REMIC Interest will have an Interest Rate equal to the
weighted average of the Adjusted Net Mortgage Rates of the Mortgage Loans
in the Corresponding Loan Group.
(3) The Class LT-AR Lower Tier REMIC Interest is the sole class of residual
interest in the Lower Tier REMIC. It has no principal balance and pays no
principal or interest.
On each Distribution Date, the Available Funds shall be distributed with
respect to the Lower Tier REMIC Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each Lower
Tier REMIC Interest at the rate, or according to the formulas, described
above;
(2) Principal, if no Cross-Over Situation Exists. If no Cross-Over
Situation exists with respect to any Class of Lower Tier REMIC Interests,
Principal Amounts arising with respect to each Loan Group will be allocated:
first to cause the Loan Group's corresponding Class A and Class B Lower Tier
REMIC Interests to equal, respectively, 0.9% of the Subordinated Portion and
0.1% of the Subordinated Portion; and second to the Loan Group's corresponding
Class C Lower Tier REMIC Interest;
(3) Principal, if a Cross-Over Situation Exists. If a Cross-Over
Situation exists with respect to the Class A and Class B Lower Tier REMIC
Interests:
(a) If the Calculation Rate in respect of the outstanding Class A and
Class B Lower Tier REMIC Interests is less than the Subordinate
Pass-Through Rate, then Principal Relocation Payments will be made
proportionately to the outstanding Class A Lower Tier REMIC Interests
prior to any other Principal Distributions from each such Loan Group.
(b) If the Calculation Rate in respect of the outstanding Class A and
Class B Lower Tier REMIC Interests is greater than the Subordinate
Pass-Through Rate, Principal Relocation Payments will be made to the
outstanding Class B Lower Tier REMIC Interests prior to any other
Principal Distributions from each such Loan Group.
In each case, Principal Relocation Payments will be made so as to cause
the Calculation Rate in respect of the outstanding Class A and Class B Lower
Tier REMIC Interests to equal the Subordinate Pass-Through Rate. With respect
to each Loan Group, if (and to the extent that) the sum of (a) the principal
payments comprising the Principal Remittance Amount received during the Due
Period and (b) the Realized Losses, are insufficient to make the necessary
reductions of principal on the Class A and Class B Lower Tier REMIC Interests,
then interest will be added to the Loan Group's other Interests that are not
receiving Principal Relocation Payments, in proportion to their principal
balances.
(c) The outstanding aggregate Class A and Class B Lower Tier REMIC
Interests for all Loan Groups will not be reduced below 1 percent of the
excess of (i) the aggregate outstanding Principal Balances of all Loan
Groups as of the end of any Due Period over (ii) the aggregate Class
Certificate Balance of the Senior Certificates for all Loan Groups
2
as of the related Distribution Date (after taking into account
distributions of principal on such Distribution Date).
If (and to the extent that) the limitation in paragraph (c) prevents the
distribution of principal to the Class A and Class B Lower Tier REMIC
Interests of a Loan Group, and if the Loan Group's Class C Lower Tier REMIC
Interest has already been reduced to zero, then the excess principal from that
Loan Group will be paid to the Class C Lower Tier REMIC Interest of the other
Loan Group the aggregate Class A and Class B Lower Tier REMIC Interests of
which is less than one percent of the Subordinated Portion. If the Loan Group
corresponding to the Class C Lower Tier REMIC Interest that receives such
payment has a Weighted Average Adjusted Net Mortgage Rate below the Weighted
Average Adjusted Net Mortgage Rate of the Loan Group making the payment, then
the payment will be treated by the Lower Tier REMIC as a Realized Loss.
Conversely, if the Loan Group corresponding to the Class C Lower Tier REMIC
Interest that receives such payment has a Weighted Average Adjusted Net
Mortgage Rate above the Weighted Average Adjusted Net Mortgage Rate of the
Loan Group making the payment, then the payment will be treated by the Lower
Tier REMIC as a reimbursement for prior Realized Losses.
3
The following table set forth characteristics of the Interests in the
Middle Tier REMIC:
----------------- -------------------------------- --------------------- -----------------------
The Middle
Tier REMIC Corresponding
Interests Initial Principal Balance Interest Rate Certificates
----------------- -------------------------------- --------------------- -----------------------
MT-1-A $50,932,000.00 (1) 1-A, 1-X (2)
----------------- -------------------------------- --------------------- -----------------------
MT-2-A $191,951,000.00 (3) 2-A, 2-X (4)
----------------- -------------------------------- --------------------- -----------------------
MT-$100 $100.00 (5) A-R
----------------- -------------------------------- --------------------- -----------------------
MT-M $3,927,000.00 (6) M
----------------- -------------------------------- --------------------- -----------------------
MT-B-1 $2,534,000.00 (6) B-1
----------------- -------------------------------- --------------------- -----------------------
MT-B-2 $1,520,000.00 (6) B-2
----------------- -------------------------------- --------------------- -----------------------
MT-B-3 $1,267000.00 (6) B-3
----------------- -------------------------------- --------------------- -----------------------
MT-B-4 $760,000.00 (6) B-4
----------------- -------------------------------- --------------------- -----------------------
MT-B-5 $507,622.00 (6) B-5
----------------- -------------------------------- --------------------- -----------------------
MT-AR (7) (7) A-R
----------------- -------------------------------- --------------------- -----------------------
(1) The interest rate with respect to any Distribution Date (and the related
Interest Accrual Period) for this Middle Tier REMIC Interest is a per
annum rate equal to the Weighted Average Adjusted Net Mortgage Rate of
the Group 1 Mortgage Loans.
(2) For each Interest Accrual Period from the Interest Accrual Period related
to the first Distribution Date to and including the Distribution Date in
November 2006, the Class 1-X Certificates are entitled to receive a
specified portion of the interest payable on the MT-1-A Middle Tier REMIC
Interest. Specifically, for each such Interest Accrual Period, the Class
1-X Certificates are entitled to interest accruals on the MT-1-A Middle
Tier REMIC Interest at a per annum rate equal to 0.7847% per annum. For
each Interest Accrual Period thereafter, the Class 1-X Certificates will
be entitled to 0% per annum.
(3) The interest rate with respect to any Distribution Date (and the related
Interest Accrual Period) for this Middle Tier REMIC Interest is a per
annum rate equal to the Weighted Average Adjusted Net Mortgage Rate of
the Group 2 Mortgage Loans.
(4) For each Interest Accrual Period from the Interest Accrual Period related
to the first Distribution Date to and including the Distribution Date in
November 2008, the Class 2-X Certificates are entitled to receive a
specified portion of the interest payable on the MT-2-A Middle Tier REMIC
Interest. Specifically, for each Interest Accrual Period, the Class 2-X
Certificates are entitled to interest accruals on the MT-2-A Middle Tier
REMIC Interest at a per annum rate equal to 0.6529% per annum. For each
Interest Accrual Period thereafter, the Class 2-X Certificates will be
entitled to 0% per annum.
(5) This Middle Tier REMIC Interest will be a principal only Interest and
will not be entitled to receive any distributions of interest.
(6) For each Interest Accrual Period, the interest rate for this Middle Tier
REMIC Interest will be the Subordinate Pass-Through Rate.
(7) The MT-A-R is the sole Class of residual interest in the Middle Tier
REMIC. It pays no interest or principal.
4
On each Distribution Date, the available funds shall be distributed with
respect to the Middle Tier REMIC Interests in the following manner:
(1) Interest is to be distributed with respect to each Middle Tier REMIC
Interest at the rate, or according to the formulas, described above; and
(2) Principal is to be distributed with respect to each Middle Tier REMIC
Interest in the same manner and in the same amount as principal is distributed
with respect to each Middle Tier REMIC Interest's Corresponding Class or
Classes of Certificates.
On each Distribution Date, Realized Losses (and increases in Principal
Balances attributable to Subsequent Recoveries) shall be allocated among the
Middle Tier REMIC Interests in the same manner that Realized Losses (and
increases in Class Certificate Balances attributable to Subsequent Recoveries)
are allocated among each Middle Tier REMIC Interest's Corresponding Class or
Classes of Certificates.
The following table sets forth characteristics of the Certificates,
together with minimum denominations and integral multiples in excess thereof
in which such Classes shall be issued (except that one Certificate of each
Class of Certificates may be issuable in a different amount and, in addition,
one Residual Certificate representing the Tax Matters Person Certificate may
be issued in a different amount for each class of REMIC Interest):
=============== ================== ================== ==================== ===================
Integral
Initial Class Pass-Through Multiples
Class Certificate Rate Minimum in Excess of
Designation Balance (per annum) Denomination Minimum
--------------- ------------------ ------------------ -------------------- -------------------
Class 1-A $50,932,000 (1) $25,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class 1-X (2) (3) $25,000.00(4) $1,000.00(4)
--------------- ------------------ ------------------ -------------------- -------------------
Class 2-A $191,951,000 (1) $25,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class 2-X (2) (3) $25,000.00(4) $1,000.00(4)
--------------- ------------------ ------------------ -------------------- -------------------
Class A-R $100 (5) (6) (6)
--------------- ------------------ ------------------ -------------------- -------------------
Class M $3,927,000 (7) $25,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class B-1 $2,534,000 (7) $25,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class B-2 $1,520,000 (7) $25,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class B-3 $1,267,000 (7) $100,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class B-4 $760,000 (7) $100,000.00 $1,000.00
--------------- ------------------ ------------------ -------------------- -------------------
Class B-5 $507,622 (7) $100,000.00 $1,000.00
=============== ================== ================== ==================== ===================
---------------------------
(1) For each Interest Accrual Period for any Distribution Date, the
Pass-Through Rate for the Class 1-A and Class 2-A Certificates will be
the Weighted Average Adjusted Net Mortgage Rate of the Mortgage Loans in
the related Loan Group minus the Pass-Through Rate for the related Class
of Notional Amount Certificates. The Pass-Through Rates for the Interest
Accrual Period for the first Distribution Date will be 3.3045% and
4.3421%, per annum for the Class 1-A and Class 2-A Certificates,
respectively.
5
(2) The Class 1-X and Class 2-X Certificates will be Notional Amount
Certificates, will have no principal balances, will pay no principal and
will bear interest on their respective Notional Amounts (initially
$50,932,000 and $191,951,000, respectively).
(3) The Pass-Through Rate for the Class 1-X Certificates for each Interest
Accrual Period for each Distribution Date on or prior to the November
2006 Distribution Date will be 0.7847% per annum and thereafter will be
0% per annum. The Pass-Through Rate for the Class 2-X Certificates for
each Interest Accrual Period for each Distribution Date on or prior to
the November 2008 Distribution Date will be 0.6529% per annum and
thereafter will be 0% per annum.
(4) Minimum denomination is based on the Notional Amount of the Class.
(5) The Class A-R Certificates will not bear interest.
(6) The Class A-R Certificate will be issued as two separate certificates,
one with an initial Certificate Balance of $99.99 and the Tax Matters
Person Certificate with an initial Certificate Balance of $.01.
(7) The Pass-Through Rate for each Class of Subordinated Certificates for
each Interest Accrual Period for any Distribution Date will be a per
annum rate equal to the Subordinate Pass-Through Rate. The Pass-Through
Rate for the Subordinated Certificates for the Interest Accrual Period
for the first Distribution Date will be 4.8051% per annum.
6
Set forth below are designations of Classes or Components of Certificates
to the categories used in this Agreement:
Accretion Directed
Certificates.............................. None.
Accrual Certificates...................... None.
Accrual Components........................ None.
Book-Entry Certificates................... All Classes of Certificates other than the Physical Certificates.
COFI Certificates......................... None.
Component Certificates.................... None.
Components................................ None.
Delay Certificates........................ All interest-bearing Classes of Certificates other than the Non-Delay
Certificates, if any.
ERISA-Restricted
Certificates.............................. The Residual Certificates and Private Certificates; and any Certificate
that does not or no longer satisfies the applicable rating requirement
under the Underwriter's Exemption.
Group 1
Senior Certificates....................... Class 1-A, Class 1-X and Class A-R Certificates.
Group 1 Certificates...................... Group 1 Senior Certificates and the Subordinated Portion related to Loan
Group 1.
Group 2
Senior Certificates....................... Class 2-A and Class 2-X Certificates.
Group 2 Certificates...................... Group 2 Senior Certificates and the Subordinated Portion related to Loan
Group 2
LIBOR Certificates........................ None.
Non-Delay Certificates.................... None.
Notional Amount
Certificates.............................. Class 1-X and Class 2-X Certificates.
7
Offered Certificates...................... All Classes of Certificates other than the Private Certificates.
Physical Certificates..................... Private Certificates and the Residual Certificates.
Planned Principal Classes................. None.
Planned Principal
Components................................ None.
Private Certificates...................... Class B-3, Class B-4 and Class B-5 Certificates.
Rating Agencies........................... S&P and ▇▇▇▇▇'▇.
Regular Certificates...................... All Classes of Certificates, other than the Residual Certificates.
Residual Certificates..................... Class A-R Certificates.
Senior Certificate Group.................. Group 1 Senior Certificates and Group 2 Senior Certificates, as
applicable.
Senior Certificates....................... Class 1-A, Class 2-A, Class 1-X, Class 2-X and Class A-R Certificates.
Subordinated Certificates ................ Class M, Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5
Certificates.
Support Classes........................... None.
With respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions in this
Agreement relating solely to such designations shall be of no force or effect,
and any calculations in this Agreement incorporating references to such
designations shall be interpreted without reference to such designations and
amounts. Defined terms and provisions in this Agreement relating to
statistical rating agencies not designated above as Rating Agencies shall be
of no force or effect.
8
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accretion Directed Certificates: As specified in the Preliminary
Statement.
Accretion Direction Rule: Not applicable.
Accrual Amount: Not applicable.
Accrual Certificates: As specified in the Preliminary Statement.
Accrual Components: As specified in the Preliminary Statement.
Accrual Termination Date: Not applicable.
Adjusted Mortgage Rate: As to each Mortgage Loan and at any time, the per
annum rate equal to the Mortgage Rate less the Master Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any time, the
per annum rate equal to the Mortgage Rate less the Expense Fee Rate.
Adjustment Date: A date specified in each Mortgage Note as a date on
which the Mortgage Rate on the related Mortgage Loan will be adjusted.
Advance: As to a Loan Group, the payment required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such payment being equal to the aggregate of payments
of principal and interest (net of the Master Servicing Fee and net of any net
income in the case of any REO Property) on the Mortgage Loans in such Loan
Group that were due on the related Due Date and not received as of the close
of business on the related Determination Date, together with an amount
equivalent to interest on each Mortgage Loan as to which the related Mortgaged
Property is an REO Property, less the aggregate amount of any such delinquent
payments that the Master Servicer has determined would constitute a
Nonrecoverable Advance if advanced.
Aggregate Subordinated Percentage: As to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is equal to the
aggregate Class Certificate Balance of the Subordinated Certificates
immediately prior to such Distribution Date and the denominator of which is
the aggregate Stated Principal Balance of all the Mortgage Loans as of the Due
Date in the month preceding the month of such Distribution Date.
Agreement: This Pooling and Servicing Agreement and all amendments or
supplements this Pooling and Servicing Agreement.
Allocable Share: As to any Distribution Date, any Loan Group and any
Class or Component of Certificates, the ratio that the amount calculated with
respect to such Distribution Date (A) with respect to the Senior Certificates
of the related Senior Certificate Group, pursuant
to clause (i) of the definition of Class Optimal Interest Distribution Amount
(without giving effect to any reduction of such amount pursuant to Section
4.02(d)) and (B) with respect to the Subordinated Certificates, pursuant to
the definition of Assumed Interest Amount for such Class or after the Senior
Termination Date, pursuant to clause (i) of the definition of Class Optimal
Interest Distribution Amount (without giving effect to any reduction of such
amount pursuant to Section 4.02(d)) bears to the aggregate amount calculated
with respect to such Distribution Date for each such related Class of
Certificates pursuant to clause (i) of the definition of Class Optimal
Interest Distribution Amount (without giving effect to any reduction of such
amounts pursuant to Section 4.02(d)) or the definition of Assumed Interest
Amount for such Loan Group and Class, as applicable.
Amount Held for Future Distribution: As to any Distribution Date and
Mortgage Loans in a Loan Group, the aggregate amount held in the Certificate
Account at the close of business on the related Determination Date on account
of (i) Principal Prepayments received after the related Prepayment Period and
Liquidation Proceeds and Subsequent Recoveries received in the month of such
Distribution Date relating to Mortgage Loans in that Loan Group and (ii) all
Scheduled Payments due after the related Due Date relating to Mortgage Loans
in that Loan Group.
Applicable Credit Support Percentage: As defined in Section 4.02(e).
Appraised Value: (i) With respect to a Mortgage Loan other than a
Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged
Property based upon the appraisal made at the time of the origination of such
Mortgage Loan and (b) the sales price of the Mortgaged Property at the time of
the origination of such Mortgage Loan; (ii) with respect to a Refinancing
Mortgage Loan other than a Streamlined Documentation Mortgage Loan, the value
of the Mortgaged Property based upon the appraisal made at the time of the
origination of such Refinancing Mortgage Loan; and (iii) with respect to a
Streamlined Documentation Mortgage Loan, (a) if the loan-to-value ratio with
respect to the Original Mortgage Loan at the time of the origination thereof
was 80% or less and the loan amount of the new mortgage loan is $650,000 or
less, the value of the Mortgaged Property based upon the appraisal made at the
time of the origination of the Original Mortgage Loan and (b) if the
loan-to-value ratio with respect to the Original Mortgage Loan at the time of
the origination thereof was greater than 80% or the loan amount of the new
mortgage loan is greater than $650,000, the value of the Mortgaged Property
based upon the appraisal (which may be a drive-by appraisal) made at the time
of the origination of such Streamlined Documentation Mortgage Loan.
Assumed Interest Amount: With respect to any Distribution Date, any Class
of Subordinated Certificates and any Loan Group, one month's interest accrued
during the related Interest Accrual Period at the Pass-Through Rate on the
related Subordinated Portion immediately prior to that Distribution Date.
Available Funds: As to any Distribution Date and each Loan Group, the sum
of (a) the aggregate amount held in the Certificate Account at the close of
business on the related Determination Date in respect of the related Mortgage
Loans pursuant to Section 3.05(b) net of the related Amount Held for Future
Distribution and net of amounts permitted to be withdrawn from the Certificate
Account pursuant to clauses (i) - (viii), inclusive, of Section 3.08(a) in
respect of the Mortgage Loans in that Loan Group and amounts permitted to be
withdrawn from the Distribution Account pursuant to clauses (i) - (iii),
inclusive, of Section 3.08(b) in respect of
2
the Mortgage Loans in that Loan Group, (b) the amount of the related Advance,
(c) in connection with Defective Mortgage Loans in such Loan Group, as
applicable, the aggregate of the Purchase Prices and Substitution Adjustment
Amounts deposited on the related Distribution Account Deposit Date, and (d)
the Transfer Payment Received plus interest thereon as provided in Section
4.05 for such Loan Group less the Transfer Payment Made plus interest thereon
as provided in Section 4.05 for such Loan Group; provided, however, that on
the Senior Termination Date, Available Funds with respect to the Loan Group
relating to the remaining Senior Certificate Group shall include the Available
Funds from the other Loan Groups after all distributions are made on the
Senior Certificates of the other Senior Certificate Groups and on any
Distribution Date thereafter, Available Funds shall be calculated based on all
the Mortgage Loans in the Mortgage Pool, as opposed to the Mortgage Loans in
the related Loan Group.
Bankruptcy Code: Title 11 of the United States Code, as amended.
Bankruptcy Coverage Termination Date: The point in time at which the
Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient Valuation
or Debt Service Reduction; provided, however, that a Bankruptcy Loss shall not
be deemed a Bankruptcy Loss hereunder so long as the Master Servicer has
notified the Trustee in writing that the Master Servicer is diligently
pursuing any remedies that may exist in connection with the related Mortgage
Loan and either (A) the related Mortgage Loan is not in default with regard to
payments due thereunder or (B) delinquent payments of principal and interest
under the related Mortgage Loan and any related escrow payments in respect of
such Mortgage Loan are being advanced on a current basis by the Master
Servicer, in either case without giving effect to any Debt Service Reduction
or Deficient Valuation.
Bankruptcy Loss Coverage Amount: As of any Determination Date, the
Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated
to the Certificates since the Cut-off Date and (ii) any permissible reductions
in the Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that any such reduction will not result in
a downgrading of the then current ratings assigned to the Classes of
Certificates rated by it.
Benefit Plan Opinion: As defined in Section 5.02(b).
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the City of New York, New York, or the States
of California or Texas or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to be
closed.
3
Calculation Rate: For each Distribution Date, in the case of the Class A
and Class B Lower Tier REMIC Interests, the product of (i) 10 and (ii) the
weighted average rate of the outstanding Class A and Class B Interests,
treating each Class A Interest as capped at zero or reduced by a fixed
percentage of 100% of the interest accruing on such Class A Interest.
Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached this Agreement as exhibits.
Certificate Account: The separate Eligible Account or Accounts created
and maintained by the Master Servicer pursuant to Section 3.05 with a
depository institution in the name of the Master Servicer for the benefit of
the Trustee on behalf of Certificateholders and designated "Countrywide Home
Loans Servicing LP in trust for the registered holders of Mortgage
Pass-Through Trust 2004-HYB1, Mortgage Pass-Through Certificates Series
2004-HYB1."
Certificate Balance: With respect to any Certificate at any date, the
maximum dollar amount of principal to which the Holder thereof is then
entitled under this Agreement, such amount being equal to the Denomination of
that Certificate (A) plus any increase in the Certificate Balance of such
Certificate pursuant to Section 4.02 due to the receipt of Subsequent
Recoveries (B) minus the sum of (i) all distributions of principal previously
made with respect to that Certificate and (ii) all Realized Losses allocated
to that Certificate and, in the case of any Subordinated Certificates, all
other reductions in Certificate Balance previously allocated to that
Certificate pursuant to Section 4.04 without duplication.
Certificate Group: The Group 1 or Group 2 Certificates, as the context
requires.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate. For the purposes
of this Agreement, in order for a Certificate Owner to enforce any of its
rights under this Agreement, it shall first have to provide evidence of its
beneficial ownership interest in a Certificate that is reasonably satisfactory
to the Trustee, the Depositor, and/or the Master Servicer, as applicable.
Certificate Register: The register maintained pursuant to Section 5.02.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, 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
of this Agreement (other than the second sentence of Section 10.01) that
requires the consent of the Holders of Certificates of a particular Class as a
condition to the taking of any action under this Agreement. The Trustee is
entitled to rely conclusively on a certification of the Depositor or any
affiliate of the Depositor in determining which Certificates are registered in
the name of an affiliate of the Depositor.
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Class: All Certificates bearing the same class designation as set forth
in the Preliminary Statement.
Class Certificate Balance: With respect to any Class and as to any date
of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and Class or
Component, the amount by which the amount described in clause (i) of the
definition of Class Optimal Interest Distribution Amount for such Class or
Component exceeds the amount of interest actually distributed on such Class or
Component on such Distribution Date pursuant to such clause (i).
Class Optimal Interest Distribution Amount: With respect to any
Distribution Date and interest-bearing Class or any interest-bearing Component
the sum of (i) one month's interest accrued during the related Interest
Accrual Period at the Pass-Through Rate for such Class on the related Class
Certificate Balance or Notional Amount immediately prior to such Distribution
Date, subject to reduction as provided in Section 4.02(d) and (ii) any Class
Unpaid Interest Amounts for such Class or Component.
Class Subordination Percentage: With respect to any Distribution Date and
each Class of Subordinated Certificates, the quotient (expressed as a
percentage) of (a) the Class Certificate Balance of such Class of Certificates
immediately prior to such Distribution Date divided by (b) the aggregate of
the Class Certificate Balances of all Classes of Certificates immediately
prior to such Distribution Date.
Class Unpaid Interest Amounts: As to any Distribution Date and Class or
Component of interest-bearing Certificates, the amount by which the aggregate
Class Interest Shortfalls for such Class or Component on prior Distribution
Dates exceeds the amount distributed on such Class or Component on prior
Distribution Dates pursuant to clause (ii) of the definition of Class Optimal
Interest Distribution Amount.
Closing Date: February 26, 2004.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COFI: The Monthly Weighted Average Cost of Funds Index for the Eleventh
District Savings Institutions published by the Federal Home Loan Bank of San
Francisco.
COFI Certificates: As specified in the Preliminary Statement.
Conveyed Assets: As defined in Section 2.01.
Component: Not applicable.
Component Rate: Not applicable.
Compensating Interest: As to any Distribution Date and Loan Group, an
amount equal to one-half of the Master Servicing Fee for the related Loan
Group for such Distribution Date.
5
Coop Shares: Shares issued by a Cooperative Corporation.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Coop Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Coop Shares of the Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The designated office of the Trustee in the State
of New York at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of
the execution of this Agreement is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Attn: Mortgage-Backed Securities Group, Mortgage
Pass-Through Trust 2004-HYB1), facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇, and which is the
address to which notices to and correspondence with the Trustee should be
directed.
Countrywide Acknowledgement: The Assignment, Assumption and Recognition
Agreement, dated February 26, 2004 among Countrywide Home Loans, Inc., the
Seller, the Depositor and the Master Servicer.
Countrywide Mortgage Loan Purchase Agreement: That certain Mortgage Loan
Purchase and Servicing Agreement, dated as of January 29, 2004, between
Countrywide Home Loans, Inc. and the Seller, including any Purchase
Confirmations entered into with respect to the Countrywide Mortgage Loans
pursuant to such Mortgage Loan Purchase and Servicing Agreement.
Countrywide Mortgage Loans: Those certain Mortgage Loans purchased by the
Seller pursuant to the Countrywide Mortgage Loan Purchase Agreement and
transferred to the Depositor pursuant to this Agreement and which are
identified as such on the Mortgage Loan Schedule.
Countrywide Purchase Group I: Those certain Countrywide Mortgage Loans
purchased by the Seller pursuant to the Countrywide Mortgage Loan Purchase
Agreement on January 29, 2004 and which are identified as being part of such
group on the Mortgage Loan Schedule.
Countrywide Purchase Group II: Those certain Countrywide Mortgage Loans
purchased by the Seller pursuant to the Countrywide Mortgage Loan Purchase
Agreement on February 25, 2004 and which are identified as being part of such
group on the Mortgage Loan Schedule.
Countrywide Servicing: Countrywide Home Loans Servicing LP, a Texas
limited partnership and its successors and assigns.
6
Cross-Over Situation: For any Distribution Date and for each Loan Group
(after taking into account principal distributions on such Distribution Date)
with respect to the Class A and Class B Lower Tier REMIC Interests, a
situation in which the Class A and Class B Interests corresponding to any Loan
Group are in the aggregate less than 1% of the Subordinate Component Balance
of the Loan Group to which they correspond.
Cut-off Date: February 1, 2004.
Cut-off Date Pool Principal Balance: $253,398,722.
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction by
a court of competent jurisdiction in a proceeding under the Bankruptcy Code in
the Scheduled Payment for such Mortgage Loan that became final and
non-appealable, except such a reduction resulting from a Deficient Valuation
or any reduction that results in a permanent forgiveness of principal.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased pursuant to Section 2.02 or 2.03.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less
than the then-outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court which is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Delay Delivery Certification: As defined in Section 2.02(a).
Delay Delivery Mortgage Loans: The Mortgage Loans for which all or a
portion of a related Mortgage File is not delivered to Trustee on the Closing
Date. With respect to up to 50% of the Mortgage Loans in each Loan Group, the
Depositor may deliver all or a portion of each related Mortgage File to the
Trustee not later than thirty days after the Closing Date. To the extent that
Countrywide Servicing or the Seller shall be in possession of any Mortgage
Files with respect to any Delay Delivery Mortgage Loan, until delivery of such
Mortgage File to the Trustee as provided in Section 2.01, Countrywide
Servicing or the Seller, as applicable, shall hold such files as agent and in
trust for the Trustee.
Deleted Mortgage Loan: As defined in Section 2.03(c).
Denomination: With respect to each Certificate, the amount set forth on
the face of that Certificate as the "Initial Certificate Balance of this
Certificate" or the "Initial Notional Amount
7
of this Certificate" or, if neither of the foregoing, the Percentage Interest
appearing on the face thereof.
Depositor: CWMBS, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is CEDE & Co., as the registered Holder of the Book-Entry
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of
New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the 15th day of each
month or, if such 15th day is not a Business Day, the preceding Business Day;
provided, however, that if such 15th day or such Business Day, whichever is
applicable, is less than two Business Days prior to the related Distribution
Date, the Determination Date shall be the first Business Day that is two
Business Days preceding such Distribution Date.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank of
New York in trust for registered holders of Mortgage Pass-Through Trust
2004-HYB1, Mortgage Pass-Through Certificates, Series 2004-HYB1." Funds in the
Distribution Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 12:30
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.
Distribution Date: The Business Day immediately following the Master
Servicer Remittance Date, commencing in March 2004.
Due Date: With respect to any Distribution Date, the first day of the
month in which that Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the debt obligations of such holding company) have the
highest short-term ratings of ▇▇▇▇▇'▇ or Fitch and one of the two highest
short-term ratings of S&P, if S&P is a Rating Agency at the time any amounts
are held on deposit therein, or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC
(to the limits established by the FDIC) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or a
perfected first priority security interest against any collateral (which shall
be limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors
8
or creditors of the depository institution or trust company in which such
account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository
institution or (b) a trust company, acting in its fiduciary capacity or (iv)
any other account acceptable to each Rating Agency. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
Eligible Repurchase Month: As defined in Section 3.11.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of an
Underwriter's Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary Statement.
Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.06(a).
Event of Default: As defined in Section 7.01.
Excess Loss: The amount of any (i) Fraud Loss realized after the Fraud
Loss Coverage Termination Date, (ii) Special Hazard Loss realized after the
Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss realized
after the Bankruptcy Coverage Termination Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan plus any Subsequent Recoveries received with respect
to such Mortgage Loan, net of any amounts previously reimbursed to the Master
Servicer as Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3.08(a)(iii), exceeds (i) the unpaid principal balance of
such Liquidated Mortgage Loan as of the Due Date in the month in which such
Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued interest at
the Mortgage Rate from the Due Date as to which interest was last paid or
advanced (and not reimbursed) to Certificateholders up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
Expense Fee Rate: As to each Mortgage Loan and any date of determination,
the sum of (a) the related Master Servicing Fee Rate and (b) the Trustee Fee
Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, 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 to the
Federal Home Loan Mortgage Corporation.
Final Certification: As defined in Section 2.02(a).
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
9
Fitch: Fitch, Inc., or any successor thereto. If Fitch is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section 10.05(b)
the address for notices to Fitch shall be Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Surveillance Group,
or such other address as Fitch may hereafter furnish to the Depositor and the
Master Servicer.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor to the Federal
National Mortgage Association.
Fraud Loan: A Liquidated Mortgage Loan as to which a Fraud Loss has
occurred.
Fraud Loss Coverage Amount: As of the Closing Date, $5,067,974, subject
to reduction from time to time by the amount of Fraud Losses allocated to the
Certificates. In addition, on each anniversary of the Cut-off Date, the Fraud
Loss Coverage Amount will be reduced as follows: (a) on the first, second,
third, fourth and fifth anniversaries of the Cut-off Date, to an amount equal
to the lesser of (i)(x) with respect to the first anniversary of the Cut-off
Date, 2% of the then current Pool Stated Principal Balance and (y) with
respect to the second, third, fourth and fifth anniversaries of the Cut-off
Date, 1% of the then current Pool Stated Principal Balance and (ii) the excess
of the Fraud Loss Coverage Amount as of the preceding anniversary of the
Cut-off Date over the cumulative amount of Fraud Losses allocated to the
Certificates since such preceding anniversary; and (b) on the sixth
anniversary of the Cut-off Date, to zero.
Fraud Loss Coverage Termination Date: The point in time at which the
Fraud Loss Coverage Amount is reduced to zero.
Fraud Losses: Realized Losses on Mortgage Loans as to which a loss is
sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a
loss by reason of the denial of coverage under any related Primary Insurance
Policy because of such fraud, dishonesty or misrepresentation.
Group 1 Senior Certificates: As specified in the Preliminary Statement.
Group 1 Weighted Average Initial Adjustment Date: The Distribution Date
in November 2006.
Group 2 Senior Certificates: As specified in the Preliminary Statement.
Group 2 Weighted Average Initial Adjustment Date: The Distribution Date
in November 2008.
Indirect Participant: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
Initial Bankruptcy Coverage Amount: $100,000.
Initial Certification: As defined in Section 2.02(a).
Initial Component Balance: Not applicable.
10
Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect, including any replacement policy or policies for any Insurance
Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any Insurance
Policy, 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 Accrual Period: With respect to any Distribution Date, the
calendar month prior to the month of such Distribution Date.
Latest Possible Maturity Date: The Distribution Date following the third
anniversary of the scheduled maturity date of the Mortgage Loan having the
latest scheduled maturity date as of the Cut-off Date.
Lender PMI Mortgage Loan: Certain Mortgage Loans as to which the lender
(rather than the Mortgagor) acquires the Primary Insurance Policy and charges
the related Mortgagor an interest premium.
LIBOR: The London interbank offered rate for one-month United States
dollar deposits calculated in the manner described in Section 4.08.
LIBOR Certificates: As specified in the Preliminary Statement.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) that was liquidated in
the calendar month preceding the month of such Distribution Date and as to
which the Master Servicer has determined (in accordance with this Agreement)
that it has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan, including the final disposition of an REO
Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale 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 Master Servicing Fees,
Servicing Advances and Advances.
Loan Group: Any of Loan Group 1 and Loan Group 2, as applicable.
Loan Group 1: All Mortgage Loans identified as Loan Group 1 Mortgage
Loans on the Mortgage Loan Schedule.
Loan Group 2: All Mortgage Loans identified as Loan Group 2 Mortgage
Loans on the Mortgage Loan Schedule.
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Loan-to-Value Ratio: With respect to any Mortgage Loan and as to any date
of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at that date of
determination and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Lost Mortgage Note: Any Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority in Interest: As to any Class of Regular Certificates, the
Holders of Certificates of such Class evidencing, in the aggregate, at least
51% of the Percentage Interests evidenced by all Certificates of such Class.
Master Servicer: Countrywide Servicing in its capacity as master servicer
hereunder.
Master Servicer Advance Date: As to any Distribution Date, 12:30 p.m.
Pacific time on the Business Day immediately preceding such Distribution Date.
Master Servicer Remittance Date: The 19th day of each calendar month, or
if such 19th day is not a Business Day, the next succeeding Business Day,
commencing in March 2004.
Master Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an amount payable out of each full payment of interest received on such
Mortgage Loan and equal to one-twelfth of the Master Servicing Fee Rate
multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due
Date in the month of such Distribution Date (prior to giving effect to any
Scheduled Payments due on such Mortgage Loan on such Due Date), subject to
reduction as provided in Section 3.14.
Master Servicing Fee Rate: With respect to each Mortgage Loan and Due
Date, the amount set forth in the Mortgage Loan Schedule for such Due Date.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any
successor to Mortgage Electronic Registration Systems, Inc.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS(R)System.
MERS(R) System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The mortgage identification number for any MERS Mortgage Loan.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
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Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.06.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto. If
▇▇▇▇▇'▇ is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to Moody's shall be
▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Residential Pass-Through Monitoring, or such other address as
Moody's may hereafter furnish to the Depositor or the Master Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents delivered to the
Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Master Servicer to reflect the addition of Substitute Mortgage
Loans, and the deletion of Deleted 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 to this Agreement as
Schedule I, setting forth the following information with respect to each
Mortgage Loan by Loan Group:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is either
(a) a detached or attached single family dwelling, (b) a dwelling in
a de minimis PUD, (c) a condominium unit or PUD (other than a de
minimis PUD), (d) a two- to four-unit residential property or (e) a
Cooperative Unit;
(xi) the Mortgage Rate;
13
(xii) the Master Servicing Fee Rate both before and after the
initial Adjustment Date for each Mortgage Loan;
(xiii) a code indicating whether the Mortgage Loan is a Lender PMI
Mortgage Loan and, in the case of any Lender PMI Mortgage Loan, a
percentage representing the amount of the related interest premium
charged to the borrower;
(xiv) the purpose for the Mortgage Loan;
(xv) the type of documentation program pursuant to which the
Mortgage Loan was originated;
(xvi) the direct servicer of such Mortgage Loan as of the Cut-off
Date;
(xvii) a code indicating whether the Mortgage Loan is a MERS
Mortgage Loan;
(xviii) a code indicating whether the Mortgage Loan is a
Countrywide Mortgage Loan or a WAMU Mortgage Loan; and
(xix) in the case of a Countrywide Mortgage Loan, a code
indicating whether such Mortgage Loan is part of Countrywide
Purchase Group I or Countrywide Purchase Group II.
Such schedule shall also set forth the total of the amounts described
under (iv) and (v) above for all of the Mortgage Loans and for each Loan
Group.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions of this Agreement 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.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time, net of any interest premium charged by the mortgagee to obtain
or maintain any Primary Insurance Policy.
Mortgaged Property: The underlying property securing a Mortgage Loan,
which, with respect to a Cooperative Loan, is the related Coop Shares and
Proprietary Lease.
Mortgagor: The obligor(s) on a Mortgage Note.
National Cost of Funds Index: The National Monthly Median Cost of Funds
Ratio to SAIF-Insured Institutions published by the Office of Thrift
Supervision.
Net Prepayment Interest Shortfalls: As to any Distribution Date and Loan
Group, the amount by which the aggregate of Prepayment Interest Shortfalls for
such Loan Group exceeds
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an amount equal to the sum of (a) the Compensating Interest for such Loan
Group and Distribution Date and (b) the excess, if any, of the Compensating
Interest for the other Loan Group for that Distribution Date over Prepayment
Interest Shortfalls experienced by the Mortgage Loans in such other Loan
Group.
Non-Delay Certificates: As specified in the Preliminary Statement.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not be ultimately recoverable by the Master Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.
Notional Amount: The Notional Amount of the Class 1-X Certificates for
any Interest Accrual Period for any Distribution Date will be equal to (i) for
any Distribution Date on or before the Weighted Average Initial Adjustment
Date for Loan Group 1, the Class Certificate Balance of the Class 1-A
Certificates immediately prior to such Distribution Date, and (ii) for any
Distribution Date after the Weighted Average Initial Adjustment Date for Loan
Group 1, $0. The Notional Amount of the Class 2-X Certificates for any
Interest Accrual Period for any Distribution Date will be equal to (i) for any
Distribution Date on or before the Weighted Average Initial Adjustment Date
for Loan Group 2, the Class Certificate Balance of the Class 2-A Certificates
immediately prior to such Distribution Date, and (ii) for any Distribution
Date after the Weighted Average Initial Adjustment Date for Loan Group 2, $0.
Notional Amount Certificates: As specified in the Preliminary Statement.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by (i) the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing Director, 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, (ii) in the case of the Master Servicer, by the
President, an Executive Vice President, a Vice President, an Assistant Vice
President, the Treasurer, or one of the Assistant Treasurers or Assistant
Secretaries of Countrywide GP, Inc. (the general partner of the Master
Servicer) or (iii) if provided for in this Agreement, by a Servicing Officer,
as the case may be, and delivered to the Depositor and the Trustee, as the
case may be, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor, the Seller or the Master Servicer, including in-house counsel,
reasonably acceptable to the Trustee; provided, however, that with respect to
the interpretation or application of the REMIC Provisions, such counsel must
(i) in fact be independent of the Depositor, the Seller and the Master
Servicer, (ii) not have any direct financial interest in the Depositor, the
Seller or the Master Servicer or in any affiliate of either, and (iii) not be
connected with the Depositor, the
15
Seller or the Master Servicer as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
Optional Termination: The termination of the trust created under this
Agreement in connection with the purchase of the Mortgage Loans pursuant to
Section 9.01(a).
Original Applicable Credit Support Percentage: With respect to each of
the following Classes of Subordinated Certificates, the corresponding
percentage described below, as of the Closing Date:
Class M 4.15%
Class B-1 2.60%
Class B-2 1.60%
Class B-3 1.00%
Class B-4 0.50%
Class B-5 0.20%
Original Mortgage Loan: The mortgage loan refinanced in connection with
the origination of a Refinancing Mortgage Loan.
Original Subordinate Principal Balance: On or prior to the Senior
Termination Date, the Subordinated Percentage for a Loan Group of the
aggregate Stated Principal Balances of the Mortgage Loans in such Loan Group,
in each case as of the Cut-off Date or, if such date is after the Senior
Termination Date, the aggregate of the principal balances of the Subordinated
Certificates as of the Closing Date.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered
to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with a
Stated Principal Balance greater than zero, which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Overcollateralized Group: As defined in Section 4.05.
Ownership Interest: As to any Residual 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.
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Pass-Through Rate: For any interest-bearing Class of Certificates, the
per annum rate set forth or calculated in the manner described in the
Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
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, or such lower
rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each Rating Agency;
(iii) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each
Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances 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 (or in the case of the principal depository
institution in a holding company system, the commercial paper or
long-term unsecured debt obligations of such holding company, but
only if ▇▇▇▇▇'▇ is not a Rating Agency) are then rated one of the
two highest long-term and the highest short-term ratings of each
Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned
to the Certificates by either Rating Agency;
(v) 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 (iv) above;
(vi) units of a taxable money-market portfolio having the highest
rating assigned by each Rating Agency (except if Fitch is a Rating
Agency and has not rated the portfolio, the highest rating assigned
by Moody's) and restricted to obligations issued or guaranteed by
the United States of America or entities whose obligations are
backed by the full faith and credit of the United States of America
and repurchase agreements collateralized by such obligations; and
17
(vii) such other relatively risk free investments bearing interest
or sold at a discount acceptable to each Rating Agency as will not
result in the downgrading or withdrawal of the rating then assigned
to the Certificates by either Rating Agency, as evidenced by a
signed writing delivered by each Rating Agency
provided, that no such instrument shall be a Permitted Investment if such
instrument evidences the right to receive interest only payments with respect
to the obligations underlying such instrument.
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) which 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 any Residual Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" as defined in section 775 of the Code, (vi) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, or other entity created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, or an estate or
trust whose income from sources without the United States is includible 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 the authority to control all substantial decisions of the trust
unless such Person has furnished the transferor and the Trustee with a duly
completed Internal Revenue Service Form W-8ECI or any applicable successor
form, and (vii) any other Person so designated by the Depositor based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such Person may cause the REMIC created under this Agreement to
fail to qualify as a REMIC at any time that the Certificates are outstanding.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision 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, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Physical Certificate: As specified in the Preliminary Statement.
Planned Balance: With respect to any Planned Principal Class or Component
and any Distribution Date appearing in Schedule IV, the amount appearing
opposite such Distribution Date for such Class or Component.
Planned Principal Classes: As specified in the Preliminary Statement.
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Planned Principal Components: As specified in the Preliminary Statement.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances of the Mortgage Loans that were Outstanding
Mortgage Loans on the Due Date in the month preceding the month of such
Distribution Date.
Prepayment Interest Shortfall: As to any Distribution Date, any Mortgage
Loan and any Principal Prepayment received during the related Prepayment
Period, the amount, if any, by which one month's interest at the related
Mortgage Rate, net of the related Master Servicing Fee Rate, on such Principal
Prepayment exceeds the amount of interest paid in connection with such
Principal Prepayment.
Prepayment Period: As to any Distribution Date and Mortgage Loan, the
calendar month immediately preceding the month in which that Distribution Date
occurs.
Prepayment Shift Percentage: Not applicable.
Primary Insurance Policy: Each policy of primary guaranty insurance or
any replacement policy therefor with respect to any Mortgage Loan.
Prime Rate: The prime commercial lending rate of The Bank of New York, as
publicly announced to be in effect from time to time. The Prime Rate shall be
adjusted automatically, without notice, on the effective date of any change in
such prime commercial lending rate. The Prime Rate is not necessarily The Bank
of New York's lowest rate of interest.
Principal Amount: As to any Distribution Date and any Loan Group, the sum
of (a) the principal portion of each Scheduled Payment (without giving effect
to any reductions thereof caused by any Debt Service Reductions or Deficient
Valuations) due on each Mortgage Loan (other than a Liquidated Mortgage Loan)
in the related Loan Group on the related Due Date, (b) the principal portion
of the Purchase Price of each Mortgage Loan in the related Loan Group that was
purchased as of such Distribution Date, (c) the Substitution Adjustment Amount
in connection with any Deleted Mortgage Loan in such Loan Group received with
respect to such Distribution Date, (d) any Insurance Proceeds or Liquidation
Proceeds allocable to recoveries of principal of Mortgage Loans in the related
Loan Group that are not yet Liquidated Mortgage Loans received during the
calendar month preceding the month of such Distribution Date, (e) with respect
to each Mortgage Loan in a Loan Group that became a Liquidated Mortgage Loan
during the calendar month preceding the month of such Distribution Date, the
amount of the Liquidation Proceeds allocable to principal received during the
calendar month preceding the month of such Distribution Date with respect to
such Mortgage Loan, (f) all Principal Prepayments for such Loan Group received
during the related Prepayment Period, (g) any Transfer Payments Received for
such Loan Group, minus any Transfer Payments Made for such Loan Group and
Distribution Date in accordance with Section 4.05 and (h) any Subsequent
Recoveries received during the calendar month preceding the month of such
Distribution Date.
Principal Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to
19
the month of prepayment. Partial Principal Prepayments shall be applied by the
Master Servicer in accordance with the terms of the related Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Private Certificate: As specified in the Preliminary Statement.
Pro Rata Share: As to any Distribution Date, the Subordinated Principal
Distribution Amount and any Class of Subordinated Certificates, the portion of
the Subordinated Principal Distribution Amount allocable to such Class, equal
to the product of the Subordinated Principal Distribution Amount on such
Distribution Date and a fraction, the numerator of which is the related Class
Certificate Balance thereof and the denominator of which is the aggregate of
the Class Certificate Balances of the Subordinated Certificates.
Pro Rata Subordinated Percentage: As to any Distribution Date and Loan
Group, 100% minus the related Senior Percentage for such Distribution Date.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Coop Shares.
Prospectus Supplement: The Prospectus Supplement dated February 24, 2004
relating to the Offered Certificates.
PUD: Planned unit development.
Purchase Agreement: With respect to the Countrywide Mortgage Loans, the
Countrywide Mortgage Loan Purchase Agreement and with respect to the WAMU
Mortgage Loans, the WAMU Mortgage Loan Purchase Agreement.
Purchase Price: With respect to any Mortgage Loan required to be
purchased (i) by the Seller pursuant to Section 2.02 or 2.03, (ii) at the
option of the Master Servicer pursuant to Section 3.11 or (iii) by the related
Transferor pursuant to the related Purchase Agreement, an amount equal to the
sum of (i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase, and (ii) accrued interest thereon at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if the purchaser is
the Master Servicer) from the date through which interest was last paid by the
Mortgagor to the Due Date in the month in which the Purchase Price is to be
distributed to Certificateholders and (iii) costs and damages incurred by the
Trust Fund in connection with a repurchase pursuant to Section 2.03 that
arises out of a violation of any predatory or abusive lending law with respect
to the related Mortgage Loan.
Qualified Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of business and
each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and
to write the insurance provided by the insurance policy issued by it, approved
as a FNMA-approved mortgage insurer and having a claims paying ability rating
of at least "AA" or equivalent rating by a nationally recognized statistical
rating organization. Any replacement insurer with respect
20
to a Mortgage Loan must have at least as high a claims paying ability rating
as the insurer it replaces had on the Closing Date.
Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If any such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Depositor,
notice of which designation shall be given to the Trustee. References in this
Agreement 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 each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation,
plus (ii) interest at the Adjusted Net Mortgage Rate from the Due Date as to
which interest was last paid or advanced (and not reimbursed) to
Certificateholders up to the Due Date in the month in which Liquidation
Proceeds are required to be distributed on the Stated Principal Balance of
such Liquidated Mortgage Loan from time to time, minus (iii) the Liquidation
Proceeds, if any, received during the month in which such liquidation
occurred, to the extent applied as recoveries of interest at the Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect
to each Mortgage Loan that has become the subject of a Deficient Valuation, if
the principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation. With respect to each
Mortgage Loan that has become the subject of a Debt Service Reduction and any
Distribution Date, the amount, if any, by which the principal portion of the
related Scheduled Payment has been reduced.
To the extent the Master Servicer receives Subsequent Recoveries with
respect to any Mortgage Loan, the amount of Realized Losses with respect to
that Mortgage Loan will be reduced by any Subsequent Recoveries.
Recognition Agreement: With respect to any Cooperative Loan, an agreement
between the Cooperative Corporation and the originator of such Mortgage Loan
which establishes the rights of such originator in the Cooperative Property.
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 such
Distribution Date occurs.
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
Regular Certificates: As specified in the Preliminary Statement.
Relief Act: The Servicemembers Civil Relief Act, as the same may be
amended from time to time.
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most
21
recently ended calendar month as a result of the application of the Relief
Act, the amount, if any, by which (i) interest collectible on such Mortgage
Loan for the most recently ended calendar month is less than (ii) interest
accrued thereon for such month pursuant to the Mortgage Note.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to REMICs and the REMIC Provisions issued after the Closing Date.
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 regulations promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Request for Release: The Request for Release submitted by the Master
Servicer to the Trustee, substantially in the form of Exhibits M and N to this
Agreement, as appropriate.
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.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee 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 the
particular subject.
Restricted Classes: As defined in Section 4.02(e).
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
which, unless otherwise specified in this Agreement, shall give effect to any
related Debt Service Reduction and any Deficient Valuation that affects the
amount of the monthly payment due on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Seller: Belvedere Trust Finance Corporation, a Delaware corporation, and
its successors and assigns, in its capacity as seller of the Mortgage Loans to
the Depositor.
Senior Certificate Group: As specified in the Preliminary Statement.
Senior Certificates: As specified in the Preliminary Statement.
22
Senior Credit Support Depletion Date: The date on which the Class
Certificate Balance of each Class of Subordinated Certificates has been
reduced to zero.
Senior Percentage: As to any Senior Certificate Group and Distribution
Date, the percentage equivalent of a fraction the numerator of which is the
aggregate of the Class Certificate Balances of each Class of Senior
Certificates of such Senior Certificate Group (other than the Notional Amount
Certificates) immediately prior to such Distribution Date and the denominator
of which is the aggregate of the Stated Principal Balance of each Mortgage
Loan in the related Loan Group as of the Due Date in the month preceding the
month of such Distribution Date; provided, however, that on any Distribution
Date after the Senior Termination Date, the Senior Percentage for the Senior
Certificates of the remaining Senior Certificate Group is the percentage
equivalent of a fraction, the numerator of which is the aggregate of the Class
Certificate Balances of each such Class of Senior Certificates (other than the
Notional Amount Certificates) immediately prior to such Distribution Date and
the denominator of which is the aggregate of the Class Certificate Balances of
all Classes of Certificates (other than the Notional Amount Certificates)
immediately prior to such Distribution Date. In no event will the Senior
Percentage be greater than 100%.
Senior Prepayment Percentage: As to a Senior Certificate Group and any
Distribution Date during the ten years beginning on the first Distribution
Date, 100%. The related Senior Prepayment Percentage for any Distribution Date
occurring on or after the tenth anniversary of the first Distribution Date
will, except as provided in this Agreement, be as follows: for any
Distribution Date in the first year thereafter, the related Senior Percentage
plus 70% of the related Subordinated Percentage for such Distribution Date;
for any Distribution Date in the second year thereafter, the related Senior
Percentage plus 60% of the related Subordinated Percentage for such
Distribution Date; for any Distribution Date in the third year thereafter, the
related Senior Percentage plus 40% of the related Subordinated Percentage for
such Distribution Date; for any Distribution Date in the fourth year
thereafter, the related Senior Percentage plus 20% of the related Subordinated
Percentage for such Distribution Date; and for any Distribution Date
thereafter, the related Senior Percentage for such Distribution Date (unless
on any Distribution Date the related Senior Percentage exceeds the initial
Senior Percentage of such Senior Certificate Group as of the Closing Date, in
which case the related Senior Prepayment Percentage for such Distribution Date
will once again equal 100%). Notwithstanding the foregoing, no decrease in the
Senior Prepayment Percentage will occur unless both of the Senior Step Down
Conditions are satisfied with respect to all Loan Groups. Notwithstanding the
foregoing, if the Two Times Test is satisfied on a Distribution Date, the
Senior Prepayment Percentage for each Senior Certificate Group will equal (x)
if such Distribution Date is on or prior to the Distribution Date in March
2007, the related Senior Percentage for such Distribution Date plus 50% of an
amount equal to 100% minus the related Senior Percentage for that Distribution
Date and (y) if such Distribution Date is after the Distribution Date in March
2007, the related Senior Percentage.
Senior Principal Distribution Amount: As to any Distribution Date and
Senior Certificate Group, the sum of (i) the related Senior Percentage of all
amounts described in clauses (a) through (d) of the definition of "Principal
Amount" with respect to the related Loan Group for such Distribution Date,
(ii) with respect to any Mortgage Loan in the related Loan Group that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the lesser of (x) the related Senior Percentage of the
Stated Principal Balance
23
of such Mortgage Loan as of the Due Date in the month preceding the month of
that Distribution Date and (y) either (A) the related Senior Prepayment
Percentage of the amount of the Liquidation Proceeds allocable to principal
received on the Mortgage Loan, or (B) if an Excess Loss was sustained with
respect to such Liquidated Mortgage Loan during such prior calendar month, the
related Senior Percentage, of the amount of the Liquidation Proceeds allocable
to principal received with respect to such Mortgage Loan, (iii) the related
Senior Prepayment Percentage of the amounts described in clauses (f) and (h)
of the definition of "Principal Amount" with respect to the related Loan Group
for such Distribution Date; (iv) any Transfer Payments Received for that Loan
Group and Distribution Date; provided, however that if a Bankruptcy Loss that
is an Excess Loss is sustained with respect to a Mortgage Loan in the related
Loan Group that is not a Liquidated Mortgage Loan, the Senior Principal
Distribution Amount will be reduced on the related Distribution Date by the
related Senior Percentage of the principal portion of such Bankruptcy Loss;
provided further, however, on any Distribution Date after the Senior
Termination Date, the Senior Principal Distribution Amount for the remaining
Senior Certificate Group will be calculated pursuant to the above formula
based on all the Mortgage Loans, as opposed to the Mortgage Loans in the
related Loan Group.
Senior Step Down Conditions: With respect to all the Mortgage Loans: (i)
the aggregate Stated Principal Balance of all Mortgage Loans in a Loan Group
delinquent 60 days or more (averaged over the preceding six month period), as
a percentage of the aggregate Class Certificate Balance of the Subordinated
Certificates, does not equal or exceed 50%, and (ii) cumulative Realized
Losses on all the Mortgage Loans do not exceed: (a) for the Distribution Date
on the tenth anniversary of the first Distribution Date, 30% of the Original
Subordinate Principal Balance, (b) for the Distribution Date on the eleventh
anniversary of the first Distribution Date, 35% of the Original Subordinate
Principal Balance, (c) for the Distribution Date on the twelfth anniversary of
the first Distribution Date, 40% of the Original Subordinate Principal
Balance, (d) for the Distribution Date on the thirteenth anniversary of the
first Distribution Date, 45% of the Original Subordinate Principal Balance and
(e) for the Distribution Date on the fourteenth anniversary of the first
Distribution Date, 50% of the Original Subordinate Principal Balance.
Senior Termination Date: For each Senior Certificate Group, the
Distribution Date on which the Class Certificate Balance of the related
Classes of Senior Certificates have been reduced to zero.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations, including, but not limited to, the cost of (i)
the preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.09.
Servicing Officer: Any officer of the Master 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 Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
24
Special Hazard Coverage Termination Date: The point in time at which the
Special Hazard Loss Coverage Amount is reduced to zero.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property
on account of direct physical loss but not including (i) any loss of a type
covered by a hazard insurance policy or a flood insurance policy required to
be maintained with respect to such Mortgaged Property pursuant to Section 3.09
to the extent of the amount of such loss covered thereby, or (ii) any loss
caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Master Servicer or any of their agents or employees (without
regard to any portion of the loss not covered by any errors and omissions
policy);
(c) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues and then only for
the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or radioactive
or chemical contamination, all whether controlled or uncontrolled, and
whether such loss be direct or indirect, proximate or remote or be in
whole or in part caused by, contributed to or aggravated by a peril
covered by the definition of the term "Special Hazard Loss;"
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual, impending
or expected attack:
1. by any government or sovereign power, de jure or de facto,
or by any authority maintaining or using military, naval or air
forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any
government or public authority or risks of contraband or illegal
transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $3,000,000. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the principal balances of the Mortgage Loans, (ii) twice the
principal balance of the largest Mortgage Loan and (iii) the aggregate of the
principal balances of all Mortgage Loans secured by Mortgaged Properties
located in the single California postal zip code area having the highest
aggregate principal balance of any such zip code area and (b) the Special
Hazard Loss Coverage Amount as of the Closing Date less the
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amount, if any, of Special Hazard Losses allocated to the Certificates since
the Closing Date. All principal balances for the purpose of this definition
will be calculated as of the first day of the calendar month preceding the
month of such Distribution Date after giving effect to Scheduled Payments on
the Mortgage Loans then due, whether or not paid.
Special Hazard Mortgage Loan: A Liquidated Mortgage Loan as to which a
Special Hazard Loss has occurred.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. If S&P is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b) the address for notices to S&P
shall be Standard & Poor's Ratings Services, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Surveillance Monitoring, or such other address
as S&P may hereafter furnish to the Depositor and the Master Servicer.
Startup Day: The Closing Date.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date as
specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any moratorium or
similar waiver or grace period) after giving effect to any previous partial
Principal Prepayments and Liquidation Proceeds allocable to principal (other
than with respect to any Liquidated Mortgage Loan) plus any Subsequent
Recoveries and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor.
Streamlined Documentation Mortgage Loan: Any Mortgage Loan originated
pursuant to Countrywide Home Loan Inc.'s Streamlined Loan Documentation
Program then in effect.
Subordinate Pass-Through Rate: For any Distribution Date, a per annum
rate equal to (1) the sum of the following for each Loan Group: the product of
(x) the Weighted Average Adjusted Net Mortgage Rate of the related Mortgage
Loans and (y) the related Subordinated Portion immediately prior to that
Distribution Date, divided by (2) the aggregate Class Certificate Balance of
the Subordinated Certificates immediately prior to that Distribution Date.
Subordinated Certificates: As specified in the Preliminary Statement.
Subordinated Percentage: As to any Distribution Date on or prior to the
Senior Termination Date and Loan Group, 100% minus the Senior Percentage for
the Senior Certificate Group relating to such Loan Group for such Distribution
Date. As to any Distribution Date after the Senior Termination Date, 100%
minus the Senior Percentage for such Distribution Date.
Subordinated Portion: For any Distribution Date and Loan Group, an amount
equal to the aggregate Stated Principal Balance of the Mortgage Loans in that
Loan Group as of the Due Date in the month prior to the month of such
Distribution Date, minus the aggregate Class Certificate Balance of the
related Senior Certificates immediately prior to such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution Date and Loan
Group, 100% minus the related Senior Prepayment Percentage for such
Distribution Date.
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Subordinated Principal Distribution Amount: With respect to any
Distribution Date and Loan Group, an amount equal to the excess of (A) the
sum, not less than zero, of the sum of (i) the Subordinated Percentage of all
amounts described in clauses (a) through (d) of the definition of "Principal
Amount" for that Loan Group and that Distribution Date, (ii) with respect to
each Mortgage Loan in that Loan Group that became a Liquidated Mortgage Loan
during the calendar month preceding the month of such Distribution Date, the
Liquidation Proceeds allocated to principal received with respect thereto
remaining after application thereof pursuant to clause (ii) of the definition
of "Senior Principal Distribution Amount", up to the Subordinated Percentage
for such Loan Group of the Stated Principal Balance of that Mortgage Loan, and
(iii) the sum of the Subordinated Prepayment Percentage for that Loan Group of
all amounts described in clauses (f) and (h) of the definition of "Principal
Amount" for such Loan Group and Distribution Date less (B) any Transfer
Payments Made for such Loan Group; provided, however, that on any Distribution
Date after the Senior Termination Date, the Subordinated Principal
Distribution Amount will not be calculated by Loan Group but will equal the
amount calculated pursuant to the formula set forth above based on the
applicable Subordinated Percentage and Subordinated Prepayment Percentage for
the Subordinated Certificates for such Distribution Date with respect to all
of the Mortgage Loans as opposed to the Mortgage Loans only in the related
Loan Group.
Subsequent Recoveries: As to any Distribution Date, with respect to a
Liquidated Mortgage Loan that resulted in a Realized Loss in a prior calendar
month, unexpected amounts received by the Master Servicer (net of any related
expenses permitted to be reimbursed pursuant to Section 3.08) specifically
related to such Liquidated Mortgage Loan.
Subservicer: Any person to whom the Master Servicer has contracted for
the servicing of all or a portion of the Mortgage Loans pursuant to Section
3.02.
Substitute Mortgage Loan: A Mortgage Loan substituted by a Transferor or
the Seller 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 M, (i) 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 more than 10% less than the Stated Principal Balance
of the Deleted Mortgage Loan; (ii) be accruing interest at a rate no lower
than and not more than 1% per annum higher than, that of the Deleted Mortgage
Loan; (iii) have a Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan; (iv) have a remaining term to maturity no greater than (and not
more than one year less than that of) the Deleted Mortgage Loan; (v) have a
maximum interest rate no lower than and not more than 1% per annum higher
than, that of the Deleted Mortgage Loan; (vi) have a minimum interest
specified in its related mortgage note not more than 1% per annum higher or
lower than the minimum mortgage rate of the Deleted Mortgage Loan; (vii) have
the same mortgage index, mortgage index reset period and periodic rate cap as
the Deleted Mortgage Loan and a gross margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (viii) not be a Cooperative
Loan unless the Deleted Mortgage Loan was a Cooperative Loan; and (ix) comply
with each representation and warranty set forth in Section 2.03.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03.
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Tax Matters Person: The person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and temporary
Treasury regulation Section 301.6231(a)(7)1T. Initially, the Tax Matters
Person shall be the Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with a
Denomination of $0.01.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Transfer Payment Made: As defined in Section 4.05.
Transfer Payment Received: As defined in Section 4.05.
Transferor: With respect to the WAMU Mortgage Loans, either Washington
Mutual Bank, FA or Washington Mutual Bank, and with respect to the Countrywide
Mortgage Loans, Countrywide Home Loans, Inc.
Trust Fund: The corpus of the trust created under this Agreement
consisting of (i) the Mortgage Loans and all interest and principal received
on or with respect thereto after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance of the Mortgage Loans; (ii) the
Certificate Account and the Distribution 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) all the right, title and
interest of the Seller (but none of its obligations) in, to and under the
Countrywide Mortgage Loan Purchase Agreement pursuant to the Countrywide
Acknowledgement in respect of the Countrywide Mortgage Loans; (v) all the
right, title and interest of the Seller (but none of its obligations) in, to
and under the WAMU Mortgage Loan Purchase Agreement pursuant to the WAMU
Acknowledgement in respect of the WAMU Mortgage Loans; and (vi) all proceeds
of the conversion, voluntary or involuntary, of any of the foregoing.
Trustee: The Bank of New York and its successors and, if a successor
trustee is appointed under this Agreement, such successor.
Trustee Advance Rate: With respect to any Advance made by the Trustee
pursuant to Section 4.01(b), a per annum rate of interest determined as of the
date of such Advance equal to the Prime Rate in effect on such date plus
5.00%.
Trustee Fee: As to any Distribution Date, an amount equal to one-twelfth
of the Trustee Fee Rate multiplied by the Pool Stated Principal Balance with
respect to such Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per annum rate
agreed upon in writing on or prior to the Closing Date by the Trustee and the
Depositor.
Two Times Test: As to any Distribution Date, if (i) the Aggregate
Subordinated Percentage is at least 200% of the Aggregate Subordinated
Percentage as of the Closing Date, (ii) the outstanding aggregate Stated
Principal Balance of all Mortgage Loans delinquent 60 days or more (averaged
over the preceding six month period), as a percentage of the aggregate Class
28
Certificate Balance of the Subordinated Certificates, does not equal or exceed
50% and (ii) the cumulative Realized Losses on all the Mortgage Loans do not
exceed (x) with respect to any Distribution Date on or prior to March 2007,
20% of the Original Subordinate Principal Balance or (y) with respect to any
Distribution Date after March 2007, 30% of the Original Subordinate Principal
Balance.
Undercollateralized Group: As defined in Section 4.05.
Underwriter's Exemption: Prohibited Transaction Exemption 2002-41, 67
Fed. Reg. 54487 (2002), as amended (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S. Department
of Labor.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class of
Notional Amount Certificates, if any (such Voting Rights to be allocated among
the holders of Certificates of each such Class in accordance with their
respective Percentage Interests), and (b) the remaining Voting Rights (or 100%
of the Voting Rights if there is no Class of Notional Amount Certificates)
shall be allocated among Holders of the remaining Classes of Certificates in
proportion to the Certificate Balances of their respective Certificates on
such date.
WAMU Acknowledgement: The Assignment, Assumption and Recognition
Agreement, dated as of February 26, 2004, among Washington Mutual Bank, FA,
Washington Mutual Bank, the Seller, the Depositor and the Master Servicer
relating to the WAMU Mortgage Loan Purchase Agreement and the WAMU Servicing
Agreement.
WAMU Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase and
Sale Agreement, dated as of February 1, 2004, among Washington Mutual Bank,
FA, Washington Mutual Bank fsb, Washington Mutual Bank and the Seller,
including any Term Sheets entered into with respect to the WAMU Mortgage Loans
pursuant to such Mortgage Loan Purchase and Sale Agreement.
WAMU Mortgage Loans: Those certain Mortgage Loans purchased by the Seller
pursuant to the WAMU Loan Purchase Agreement and transferred to the Depositor
pursuant to this Agreement and which are identified as such on the Mortgage
Loan Schedule.
WAMU Servicing Agreement: The Servicing Agreement, dated as of February
1, 2004, between Washington Mutual Bank NA and the Seller.
Weighted Average Adjusted Net Mortgage Rate: For each Loan Group, the
average of the Adjusted Net Mortgage Rate of each Mortgage Loan in that Loan
Group, weighted on the basis of its Stated Principal Balance.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans
(a) The Seller, concurrently with the execution and delivery of this
Agreement, hereby sells, transfers, assigns, sets over and otherwise conveys to
the Depositor, without recourse, the following property (collectively, the
"Conveyed Assets") (i) all the right, title and interest of the Seller in and
to the Mortgage Loans, including all interest and principal received or
receivable by the Seller on or with respect to the Mortgage Loans after the
Cut-off Date and all interest and principal payments on the Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and
principal due thereafter, but not including payments of principal and interest
due and payable on the Mortgage Loans on or before the Cut-off Date, (ii) all
the right, title and interest of the Seller (but none of its obligations) in,
to and under the Countrywide Mortgage Loan Purchase Agreement pursuant to the
Countrywide Acknowledgements in respect of the Countrywide Mortgage Loans and
(iii) all the right, title and interest of the Seller (but none of its
obligations) in, to and under the WAMU Mortgage Loan Purchase Agreement
pursuant to the WAMU Acknowledgement in respect of the WAMU Mortgage Loans. On
or prior to the Closing Date, the Seller shall deliver to the Depositor or, at
the Depositor's direction, to the Trustee or other designee of the Depositor,
the Mortgage File for each Mortgage Loan listed in the Mortgage Loan Schedule
(except that, in the case of the Delay Delivery Mortgage Loans, such delivery
may take place within thirty (30) days following the Closing Date). Such
delivery of the Mortgage Files shall be made against payment by the Depositor
of the purchase price, previously agreed to by the Seller and Depositor, for
the Mortgage Loans. With respect to any Mortgage Loan that does not have a
first payment date on or before the Due Date in the month of the first
Distribution Date, the Seller shall deposit into the Distribution Account on or
before the Distribution Account Deposit Date relating to the applicable
Distribution Date, an amount equal to one month's interest at the related
Adjusted Mortgage Rate on the Cut-off Date Principal Balance of such Mortgage
Loan.
(b) Immediately upon the conveyance of the Mortgage Loans referred to in
clause (a), the Depositor sells, transfers, assigns, sets over and otherwise
conveys to the Trustee for the benefit of the Certificateholders, without
recourse, all the right, title and interest of the Depositor in and to the
Trust Fund together with the Depositor's right to require the Seller to cure
any breach of a representation or warranty made in this Agreement by the Seller
or to repurchase or substitute for any affected Mortgage Loan in accordance
herewith.
(c) In connection with the transfer and assignment set forth in clause (b)
above, the Seller at the direction of the Depositor has delivered or caused to
be delivered to the Trustee (or, in the case of the Delay Delivery Mortgage
Loans that are Mortgage Loans, the Seller or the relevant Transferor will
deliver or cause to be delivered to the Trustee within thirty (30) days
following the Closing Date) for the benefit of the Certificateholders the
following documents or instruments with respect to each Mortgage Loan so
assigned:
(i) (A) the original Mortgage Note endorsed by manual or
facsimile signature in blank in the following form: "Pay to the order
of ____________ without recourse," with all intervening endorsements
showing a complete chain of
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endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right,
title and interest of the party so endorsing, as noteholder or
assignee thereof, in and to that Mortgage Note); or
(B) with respect to any Lost Mortgage Note, a lost note
affidavit from the Seller stating that the original Mortgage Note was
lost or destroyed, together with a copy of such Mortgage Note;
(ii) except as provided below and for each Mortgage Loan that is
not a MERS Mortgage Loan, the original recorded Mortgage or a copy of
such Mortgage certified by the Seller as being a true and complete
copy of the Mortgage (or, in the case of a Mortgage for which the
related Mortgaged Property is located in the Commonwealth of Puerto
Rico, a true copy of the Mortgage certified as such by the applicable
notary) and in the case of each MERS Mortgage Loan, the original
Mortgage, noting the presence of the MIN of the Mortgage Loans and
either language indicating that the Mortgage Loan is a MOM Loan if
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;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage (which may
be included in a blanket assignment or assignments), together with,
except as provided below, all interim recorded assignments of such
mortgage (each such assignment, when duly and validly completed, to
be in recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the
assignment relates); provided that, if the related Mortgage has not
been returned from the applicable public recording office, such
assignment of the Mortgage may exclude the information to be provided
by the recording office; provided, further, that such assignment of
Mortgage need not be delivered in the case of a Mortgage for which
the related Mortgaged Property is located in the Commonwealth of
Puerto Rico;
(iv) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(v) except in the case of the WAMU Mortgage Loans or as provided
below, the original or duplicate original lender's title policy or a
printout of the electronic equivalent and all riders thereto; and
(vi) in the case of a Cooperative Loan, the originals of the
following documents or instruments:
(A) The Coop Shares, together with a stock power in blank;
(B) The executed Security Agreement;
31
(C) The executed Proprietary Lease;
(D) The executed Recognition Agreement;
(E) The executed UCC-1 financing statement with evidence of
recording thereon which have been filed in all places required
to perfect the applicable Seller's interest in the Coop Shares
and the Proprietary Lease; and
(F) The executed UCC-3 financing statements or other
appropriate UCC financing statements required by state law,
evidencing a complete and unbroken line from the mortgagee to
the Trustee with evidence of recording thereon (or in a form
suitable for recordation).
In addition, in connection with the assignment of any MERS Mortgage Loan,
the Seller agrees that it will use its best reasonable efforts to cause, at the
Trustee's expense, the MERS(R) System to indicate that such Mortgage Loans have
been assigned by the applicable Transferor to the Seller in accordance with the
applicable Purchase Agreement and by the Seller to the Trustee in accordance
with this Agreement for the benefit of the Certificateholders by including (or
deleting, in the case of Mortgage Loans which are repurchased in accordance
with this Agreement) in such computer files the information required by the
MERS(R) System to identify the series of the Certificates issued in connection
with such Mortgage Loans. The Seller further agrees that it will not and the
Master Servicer agrees that it will not, alter the information referenced in
this paragraph with respect to any Mortgage Loan during the term of this
Agreement unless and until such Mortgage Loan is repurchased in accordance with
the terms of this Agreement.
In the event that in connection with any Mortgage Loan that is not a MERS
Mortgage Loan the Seller or the relevant Transferor cannot deliver (a) the
original recorded Mortgage, (b) all interim recorded assignments or (c) the
lender's title policy (together with all riders thereto) satisfying the
requirements of clause (ii), (iii) or (v) above, respectively, concurrently
with the execution and delivery of this Agreement because such document or
documents have not been returned from the applicable public recording office in
the case of clause (ii) or (iii) above, or because the title policy has not
been delivered to the relevant Transferor, the Seller, the Master Servicer or
the Depositor by the applicable title insurer in the case of clause (v) above,
the Seller or the relevant Transferor shall promptly deliver to the Trustee, in
the case of clause (ii) or (iii) above, such original Mortgage or such interim
assignment, as the case may be, with evidence of recording indicated thereon
upon receipt thereof from the public recording office, or a copy thereof,
certified, if appropriate, by the relevant recording office, but in no event
shall any such delivery of the original Mortgage and each such interim
assignment or a copy thereof, certified, if appropriate, by the relevant
recording office, be made later than one year following the Closing Date, or,
in the case of clause (v) above, no later than 120 days following the Closing
Date; provided, however, in the event the Seller or the relevant Transferor is
unable to deliver by such date each Mortgage and each such interim assignment
by reason of the fact that any such documents have not been returned by the
appropriate recording office, or, in the case of each such interim assignment,
because the related Mortgage has not been returned by the appropriate recording
office, the Seller or the relevant Transferor shall deliver such documents to
the Trustee as promptly as possible upon receipt thereof and, in any event,
within 720 days following the Closing Date. The Seller or the relevant
Transferor shall forward or cause to be
32
forwarded to the Trustee (a) from time to time additional original documents
evidencing an assumption or modification of a Mortgage Loan and (b) any other
documents required to be delivered by the relevant Transferor, the Seller, the
Depositor or the Master Servicer to the Trustee. In the event that the original
Mortgage is not delivered and in connection with the payment in full of the
related Mortgage Loan and the public recording office requires the presentation
of a "lost instruments affidavit and indemnity" or any equivalent document,
because only a copy of the Mortgage can be delivered with the instrument of
satisfaction or reconveyance, the Master Servicer shall execute and deliver or
cause to be executed and delivered such a document to the public recording
office. In the case where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after recordation in
a public recording office, the Seller or the relevant Transferor shall deliver
to the Trustee a copy of such Mortgage certified by such public recording
office to be a true and complete copy of the original recorded Mortgage.
As promptly as practicable subsequent to such transfer and assignment, and
in any event, within thirty (30) days after such transfer and assignment, the
Trustee shall (i) as the assignee thereof, affix the following language to each
assignment of Mortgage: "CWMBS Series 2004-HYB1, The Bank of New York as
trustee", (ii) cause such assignment to be in proper form for recording in the
appropriate public office for real property records and (iii) cause to be
delivered for recording in the appropriate public office for real property
records the assignments of the Mortgages to the Trustee, except that, with
respect to any assignments of Mortgage as to which the Trustee has not received
the information required to prepare such assignment in recordable form, the
Trustee's obligation to do so and to deliver the same for such recording shall
be as soon as practicable after receipt of such information and in any event
within thirty (30) days after receipt thereof and that the Trustee need not
cause to be recorded any assignment which relates to a Mortgage Loan (a) the
Mortgaged Property and Mortgage File relating to which are located in
California or (b) in any other jurisdiction (including Puerto Rico) under the
laws of which in the opinion of counsel the recordation of such assignment is
not necessary to protect the Trustee's and the Certificateholders' interest in
the related Mortgage Loan.
In the case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Seller or the relevant Transferor, in lieu of delivering the
above documents to the Trustee, will deposit in the Certificate Account the
portion of such payment that is required to be deposited in the Certificate
Account pursuant to Section 3.05.
Notwithstanding anything to the contrary in this Agreement, within thirty
days after the Closing Date with respect to the Mortgage Loans, the Seller or
the relevant Transferor shall either (i) deliver to the Depositor, or at the
Depositor's direction, to the Trustee or other designee of the Depositor the
Mortgage File as required pursuant to this Section 2.01 for each Delay Delivery
Mortgage Loan or (ii) (A) substitute a Substitute Mortgage Loan for the Delay
Delivery Mortgage Loan or (B) repurchase the Delay Delivery Mortgage Loan,
which substitution or repurchase shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03 (treating each Delay
Delivery Mortgage Loan as a Deleted Mortgage Loan for purposes of such Section
2.03); provided, however, that if the Seller or the relevant Transferor fails
to deliver a Mortgage File for any Delay Delivery Mortgage Loan within the
thirty-day period provided in the prior sentence, the Seller or the relevant
Transferor shall effect a substitution, rather than a repurchase of, such
Deleted Mortgage Loan and provided further that the cure period provided for in
Section 2.02 or in Section 2.03 shall not apply to the initial
33
delivery of the Mortgage File for such Delay Delivery Mortgage Loan, but rather
the Seller or the relevant Transferor shall have five (5) Business Days to cure
such failure to deliver. At the end of such thirty-day period the Trustee shall
send a Delay Delivery Certification for the Delay Delivery Mortgage Loans
delivered during such thirty-day period in accordance with the provisions of
Section 2.02.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
(a) The Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form annexed hereto as Exhibit F (an "Initial
Certification") and declares that it holds and will hold such documents and the
other documents delivered to it constituting the Mortgage Files, and that it
holds or will hold such other assets as are included in the Trust Fund, in
trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee acknowledges that it will maintain possession
of the Mortgage Notes in the State of California, unless otherwise permitted by
the Rating Agencies.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Master Servicer and the Seller an Initial Certification. Based
on its review and examination, and only as to the documents identified in such
Initial Certification, the Trustee acknowledges that such documents appear
regular on their face and relate to the Mortgage Loans. The Trustee shall be
under no duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face.
On or about the thirtieth (30th) day after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer and the Seller a Delay
Delivery Certification with respect to the Mortgage Loans in the form annexed
hereto as Exhibit G (a "Delay Delivery Certification"), with any applicable
exceptions noted thereon.
Not later than 90 days after the Closing Date, the Trustee shall deliver
to the Depositor, the Master Servicer and the Seller a Final Certification with
respect to the Mortgage Loans in the form annexed hereto as Exhibit H (a "Final
Certification"), with any applicable exceptions noted thereon.
If, in the course of such review, the Trustee finds any document
constituting a part of a Mortgage File that does not meet the requirements of
Section 2.01, the Trustee shall list such as an exception in the Final
Certification; provided, however that the Trustee shall not make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment relates. The Seller or the
relevant Transferor shall promptly correct or cure such defect within 90 days
from the date it was so notified of such defect and, if the Seller or the
relevant Transferor does not correct or cure such defect within such period,
the Seller or the relevant Transferor shall either (a) substitute for the
related Mortgage Loan a Substitute Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03, or (b) purchase such Mortgage Loan from the Trustee within 90 days from
the date the Seller or the relevant
34
Transferor was notified of such defect in writing at the Purchase Price of such
Mortgage Loan; provided, however, that in no event shall such substitution or
purchase occur more than 540 days from the Closing Date, except that if the
substitution or purchase of a Mortgage Loan pursuant to this provision is
required by reason of a delay in delivery of any documents by the appropriate
recording office, and there is a dispute between either the Master Servicer,
the relevant Transferor or the Seller and the Trustee over the location or
status of the recorded document, then such substitution or purchase shall occur
within 720 days from the Closing Date. The Trustee shall deliver written notice
to each Rating Agency within 270 days from the Closing Date indicating each
Mortgage Loan (a) that has not been returned by the appropriate recording
office or (b) as to which there is a dispute as to location or status of such
Mortgage Loan. Such notice shall be delivered every 90 days thereafter until
the related Mortgage Loan is returned to the Trustee. Any such substitution
pursuant to (a) above or purchase pursuant to (b) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05, if any, and any substitution pursuant to (a) above shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit N. No substitution is permitted to
be made in any calendar month after the Determination Date for such month. The
Purchase Price for any such Mortgage Loan shall be deposited by the Seller or
the relevant Transferor in the Certificate Account on or prior to the
Distribution Account Deposit Date for the Distribution Date in the month
following the month of repurchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit N hereto, the Trustee
shall release the related Mortgage File to the Seller or the relevant
Transferor and shall execute and deliver at the Seller's or the relevant
Transferor's request such instruments of transfer or assignment prepared by the
Seller or the relevant Transferor, in each case without recourse, as shall be
necessary to vest in the Seller, the relevant Transferor, or a designee, the
Trustee's interest in any Mortgage Loan released pursuant hereto. If pursuant
to the foregoing provisions the Seller or the relevant Transferor repurchases a
Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall either
(i) cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to the Seller or the
relevant Transferor and shall cause such Mortgage to be removed from
registration on the MERS(R) System in accordance with MERS' rules and
regulations or (ii) cause MERS to designate on the MERS(R) System the Seller or
the relevant Transferor as the beneficial holder of such Mortgage Loan.
(b) Reserved.
(c) Reserved.
(d) The Trustee shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions set forth in this
Agreement. The Master Servicer shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
(e) It is understood and agreed that the obligation of the Seller or the
relevant Transferor to substitute for or to purchase any Mortgage Loan which
does not meet the requirements of Section 2.01 above shall constitute the sole
remedy respecting such defect available to the Trustee, the Depositor and any
Certificateholder against the Seller.
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SECTION 2.03. Representations, Warranties and Covenants of the Seller
and Master Servicer.
(a) The Seller hereby makes the representations and warranties set forth
in (i) Schedule II hereto, and by this reference incorporated in this Agreement
to the Master Servicer, the Depositor and the Trustee, as of the Closing Date
and (ii) Schedule IV hereto, and by this reference incorporated in this
Agreement, to the Depositor, the Master Servicer and the Trustee, as of the
Closing Date, or if so specified therein, as of the Cut-off Date with respect
to the Mortgage Loans.
(b) The Master Servicer hereby makes the representations and warranties
set forth in Schedule III to this Agreement, and by this reference incorporated
in this Agreement, to the Depositor, the Seller and the Trustee, as of the
Closing Date.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(a)(ii) or a breach of
a representation or warranty made by a Transferor in the applicable Purchase
Agreement that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach
shall give prompt notice thereof to the other parties and the relevant
Transferor. Within 90 days of the earlier of its discovery or its receipt of
written notice from any party of a breach of any representation or warranty
made pursuant to Section 2.03(a)(ii) that materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the Seller or the
relevant Transferor shall cure such breach in all material respects, and if
such breach is not so cured, shall, (i) if such 90-day period expires prior to
the second anniversary of the Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in its place a
Substitute Mortgage Loan, in the manner and subject to the conditions set forth
in this Section; or (ii) repurchase the affected Mortgage Loan or Mortgage
Loans from the Trustee at the Purchase Price in the manner set forth below;
provided, however, that any such substitution pursuant to (i) above shall not
be effected prior to the delivery to the Trustee of the Opinion of Counsel
required by Section 2.05, if any, and any such substitution pursuant to (i)
above shall not be effected prior to the additional delivery to the Trustee of
a Request for Release substantially in the form of Exhibit N and the Mortgage
File for any such Substitute Mortgage Loan. With respect to the representations
and warranties described in this Section which are made to the best of the
Seller's knowledge, if it is discovered by the Depositor, the Master Servicer,
the Seller or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan or the interests of the Certificateholders
therein, notwithstanding the Seller's or the applicable Transferor's lack of
knowledge with respect to the substance of such representation or warranty,
such inaccuracy shall be deemed a breach of the applicable representation or
warranty.
If the Seller fails to take any action in accordance with the preceding
paragraph after the Seller has been notified of a breach of a representation or
warranty it has made that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the Trustee shall pursue any remedies
available to it against the Seller. The Seller shall promptly reimburse the
Trustee and the Master Servicer for any expenses reasonably incurred by the
Trustee or the Master Servicer in respect of enforcing the remedies for such
breach.
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With respect to any Substitute Mortgage Loan or Loans, the Seller or the
related Transferor shall deliver to the Trustee for the benefit of the
Certificateholders the Mortgage Note, the Mortgage, the related assignment of
the Mortgage, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.01. No substitution is permitted to be made in any
calendar month after the Determination Date for such month. Scheduled Payments
due with respect to Substitute Mortgage Loans in the month of substitution
shall not be part of the Trust Fund and will be retained by the Seller or the
related Transferor on the next succeeding Distribution Date. For the month of
substitution, distributions to Certificateholders will include the monthly
payment due on any Deleted Mortgage Loan for such month and thereafter the
Seller or the related Transferor shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Master Servicer shall
amend the Mortgage Loan Schedule for the benefit of the Certificateholders to
reflect the removal of such Deleted Mortgage Loan and the substitution of the
Substitute Mortgage Loan or Loans and the Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Substitute Mortgage Loan or Loans shall be subject to-the terms of this
Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2.03(b) with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Certificate Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release the Mortgage File held for the benefit of
the Certificateholders relating to such Deleted Mortgage Loan to the Seller or
the related Transferor and shall execute and deliver at the Seller's direction
such instruments of transfer or assignment prepared by the Seller or the
related Transferor, in each case without recourse, as shall be necessary to
vest title in the Seller, the related Transferor, or its designee, the
Trustee's interest in any Deleted Mortgage Loan substituted for pursuant to
this Section 2.03.
For any month in which the Seller or a Transferor substitutes or causes
the substitution of one or more Substitute Mortgage Loans for one or more
Deleted Mortgage Loans, the Master Servicer will determine the amount (if any)
by which the aggregate Stated Principal Balances of all such Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after application of the
scheduled principal portion of the monthly payments due in the month of
substitution). The amount of such shortage (the "Substitution Adjustment
Amount") plus an amount equal to the aggregate of any unreimbursed Advances
with respect to such Deleted Mortgage Loans shall be deposited in the
Certificate Account by the Seller or the related Transferor on or before the
Distribution Account Deposit Date for the Distribution Date in the month
succeeding the calendar month during which the related Mortgage Loan became
required to be purchased or replaced hereunder.
In the event that the Seller or a Transferor shall have repurchased a
Mortgage Loan, the Purchase Price therefor shall be deposited in the
Certificate Account pursuant to Section 3.05 on or before the Distribution
Account Deposit Date for the Distribution Date in the month following the month
during which the Seller or the related Transferor became obligated hereunder or
under the related Purchase Agreement, as applicable, to repurchase or replace
(or cause the repurchase or replacement of) such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05 and receipt of a Request for Release in the form of Exhibit N
hereto, the Trustee shall release the related Mortgage File held for the
benefit of the Certificateholders to such Person, and the Trustee shall execute
and deliver at such
37
Person's direction such instruments of transfer or assignment prepared by such
Person, in each case without recourse, as shall be necessary to transfer title
from the Trustee. It is understood and agreed that the obligation under this
Agreement of the Seller to cure, repurchase or replace any Mortgage Loan as to
which a breach has occurred and is continuing shall constitute the sole remedy
against the Seller respecting such breach available to Certificateholders, the
Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this Section 2.03
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Certificateholders.
Notwithstanding anything to the contrary in this Agreement, with respect
to any action which this Agreement provides shall be taken by the Seller or a
Transferor and which a Transferor is obligated to take under the respective
Purchase Agreement, (i) if the relevant Transferor is an affiliate of the
Master Servicer, then the Master Servicer shall use its best reasonable efforts
to cause such Transferor to take such action and the Seller shall have no
obligation or responsibility whatsoever either to take such action or to use
any efforts to cause such Transferor to take such action, (ii) if the relevant
Transferor is not an affiliate of the Master Servicer, then upon the request of
the Master Servicer the Seller shall use its best reasonable efforts to enforce
such Transferor's obligation to take such action but shall have no further
obligation if such Transferor fails to take such action after the Seller has
used its best reasonable efforts to cause such Transferor to take such action
and (iii) in no event shall the Seller be obligated to take any action that is
an obligation of a Transferor under a Purchase Agreement. All action taken by
the Master Servicer or the Seller pursuant to the preceding sentence shall be
at their own expense.
If the Seller or the Master Servicer, as applicable, fails to enforce any
obligation of a Transferor under the related Purchase Agreement, the Trustee
shall pursue any remedies available to it against such Transferor, and the
Seller (in the case of a Transferor that is not an affiliate of the Master
Servicer) or the Master Servicer (in the case of a Transferor that is an
affiliate of the Master Servicer) shall promptly reimburse the Trustee for any
expenses reasonably incurred by the Trustee in respect of taking such action.
SECTION 2.04. Representations and Warranties of the Depositor as to
the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee with respect
to each Mortgage Loan that immediately prior to the transfer and assignment of
the Mortgage Loans to the Trustee pursuant to this Agreement, the Depositor had
good title to the Mortgage Loans and the Mortgage Notes were subject to no
offsets, defenses or counterclaims.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee. Upon discovery by the Depositor or the Trustee of a breach of any of
the foregoing representations and warranties set forth in this Section 2.04,
which breach materially and adversely affects the interest of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the others and to each Rating Agency.
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SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions.
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made more than
90 days after the Closing Date unless the Transferor or the Seller delivers to
the Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of either the Trustee or the Trust Fund, addressed to the Trustee, to
the effect that such substitution will not (i) result in the imposition of the
tax on "prohibited transactions" on the Trust Fund or contributions after the
Startup Day or (ii) cause the REMIC created under this Agreement to fail to
qualify as a REMIC at any time that any Certificates are outstanding.
(b) Upon discovery by the Depositor, the Seller, the Master 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 five (5) Business Days of
discovery) give written notice thereof to the other parties. In connection
therewith, the Trustee shall require the Seller or the relevant Transferor to
either (i) substitute if the conditions in Section 2.03(c) with respect to
substitutions are satisfied, a Substitute 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 made pursuant to Section 2.03. The Trustee shall
reconvey to the Seller or the relevant Transferor the Mortgage Loan to be
released pursuant to this Section 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.
If the Seller or the relevant Transferor fails to take any action after it
has received notice in accordance with the preceding paragraph, the Trustee
shall pursue any remedies available to it against the Seller or the relevant
Transferor. The Seller or the relevant Transferor, as the case may be, shall
promptly reimburse the Trustee for any expenses reasonably incurred by the
Trustee in respect of enforcing the remedies for such breach.
SECTION 2.06. Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has executed and
delivered to or upon the order of the Depositor, the Certificates in authorized
denominations evidencing directly or indirectly the entire ownership of the
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 the duties set forth in this Agreement to the best
of its ability, to the end that the interests of the Holders of the
Certificates may be adequately and effectively protected.
SECTION 2.07. REMIC Matters.
The Preliminary Statement sets forth the designations and "latest possible
maturity date" for federal income tax purposes of all interests created hereby.
The "tax matters person" with respect to the REMIC hereunder shall be the
Trustee and the Trustee shall hold the Tax Matters Person Certificate. The
REMIC's fiscal year shall be the calendar year.
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SECTION 2.08. Covenants of the Master Servicer.
The Master Servicer covenants to the Depositor and the Trustee as follows:
(a) the Master 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; and
(b) no written information, certificate of an officer, statement furnished
in writing or written report delivered to the Depositor, any affiliate of the
Depositor or the Trustee and prepared by the Master Servicer pursuant to this
Agreement will contain any untrue statement of a material fact or omit to state
a material fact necessary to make such information, certificate, statement or
report not misleading.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer shall
service and administer the Mortgage Loans in accordance with the terms of this
Agreement and customary and usual standards of practice of prudent mortgage
loan servicers. In connection with such servicing and administration, the
Master Servicer shall have full power and authority, acting alone and/or
through Subservicers as provided in Section 3.02, subject to the terms of this
Agreement (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 (which for the purpose of this Section 3.01 includes any Subsequent
Recoveries) and (iv) to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan; provided that
the Master 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 or the rights and interests of the Depositor, the Trustee and the
Certificateholders under this Agreement. The Master Servicer shall represent
and protect the interests of the Trust Fund in the same manner as it protects
its own interests in mortgage loans in its own portfolio in any claim,
proceeding or litigation regarding a Mortgage Loan, and shall not make or
permit any modification, waiver or amendment of any Mortgage Loan which would
cause the REMIC created under this Agreement to fail to qualify as a REMIC or
result in the imposition of any tax under section 860F(a) or section 860G(d) of
the Code. Without limiting the generality of the foregoing, the Master
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
Master 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 Master Servicer shall
prepare and deliver to the Depositor and/or the Trustee such documents
requiring execution and delivery by either or both of them as are necessary or
appropriate to enable the Master Servicer to service and administer the
Mortgage Loans to the extent that the Master Servicer is not permitted to
execute and deliver such documents pursuant to the preceding sentence. Upon
receipt of such documents, the Depositor and/or the Trustee shall execute such
documents and deliver them to the Master Servicer. The Master Servicer further
is authorized and empowered by the Trustee, on behalf of the Certificateholders
and the Trustee, in its own name or in the name of the Subservicer, when the
Master Servicer or the Subservicer, as the case may be, believes it appropriate
in its best judgment to register any Mortgage Loan on the MERS(R) System, or
cause the removal from the registration of any Mortgage Loan on the MERS(R)
System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns.
41
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the 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. The costs incurred by the Master 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 Principal Balances of the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Subservicers.
(a) The Master Servicer may arrange for the subservicing of any Mortgage
Loan by a Subservicer pursuant to a subservicing agreement; provided, however,
that 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 under this Agreement.
Unless the context otherwise requires, references in this Agreement to actions
taken or to be taken by the Master Servicer in servicing the Mortgage Loans
include actions taken or to be taken by a Subservicer on behalf of the Master
Servicer. Notwithstanding the provisions of any subservicing agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master 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 Master Servicer alone were servicing and administering the Mortgage
Loans. All actions of each Subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Master Servicer
with the same force and effect as if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master 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 Master Servicer.
(c) Upon the direction of the Master Servicer, the Trustee shall cooperate
with any Subservicer in the manner so directed by the Master Servicer;
provided, however, that the Trustee shall be under no obligation to take any
action or cooperate in any manner with a Subservicer if the Trustee does not
have an obligation to take such action or cooperate in such manner with respect
to the Master Servicer pursuant to the express terms of this Agreement.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Master Servicer.
The Depositor may, but is not obligated to, enforce the obligations of the
Master Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
and in connection with any such defaulted
42
obligation to exercise the related rights of the Master Servicer hereunder;
provided that the Master Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance by the Depositor or its
designee. Neither the Trustee nor the Depositor shall have any responsibility
or liability for any action or failure to act by the Master Servicer nor shall
the Trustee or the Depositor be obligated to supervise the performance of the
Master Servicer under this Agreement or otherwise.
SECTION 3.04. Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no longer be
the Master Servicer hereunder (including by reason of an Event of Default), the
Trustee or its successor shall then assume all of the rights and obligations of
the Master Servicer hereunder arising thereafter (except that the Trustee shall
not be (i) liable for losses of the Master Servicer pursuant to Section 3.09 or
any acts or omissions of the predecessor Master Servicer under this Agreement),
(ii) obligated to make Advances if it is prohibited from doing so by applicable
law, (iii) obligated to effectuate repurchases or substitutions of Mortgage
Loans hereunder including, but not limited to, repurchases or substitutions of
Mortgage Loans pursuant to Section 2.02 or 2.03, (iv) responsible for expenses
of the Master Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations and warranties of the Master Servicer under this Agreement).
Any such assumption shall be subject to Section 7.02. If the Master Servicer
shall for any reason no longer be the Master Servicer (including by reason of
any Event of Default), the Trustee or its successor shall succeed to any rights
and obligations of the Master Servicer under each subservicing agreement.
The Master Servicer shall, upon request of the Trustee, but at the expense
of the Master Servicer, deliver to the assuming party all documents and records
relating to each subservicing agreement or substitute subservicing agreement
and the Mortgage Loans then being serviced thereunder and an accounting of
amounts collected or held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the substitute subservicing agreement to
the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account.
(a) The Master Servicer shall make reasonable efforts in accordance with
the customary and usual standards of practice of prudent mortgage servicers to
collect all payments called for under the terms and provisions of the Mortgage
Loans to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Required Insurance Policy. Consistent
with the foregoing, the Master Servicer may in its discretion (i) waive any
late payment charge or any prepayment charge or penalty interest in connection
with the prepayment of a Mortgage Loan and (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that the Master Servicer cannot extend the maturity of any
such Mortgage Loan past the date on which the final payment is due on the
latest maturing Mortgage Loan as of the Cut-off Date. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan in accordance with the provisions of Section 4.01 during the scheduled
period in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements. The Master
Servicer shall not be required to institute or join in litigation with
43
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.
(b) The Master Servicer shall establish and maintain a Certificate Account
into which the Master Servicer shall deposit or cause to be deposited no later
than two Business Days after receipt (or, if the current long-term credit
rating of Countrywide Home Loans, Inc. is reduced below "A-" by S&P or "A3" by
▇▇▇▇▇'▇, the Master Servicer shall deposit or cause to be deposited on a daily
basis within one Business Day of receipt), except as otherwise specifically
provided in this Agreement, the following payments and collections remitted by
Subservicers or received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts
required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage Loans,
including Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans, net
of the related Master Servicing Fee;
(iii) all Insurance Proceeds, Subsequent Recoveries and Liquidation
Proceeds, other than proceeds to be applied to the restoration or repair
of a Mortgaged Property or released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Master Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.09(d) and in respect of net monthly rental income
from REO Property pursuant to Section 3.11;
(vi) all Substitution Adjustment Amounts;
(vii) all Advances made by the Master Servicer pursuant to Section
4.01; and
(viii) any other amounts required to be deposited under this
Agreement.
In addition, with respect to any Mortgage Loan that is subject to a
buydown agreement, on each Due Date for such Mortgage Loan, in addition to the
monthly payment remitted by the Mortgagor, the Master Servicer shall cause
funds to be deposited into the Certificate Account in an amount required to
cause an amount of interest to be paid with respect to such Mortgage Loan equal
to the amount of interest that has accrued on such Mortgage Loan from the
preceding Due Date at the Mortgage Rate net of the related Master Servicing
Fee.
The foregoing requirements for remittance by the Master Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, late payment
charges or assumption fees, if collected, need
44
not be remitted by the Master Servicer. In the event that the Master Servicer
shall remit any amount not required to be remitted, it may at any time withdraw
or direct the institution maintaining the Certificate Account to withdraw such
amount from the Certificate Account, any provision in this Agreement to the
contrary notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the Trustee or such other institution
maintaining the Certificate Account which describes the amounts deposited in
error in the Certificate Account. The Master Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All
funds deposited in the Certificate Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08.
(c) [Reserved].
(d) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain in the Distribution
Account the following:
(i) the aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3.08(a)(ix);
(ii) any amount deposited by the Master Servicer pursuant to Section
3.05(e) in connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required to be
deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not required
to be remitted, it may at any time direct the Trustee to withdraw such amount
from the Distribution Account, any provision in this Agreement to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in
the Distribution Account. All funds deposited in the Distribution 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
Distribution Account at the direction of the Master Servicer.
(e) Each institution at which the Certificate Account or the Distribution
Account is maintained shall invest the funds in such account as directed in
writing by the Master Servicer in Permitted Investments, which shall mature not
later than (i) in the case of the Certificate Account, the second Business Day
next preceding the related Distribution Account Deposit Date (except that if
such Permitted Investment is an obligation of the institution that maintains
such account, then such Permitted Investment shall mature not later than the
Business Day next preceding such Distribution Account Deposit Date) and (ii) in
the case of the Distribution Account, the Business Day next preceding the
Distribution Date (except that if such Permitted Investment is an obligation of
the institution that maintains such fund or account, then such Permitted
Investment shall mature not later 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 Trustee, for the benefit
of the Certificateholders. All income and gain net of any losses realized from
any such investment of funds on deposit in the Certificate Account or the
45
Distribution Account shall be for the benefit of the Master Servicer as
servicing compensation and shall be remitted to it monthly as provided in this
Agreement. The amount of any realized losses in the Certificate Account or the
Distribution Account incurred in any such account in respect of any such
investments shall promptly be deposited by the Master Servicer in the
Certificate Account or paid to the Trustee for deposit into the Distribution
Account, as applicable. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of any investment or lack
of investment of funds held in the Certificate Account or the Distribution
Account and made in accordance with this Section 3.05.
(f) The Master Servicer shall give notice to the Trustee, the Seller, each
Rating Agency and the Depositor of any proposed change of the location of the
Certificate Account prior to any change thereof. The Trustee shall give notice
to the Master Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Distribution Account prior to any change
thereof.
(g) Reserved.
(h) Reserved.
(i) The Master Servicer shall give notice to the Trustee, the Seller, each
Rating Agency and the Depositor of any proposed change of the location of the
Certificate Account prior to any change thereof. The Trustee shall give notice
to the Master Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Distribution Account prior to any change
thereof.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
(a) To the extent required by the related Mortgage Note and not violative
of current law, the Master Servicer shall establish and maintain one or more
accounts (each, an "Escrow Account") and deposit and retain in such accounts
all collections from the Mortgagors (or advances by the Master Servicer) for
the payment of taxes, assessments, hazard insurance premiums or comparable
items for the account of the Mortgagors. Nothing in this Agreement shall
require the Master Servicer to compel a Mortgagor to establish an Escrow
Account in violation of applicable law.
(b) 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 Master Servicer out of related collections for any payments made
pursuant to Sections 3.01 (with respect to taxes and assessments and insurance
premiums) and 3.09 (with respect to hazard insurance), to refund to any
Mortgagors any sums 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. The Escrow
Accounts shall not be a part of the Trust Fund.
(c) The Master Servicer shall advance any payments referred to in Section
3.06(a) that are not timely paid by the Mortgagors on the date when the tax,
premium or other cost for which
46
such payment is intended is due, but the Master Servicer shall be required so
to advance only to the extent that such advances, in the good faith judgment of
the Master Servicer will be recoverable by the Master Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation regarding the Mortgage Loans and all
accounts, insurance information and other matters relating to this Agreement,
such access being afforded without charge, but only upon reasonable request and
during normal business hours at the office designated by the Master Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide to each Certificateholder or Certificate Owner which 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 or Certificate Owner to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided that the Master Servicer shall be
entitled to be reimbursed by each such Certificateholder or Certificate Owner
for actual expenses incurred by the Master Servicer in providing such reports
and access.
SECTION 3.08. Permitted Withdrawals from the Certificate Account and
the Distribution Account.
(a) The Master Servicer may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not previously
retained by the Master Servicer), the servicing compensation to which it
is entitled pursuant to Section 3.14 and to pay to the Master Servicer, as
additional servicing compensation, earnings on or investment income with
respect to funds in or credited to the Certificate Account;
(ii) to reimburse each of the Master Servicer and the Trustee for
unreimbursed Advances made by it, such right of reimbursement pursuant to
this subclause (ii) being limited to amounts received on the Mortgage
Loan(s) in respect of which any such Advance was made;
(iii) to reimburse each of the Master Servicer and the Trustee for
any Nonrecoverable Advance previously made by it;
(iv) to reimburse the Master Servicer for Insured Expenses from the
related Insurance Proceeds;
(v) to reimburse the Master Servicer for (a) unreimbursed Servicing
Advances, the Master Servicer's right to reimbursement pursuant to this
clause (a) with respect to any Mortgage Loan being limited to amounts
received on such Mortgage
47
Loan(s) that represent late recoveries of the payments for which such
advances were made pursuant to Section 3.01 or Section 3.06 and (b) for
unpaid Master Servicing Fees as provided in Section 3.11;
(vi) to pay to the purchaser, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased pursuant to
Section 2.02, 2.03 or 3.11, all amounts received on such Mortgage Loan
after the date of such purchase;
(vii) to reimburse the Seller, the Master Servicer or the Depositor
for expenses incurred by any of them and reimbursable pursuant to Section
6.03;
(viii) to withdraw any amount deposited in the Certificate Account
and not required to be deposited in the Certificate Account;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the related Available Funds and the Trustee
Fee for such Distribution Date and remit such amount to the Trustee for
deposit in the Distribution Account; and
(x) to clear and terminate the Certificate Account upon termination
of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to such subclauses (i), (ii),
(iv), (v) and (vi). Prior to making any withdrawal from the Certificate Account
pursuant to subclause (iii), the Master Servicer shall deliver to the Trustee
an Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account for
distributions to 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 withhold pursuant to the last paragraph of Section 8.11). In
addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related Distribution
Date;
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in the
Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein;
(iv) to reimburse the Trustee for any unreimbursed Advances made by
it pursuant to Section 4.01(b) hereof, such right of reimbursement
pursuant to this subclause (iv) being limited to (x) amounts received on
the related Mortgage Loan(s) in respect of which any such Advance was made
and (y) amounts not otherwise reimbursed to the Trustee pursuant to
Section 3.08(a)(ii) hereof;
48
(v) to reimburse the Trustee for any Nonrecoverable Advance
previously made by the Trustee pursuant to Section 4.01(b) hereof, such
right of reimbursement pursuant to this subclause (v) being limited to
amounts not otherwise reimbursed to the Trustee pursuant to Section
3.08(a)(iii) hereof; and
(vi) to clear and terminate the Distribution Account upon termination
of the Agreement pursuant to Section 9.01.
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of Primary
Insurance Policies.
(a) The Master Servicer shall cause to be maintained, for each Mortgage
Loan, hazard insurance with extended coverage in an amount that is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (y) the outstanding
principal balance of the Mortgage Loan and (z) an amount such that the proceeds
of such policy shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. Any amounts collected by the Master Servicer under
any such policies (other than the amounts to be applied to the restoration or
repair of the related Mortgaged Property or amounts released to the Mortgagor
in accordance with the Master Servicer's normal servicing procedures) shall be
deposited in the Certificate Account. Any cost incurred by the Master 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 Master Servicer out of late payments by the related
Mortgagor or out of liquidation proceeds or Subsequent Recoveries to the extent
permitted by Section 3.08. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property 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 Master 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 least of (i) the original principal balance of the
related Mortgage Loan, (ii) the replacement value of the improvements which are
part of such Mortgaged Property, and (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program.
(b) [Reserved]
(c) The Master Servicer shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy of any loss which,
but for the actions of the Master Servicer, would have been covered thereunder.
The Master Servicer shall not cancel or refuse to renew any such Primary
Insurance Policy that is in effect at the date of the initial issuance of the
Certificates and is required to be kept in force hereunder unless the
replacement Primary Insurance Policy for such canceled or non-renewed policy is
maintained with a Qualified Insurer.
49
Except with respect to any Lender PMI Mortgage Loans, the Master Servicer
shall not be required to maintain any Primary Insurance Policy (i) with respect
to any Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80% as of
any date of determination or, based on a new appraisal, the principal balance
of such Mortgage Loan represents 80% or less of the new appraised value or (ii)
if maintaining such Primary Insurance Policy is prohibited by applicable law.
With respect to the Lender PMI Mortgage Loans, the Master Servicer shall
maintain the Primary Insurance Policy for the life of such Mortgage Loans,
unless otherwise prohibited by law.
The Master Servicer agrees to effect the timely payment of the premiums on
each Primary Insurance Policy, and such costs not otherwise recoverable shall
be recoverable by the Master Servicer from the related liquidation proceeds and
Subsequent Recoveries.
(d) In connection with its activities as Master Servicer of the Mortgage
Loans, the Master Servicer agrees to present on behalf of itself, the Trustee
and Certificateholders, claims to the insurer under any Primary Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans. Any amounts collected by the Master Servicer under
any Primary Insurance Policies shall be deposited in the Certificate Account.
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section, when any property
subject to a Mortgage has been conveyed by the Mortgagor, the Master Servicer
shall to the extent that it has knowledge of such conveyance, enforce any
due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. Notwithstanding the foregoing, the Master
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 Master 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 Master
Servicer is authorized, subject to Section 3.10(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
state law, the Mortgagor remains liable thereon, provided that the Mortgage
Loan shall continue to be covered (if so covered before the Master Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Master Servicer, subject to Section 3.10(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 Master Servicer shall not be deemed to be in default under this
Section by reason of any transfer or assumption which the Master Servicer
reasonably believes it is restricted by law from preventing, for any reason
whatsoever.
50
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.10(a), 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 Master
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 may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Master Servicer in accordance with
its underwriting standards as then in effect. Together with each such
substitution, assumption or other agreement or instrument delivered to the
Trustee for execution by it, the Master Servicer shall deliver an Officer's
Certificate signed by a Servicing Officer stating that the requirements of this
subsection have been met in connection therewith. The Master Servicer shall
notify the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee 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 Master Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as additional servicing compensation.
SECTION 3.11. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
(a) The Master Servicer shall use reasonable efforts 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 Master 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 meet the requirements of the insurer under any Required Insurance Policy;
provided, however, that the Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
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 and Subsequent Recoveries
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account). The Master 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 of such costs and expenses from the
liquidation proceeds and Subsequent Recoveries with respect to the related
Mortgaged Property, as provided in the definition of Liquidation Proceeds. If
the Master Servicer has knowledge that a Mortgaged Property which the Master
Servicer is contemplating acquiring in foreclosure or by deed in lieu
51
of foreclosure is located within a one mile radius of any site listed in the
Expenditure Plan for the Hazardous Substance Clean Up Bond Act of 1984 or other
site with environmental or hazardous waste risks known to the Master Servicer,
the Master Servicer will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with its established
environmental review procedures.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Certificateholders, or
its nominee, on behalf of the Certificateholders. The Trustee's name shall be
placed on the title to such REO Property solely as the Trustee hereunder and
not in its individual capacity. The Master Servicer shall ensure that the title
to such REO Property references the Pooling and Servicing Agreement and the
Trustee's capacity thereunder. Pursuant to its efforts to sell such REO
Property, the Master Servicer shall either itself or through an agent selected
by the Master 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
Master Servicer deems to be in the best interest of the Certificateholders for
the period prior to the sale of such REO Property. The Master Servicer shall
prepare for and deliver to the Trustee 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 maintenance of such REO Property
at such times as is necessary to enable the Trustee 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 Certificate Account no
later than the close of business on each Determination Date. The Master
Servicer shall perform the tax reporting and withholding required by sections
1445 and 6050J of the Code with respect to foreclosures and abandonments, the
tax reporting required by section 6050H of the Code with respect to the receipt
of mortgage interest from individuals and any tax reporting required by section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing such tax and information returns as may be
required, in the form required, and delivering the same to the Trustee for
filing.
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 Master Servicer shall dispose of such Mortgaged Property as
soon as practicable in a manner that maximizes the Liquidation Proceeds
thereof, but in no event later than three years after its acquisition by the
Trust Fund. In that event, the Trustee shall have been supplied with an Opinion
of Counsel to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to a three-year period, if applicable, will not result in
the imposition of taxes on "prohibited transactions" of any REMIC hereunder as
defined in section 860F of the Code or cause any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificates are outstanding, and the
Trust Fund may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel) after the expiration of such
three-year period. Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be 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 any REMIC
hereunder to the imposition of any federal, state or local income taxes on the
income earned from such
52
Mortgaged Property under section 860G(c) of the Code or otherwise, unless the
Master Servicer has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.
In the event of a default on a Mortgage Loan one or more of whose obligor
is not a United States Person, as that term is defined in section 7701(a)(30)
of the Code, in connection with any foreclosure or acquisition of a deed in
lieu of foreclosure (together, "foreclosure") in respect of such Mortgage Loan,
the Master Servicer will cause compliance with the provisions of Treasury
Regulation Section 1.1445-2(d)(3) (or any successor thereto) necessary to
assure that no withholding tax obligation arises with respect to the proceeds
of such foreclosure except to the extent, if any, that proceeds of such
foreclosure are required to be remitted to the obligors on such Mortgage Loan.
The decision of the Master Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Master 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 REO Properties,
net of reimbursement to the Master Servicer for expenses incurred (including
any property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Advances and Servicing Advances, 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 Certificate Account. To the
extent the net income received during any calendar month is in excess of the
amount attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a partial prepayment of principal of the related
Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer for any related unreimbursed
Servicing Advances and Master Servicing Fees; second, to reimburse the Master
Servicer for any unreimbursed Advances; third, to reimburse the Certificate
Account for any Nonrecoverable Advances (or portions thereof) that were
previously withdrawn by the Master Servicer pursuant to Section 3.08(a)(iii)
that related to such Mortgage Loan; fourth, to accrued and unpaid interest (to
the extent no Advance has been made for such amount or any such Advance has
been reimbursed) on the Mortgage Loan or related REO Property, at the Adjusted
Net Mortgage Rate to the Due Date occurring in the month in which such amounts
are required to be distributed; and fifth, as a recovery of principal of the
Mortgage Loan. Excess Proceeds, if any, from the liquidation of a Liquidated
Mortgage Loan will be retained by the Master Servicer as additional servicing
compensation pursuant to Section 3.14.
The Master Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Trust Fund any Mortgage Loan which is 151
days or more delinquent at a price equal to the Purchase Price; provided,
however, that the Master Servicer may only exercise this right on or before the
next to the last day of the calendar month in which such Mortgage Loan became
151 days delinquent (such month, the "Eligible Repurchase Month"); provided
further, that any such Mortgage Loan which becomes current but thereafter
becomes delinquent may be purchased by the Master Servicer pursuant to this
Section in any ensuing Eligible ▇▇▇▇▇▇▇▇▇▇
▇▇
Month. The Purchase Price for any Mortgage Loan purchased under this Section
3.11 shall be deposited in the Certificate Account and the Trustee, upon
receipt of a certificate from the Master Servicer in the form of Exhibit N to
this Agreement, shall release or cause to be released to the purchaser of such
Mortgage Loan the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto
and the purchaser of such Mortgage Loan shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation
to the Trustee or the Certificateholders with respect thereto.
(b) The Master Servicer may agree to a modification of any Mortgage Loan
(the "Modified Mortgage Loan") if (i) the modification is in lieu of a
refinancing, (ii) the Mortgage Rate on the Modified Mortgage Loan is
approximately a prevailing market rate for newly-originated mortgage loans
having similar terms and (iii) the Master Servicer purchases the Modified
Mortgage Loan from the Trust Fund as described below. Effective immediately
after the modification, and, in any event, on the same Business Day on which
the modification occurs, all interest of the Trustee in the Modified Mortgage
Loan shall automatically be deemed transferred and assigned to the Master
Servicer and all benefits and burdens of ownership thereof, including the right
to accrued interest thereon from the date of modification and the risk of
default thereon, shall pass to the Master Servicer. The Master Servicer shall
promptly deliver to the Trustee a certification of a Servicing Officer to the
effect that all requirements of this paragraph have been satisfied with respect
to the Modified Mortgage Loan. For federal income tax purposes, the Trustee
shall account for such purchase as a prepayment in full of the Modified
Mortgage Loan.
The Master Servicer shall deposit the Purchase Price for any Modified
Mortgage Loan in the Certificate Account pursuant to Section 3.05 within one
Business Day after the purchase of the Modified Mortgage Loan. Upon receipt by
the Trustee of written notification of any such deposit signed by a Servicing
Officer, the Trustee shall release to the Master Servicer the related Mortgage
File and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, as shall be necessary to vest in the Master
Servicer any Modified Mortgage Loan previously transferred and assigned
pursuant to this Agreement. The Master Servicer covenants and agrees to
indemnify the Trust Fund against any liability for any "prohibited transaction"
taxes and any related interest, additions, and penalties imposed on the Trust
Fund established hereunder as a result of any modification of a Mortgage Loan
effected pursuant to this subsection (b), any holding of a Modified Mortgage
Loan by the Trust Fund or any purchase of a Modified Mortgage Loan by the
Master Servicer (but such obligation shall not prevent the Master Servicer or
any other appropriate Person from in good faith contesting any such tax in
appropriate proceedings and shall not prevent the Master Servicer from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Master Servicer shall have no right of reimbursement for
any amount paid pursuant to the foregoing indemnification, except to the extent
that the amount of any tax, interest, and penalties, together with interest
thereon, is refunded to the Trust Fund or the Master Servicer.
54
SECTION 3.12. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Trustee by delivering, or causing to be delivered a "Request for Release"
substantially in the form of Exhibit N of this Agreement. Upon receipt of such
request, the Trustee shall promptly release the related Mortgage File to the
Master Servicer, and the Trustee shall at the Master Servicer's direction
execute and deliver to the Master 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 Master
Servicer, together with the Mortgage Note with written evidence of cancellation
on the Mortgage Note. The Master Servicer is authorized to cause the removal
from the registration on the MERS(R) System of such Mortgage and to execute and
deliver, on behalf of the Trustee and the Certificateholders or any of them,
any and all instruments of satisfaction or cancellation or of partial or full
release. Expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be chargeable to the related Mortgagor. 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 shall,
upon delivery to the Trustee of a Request for Release in the form of Exhibit M
signed by a Servicing Officer, release the Mortgage File to the Master
Servicer. Subject to the further limitations set forth below, the Master
Servicer shall cause the Mortgage File or documents so released to be returned
to the Trustee when the need therefor by the Master Servicer no longer exists,
unless the Mortgage Loan is liquidated and the proceeds thereof are deposited
in the Certificate Account, in which case the Master Servicer shall deliver to
the Trustee a Request for Release in the form of Exhibit N, signed by a
Servicing Officer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, 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 enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity.
SECTION 3.13. Documents, Records and Funds in Possession of Master
Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or which otherwise
are collected by the Master Servicer as Liquidation Proceeds, Insurance
Proceeds or Subsequent Recoveries in respect of any Mortgage Loan. All Mortgage
Files and funds collected or held by, or under the control of, the Master
Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds and Subsequent
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Recoveries, including but not limited to, any funds on deposit in the
Certificate Account, shall be held by the Master 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 Master
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Certificate Account, Distribution
Account or 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
setoff against any Mortgage File or any funds collected on, or in connection
with, a Mortgage Loan, except, however, that the Master Servicer shall be
entitled to set off against and deduct from any such funds any amounts that are
properly due and payable to the Master Servicer under this Agreement.
SECTION 3.14. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall be
entitled to retain or withdraw from the Certificate Account an amount equal to
the Master Servicing Fee; provided, that the aggregate Master Servicing Fee
with respect to any Distribution Date shall be reduced (i) by an amount equal
to the aggregate of the Prepayment Interest Shortfalls on all of the Mortgage
Loans, if any, with respect to such Distribution Date, but not to exceed the
Compensating Interest for such Distribution Date, and (ii) with respect to the
first Distribution Date, an amount equal to any amount to be deposited into the
Distribution Account by the Depositor pursuant to Section 2.01(a) and not so
deposited.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments shall be retained by the Master Servicer to the extent not required
to be deposited in the Certificate Account pursuant to Section 3.05. The Master
Servicer shall be required to pay all expenses incurred by it in connection
with its master servicing activities hereunder (including payment of any
premiums for hazard insurance and any Primary Insurance Policy and maintenance
of the other forms of insurance coverage required by this Agreement) and shall
not be entitled to reimbursement therefor except as specifically provided in
this Agreement.
SECTION 3.15. Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Certificateholders or Certificate
Owners and the examiners and supervisory agents of the OTS, the FDIC and such
other authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall
be afforded without charge, but only upon reasonable and prior written request
and during normal business hours at the offices designated by the Master
Servicer. Nothing in this Section shall limit the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Master Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
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SECTION 3.16. Annual Statement as to Compliance.
The Master Servicer shall deliver to the Depositor and the Trustee on or
before 80 days after the end of the Master Servicer's fiscal year, commencing
with its 2004 fiscal year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of the Master Servicer during the
preceding calendar year and of the performance of the Master Servicer under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.
SECTION 3.17. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before 80 days after the end of the Master Servicer's fiscal year,
commencing with its 2004 fiscal year, the Master Servicer at its expense shall
cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Trustee and the
Depositor to the effect that such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
of mortgage loans under pooling and servicing agreements substantially similar
to this Agreement (such statement to have attached thereto a schedule setting
forth the pooling and servicing agreements covered thereby) and that, on the
basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in
compliance with such pooling and servicing agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FNMA and FHLMC requires it to report. In
rendering such statement, such firm may rely, as to matters relating to direct
servicing of mortgage loans by Subservicers, upon comparable statements for
examinations conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FNMA and FHLMC (rendered within one year of such statement) of
independent public accountants with respect to the related Subservicer. Copies
of such statement shall be provided by the Trustee to any Certificateholder
upon request at the Master Servicer's expense, provided that such statement is
delivered by the Master Servicer to the Trustee.
SECTION 3.18. Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall for so long as it acts as master 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 Master Servicer hereunder and (b) a fidelity bond in respect of its
officers, employees and agents. Each such policy or policies and bond shall,
together, comply with the requirements from time to time of FNMA or FHLMC for
persons performing servicing for mortgage loans purchased by FNMA or FHLMC. In
the event that any such policy
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or bond ceases to be in effect, the Master Servicer shall 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.
SECTION 3.19. Notification of Adjustments.
On each Adjustment Date, the Master Servicer shall make interest rate
adjustments for each Mortgage Loan in compliance with the requirements of the
related Mortgage and Mortgage Note and applicable regulations. The Master
Servicer shall execute and deliver the notices required by each Mortgage and
Mortgage Note and applicable regulations regarding interest rate adjustments.
The Master Servicer also shall provide timely notification to the Trustee of
all applicable data and information regarding such interest rate adjustments
and the Master Servicer's methods of implementing such interest rate
adjustments. Upon the discovery by the Master Servicer or the Trustee that the
Master Servicer has failed to adjust or has incorrectly adjusted a Mortgage
Rate or a monthly payment pursuant to the terms of the related Mortgage Note
and Mortgage, the Master Servicer shall immediately deposit in the Certificate
Account from its own funds the amount of any interest loss caused thereby
without reimbursement therefor; provided, however, the Master Servicer shall be
held harmless with respect to any interest rate adjustments made by any
servicer prior to the Master Servicer.
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ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances.
(a) The Master Servicer shall determine on or before each Master Servicer
Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make an
Advance, it shall, on or before the Master Servicer Advance Date, either (i)
deposit into the Certificate Account an amount equal to the Advance or (ii)
make an appropriate entry in its records relating to the Certificate Account
that any Amount Held for Future Distribution has been used by the Master
Servicer in discharge of its obligation to make any such Advance. Any funds so
applied shall be replaced by the Master Servicer by deposit in the Certificate
Account no later than the close of business on the next Master Servicer Advance
Date. The Master Servicer shall be entitled to be reimbursed from the
Certificate Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Mortgage Loan shall continue if such Mortgage Loan has been
foreclosed or otherwise terminated and the related Mortgaged Property has not
been liquidated.
(b) If the Master Servicer determines that it will be unable to comply
with its obligation to make the Advances as and when described in the second
sentence of Section 4.01(a), the Master Servicer shall use its best efforts to
give written notice thereof to the Trustee (each such notice a "Trustee Advance
Notice"; and such notice may be given by telecopy), not later than 3:00 P.M.,
New York time, on the Business Day immediately preceding the related Master
Servicer Advance Date, specifying the amount that will not be deposited by the
Master Servicer (each such amount an "Advance Deficiency") and certifying that
such Advance Deficiency constitutes an Advance hereunder and is not a
Nonrecoverable Advance. If the Trustee receives a Trustee Advance Notice on or
before 3:30 P.M., New York time on a Master Servicer Advance Date, the Trustee
shall, not later than 3:00 P.M., New York time, on the related Distribution
Date, deposit in the Distribution Account an amount equal to the Advance
Deficiency identified in such Trustee Advance Notice unless it is prohibited
from so doing by applicable law. Notwithstanding the foregoing, the Trustee
shall not be required to make such deposit if the Trustee shall have received
written notification from the Master Servicer that the Master Servicer has
deposited or caused to be deposited in the Certificate Account an amount equal
to such Advance Deficiency. All Advances made by the Trustee pursuant to this
Section 4.01(b) shall accrue interest on behalf of the Trustee at the Trustee
Advance Rate from and including the date such Advances are made to but
excluding the date of repayment, with such interest being an obligation of the
Master Servicer and not the Trust Fund. The Master Servicer shall reimburse the
Trustee for the amount of any Advance made by the Trustee pursuant to this
Section 4.01(b) together with accrued interest, not later than the fifth day
following the related Master Servicer Advance Date. In the event that the
Master Servicer does not reimburse the Trustee in accordance with the
requirements of the preceding sentence, the Trustee shall immediately (a)
terminate all of the rights and obligations of the Master Servicer under this
Agreement in accordance with Section 7.01 and (b) subject to the limitations
set forth in Section 3.04, assume all of the rights and obligations of the
Master Servicer hereunder.
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(c) The Master Servicer shall, not later than the close of business on the
second Business Day immediately preceding each Distribution Date, deliver to
the Trustee a report (in form and substance reasonably satisfactory to the
Trustee) that indicates (i) the Mortgage Loans with respect to which the Master
Servicer has determined that the related Scheduled Payments should be advanced
and (ii) the amount of the related Scheduled Payments. The Master Servicer
shall deliver to the Trustee on the related Master Servicer Advance Date an
Officer's Certificate of a Servicing Officer indicating the amount of any
proposed Advance determined by the Master Servicer to be a Nonrecoverable
Advance.
SECTION 4.02. Priorities of Distribution.
(a) (1) With respect to the Available Funds for Loan Group 1, on each
Distribution Date, the Trustee shall withdraw such Available Funds from the
Distribution Account and apply such funds to distributions on the specified
Classes of Group 1 Senior Certificates in the following order and priority and,
in each case, to the extent of such funds remaining:
(i) [Reserved];
(ii) concurrently, to each Class of Group 1 Senior Certificates, an
amount allocable to interest equal to the related Class Optimal Interest
Distribution Amount for such Distribution Date, any shortfall being
allocated among such Classes in proportion to the amount of the Class
Optimal Interest Distribution Amount that would have been distributed in
the absence of such shortfall;
(iii) [Reserved];
(iv) to each Class of Group 1 Senior Certificates, concurrently as
follows:
(x) [Reserved]; and
(y) the related Principal Amount, up to the amount of
the Senior Principal Distribution Amount for Loan Group 1
for such Distribution Date, will be distributed
sequentially, to the Class A-R and Class 1-A Certificates,
in that order, until their respective Class Certificate
Balances are reduced to zero;
(2) With respect to the Available Funds for Loan Group 2, on each
Distribution Date, the Trustee shall withdraw such Available Funds from the
Distribution Account and apply such funds to distributions on the specified
Classes of Group 2 Senior Certificates in the following order and priority and,
in each case, to the extent of such funds remaining:
(i) [Reserved];
(ii) concurrently, to each Class of Group 2 Senior Certificates, an
amount allocable to interest equal to the related Class Optimal Interest
Distribution Amount for such Distribution Date, any shortfall being
allocated among such Classes and Components in proportion to the amount of
the Class Optimal Interest Distribution Amount that would have been
distributed in the absence of such shortfall;
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(iii) [Reserved];
(iv) to each Class of Group 2 Senior Certificates, concurrently as
follows:
(x) [Reserved]; and
(y) the related Principal Amount, up to the amount of
the Senior Principal Distribution Amount for Loan Group 2
for such Distribution Date, will be distributed to the
Class 2-A Certificates until its Class Certificate Balance
is reduced to zero;
(3) On each Distribution Date, Available Funds from all Loan Groups
remaining after making the distributions described in Section 4.02(a)(1) and
Section 4.02(a)(2), will be distributed to the Senior Certificates to the
extent provided in Section 4.05.
(4) On each Distribution Date, Available Funds from all Loan Groups
remaining after making the distributions described in Section 4.02(a)(1),
Section 4.02(a)(2) and Section 4.02(a)(3) above, will be distributed to the
Subordinated Certificates and the Class A-R Certificates in the following order
and priority and, in each case, to the extent of such funds remaining:
(A) to the Class M Certificates, an amount allocable
to interest equal to the Class Optimal Interest
Distribution Amount for such Class for such Distribution
Date;
(B) to the Class M Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(C) to the Class B-1 Certificates, an amount allocable
to interest equal to the Class Optimal Interest
Distribution Amount for such Class for such Distribution
Date;
(D) to the Class B-1 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(E) to the Class B-2 Certificates, an amount allocable
to interest equal to the Class Optimal Interest
Distribution Amount for such Class for such Distribution
Date;
(F) to the Class B-2 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(G) to the Class B-3 Certificates, an amount allocable
to interest equal to the amount of the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date;
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(H) to the Class B-3 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(I) to the Class B-4 Certificates, an amount allocable
to interest equal to the amount of the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date;
(J) to the Class B-4 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(K) to the Class B-5 Certificates, an amount allocable
to interest equal to the Class Optimal Interest
Distribution Amount for such Class for such Distribution
Date; and
(L) to the Class B-5 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(M) [Reserved]; and
(N) to the Class A-R Certificates, any remaining funds
in the Trust Fund.
(b) [Reserved]
(c) [Reserved]
(d) On each Distribution Date, the amount referred to in clause (i) of the
definition of Class Optimal Interest Distribution Amount for each Class of
Certificates for such Distribution Date shall be reduced for each Class of
Senior Certificates of a Senior Certificate Group and each Class of
Subordinated Certificates by (i) the related Class' pro rata share of Net
Prepayment Interest Shortfalls for such Loan Group based (x) with respect to a
Class of Senior Certificates, on the related Class Optimal Interest
Distribution Amount for such Distribution Date, and (y) with respect to a Class
of Subordinated Certificates on and prior to the Senior Termination Date on the
Assumed Interest Amount or after such Senior Termination Date, the related
Class Optimal Interest Distribution Amount for such Distribution Date, without
taking into account such Net Prepayment Interest Shortfalls, and (ii) the
related Class' Allocable Share of (A) after the Special Hazard Coverage
Termination Date, with respect to each Mortgage Loan in the related Loan Group
(or after the Senior Credit Support Depletion Date, any Mortgage Loan) that
became a Special Hazard Mortgage Loan during the calendar month preceding the
month of such Distribution Date, the excess of one month's interest at the
related Adjusted Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan as of the Due Date in such month over the amount of Liquidation
Proceeds applied as interest on such Mortgage Loan with respect to such month,
(B) after the Bankruptcy Coverage Termination Date, with respect to each
Mortgage Loan in the related Loan Group (or after the Senior Credit Support
Depletion Date, any Mortgage Loan) that became subject to a Bankruptcy Loss
during the calendar month preceding
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the month of such Distribution Date, the interest portion of the related Debt
Service Reduction or Deficient Valuation, (C) each Relief Act Reduction for the
Mortgage Loans in the related Loan Group (or after the Senior Credit Support
Depletion Date, any Mortgage Loan) incurred during the calendar month preceding
the month of such Distribution Date and (D) after the Fraud Loss Coverage
Termination Date, with respect to each Mortgage Loan in the related Loan Group
(or after the Senior Credit Support Depletion Date, any Mortgage Loan) that
became a Fraud Loan during the calendar month preceding the month of such
Distribution Date, the excess of one month's interest at the related Adjusted
Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan as of
the Due Date in such month over the amount of Liquidation Proceeds applied as
interest on such Mortgage Loan with respect to such month.
(e) Notwithstanding the priority and allocation contained in Section
4.02(a)(4), if with respect to any Class of Subordinated Certificates on any
Distribution Date (other than the Class of Subordinated Certificates then
outstanding with the highest priority of distribution) the sum of the related
Class Subordination Percentages of such Class and of all Classes of
Subordinated Certificates which have a higher numerical Class designation than
such Class (the "Applicable Credit Support Percentage") is less than the
Original Applicable Credit Support Percentage for such Class, no distribution
of Principal Prepayments will be made to any such Classes (the "Restricted
Classes") and the amount of such Principal Prepayments otherwise distributable
to the Restricted Classes shall be distributed to any Classes of Subordinated
Certificates having lower numerical Class designations than such Class, pro
rata, based on their respective Class Certificate Balances immediately prior to
such Distribution Date and shall be distributed in the sequential order
provided in Section 4.02(a)(4).
(f) If Subsequent Recoveries have been received with respect to a
Liquidated Mortgage Loan, the amount of such Subsequent Recoveries will be
applied sequentially, in the order of payment priority, to increase the Class
Certificate Balance of each Class of Certificates to which Realized Losses have
been allocated, but in each case by not more than the amount of Realized Losses
previously allocated to that Class of Certificates pursuant to Section 4.04.
Holders of such Certificates will not be entitled to any payment in respect of
the Class Optimal Interest Distribution Amount on the amount of such increases
for any Interest Accrual Period preceding the Distribution Date on which such
increase occurs. Any such increases shall be applied pro rata to the
Certificate Balance of each Certificate of such Class.
SECTION 4.03. [Reserved].
SECTION 4.04. Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Trustee shall determine
the total amount of Realized Losses, including Excess Losses, with respect to
the related Distribution Date. For purposes of allocating losses to the
Subordinated Certificates, the Class M Certificates will be deemed to have a
lower numerical Class designation, and to be of a higher relative payment
priority, than each other Class of Subordinated Certificates.
Realized Losses with respect to any Distribution Date shall be allocated
as follows:
(i) [Reserved]
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(ii) (A) any Realized Loss (other than an Excess Loss) on the
Mortgage Loans in a Loan Group shall be allocated first to the
Subordinated Certificates in reverse order of their respective numerical
Class designations (beginning with the Class of Subordinated Certificates
then outstanding with the highest numerical Class designation) until the
respective Class Certificate Balance of each such Class is reduced to
zero, and second to the Senior Certificates of the related Senior
Certificate Group (other than any Notional Amount Certificates), if
applicable, pro rata, on the basis of their respective Class Certificate
Balances, in each case immediately prior to the related Distribution Date
until the respective Class Certificate Balance of each such Class is been
reduced to zero; and
(B) On each Distribution Date, Excess Losses on the Mortgage Loans in
a Loan Group shall be allocated among the Classes of Senior Certificates
of the related Senior Certificate Group (other than the related Notional
Amount Certificates (if any)) and the Subordinated Certificates as
follows: (i) in the case of the Senior Certificates, the applicable Senior
Percentage of such Excess Losses shall be allocated among the Classes of
Senior Certificates (other than the Notional Amount Certificates) in the
related Senior Certificate Group pro rata on the basis of their respective
Class Certificate Balances immediately prior to the related Distribution
Date and (ii) in the case of the Subordinated Certificates, the applicable
Subordinated Percentage of such Excess Losses shall be allocated among the
Classes of Subordinated Certificates pro rata based on each Class' share
of the Subordinated Portion related to such Loan Group immediately prior
to the related Distribution Date. Each Class of Subordinated Certificates
share of the Subordinated Portion for a Loan Group shall be based on the
Class Certificate Balance of each Class of Subordinated Certificates;
provided, however, on any Distribution Date after the Senior Termination
Date, such Excess Losses on the Mortgage Loans in the related Loan Group
shall be allocated to the Senior Certificates and the Subordinated
Certificates (other than any Notional Amount Certificates, if applicable)
on the basis of their respective Class Certificate Balances immediately
prior to such Distribution Date; provided further, however, on any
Distribution Date on and after the Senior Credit Support Depletion Date,
any Excess Loss shall be allocated, pro rata, among the Classes of Senior
Certificates (other than the Notional Amount Certificates) based on their
respective Class Certificate Balances immediately prior to the related
Distribution Date.
(b) The Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date by the amount, if any, by which the
aggregate of the Class Certificate Balances of all outstanding Classes of
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses on such Distribution Date) exceeds the Pool
Stated Principal Balance as of the Due Date in the month of such Distribution
Date.
(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates pursuant
to Section 4.04(b) above shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Balances.
(d) Any allocation of Realized Losses to a Certificate or to any Component
or any reduction in the Certificate Balance of a Certificate, pursuant to
Section 4.04(b) above shall be accomplished by reducing the Certificate
Balance, Component Balance or Subordinated Portion
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thereof, as applicable, immediately following the distributions made on the
related Distribution Date in accordance with the definition of "Certificate
Balance," "Component Balance" or "Subordinated Portion," as the case may be.
SECTION 4.05. Cross-Collateralization; Adjustments to Available Funds
If on any Distribution Date the Class Certificate Balance of Senior
Certificates in a Senior Certificate Group is greater than the aggregate Stated
Principal Balance of the Mortgage Loans in the related Loan Group (the
"Undercollateralized Group"), then the Trustee shall apply the Available Funds
of the other Loan Group that is not undercollateralized (the
"Overcollateralized Group"), as follows:
(1) to add to the Available Funds of the Undercollateralized Group an
amount equal to the lesser of (a) one month's interest on the Transfer Payment
Received of the Undercollateralized Group at the Weighted Average Adjusted Net
Mortgage Rate applicable to the Undercollateralized Group and (b) Available
Funds of the Overcollateralized Group remaining after making distributions to
the Certificates of the Overcollateralized Group on such Distribution Date
pursuant to Section 4.02; and
(2) to the Senior Certificates of the Undercollateralized Group, to the
extent of the principal portion of Available Funds of the Overcollateralized
Group remaining after making distributions to the Senior Certificates of the
Overcollateralized Group on such Distribution Date pursuant to Section 4.02,
until the Class Certificate Balance of the Senior Certificates of such
Undercollateralized Group equals the aggregate Stated Principal Balance of the
Mortgage Loans in the related Loan Group.
The payment received by the Undercollateralized Group is referred to as a
"Transfer Payment Received." The payment made by the Overcollateralized Group
is referred to as a "Transfer Payment Made."
SECTION 4.06. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare and
cause to be forwarded by first class mail to each Certificateholder, the Master
Servicer, the Depositor and each Rating Agency a statement setting forth with
respect to the related distribution:
(i) the amount thereof allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments and Liquidation Proceeds
included therein;
(ii) the amount thereof allocable to interest, any Class Unpaid
Interest Amounts included in such distribution and any remaining Class
Unpaid Interest Amounts after giving effect to such distribution;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the amount
of the shortfall and the allocation thereof as between principal and
interest;
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(iv) the Class Certificate Balance or Notional Amount of each Class
of Certificates after giving effect to the distribution of principal on
such Distribution Date;
(v) the Pool Stated Principal Balance for the following Distribution
Date;
(vi) each Senior Percentage and Subordinated Percentage for the
following Distribution Date;
(vii) the amount of the Master Servicing Fees paid to or retained by
the Master Servicer with respect to such Distribution Date;
(viii) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(ix) the amount of Advances included in the distribution on such
Distribution Date and the aggregate amount of Advances outstanding as of
the close of business on such Distribution Date;
(x) the number and aggregate principal amounts of Mortgage Loans (A)
delinquent (exclusive of Mortgage Loans in foreclosure) (1) 1 to 30 days
(2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days and (B) in
foreclosure and delinquent (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90
days and (4) 91 or more days, as of the close of business on the last day
of the calendar month preceding such Distribution Date;
(xi) 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 preceding such Distribution Date and the date of
acquisition thereof;
(xii) the total number and principal balance of any REO Properties
(and market value, if available) as of the close of business on the
Determination Date preceding such Distribution Date;
(xiii) each Senior Prepayment Percentage and Subordinated Prepayment
Percentage for the following Distribution Date;
(xiv) the aggregate amount of Realized Losses incurred during the
preceding calendar month and the aggregate amount of Subsequent
Recoveries, if any, reducing the Realized Losses from the preceding
calendar months;
(xv) the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
Amount and the Bankruptcy Loss Coverage Amount, in each case as of the
related Determination Date; and
(xvi) with respect to the second Distribution Date, the number and
aggregate balance of any Delay Delivery Mortgage Loans not delivered
within thirty days after the Closing Date.
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The Trustee may make the above information available to Certificateholders via
the Trustee's website at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
(b) The Trustee's responsibility for disbursing the above information to
the Certificateholders is limited to the availability, timeliness and accuracy
of the information provided by the Master Servicer.
(c) On or before the fifth Business Day following the end of each
Prepayment Period (but in no event later than the third Business Day prior to
the related Distribution Date), the Master Servicer shall deliver to the
Trustee (which delivery may be by electronic data transmission) a report in
substantially the form set forth as Schedule VI to this Agreement.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder, a statement containing the
information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this Section
4.06 aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of
the Code as from time to time in effect.
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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
denominations, integral multiples in excess thereof (except that one
Certificate in each Class may be issued in a different amount which must be in
excess of the applicable minimum denomination) and aggregate denominations per
Class set forth in the Preliminary Statement.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by
wire transfer in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if (i) such Holder
has so notified the Trustee at least five Business Days prior to the related
Record Date and (ii) such Holder shall hold (A) a Notional Amount Certificate,
(B) 100% of the Class Certificate Balance of any Class of Certificates or (C)
Certificates of any Class with aggregate principal Denominations of not less
than $1,000,000 or (y) by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register.
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 Trustee, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the countersignature and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless countersigned by the Trustee by manual signature, and
such countersignature upon any Certificate shall be conclusive evidence, and
the only evidence, that such Certificate has been duly executed and delivered
hereunder. All Certificates shall be dated the date of their countersignature.
On the Closing Date, the Trustee shall countersign the Certificates to be
issued at the direction of the Depositor, or any affiliate of the Depositor.
The Depositor shall provide, or cause to be provided, to the Trustee on a
continuous basis, an adequate inventory of Certificates to facilitate
transfers.
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 5.06, 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 provided in this Agreement. Upon surrender for registration of transfer of
any Certificate, the Trustee shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and aggregate Percentage Interest.
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At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the 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 cancelled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) No transfer of a Private 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 said 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 each certify to the
Trustee in writing the facts surrounding the transfer in substantially the
forms set forth in Exhibit J-2 (the "Transferor Certificate") and (i) deliver a
letter in substantially the form of either Exhibit K (the "Investment Letter")
or Exhibit L (the "Rule 144A Letter") or (ii) there shall be delivered to the
Trustee at the expense of the transferor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act. The
Depositor shall provide to any Holder of a Private 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 and the Master Servicer shall cooperate with the
Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information 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 Private Certificate desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor, the Seller and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee (in the event such Certificate is a Private Certificate, such
requirement is satisfied only by the Trustee's receipt of a representation
letter from the transferee substantially in the form of Exhibit K or Exhibit L,
or in the event such Certificate is a Residual Certificate, such requirement is
satisfied only by the Trustee's receipt of
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a representation letter from the transferee substantially in the form of
Exhibit I), to the effect that (x) such transferee is not an employee benefit
plan or arrangement subject to Section 406 of ERISA or a plan or arrangement
subject to Section 4975 of the Code, or a person acting on behalf of any such
plan or arrangement, or using the assets of any such plan or arrangement to
effect such transfer or (y) in the case of a Certificate that is an
ERISA-Restricted Certificate and that has been the subject of an
ERISA-Qualifying Underwriting, if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under Sections I and III of PTCE 95-60 or (ii) in the
case of any ERISA-Restricted Certificate presented for registration in the name
of an employee benefit plan or arrangement subject to ERISA, or a plan or
arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets,
an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust Fund, addressed to
the Trustee, to the effect that the purchase and holding of such
ERISA-Restricted Certificate will not result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code, and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability (such Opinion of Counsel, a
"Benefit Plan Opinion"). For purposes of the preceding sentence, with respect
to an ERISA-Restricted Certificate that is not a Residual Certificate, in the
event the representation letter or Benefit Plan Opinion referred to in the
preceding sentence is not so furnished, one of the representations in clause
(i), as appropriate, shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. Notwithstanding anything else to the contrary in
this Agreement, any purported transfer of an ERISA-Restricted Certificate to or
on behalf of an employee benefit plan or arrangement subject to ERISA or to the
Code without the delivery to the Trustee of a Benefit Plan Opinion satisfactory
to the Trustee as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of
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any Residual Certificate 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 to this
Agreement as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Residual 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 Residual 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 Residual Certificate and (C)
not to Transfer its Ownership Interest in a Residual Certificate or to
cause the Transfer of an Ownership Interest in a Residual Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Residual 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 Residual 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 Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Residual
Certificate that is in fact not permitted by 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, Transferor
Certificate and either the Rule 144A Letter or the Investment Letter. The
Trustee shall be entitled but not obligated to recover from any Holder of
a Residual 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 Residual
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) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Residual Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel, which Opinion of
Counsel shall not be an expense of the Trust Fund, the Trustee, the Seller or
the Master Servicer, to the effect that the elimination of such restrictions
will not cause any REMIC hereunder 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, a Certificateholder or another Person. Each Person holding or
acquiring any Ownership Interest in a Residual Certificate hereby consents to
any amendment of this Agreement which, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
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of, or any beneficial interest in, a Residual 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 Residual Certificate which
is held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions referred
to above in this Section 5.02 in connection with transfer shall be at the
expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee or the Depositor is unable
to locate a qualified successor or (y) after the occurrence of an Event of
Default, Certificate Owners representing at least 51% of the Certificate
Balance of the Book-Entry Certificates together advise the Trustee and the
Depository through the Depository Participants in writing that the continuation
of a book-entry system through the Depository is no longer in the best
interests of the Certificate Owners, the Trustee shall notify all Certificate
Owners, through the Depository, of the occurrence of any such event and of the
availability of definitive, fully-registered Certificates (the "Definitive
Certificates") to Certificate Owners requesting the same. Upon surrender to the
Trustee of the related Class of Certificates by the Depository, accompanied by
the instructions from the Depository for registration, the Trustee shall issue
the Definitive Certificates. Neither the Master Servicer, the Depositor nor the
Trustee shall be liable for any delay in delivery of such instruction and each
may conclusively rely on, and shall be protected in relying on, such
instructions. The Master Servicer shall provide the Trustee with an adequate
inventory of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references in
this Agreement to obligations imposed upon or to be performed by the Depository
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shall be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates and the Trustee shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder; provided that the Trustee shall not by virtue of its assumption of
such obligations become liable to any party for any act or failure to act of
the Depository.
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 (b) there is delivered to the Master Servicer and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, countersign 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, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Master Servicer, the Trustee and any agent of the Master Servicer 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 Master Servicer, the Trustee nor any agent of the Master Servicer 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 and/or Certificate Owners (a)
request such information in writing from the Trustee, (b) state that such
Certificateholders and/or Certificate Owners desire to communicate with other
Certificateholders and/or Certificate Owners with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders and/or Certificate Owners propose
to transmit, or if the Depositor or Master Servicer shall request such
information in writing from the Trustee, then the Trustee shall, within ten
Business Days after the receipt of such request, (x) provide the Depositor,
the Master Servicer or such Certificateholders and/or Certificate Owners at
such recipients' expense the most recent list of the Certificateholders of
such Trust Fund held by the Trustee, if any, and (y) assist the Depositor, the
Master Servicer or such Certificateholders and/or Certificate Owners at such
recipients' expense with obtaining from the Depository a list of the related
Depository Participants acting on behalf of Certificate Owners of Book Entry
Certificates. The Depositor and every Certificateholder and Certificate Owner,
by receiving and holding a Certificate or beneficial interest therein, agree
that the Trustee shall not be held accountable by reason of the disclosure of
any such information as to the list of the
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Certificateholders and/or Depository Participants hereunder, regardless of the
source from which such information was derived.
SECTION 5.06. 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 in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates its Corporate Trust Office 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 MASTER SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Master
Servicer.
The Depositor and the Master Servicer shall each be liable in accordance
with this Agreement only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them in this Agreement.
SECTION 6.02. Merger or Consolidation of the Depositor or the Master
Servicer.
The Depositor will keep in full effect its existence, rights and
franchises as a corporation under the laws of the United States or under the
laws of one of the states thereof and will obtain and preserve its
qualification to do business as a foreign corporation in the 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 duties under this Agreement. The Master Servicer will keep in effect its
existence, rights and franchises as a limited partnership under the laws of the
United States or under the laws of one of the states thereof and will obtain
and preserve its qualification or registration to do business as a foreign
partnership in each jurisdiction in which such qualification or registration is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the Depositor or the Master Servicer may be merged
or consolidated, or any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any person
succeeding to the business of the Depositor or the Master Servicer, shall be
the successor of the Depositor or the Master 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 in this Agreement to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Master Servicer shall be qualified to service mortgage loans on
behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Seller,
the Master Servicer and Others.
None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to 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 Seller, the Master Servicer
or any such Person against any breach of representations or warranties made by
it in this Agreement or protect the Depositor, the Seller, the Master Servicer
or any such Person from any liability which would otherwise be imposed by
reasons of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Seller, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller or the Master
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
under this Agreement. The Depositor, the Seller, the Master Servicer and any
director, officer,
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employee or agent of the Depositor, the Seller or the Master Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense 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 related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. None of the Depositor, the Seller or the Master 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 which in its opinion may
involve it in any expense or liability; provided, however, that any of the
Depositor, the Seller or the Master 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
Trustee and the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor, the
Seller and the Master Servicer shall be entitled to be reimbursed therefor out
of the Certificate Account.
SECTION 6.04. Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrade or withdrawal of the
rating of any of the Certificates or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such
determination under clause (b) permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Trustee. No such resignation shall become effective until the Trustee or
a successor master servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities and obligations under this Agreement.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default," wherever used in this Agreement, means any one of the
following events:
(i) any failure by the Master Servicer to deposit in the Certificate
Account or remit to the Trustee any payment required to be made under the
terms of this Agreement, which failure shall continue unremedied for five
days after the date upon which written notice of such failure shall have
been given to the Master Servicer by the Trustee or the Depositor or to
the Master Servicer and the Trustee by the Holders of Certificates having
not less than 25% of the Voting Rights evidenced by the Certificates; or
(ii) any failure by the Master Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Master Servicer contained in this Agreement, which failure materially
affects the rights of Certificateholders, that failure continues
unremedied for a period of 60 days after the date on which written notice
of such failure shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer and the Trustee by the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates; provided, however, that the sixty day cure
period shall not apply to the initial delivery of the Mortgage File for
Delay Delivery Mortgage Loans nor the failure to substitute or repurchase
in lieu of delivery; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) the Master Servicer shall fail to reimburse in full the Trustee
within five days of the Master Servicer Advance Date for any Advance made
by the Trustee pursuant to Section 4.01(b) together with accrued and
unpaid interest.
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If an Event of Default described in clauses (i) to (v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, or at the direction of
the Holders of Certificates evidencing not less than 66 2/3% of the Voting
Rights evidenced by the Certificates, the Trustee shall by notice in writing to
the Master Servicer (with a copy to each Rating Agency), terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. On and after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee. The Trustee shall thereupon make any Advance which the
Master Servicer failed to make subject to Section 4.01 whether or not the
obligations of the Master Servicer have been terminated pursuant to this
Section. The Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any
obligation of the Master Servicer to pay amounts owed pursuant to Article VIII.
The Master Servicer agrees to cooperate with the Trustee in effecting the
termination of the Master 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 Certificate Account, or thereafter
be received with respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan which was due prior to the
notice terminating such Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to
which such Master Servicer would have been entitled pursuant to Sections
3.08(a)(i) through (viii), and any other amounts payable to such Master
Servicer hereunder the entitlement to which arose prior to the termination of
its activities under this Agreement.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.01, the Trustee shall, subject to and to the extent
provided in Section 3.04, be the successor to the Master Servicer in its
capacity as master servicer under this Agreement and the transactions set forth
or provided for in this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer by the terms and provisions of this Agreement and applicable law
including the obligation to make Advances pursuant to Section 4.01. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans that the Master Servicer would have been entitled to charge
to the Certificate Account or Distribution Account if the Master Servicer had
continued to act hereunder. Notwithstanding the foregoing, if the Trustee has
become the successor to the Master Servicer in accordance with Section 7.01,
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 or
if it is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
the appointment of which does not adversely affect the then current rating of
the Certificates by each Rating Agency as the successor to the
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Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $15,000,000, and which is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of
the Master Servicer (other than liabilities of the Master Servicer under
Section 6.03 incurred prior to termination of the Master 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.
Pending appointment of a successor to the Master Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.04, 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 the Master Servicing Fee permitted to be paid to the
Master 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 master 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 Master Servicer to
deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.
Any successor to the Master Servicer as master servicer shall give notice
to the Mortgagors of such change of servicer and shall, during the term of its
service as master servicer maintain in force the policy or policies that the
Master Servicer is required to maintain pursuant to Section 3.09.
In connection with the termination or resignation of the Master Servicer
hereunder, either (i) the successor Master Servicer, including the Trustee if
the Trustee is acting as successor Master Servicer, shall represent and warrant
that it is a member of MERS in good standing and shall agree to comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, or (ii) the
predecessor Master Servicer shall cooperate with the successor Master Servicer
either (x) in causing MERS to execute and deliver an assignment of Mortgage in
recordable form to transfer the Mortgage from MERS to the Trustee and to
execute and deliver such other notices, documents and other instruments as may
be necessary or desirable to effect a transfer of such Mortgage Loan or
servicing of such Mortgage Loan on the MERS(R) System to the successor Master
Servicer or (y) in causing MERS to designate on the MERS(R) System the
successor Master Servicer as the servicer of such Mortgage Loan. The
predecessor Master Servicer shall file or cause to be filed any such assignment
in the appropriate recording office. The successor Master Servicer shall cause
such assignment to be delivered to the Trustee promptly upon receipt of the
original with evidence of recording thereon or a copy certified by the public
recording office in which such assignment was recorded.
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SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Master
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
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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.
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 are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act
or its own willful misconduct; provided, however, that:
(i) unless an Event of Default known to the Trustee shall have
occurred and be continuing, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this Agreement,
the Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against
the Trustee and 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 which it 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 for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be finally proven that the Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of Holders of Certificates evidencing not less than 25%
of the Voting Rights of Certificates relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee under
this Agreement; and
(iv) without limiting the provisions of this Section 8.01 or Section
8.02, the Trustee shall be entitled to rely conclusively on the
information delivered to it by the
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Master Servicer in a Trustee Advance Notice in determining whether it is
required to make an Advance under Section 4.01(b), shall have no
responsibility to ascertain or confirm any information contained in any
Trustee Advance Notice, and shall have no obligation to make any Advance
under Section 4.01(b) in the absence of a Trustee Advance Notice or actual
knowledge of a Responsible Officer of the Trustee that (A) an Advance was
not made by the Master Servicer and (B) such Advance is not a
Nonrecoverable Advance.
SECTION 8.02. Certain Matters Affecting the Trustee.
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, Officers'
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 and the Trustee
shall have no responsibility to ascertain or confirm the genuineness of
any signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion
of Counsel;
(iii) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(iv) 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
Holders of Certificates evidencing not less than 25% of the Voting Rights
allocated to each Class of Certificates;
(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 risk or expend its own
funds or otherwise incur any financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers hereunder
if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not assured
to it;
(vii) the Trustee shall not be liable for any loss on any investment
of funds pursuant to this Agreement in its commercial capacity (other than
as issuer of the investment security);
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(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; and
(ix) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which may be
incurred therein or thereby.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained in this Agreement and in the Certificates shall be
taken as the statements of the Depositor or the Seller, 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 or of
the Certificates or of any Mortgage Loan or related document or of MERS or the
MERS(R) System other than with respect to the Trustee's execution and
counter-signature of the Certificates. The Trustee shall not be accountable for
the use or application by the Depositor or the Master Servicer of any funds
paid to the Depositor or the Master Servicer in respect of the Mortgage Loans
or deposited in or withdrawn from the Certificate Account by the Depositor or
the Master 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 and Expenses.
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Distribution Account on each Distribution Date an
amount equal to the Trustee Fee for such Distribution Date. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Seller and held harmless against any loss, liability or expense (including
reasonable attorney's fees and expenses) incurred in connection with any claim
or legal action relating to (a) this Agreement, (b) the Certificates or (c) in
connection with the performance of any of the Trustee's duties hereunder, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of any of the Trustee's duties
hereunder or incurred by reason of any action of the Trustee taken at the
direction of the Certificateholders. Such indemnity shall survive the
termination of this Agreement or the resignation or removal of the Trustee
hereunder. Without limiting the foregoing, the Seller covenants and agrees,
except as otherwise agreed upon in writing by the Depositor and the Trustee,
and except for any such expense, disbursement or advance as may arise from the
Trustee's negligence, bad faith or willful misconduct, to pay or reimburse the
Trustee, for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Agreement
with respect to: (A) the reasonable compensation and the expenses and
disbursements of its counsel not associated with the closing of the issuance of
the Certificates, (B) the reasonable compensation, expenses and
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disbursements of any accountant, engineer or appraiser that is not regularly
employed by the Trustee, to the extent that the Trustee must engage such
persons to perform acts or services hereunder and (C) printing and engraving
expenses in connection with preparing any Definitive Certificates. Except as
otherwise provided in this Agreement, the Trustee shall not be entitled to
payment or reimbursement for any routine ongoing expenses incurred by the
Trustee in the ordinary course of its duties as Trustee, Registrar, Tax Matters
Person or Paying Agent hereunder or for any other expenses.
The Trustee and any director, officer, employee or agent of the Trustee
shall be indemnified by the Master Servicer and held harmless against any loss,
liability or expense (including reasonable attorney's fees and expenses)
incurred in connection with any claim or legal action resulting from (a) any
error in any tax or information return prepared by the Master Servicer or (b)
willful misfeasance, bad faith or negligence by the Master Servicer in
connection with the performance of its duties hereunder; provided, however,
that the Master Servicer shall have no obligation to indemnify or hold harmless
the Trustee or any director, officer, employee or agent of the Trustee against
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of any of the Trustee's duties hereunder
or incurred by reason of any action of the Trustee taken at the direction of
the Certificateholders
SECTION 8.06. 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 which
would not cause either of the Rating Agencies to reduce or withdraw their
respective then current ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction) as
evidenced in writing by each Rating Agency. 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 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07. The entity serving as
Trustee may have normal banking and trust relationships with the Depositor and
its affiliates or the Master Servicer and its affiliates; provided, however,
that such entity cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor, the
Master Servicer and each Rating Agency not less than 60 days before the date
specified in such notice when, subject to Section 8.08, such resignation is to
take effect, and acceptance by a successor trustee in accordance with Section
8.08 meeting the qualifications set forth in Section 8.06. If no successor
trustee meeting such qualifications shall have been so appointed and have
accepted appointment
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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 the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
thereto by the Depositor, or if at any time 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 a tax is imposed with
respect to the Trust Fund by any state in which the Trustee or the Trust Fund
is located and the imposition of such tax would be avoided by the appointment
of a different trustee, then the Depositor or the Master Servicer may remove
the Trustee and 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 Master Servicer and one copy to the
successor trustee.
The Holders of Certificates entitled to at least 51% of the Voting Rights
may at any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered by the successor Trustee to the Master 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 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 8.07 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor trustee and the
Master Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee in this Agreement. The Depositor, the Master Servicer and the
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties, and
obligations.
No successor trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06 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 8.08, 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 10 days after acceptance of
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appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Depositor.
SECTION 8.09. 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 the business of the Trustee, shall be the successor
of the Trustee hereunder, provided that such corporation shall be eligible
under the provisions of Section 8.06 without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything in this
Agreement to the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time
be located, the Master Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Fund, and to vest in such Person or Persons, in such capacity and
for the benefit of the Certificateholders, such title to the Trust Fund or any
part thereof, whichever is applicable, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in the case an Event of Default
shall have occurred and be continuing, the Trustee alone shall have the power
to make such appointment. No co-trustee or separate trustee under this Section
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.06 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) To the extent necessary to effectuate the purposes of this
Section 8.10, 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 Master 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 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 Master
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 applicable 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;
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(ii) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder and such appointment
shall not, and shall not be deemed to, constitute any such separate
trustee or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(iv) The Seller, and not the Trustee, shall be liable for the payment
of reasonable compensation, reimbursement and indemnification to any such
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 separate trustees and co-trustees, when and
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 Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
SECTION 8.11. Tax Matters.
It is intended that the assets with respect to which the REMIC election is
to be made, as set forth in the Preliminary Statement, shall constitute, and
that the conduct of matters relating to such assets shall be such as to qualify
such assets as, a "real estate mortgage investment conduit" as defined in and
in accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of the REMIC 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 the REMIC,
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
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such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code; (c) make
or cause to be made elections that such assets be treated as a REMIC on the
federal tax return for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as and
when required to be provided to them in accordance with the REMIC Provisions,
including without limitation, the calculation of any original issue discount
using the Prepayment Assumption; (e) provide information necessary for the
computation of tax imposed on the transfer of a Residual Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Non-Permitted Transferee, or a pass-through
entity in which a Non-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 matters relating to such assets at all times that any
Certificates are outstanding so as to maintain the status as a REMIC under the
REMIC Provisions; (g) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status; (h) pay,
from the sources specified in the last paragraph of this Section 8.11, the
amount of any federal or state tax, including prohibited transaction taxes as
described below, imposed on the REMIC prior to its termination when and as the
same shall be due and payable (but such obligation shall not prevent the
Trustee or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (i) ensure that federal, state or local income tax or information
returns shall be signed by the Trustee or such other person as may be required
to sign such returns by the Code or state or local laws, regulations or rules;
(j) maintain records relating to the REMIC, including but not limited to the
income, expenses, assets and liabilities thereof and the fair market value and
adjusted basis of the assets determined at such intervals as may be required by
the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and (k) as and when necessary and appropriate,
represent the REMIC 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 the REMIC, enter into
settlement agreements with any governmental taxing agency, extend any statute
of limitations relating to any tax item of the REMIC, and otherwise act on
behalf of the REMIC in relation to any tax matter or controversy involving it.
In order to enable the Trustee to perform its duties as set forth in this
Agreement, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information or data that the
Trustee 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,
reasonably request in order to enable the Trustee to perform its duties as set
forth in this Agreement. The Depositor hereby indemnifies the Trustee for any
losses, liabilities, damages, claims or expenses of the Trustee arising from
any errors, omissions or miscalculations of the Trustee that result from any
failure of the Depositor to provide, or to cause to be provided, accurate
information or data to the Trustee on a timely basis.
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In the event that any tax is imposed on "prohibited transactions" of the
REMIC as defined in section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the REMIC as defined in section 860G(c) of the Code,
on any contribution to the REMIC hereunder after the Startup Day pursuant to
section 860G(d) of the Code, or any other tax is imposed, including, without
limitation, any minimum tax imposed upon the REMIC pursuant to sections 23153
and 24874 of the California Revenue and Taxation Code, if not paid as otherwise
provided for in this Agreement, such tax shall be paid by (i) the Trustee, if
any such other tax arises out of or results from a breach by the Trustee of any
of its obligations under this Agreement, (ii) the Master Servicer, in the case
of any such minimum tax, or if such tax arises out of or results from a breach
by the Master Servicer or Seller of any of their obligations under this
Agreement, (iii) the Seller or the relevant Transferor, if any such tax arises
out of or results from the Seller's or the relevant Transferor's obligation to
repurchase a Mortgage Loan pursuant to Section 2.02 or 2.03, in the case of the
Seller, or the related Purchase Agreement, in the case of a Transferor, or (iv)
in all other cases, or in the event that the Trustee, the Master Servicer, the
Seller or the relevant Transferor fails to honor its obligations under the
preceding clauses (i),(ii) or (iii), any such tax will be paid with amounts
otherwise to be distributed to the Certificateholders, as provided in Section
3.08(b).
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all Mortgage
Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Seller, the Master Servicer and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the purchase
by the Master Servicer of all Mortgage Loans (and REO Properties) remaining in
the Trust Fund at the price equal to the sum of (i) 100% of the Stated
Principal Balance of each Mortgage Loan plus one month's accrued interest
thereon at the applicable Adjusted Mortgage Rate, (ii) the lesser of (x) the
appraised value of any REO Property as determined by the higher of two
appraisals completed by two independent appraisers selected by the Master
Servicer at the expense of the Master Servicer and (y) the Stated Principal
Balance of each Mortgage Loan related to any REO Property, and (iii) any
remaining unpaid costs and damages incurred by the Trust Fund that arises out
of a violation of any predatory or abusive lending law that also constitutes an
actual breach of a representation or warranty of clause (8) on Schedule IV, in
all cases plus accrued and unpaid interest thereon at the applicable Adjusted
Mortgage Rate and (b) the later of (i) the maturity or other liquidation (or
any Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (ii) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant
to this Agreement. In no event shall the trusts created hereby continue beyond
the earlier of (i) the expiration of 21 years from the death of the survivor of
the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States
to the Court of St. James's, living on the date of this Agreement and (ii) the
Latest Possible Maturity Date. The right to purchase all Mortgage Loans and REO
Properties in the Trust Fund pursuant to clause (a) above shall be conditioned
upon the Pool Stated Principal Balance, at the time of any such repurchase,
aggregating less than or equal to ten percent of the Cut-off Date Pool
Principal Balance.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, the Master Servicer determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust
Fund other than the funds in the Certificate Account, the Master Servicer shall
direct the Trustee promptly to send a final distribution notice to each
Certificateholder. If the Master Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
notice is to be mailed to the affected Certificateholders, the Master Servicer
shall notify the Depositor and the Trustee of the date the Master Servicer
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 next 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 amount of such final distribution, (c) the location of the office or
agency at which such presentation and surrender must be made, and (d) that the
Record
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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 Master Servicer will give
such notice to each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Master Servicer shall cause all
funds in the Certificate Account to be remitted to the Trustee for deposit in
the Distribution Account on or before 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 Master Servicer the Mortgage Files for the Mortgage
Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders of each Class, in each case
on the final Distribution Date and in the order set forth in Section 4.02, in
proportion to their respective Percentage Interests, with respect to
Certificateholders of the same Class, an amount equal to (i) as to each Class
of Regular Certificates, the Certificate Balance thereof plus accrued interest
thereon (or on their Notional Amount, if applicable) in the case of an
interest-bearing Certificate and (ii) as to the Residual Certificates, the
amount, if any, which remains on deposit in the Distribution Account (other
than the amounts retained to meet claims) after application pursuant to clause
(i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which 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 A-R
Certificateholders shall be entitled to all unclaimed funds and other assets of
the Trust Fund which remain subject to this Agreement.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its purchase option as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied
with an Opinion of Counsel, at the expense of the Master Servicer, to the
effect that the failure to comply with the requirements of this Section 9.03
will not (i) result in the imposition of taxes on "prohibited transactions" on
the REMIC as defined in section 860F of the Code, or (ii) cause the REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set
forth in the notice given by the Master Servicer under Section 9.02, the
Master Servicer shall prepare and the Trustee, at the expense of the "tax
matters person," shall adopt a plan of complete liquidation within the
meaning of section 860F(a)(4) of the Code which, as evidenced by
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an Opinion of Counsel (which opinion shall not be an expense of the
Trustee or the Tax Matters Person), meets the requirements of a qualified
liquidation; and
(2) Within 90 days after the time of adoption of such a plan
of complete liquidation, the Trustee shall sell all of the assets of the
Trust Fund to the Master Servicer for cash in accordance with Section
9.01.
(b) The Trustee as agent for the REMIC created under this Agreement agrees
to adopt and sign such a plan of complete liquidation upon the written request
of the Master Servicer, and the receipt of the Opinion of Counsel referred to
in Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Master Servicer.
(c) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Master Servicer to prepare and the Trustee to adopt and sign a
plan of complete liquidation.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Seller, the Master Servicer and the Trustee without the consent of any of the
Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct any
defective provision in this Agreement or to supplement any provision in this
Agreement which may be inconsistent with any other provision in this Agreement,
(iii) to conform this Agreement to the Prospectus Supplement provided to
investors in connection with the initial offering of the Certificates, (iv) to
add to the duties of the Depositor, the Seller or the Master Servicer, (v) to
add any other provisions with respect to matters or questions arising hereunder
or (vi) to modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement; provided that any action pursuant to
clauses (v) or (vi) above shall not, as evidenced by an Opinion of Counsel
(which Opinion of Counsel shall not be an expense of the Trustee or the Trust
Fund), adversely affect in any material respect the interests of any
Certificateholder; provided, however, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the
Certificateholders if the Person requesting the amendment obtains a letter from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to 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, no amendment that
significantly changes the permitted activities of the trust created by this
Agreement may be made without the consent of a Majority in Interest of each
Class of Certificates affected by such amendment. The Trustee, the Seller, the
Depositor and the Master Servicer also may at any time and from time to time
amend this Agreement without the consent of the Certificateholders to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or helpful to (i) maintain the qualification of the REMIC as a REMIC under the
Code, (ii) avoid or minimize the risk of the imposition of any tax on any REMIC
pursuant to the Code that would be a claim at any time prior to the final
redemption of the Certificates or (iii) comply with any other requirements of
the Code, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion 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 helpful to, as applicable, (i) maintain
such qualification, (ii) avoid or minimize the risk of the imposition of such a
tax or (iii) comply with any such requirements of the Code.
This Agreement may also be amended from time to time by the Depositor, the
Seller, the Master Servicer and the Trustee with the consent of the Holders of
a Majority in Interest of each Class of Certificates adversely affected thereby
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
93
Certificates of such Class evidencing, as to such Class, Percentage Interests
aggregating 66%, 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, which opinion shall not be an expense of the
Trustee or the Trust Fund, to the effect that such amendment will not cause the
imposition of any tax on the REMIC or the Certificateholders or cause the REMIC
to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner
of obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations
as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be
an expense of the Trustee or the Trust Fund, satisfactory to the Trustee that
(i) such amendment is permitted and is not prohibited by this Agreement and
that all requirements for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material respect
the interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate public offices
for real property records in all the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated,
and in any other appropriate public recording office or elsewhere, such
recordation to be effected by the Master Servicer at its expense, but only upon
direction by the Trustee accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as in
this Agreement provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
SECTION 10.03. 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
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OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND
THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
(i) Conveyed Assets by the Seller to the Depositor and (ii) Trust Fund by the
Depositor to the Trustee each be, and be construed as, an absolute sale thereof
to the Trustee. It is, further, not the intention of the parties that such
conveyances be deemed a pledge thereof. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Seller or Depositor, as the case may be, or if for any other
reason this Agreement is held or deemed to create a security interest in either
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)
with respect to all such assets and security interests and (ii) the conveyances
provided for in this Agreement shall be deemed to be an assignment and a grant
pursuant to the terms of this Agreement (a) by the Seller to the Depositor or
(b) 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 Seller and 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 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 Seller shall
arrange for filing any Uniform Commercial Code financing or continuation
statements in connection with any security interest granted or assigned to the
Trustee for the benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency with respect to each of the following of which it has actual
knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the Trustee
and the appointment of any successor;
4. The repurchase or substitution of Mortgage Loans pursuant to Section
2.03;
5. The final payment to Certificateholders; and
6. Any rating action involving the long-term credit rating of the Master
Servicer, which notice shall be made by first class mail within two Business
Days after the Trustee gains actual knowledge of such a rating action.
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In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
1. Each report to Certificateholders described in Section 4.06;
2. Each annual statement as to compliance described in Section 3.16;
3. Each annual independent public accountants' servicing report described
in Section 3.17; and
4. Any notice of a purchase of a Mortgage Loan pursuant to Section 2.02,
2.03 or 3.11.
(b) All directions, demands and notices under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered by first
class mail, by courier or by facsimile transmission to (a) in the case of the
Depositor, CWMBS, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (b) in the case
of the Seller, Belvedere Trust Finance Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer, or such other address
as may be hereafter furnished to the Depositor and the Trustee by the Seller in
writing, (c) in the case of the Master Servicer, Countrywide Home Loans
Servicing LP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ facsimile
number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇, or such other address as may be
hereafter furnished to the Depositor and the Trustee by the Master Servicer in
writing, (d) in the case of the Trustee, The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Mortgage-Backed Securities Group, Mortgage Pass-Through Trust
2004-HYB1, or such other address as the Trustee may hereafter furnish to the
Depositor or Master Servicer and (e) in the case of the Rating Agencies, the
address specified therefor in the definition corresponding to the name of such
Rating Agency. 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 of the
Certificates.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Section 6.02, this Agreement may not be assigned by the
Master 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 created hereby, nor entitle such
Certificateholder's legal representative or
96
heirs to claim an accounting or to take any action or commence any proceeding
in any court for a petition or winding up of the trust created by this
Agreement, or otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided in
this Agreement) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
set forth in this Agreement 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 of this Agreement.
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 provided in this Agreement,
and unless 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, or to obtain or seek to obtain priority over or preference to any
other such Holder or to enforce any right under this Agreement, except in the
manner provided in this Agreement 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 Master Servicer agrees that, on reasonable prior notice, it will
permit and will cause each Subservicer to permit any representative of the
Depositor or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its
officers, employees and independent public accountants (and by this provision
the Master Servicer hereby authorizes said accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor or the Trustee of any right under
this Section 10.09 shall be borne by the party requesting such inspection; all
other such expenses shall be borne by the Master Servicer or the related
Subservicer.
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SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof
by the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 10.11. [Reserved].
SECTION 10.12. Protection of Assets.
(a) Except for transactions and activities entered into in connection with
the securitization that is the subject of this Agreement, the Trust Fund
created by this Agreement is not authorized and has no power to:
(i) borrow money or issue debt;
(ii) merge with another entity, reorganize, liquidate or sell assets;
or
(iii) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid.
* * * * * *
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IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller and the Master
Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
CWMBS, INC.,
as Depositor
By:
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------------------
Name:
Title:
BELVEDERE TRUST FINANCE CORPORATION,
as Seller
By:
----------------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By:
----------------------------------------------
Name:
Title:
Acknowledged solely with respect to its obligations
under Section 4.01(b)
THE BANK OF NEW YORK, in its individual capacity
By:
----------------------------------------------
Name:
Title:
S-I-X-1
SCHEDULE I
Mortgage Loan Schedule
[Delivered at Closing to Trustee]
S-I-1
SCHEDULE II
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 2004-HYB1
Representations and Warranties of the Seller
Belvedere Trust Finance Corporation ("Belvedere") hereby makes the
representations and warranties set forth in this Schedule II to the Depositor,
the Master Servicer and the Trustee, as of the Closing Date, or if so specified
in this Agreement, as of the Cut-off Date. Capitalized terms used but not
otherwise defined in this Schedule II shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
relating to the above-referenced Series, among Belvedere, as seller, CWMBS,
Inc., as depositor, Countrywide Home Loans Servicing LP, as master servicer and
The Bank of New York, as trustee.
1. Belvedere is duly organized as a Delaware corporation and is validly
existing and in good standing under the laws of the State of Delaware and is
duly authorized and qualified to transact any and all business contemplated by
the Pooling and Servicing Agreement to be conducted by Belvedere 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
perform any of its obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
2. Belvedere has the full corporate power and authority to sell each Mortgage
Loan, and to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by the Pooling and Servicing Agreement and has duly
authorized by all necessary corporate action on the part of Belvedere the
execution, delivery and performance of the Pooling and Servicing Agreement; and
the Pooling and Servicing Agreement, assuming the due authorization, execution
and delivery thereof by the other parties thereto, constitutes a legal, valid
and binding obligation of Belvedere, enforceable against Belvedere in
accordance with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3. The execution and delivery of the Pooling and Servicing Agreement by
Belvedere, the sale of the Mortgage Loans by Belvedere under the Pooling and
Servicing Agreement and the Countrywide Acknowledgements and the WAMU
Acknowledgement, the assignment by Belvedere of its rights under each of the
Purchase Agreements pursuant to the Pooling and Servicing Agreement, the
consummation of any other of the transactions contemplated by the Pooling and
Servicing Agreement, and the fulfillment of or compliance with the terms
thereof are in the ordinary course of business of Belvedere and will not (A)
result in a material breach of any term or provision of the charter or by-laws
of Belvedere 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 Belvedere is a party or
by which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to Belvedere of any court, regulatory
body, administrative agency or governmental body having
S-II-1
jurisdiction over Belvedere; and Belvedere 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 Belvedere's ability to perform or
meet any of its obligations under the Pooling and Servicing Agreement.
4. No litigation is pending or, to the best of Belvedere's knowledge,
threatened, against Belvedere that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing Agreement or
the ability of Belvedere to sell the Mortgage Loans or to perform any of its
other obligations under the Pooling and Servicing Agreement in accordance with
the terms thereof.
5. No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by
Belvedere of, or compliance by Belvedere with, the Pooling and Servicing
Agreement or the consummation of the transactions contemplated thereby, or if
any such consent, approval, authorization or order is required, Belvedere has
obtained the same.
6. Belvedere intends to treat the transfer of the Mortgage Loans to the
Depositor as a sale of the Mortgage Loans for all tax, accounting and
regulatory purposes.
S-II-2
SCHEDULE III
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 2004-HYB1
Representations and Warranties of the Master Servicer
-----------------------------------------------------
Countrywide Home Loans Servicing LP ("Countrywide Servicing") hereby makes
the representations and warranties set forth in this Schedule III to the
Depositor, the Seller and the Trustee as of the Closing Date. Capitalized terms
used but not otherwise defined in this Schedule III shall have the meanings
ascribed thereto in the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") relating to the above-referenced Series, among Belvedere
Trust Finance Corporation, as seller, Countrywide Home Loans Servicing LP, as
master servicer, CWMBS, Inc., as depositor, and The Bank of New York, as
trustee.
(1) Countrywide Servicing is duly organized as a limited
partnership and is validly existing and in good standing under the laws of
the State of Texas and is duly authorized and qualified to transact any
and all business contemplated by the Pooling and Servicing Agreement to be
conducted by Countrywide Servicing 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 Pooling and Servicing Agreement and to perform any
of its obligations under the Pooling and Servicing Agreement in accordance
with the terms thereof.
(2) Countrywide Servicing has the full partnership power and
authority to service each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated by
the Pooling and Servicing Agreement and has duly authorized by all
necessary partnership action on the part of Countrywide Servicing the
execution, delivery and performance of the Pooling and Servicing
Agreement; and the Pooling and Servicing Agreement, assuming the due
authorization, execution and delivery thereof by the other parties
thereto, constitutes a legal, valid and binding obligation of Countrywide
Servicing, enforceable against Countrywide Servicing in accordance with
its terms, except that (a) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(3) The execution and delivery of the Pooling and Servicing
Agreement by Countrywide Servicing, the servicing of the Mortgage Loans by
Countrywide Servicing under the Pooling and Servicing Agreement, the
consummation of any other of the transactions contemplated by the Pooling
and Servicing Agreement, and the fulfillment of or compliance with the
terms thereof are in the ordinary course of business of Countrywide
Servicing and will not (A) result in a material breach of any term or
provision of the certificate of limited partnership, partnership agreement
or other organizational document of Countrywide Servicing or (B)
materially conflict with, result
S-III-1
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 Countrywide Servicing is a party or by which it may be
bound, or (C) constitute a material violation of any statute, order or
regulation applicable to Countrywide Servicing of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Countrywide Servicing; and Countrywide Servicing 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
ability of Countrywide Servicing to perform or meet any of its obligations
under the Pooling and Servicing Agreement.
(4) Countrywide Servicing is an approved servicer of
conventional mortgage loans for FNMA or FHLMC and is a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Acts.
(5) No litigation is pending or, to the best of Countrywide
Servicing's knowledge, threatened, against Countrywide Servicing that
would materially and adversely affect the execution, delivery or
enforceability of the Pooling and Servicing Agreement or the ability of
Countrywide Servicing to service the Mortgage Loans or to perform any of
its other obligations under the Pooling and Servicing Agreement in
accordance with the terms thereof.
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by Countrywide Servicing of, or compliance by Countrywide
Servicing with, the Pooling and Servicing Agreement or the consummation of
the transactions contemplated thereby, or if any such consent, approval,
authorization or order is required, Countrywide Servicing has obtained the
same.
(7) Countrywide Servicing is a member of MERS in good
standing, and will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the MERS Mortgage
Loans for as long as such Mortgage Loans are registered with MERS.
S-III-2
SCHEDULE IV
CWMBS, Inc.
Mortgage Pass-Through Certificates
Series 2004-HYB1
Representations and Warranties as to the Mortgage Loans
-------------------------------------------------------
Belvedere Trust Finance Corporation ("Belvedere") hereby makes the
representations and warranties set forth in this Schedule IV to the Depositor,
the Master Servicer and the Trustee as of the Closing Date, or if so specified
in this Agreement, with respect to the Cut-off Date. Capitalized terms used but
not otherwise defined in this Schedule IV shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Belvedere, as
seller, Countrywide Home Loans Servicing LP, as master servicer, CWMBS, Inc.,
as depositor, and The Bank of New York, as trustee.
1) With respect to the Countrywide Mortgage Loans, Belvedere
hereby represents and warrants, as of the Closing Date, that the
representations and warranties of Countrywide Home Loans, Inc. contained
in Schedule I and Schedule II of the Countrywide Acknowledgement, to the
extent true and correct as of the date such representations and warranties
were made by Countrywide Home Loans, Inc., have remained true and correct
at all times (i) in the case of those representations and warranties given
as of the "Closing Date" or as to which no time qualification is
specified, from such date until February 26, 2004 and (ii) with respect to
the Mortgage Loans in Countrywide Purchase Group I, in the case of those
representations and warranties given as of the "Cut-off Date" (as defined
in Schedule I or Schedule II, as applicable, of the Countrywide
Acknowledgement), from such specified date until February 1, 2004.
2) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to each Mortgage Loan is true and correct
in all material respects as of the Closing Date.
3) The Pooling and Servicing Agreement constitutes a valid
transfer and assignment to the Depositor of all right, title and interest
of Belvedere in and to the Mortgage Loans, all monies due or to become due
with respect thereto after the Cut-off Date, and all proceeds of the
Mortgage Loans and all other property specified in Section 2.01(a) of the
Pooling and Servicing Agreement.
4) Immediately prior to the assignment of each Mortgage Loan
to the Depositor, Belvedere had good title to, and was the sole owner of,
such Mortgage Loan free and clear of any pledge, lien, encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and
assign the same pursuant to the Pooling and Servicing Agreement.
Immediately upon the transfer and assignment contemplated by Section
2.01(a) of the Pooling and
S-IV-1
Servicing Agreement, Belvedere shall have transferred all of its right,
title and interest in and to each Mortgage Loan to the Depositor (or its
assignee) and the Depositor (or its assignee) will hold good, marketable
and indefeasible title, to and be the sole owner of each Mortgage Loan
subject to no liens.
5) Other than the security interest granted to the Depositor
pursuant to this Agreement, Belvedere has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Mortgage
Loans. Belvedere has not authorized the filing of and is not aware of any
financing statements against Belvedere that include a description of
collateral covering the Mortgage Loans other than any financing statement
relating to the Mortgage Loans granted to the Depositor pursuant to the
Pooling and Servicing Agreement or that has been terminated. Belvedere is
not aware of any judgment or tax lien filings against Belvedere.
6) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company, or mortgage banking company which is supervised and examined by a
federal or state authority, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 2.03 and 2.11 of the
National Housing Act.
7) Each Mortgage Loan was originated (within the meaning of
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended) by an
entity that satisfied at the time of origination the requirements of
Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
8) Each Mortgage Loan at the time it was made complied in all
material respects with applicable local, state and federal laws,
including, but not limited to, all applicable predatory and abusive
lending laws.
9) The Mortgage Loans were selected from among the
outstanding mortgage loans in Belvedere's portfolio at the Closing Date as
to which the representations and warranties made as to the Mortgage Loans
set forth in this Schedule IV can be made. Such selection was not made in
a manner intended to adversely affect the interest of Certificateholders.
S-IV-2
SCHEDULE V
Principal Balances Schedule
[not applicable]
S-V-1
SCHEDULE VI
Form of Monthly Master Servicer Report
==================================================================================================================================
LOAN LEVEL REPORTING SYSTEM
----------------------------------------------------------------------------------------------------------------------------------
DATABASE STRUCTURE
----------------------------------------------------------------------------------------------------------------------------------
[MONTH, YEAR]
----------------------------------------------------------------------------------------------------------------------------------
Field Number Field Name Field Type Field Width Dec
----------------------------------------------------------------------------------------------------------------------------------
1 INVNUM Numeric 4
----------------------------------------------------------------------------------------------------------------------------------
2 INVBLK Numeric 4
----------------------------------------------------------------------------------------------------------------------------------
3 INACNU Character 8
----------------------------------------------------------------------------------------------------------------------------------
4 BEGSCH Numeric 15 2
----------------------------------------------------------------------------------------------------------------------------------
5 SCHPRN Numeric 13 2
----------------------------------------------------------------------------------------------------------------------------------
6 TADPRN Numeric 11 2
----------------------------------------------------------------------------------------------------------------------------------
7 LIQEPB Numeric 11 2
----------------------------------------------------------------------------------------------------------------------------------
8 ACTCOD Numeric 11
----------------------------------------------------------------------------------------------------------------------------------
9 ACTDAT Numeric 4
----------------------------------------------------------------------------------------------------------------------------------
10 INTPMT Numeric 8
----------------------------------------------------------------------------------------------------------------------------------
11 PRNPMT Numeric 13 2
----------------------------------------------------------------------------------------------------------------------------------
12 ENDSCH Numeric 13 2
----------------------------------------------------------------------------------------------------------------------------------
13 SCHNOT Numeric 13 2
----------------------------------------------------------------------------------------------------------------------------------
14 SCHPAS Numeric 7 3
----------------------------------------------------------------------------------------------------------------------------------
15 PRINPT Numeric 7 3
----------------------------------------------------------------------------------------------------------------------------------
16 PRIBAL Numeric 11 2
----------------------------------------------------------------------------------------------------------------------------------
17 LPIDTE Numeric 13 2
----------------------------------------------------------------------------------------------------------------------------------
18 DELPRN Numeric 7
----------------------------------------------------------------------------------------------------------------------------------
19 PPDPRN Numeric 11 2
----------------------------------------------------------------------------------------------------------------------------------
20 DELPRN Numeric 11 2
----------------------------------------------------------------------------------------------------------------------------------
21 NXTCHG Numeric 8
----------------------------------------------------------------------------------------------------------------------------------
22 ARMNOT Numeric 7 3
----------------------------------------------------------------------------------------------------------------------------------
23 ARMPAS Numeric 7 3
----------------------------------------------------------------------------------------------------------------------------------
24 ARMPMT Numeric 11 2
----------------------------------------------------------------------------------------------------------------------------------
25 ZZTYPE Character 2
----------------------------------------------------------------------------------------------------------------------------------
26 ISSUID Character 1
----------------------------------------------------------------------------------------------------------------------------------
27 KEYNAME Character 8
----------------------------------------------------------------------------------------------------------------------------------
TOTAL 240
----------------------------------------------------------------------------------------------------------------------------------
Suggested Format: DBASE file
Modem transmission
==================================================================================================================================
S-VII-1