FREMONT MORTGAGE SECURITIES CORPORATION,
as Depositor,
FREMONT INVESTMENT & LOAN,
as Originator and Servicer,
▇▇▇▇▇ FARGO BANK, N.A.,
as Master Servicer and Trust Administrator,
and
HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2005
FREMONT HOME LOAN TRUST 2005-B
MORTGAGE-BACKED CERTIFICATES,
SERIES 2005-B
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS 5
Section 1.01. Definitions............................................................................................. 5
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES 55
Section 2.01. Conveyance of Mortgage Loans............................................................................ 55
Section 2.02. Acceptance by the Trustee or Trust Administrator of the Mortgage Loans.................................. 58
Section 2.03. Representations, Warranties and Covenants of the Originator and the Servicer............................ 60
Section 2.04. Delivery of Opinion of Counsel in Connection with Substitution; Non-Qualified Mortgages................. 62
Section 2.05. Execution and Delivery of Certificates.................................................................. 63
Section 2.06. Representations and Warranties of the Depositor......................................................... 63
Section 2.07. Representations, Warranties and Covenants of the Servicer, the Originator and the Master Servicer....... 65
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS 70
Section 3.01. Servicer to Service Mortgage Loans...................................................................... 70
Section 3.02. Subservicing Agreements between the Servicer and Subservicers........................................... 72
Section 3.03. Successor Subservicers.................................................................................. 73
Section 3.04. Liability of the Servicer............................................................................... 73
Section 3.05. No Contractual Relationship between Subservicers and the Trustee, Master Servicer, Trust Administrator
or Certificateholder.................................................................................... 74
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee or Trust Administrator.................. 74
Section 3.07. Collection of Certain Mortgage Loan Payments............................................................ 74
Section 3.08. Subservicing Accounts................................................................................... 76
Section 3.09. Collection of Taxes, Assessments and Similar Items; Escrow Accounts..................................... 76
Section 3.10. Collection Account...................................................................................... 77
Section 3.11. Withdrawals from the Collection Account................................................................. 78
Section 3.12. Investment of Funds in the Collection Account and the Distribution Account.............................. 80
Section 3.13. Maintenance of Hazard Insurance, Errors and Omissions and Fidelity Coverage............................. 81
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements............................................... 82
Section 3.15. Realization upon Defaulted Mortgage Loans............................................................... 83
Section 3.16. Release of Mortgage Files............................................................................... 85
Section 3.17. Title, Conservation and Disposition of REO Property..................................................... 86
Section 3.18. Notification of Adjustments............................................................................. 88
Section 3.19. Access to Certain Documentation and Information Regarding the Mortgage Loans............................ 88
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Section 3.20. Documents, Records and Funds in Possession of the Servicer to Be Held for the Trustee................... 88
Section 3.21. Servicing Compensation.................................................................................. 89
Section 3.22. Annual Statement as to Compliance....................................................................... 89
Section 3.23. Annual Independent Public Accountants' Servicing Statement; Financial Statements........................ 90
Section 3.24. Master Servicer to Act as Servicer...................................................................... 90
Section 3.25. Compensating Interest................................................................................... 91
Section 3.26. Credit Reporting; ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act................................................................ 91
Section 3.27. Net WAC Rate Carryover Reserve Account; Distribution Account............................................ 91
Section 3.28. Optional Purchase of Delinquent Mortgage Loans.......................................................... 92
Section 3.29. REMIC-Related Covenants................................................................................. 93
Section 3A.01 Master Servicer......................................................................................... 93
Section 3A.02 REMIC-Related Covenants................................................................................. 94
Section 3A.03 Monitoring of Servicer.................................................................................. 94
Section 3A.04 Fidelity Bond........................................................................................... 95
Section 3A.05 Power to Act; Procedures................................................................................ 96
Section 3A.06 Due-on-Sale Clauses; Assumption Agreements.............................................................. 96
Section 3A.07 Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.................... 96
Section 3A.08 [RESERVED].............................................................................................. 97
Section 3A.09 Compensation for the Master Servicer.................................................................... 97
Section 3A.10 Annual Officer's Certificate as to Compliance........................................................... 97
Section 3A.11 Annual Independent Accountant's Servicing Report........................................................ 98
Section 3A.12 Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls.......................... 98
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER 99
Section 4.01. Advances................................................................................................ 99
Section 4.02. Priorities of Distribution.............................................................................. 100
Section 4.03. Monthly Statements to Certificateholders................................................................ 110
Section 4.04. Certain Matters Relating to the Determination of LIBOR.................................................. 113
Section 4.05. Allocation of Realized Loss Amounts..................................................................... 114
Section 4.06. Compliance with Withholding Requirements................................................................ 114
Section 4.07. Commission Reporting.................................................................................... 114
Section 4.08. REMIC Distributions and Allocation of Losses............................................................ 116
ARTICLE V THE CERTIFICATES 120
Section 5.01. The Certificates........................................................................................ 120
Section 5.02. Certificate Register; Registration of Transfer and Exchange of Certificates............................. 121
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates....................................................... 126
Section 5.04. Persons Deemed Owners................................................................................... 126
Section 5.05. Access to List of Certificateholders' Names and Addresses............................................... 127
Section 5.06. Maintenance of Office or Agency......................................................................... 127
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ARTICLE VI THE DEPOSITOR, THE ORIGINATOR, THE MASTER SERVICER AND THE SERVICER 127
Section 6.01. Respective Liabilities of the Depositor, the Originator, the Master Servicer and the Servicer........... 127
Section 6.02. Merger or Consolidation of the Depositor, the Originator, the Master Servicer or the Servicer........... 127
Section 6.03. Limitation on Liability of the Depositor, the Originator, the Master Servicer, the Trust
Administrator, the Servicer and Others.................................................................. 127
Section 6.04. Limitation on Resignation of the Servicer............................................................... 128
Section 6.05. Additional Indemnification by the Servicer; Third Party Claims.......................................... 129
Section 6.06. Rights of the Depositor, the Master Servicer, the Trust Administrator and the Trustee in Respect of
the Servicer............................................................................................ 129
Section 6.07. Limitation on Resignation of the Master Servicer........................................................ 130
Section 6.08. Assignment of Master Servicing.......................................................................... 130
ARTICLE VII DEFAULT 131
Section 7.01. Events of Default....................................................................................... 131
Section 7.02. Master Servicer to Act; Appointment of Successor........................................................ 136
Section 7.03. Notification to Certificateholders...................................................................... 138
ARTICLE VIII CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR 138
Section 8.01. Duties of the Trustee................................................................................... 138
Section 8.02. Certain Matters Affecting the Trustee and the Trust Administrator....................................... 139
Section 8.03. Neither the Trustee Nor the Trust Administrator Liable for Certificates or Mortgage Loans............... 141
Section 8.04. Trustee and Trust Administrator May Own Certificates.................................................... 142
Section 8.05. Fees and Expenses of the Trustee and Trust Administrator................................................ 142
Section 8.06. Eligibility Requirements for the Trustee and Trust Administrator........................................ 143
Section 8.07. Resignation and Removal of the Trustee or Trust Administrator........................................... 144
Section 8.08. Successor Trustee or Trust Administrator................................................................ 144
Section 8.09. Merger or Consolidation of the Trustee or the Trust Administrator....................................... 145
Section 8.10. Appointment of Co-Trustee or Separate Trustee........................................................... 145
Section 8.11. Representations and Warranties of the Trustee and Trust Administrator................................... 146
ARTICLE IX TERMINATION 147
Section 9.01. Termination upon Liquidation or Purchase of the Mortgage Loans.......................................... 147
Section 9.02. Final Distribution on the Certificates.................................................................. 148
Section 9.03. Additional Termination Requirements..................................................................... 149
ARTICLE X MISCELLANEOUS PROVISIONS 150
Section 10.01.Amendment............................................................................................... 150
Section 10.02.Recordation of Agreement; Counterparts.................................................................. 152
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Section 10.03. Governing Law........................................................................................... 152
Section 10.04. Intention of Parties.................................................................................... 152
Section 10.05. Notices................................................................................................. 153
Section 10.06. Severability of Provisions.............................................................................. 154
Section 10.07. Assignment; Sales; Advance Facilities................................................................... 154
Section 10.08. Limitation on Rights of Certificateholders.............................................................. 155
Section 10.09. Inspection and Audit Rights............................................................................. 156
Section 10.10. Certificates Nonassessable and Fully Paid............................................................... 156
Section 10.11. Waiver of Jury Trial.................................................................................... 157
ARTICLE XI REMIC PROVISIONS 157
Section 11.01. REMIC Administration.................................................................................... 157
Section 11.02. Prohibited Transactions and Activities.................................................................. 160
Section 11.03. Indemnification......................................................................................... 161
SCHEDULES
Schedule I Mortgage Loan Schedule
Schedule II Reserved
Schedule III Reserved
Schedule IV Representations and Warranties of Fremont Investment & Loan
as to the Mortgage Loans
EXHIBITS
Exhibit A Form of Class A and Class M Certificates
Exhibit B Form of Class P Certificate
Exhibit C Form of Class R Certificate
Exhibit D Form of Class C Certificate
Exhibit E Form of Initial Certification of Trust Administrator
Exhibit F Form of Document Certification and Exception Report of
Trust Administrator
Exhibit G Form of Residual Transfer Affidavit and Agreement
Exhibit H Form of Transferor Certificate
Exhibit I Form of Rule 144A Letter
Exhibit J Form of Request for Release
Exhibit K Form of Contents for Each Mortgage File
Exhibit L Power of Attorney
Exhibit M Form of Trust Administrator Certification
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Exhibit N Form of Servicer Certification
Exhibit O Purchase Agreement
Exhibit P Standard & Poor's LEVELS(R) Glossary
Exhibit Q Form of Calculation of Realized Loss
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THIS POOLING AND SERVICING AGREEMENT, dated as of May 1, 2005, among
Fremont Mortgage Securities Corporation, as depositor (the "Depositor"), FREMONT
INVESTMENT & LOAN, as originator and servicer (the "Originator" and the
"Servicer", as applicable; and together "Fremont"), and ▇▇▇▇▇ Fargo Bank, N.A.,
as master servicer and trust administrator (the "Master Servicer" and "Trust
Administrator" in such capacities, respectively), and HSBC BANK USA, NATIONAL
ASSOCIATION, as trustee (the "Trustee"),
WITNESSETH:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT
The Issuer intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of nineteen Classes of
Certificates, designated as (i) the Class 1-A-1 and Class 1-A-2 Certificates,
(ii) the Class 2-A-1, Class 2-A-2 and Class 2-A-3 Certificates, (iii) the Class
M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class
M9, Class M10 and Class M11 Certificates, (iv) the Class C Certificates, (v) the
Class P Certificates and (vi) the Class R Certificate. The descriptions of REMIC
I and REMIC II that follow are part of the Preliminary Statement. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections described below.
REMIC I
As provided herein, the Trust Administrator will make an election to treat
the assets of the Trust Fund, other than the Corridor Agreements, the Net WAC
Rate Carryover Reserve Account and any Net WAC Rate Carryover Amounts, as a real
estate mortgage investment conduit (a "REMIC") for federal income tax purposes,
and such segregated pool of assets will be designated as "REMIC I." The Class
R-I Interest will represent the sole class of "residual interests" in REMIC I
for purposes of the REMIC Provisions under federal income tax law. Interest on
all Classes of REMIC I Regular Interests will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
The following table irrevocably sets forth the designation, the
Uncertificated REMIC I Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury Regulations Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Interests.
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UNCERTIFICATED REMIC INITIAL UNCERTIFICATED LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE (1)
----------- -------------------- ---------------------- -----------------
LTAA Variable(2) $481,604,776.90 April 2035
LT1A1 Variable(2) 1,013,060.00 April 2035
LT1A2 Variable(2) 253,270.00 April 2035
LT2A1 Variable(2) 1,107,875.00 April 2035
LT2A2 Variable(2) 1,265,880.00 April 2035
LT2A3 Variable(2) 94,805.00 April 2035
LTM1 Variable(2) 86,005.00 April 2035
LTm2 Variable(2) 208,855.00 April 2035
LTM3 Variable(2) 199,035.00 April 2035
LTM4 Variable(2) 98,285.00 April 2035
LTM5 Variable(2) 98,285.00 April 2035
LTM6 Variable(2) 86,000.00 April 2035
LTM7 Variable(2) 73,715.00 April 2035
LTM8 Variable(2) 73,715.00 April 2035
LTM9 Variable(2) 61,430.00 April 2035
LTM10 Variable(2) 66,345.00 April 2035
LTM11 Variable(2) 71,260.00 April 2035
LTZZ Variable(2) 4,970,848.92 April 2035
LT1GRP Variable(2) 7,997.96 April 2035
LT1SUB Variable(2) 33,324.56 April 2035
LT2GRP Variable(2) 15,590.94 April 2035
LT2SUB Variable(2) 64,962.14 April 2035
LTXX Variable(2) 491,311,570.22 April 2035
LTP Variable(2) 100.00 April 2035
----------------
(1) Solely for purposes of Treasury Regulations Section 1.860G-1(a)(4)(iii),
the Distribution Date in the month following the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
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REMIC II
As provided herein, the Trust Administrator shall make an election to
treat the segregated pool of assets consisting of the REMIC I Regular Interests
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC II." The Class R-II Interest represents the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
Interest on all Regular Certificates (other than the Class M11 Certificates)
will be calculated on the basis of the actual number of days in the related
Interest Accrual Period and a 360-day year. Interest on the Class M11
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate and original Class Certificate Balance for each Class
of Certificates comprising the interests in the Trust Fund created hereunder:
ORIGINAL CLASS CERTIFICATE ASSUMED FINAL
CLASS CERTIFICATE BALANCE INTEREST RATE MATURITY DATES (1)
----- ------------------- ------------- ------------------
1-A-1 $202,612,000 (2) April 2035
1-A-2 50,654,000 (2) April 2035
2-A-1 221,575,000 (2) April 2035
2-A-2 253,176,000 (2) April 2035
2-A-3 18,961,000 (2) April 2035
M1 17,201,000 (2) April 2035
M2 41,771,000 (2) April 2035
M3 39,807,000 (2) April 2035
M4 19,657,000 (2) April 2035
M5 19,657,000 (2) April 2035
M6 17,200,000 (2) April 2035
M7 14,743,000 (2) April 2035
M8 14,743,000 (2) April 2035
M9 12,286,000 (2) April 2035
M10 13,269,000 (2) April 2035
M11 14,252,000 (3) April 2035
C (4) (4) April 2035
P $100 (5) April 2035
R N/A N/A April 2035
--------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Class of Certificates, each of
which represents one or more of the "regular interests" in REMIC II.
(2) A variable rate calculated in accordance with the definition of
"Pass-Through Rate" herein.
(3) The Class M11 Certificates will accrue interest at a fixed rate, subject
to a cap of the Subordinate Net WAC Rate, as set forth in the definition
of "Pass Through Rate" herein.
(4) The Class C Certificate will accrue interest at the Class C Pass-Through
Rate on the Notional Amount of the Class C Certificates outstanding from
time to time which shall equal the aggregate of the Uncertificated
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Principal Balances of the REMIC I Regular Interests (other than REMIC I
Regular Interest LTP). The Class C Certificate will have an initial
Certificate Balance equal to the Initial Overcollateralization Amount. The
Class C Certificate will not accrue interest on its Certificate Balance.
(5) The Class P Certificates do not bear interest. The Class P Certificates
represent the right to receive payments in respect of Prepayment Premiums.
The minimum denomination for each Class of the Offered Certificates will
be $25,000, with integral multiples of $1 in excess thereof except that one
Certificate in each Class may be issued in a different amount. The minimum
denomination for (a) each of the Class M11 Certificates will be $25,000, with
integral multiples of $1 in excess thereof except that one Certificate in each
Class may be issued in a different amount, (b) each of the Class P and Class R
Certificates will be a 100% Percentage Interest in such Class and (c) the Class
C Certificates will be a 10% Percentage Interest in such Class.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Book-Entry Certificates........................ All Classes of Certificates other than the Physical
Certificates.
ERISA-Restricted Certificates.................. Class R Certificates, Class P Certificates, Class C
Certificates and Class M11 Certificates; and any other
certificate with a rating below the lowest applicable
permitted rating under the Underwriters' Exemption.
LIBOR Certificates............................. The Senior Certificates and the Subordinate Certificates other
than the Class M11 Certificates.
Offered Certificates........................... All Classes of Certificates other than the Private
Certificates.
Physical Certificates.......................... Class C, Class P and Class R Certificates.
Private Certificates........................... Class M11, Class C, Class P and Class R Certificates.
Rating Agencies................................ Moody's and Standard & Poor's.
Regular Certificates........................... All Classes of Certificates other than the Class R
Certificates (exclusive of
the right to any Net WAC
Rate Carryover Amounts)
each of which represents a
regular interest in REMIC
II for purposes of the
REMIC Provisions.
Residual Certificates.......................... Class R Certificates.
Senior Certificates............................ Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2 and Class
2-A-3 Certificates.
Subordinate Certificates....................... Class M1, Class M2, Class M3, Class M4, Class M5, Class M6,
Class M7, Class M8, Class M9, Class M10 and Class M11
Certificates.
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any Mortgage Loan, as
applicable, (1) either (x) those mortgage master servicing practices of prudent
mortgage lending institutions which master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located to the extent applicable to the Master Servicer
(except in its capacity as successor to the Servicer), or (y) as provided in
Section 3A.01 hereof, but in no event below the standard set forth in clause (x)
and (2) in accordance with applicable local, state and federal laws, rules and
regulations.
Accepted Servicing Practices: With respect to any Mortgage Loan, as
applicable, (1) either (x) those mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the same type and
quality as such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located to the extent applicable to the Servicer, or (y) as provided
in Section 3.01 hereof, but in no event below the standard set forth in clause
(x) and (2) in accordance with applicable local, state and federal laws, rules
and regulations.
Account: Any of the Collection Account, the Distribution Account, any
Escrow Account or the Net WAC Rate Carryover Reserve Account. Each Account shall
be an Eligible Account.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan purchased
pursuant to the Purchase Agreement.
Adjusted Net Mortgage Interest Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Interest Rate less the Expense
Fee Rate.
Adjustment Date: As to any Mortgage Loan, the first Due Date on which the
related Mortgage Interest Rate adjusts as set forth in the related Mortgage Note
and each Due Date thereafter on which the Mortgage Interest Rate adjusts as set
forth in the related Mortgage Note.
Advance: Any P&I Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in Section
10.07.
Advancing Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any P&I Advances or Servicing Advances have been
assigned pursuant to Section 10.07.
Adverse REMIC Event: As defined in Section 11.01(f) hereof.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control"
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means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments or
supplements hereto.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which the aggregate Class Certificate Balance of the LIBOR
Certificates and the Class M11 Certificates after distributions of principal on
such Distribution Date exceeds the aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date.
Appraised Value: With respect to any Mortgage Loan, the value of the
related Mortgaged Property based upon the appraisal made for the originator at
the time of origination of such Mortgage Loan or the sales price of such
Mortgaged Property at such time of origination, whichever is less; provided,
however, that in the case of a refinanced Mortgage Loan, such value is based
solely upon the appraisal made at the time of origination of such refinanced
Mortgage Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form (other than the assignee's name and
recording information not yet returned from the recording office), reflecting
the sale of the Mortgage to the Trustee.
Available Funds: With respect to any Distribution Date and the Mortgage
Loans to the extent received by the Trust Administrator (x) the sum of (i) all
scheduled installments of interest (net of the related Expense Fees) and
principal due on the Due Date on such Mortgage Loans in the related Due Period
and received on or prior to the related Determination Date, together with any
P&I Advances in respect thereof; (ii) all Condemnation Proceeds, Insurance
Proceeds and Liquidation Proceeds during the related Prepayment Period (in each
case, net of unreimbursed expenses incurred in connection with a liquidation or
foreclosure and unreimbursed Advances, if any); (iii) all partial or full
prepayments on the Mortgage Loans received during the related Prepayment Period
together with all Compensating Interest thereon and any amounts paid by the
Servicer or Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Sections 3.25 and 3A.12, respectively
(excluding in each case Prepayment Premiums and any Prepayment Interest Excess);
(iv) any Subsequent Recoveries, and (v) amounts received with respect to such
Distribution Date as the Substitution Adjustment Amount or purchase price in
respect of a Deleted Mortgage Loan or a Mortgage Loan repurchased by the
Originator or the Depositor as of such Distribution Date; reduced by (y) amounts
in reimbursement for P&I Advances and Servicing Advances previously made with
respect to the Mortgage Loans and other amounts to which the Servicer, the
Master Servicer, the Depositor, the Trust Administrator or the Trustee (or
co-trustee) are entitled to be paid or reimbursed pursuant to this Agreement.
Base Rate: For any Distribution Date and any Class of LIBOR Certificates,
the sum of (i) one-month LIBOR plus (ii) the related Pass-Through Margin. For
any Distribution Date and
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the Class M11 Certificates, a per annum rate equal to 5.250%, or after the
Optional Termination Date, 5.750%.
Best's: Best's Key Rating Guide, as the same shall be amended from time to
time.
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions, in (a) the states of New York,
Maryland, Minnesota and California, (b) the state in which the Servicer's
servicing operations are located, or (c) the state in which the Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.
Certificate: Any one of the Certificates executed by the Trust
Administrator in substantially the forms attached hereto as exhibits.
Certificate Balance: With respect to any Class of Certificates, other than
the Class C or Class R Certificates, at any date, the maximum dollar amount of
principal to which the Holder thereof is then entitled hereunder, such amount
being equal to the Denomination thereof minus all distributions of principal
previously made with respect thereto and in the case of the Subordinate
Certificates, reduced by any Applied Realized Loss Amounts applicable to such
Class; provided, however, that the Certificate Balances of the Subordinate
Certificates then outstanding will be increased in direct order of seniority by
the amount of any Subsequent Recoveries distributed to any Class senior to such
Class. With respect to the Class C Certificate and any Distribution Date, the
excess, if any, of the then aggregate Uncertificated Principal Balances of the
REMIC I Regular Interests over the aggregate Certificate Balance of the LIBOR
Certificates, the Class M11 Certificates and the Class P Certificate then
outstanding. The Class R Certificates will not have a Certificate Balance.
Certificate Interest Rate: With respect to each Distribution Date during
the Interest Accrual Period and each Class of LIBOR Certificates, the Class M11
Certificates and the Class C Certificates, the related Pass-Through Rate.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section 5.02.
Certificate Registrar: The registrar appointed pursuant to Section 5.02.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor, the Master Servicer or the Servicer or any affiliate
thereof 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
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Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee and the Trust Administrator are entitled to
rely conclusively on a certification of the Depositor or any affiliate of the
Depositor in determining which Certificates are registered in the name of an
affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set forth in
the Preliminary Statement.
Class A Certificates: Any of the Class 1-A Certificates and the Class 2-A
Certificates, as applicable.
Class 1-A Certificates: Any of the Class 1-A-1 Certificates and the Class
1-A-2 Certificates, as applicable.
Class 1-A-1 Certificates: All Certificates bearing the Class designation
of "Class 1-A-1 Certificates" representing the right to distributions as set
forth herein and therein and representing a regular interest in REMIC II for
purposes of the REMIC Provisions.
Class 1-A-2 Certificates: All Certificates bearing the Class designation
of "Class 1-A-2 Certificates" representing the right to distributions as set
forth herein and therein and representing a regular interest in REMIC II for the
purposes of the REMIC Provisions.
Class 2-A Certificates: Any of the Class 2-A-1 Certificates, Class 2-A-2
Certificates and the Class 2-A-3 Certificates, as applicable.
Class 2-A-1 Certificates: All Certificates bearing the Class designation
of "Class 2-A-1 Certificates" representing the right to distributions as set
forth herein and therein and representing a regular interest in REMIC II for
purposes of the REMIC Provisions.
Class 2-A-2 Certificates: All Certificates bearing the Class designation
of "Class 2-A-2 Certificates" representing the right to distributions as set
forth herein and therein and representing a regular interest in REMIC II for
purposes of the REMIC Provisions.
Class 2-A-3 Certificates: All Certificates bearing the Class designation
of "Class 2-A-3 Certificates" representing the right to distributions as set
forth herein and therein and representing a regular interest in REMIC II for
purposes of the REMIC Provisions.
Class C Certificates: All Certificates bearing the Class designation of
"Class C Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
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 C Distributable Amount: On any Distribution Date, the sum of (i) the
interest accrued on such Class C Certificate at its Pass-Through Rate calculated
on its Notional Amount less the amount (without duplication) of any Net WAC Rate
Carryover Payments paid pursuant
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to Section 4.02(a)(iii) and less the amount applied as an Extra Principal
Distribution Amount on such Distribution Date, (ii) any amount of the
Certificate Balance of the Class C Certificate that is distributable as an
Overcollateralization Release Amount and (iii) the aggregate of amounts
remaining in the Net WAC Rate Carryover Reserve Accounts after the distributions
in Sections 4.02(a)(iii)(O) and (P).
Class M1 Certificates: All Certificates bearing the Class designation of
"Class M1 Certificates" representing the right to distributions as set forth
herein and therein and representing an interest in REMIC II for purposes of the
REMIC Provisions.
Class M1 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date) and (ii) the aggregate
Certificate Balance of the Class M1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 55.50 % and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the Overcollateralization Floor Amount.
Class M2 Certificates: All Certificates bearing the Class designation of
"Class M2 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M2 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date) and (iii) the aggregate Certificate Balance of the Class M2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 64.00% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the
Overcollateralization Floor Amount.
Class M3 Certificates: All Certificates bearing the Class designation of
"Class M3 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
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9
Class M3 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate Balance
of the Class M3 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 72.10% and (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) minus the Overcollateralization Floor Amount.
Class M4 Certificates: All Certificates bearing the Class designation of
"Class M4 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M4 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date) and (v)
the aggregate Certificate Balance of the Class M4 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 76.10%
and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the Overcollateralization Floor Amount.
Class M5 Certificates: All Certificates bearing the Class designation of
"Class M5 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
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Class M5 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date) and (vi) the aggregate Certificate Balance of the Class
M5 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 80.10% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor Amount.
Class M6 Certificates: All Certificates bearing the Class designation of
"Class M6 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M6 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date) and (vii) the aggregate
Certificate Balance of the Class M6 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 83.60% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and
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unscheduled collections of principal received during the related Prepayment
Period) minus the Overcollateralization Floor Amount.
Class M7 Certificates: All Certificates bearing the Class designation of
"Class M7 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M7 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date) and (viii) the aggregate Certificate Balance of the Class M7 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 86.60% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus the
Overcollateralization Floor Amount.
Class M8 Certificates: All Certificates bearing the Class designation of
"Class M8 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M8 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after
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taking into account the distribution of the Class M3 Principal Distribution
Amount on such Distribution Date), (v) the aggregate Certificate Balance of the
Class M4 Certificates (after taking into account the distribution of the Class
M4 Principal Distribution Amount on such Distribution Date), (vi) the aggregate
Certificate Balance of the Class M5 Certificates (after taking into account the
distribution of the Class M5 Principal Distribution Amount on such Distribution
Date), (vii) the aggregate Certificate Balance of the Class M6 Certificates
(after taking into account the distribution of the Class M6 Principal
Distribution Amount on such Distribution Date), (viii) the aggregate Certificate
Balance of the Class M7 Certificates (after taking into account the distribution
of the Class M7 Principal Distribution Amount on such Distribution Date) and
(ix) the aggregate Certificate Balance of the Class M8 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
89.60% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus the Overcollateralization Floor
Amount.
Class M9 Certificates: All Certificates bearing the Class designation of
"Class M9 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M9 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date), (viii) the aggregate Certificate Balance of the Class M7 Certificates
(after taking into account the distribution of the Class M7 Principal
Distribution Amount on such Distribution Date), (ix) the aggregate Certificate
Balance of the Class M8 Certificates (after taking into account the distribution
of the Class M8 Principal Distribution Amount on such Distribution Date) and (x)
the aggregate Certificate Balance of the Class M9 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 92.10%
and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of
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the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) minus the Overcollateralization
Floor Amount.
Class M10 Certificates: All Certificates bearing the Class designation of
"Class M10 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M10 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date), (viii) the aggregate Certificate Balance of the Class M7 Certificates
(after taking into account the distribution of the Class M7 Principal
Distribution Amount on such Distribution Date), (ix) the aggregate Certificate
Balance of the Class M8 Certificates (after taking into account the distribution
of the Class M8 Principal Distribution Amount on such Distribution Date), (x)
the aggregate Certificate Balance of the Class M9 Certificates (after taking
into account the distribution of the Class M9 Principal Distribution Amount on
such Distribution Date) and (xi) the aggregate Certificate Balance of the Class
M10 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 94.80% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor Amount.
Class M11 Certicates: All Certificates bearing the Class designation of
"Class M11 Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class M11 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after
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14
taking into account the distribution of the Senior Principal Distribution Amount
on such Distribution Date), (ii) the aggregate Certificate Balance of the Class
M1 Certificates (after taking into account the distribution of the Class M1
Principal Distribution Amount on such Distribution Date), (iii) the aggregate
Certificate Balance of the Class M2 Certificates (after taking into account the
distribution of the Class M2 Principal Distribution Amount on such Distribution
Date), (iv) the aggregate Certificate Balance of the Class M3 Certificates
(after taking into account the distribution of the Class M3 Principal
Distribution Amount on such Distribution Date), (v) the aggregate Certificate
Balance of the Class M4 Certificates (after taking into account the distribution
of the Class M4 Principal Distribution Amount on such Distribution Date), (vi)
the aggregate Certificate Balance of the Class M5 Certificates (after taking
into account the distribution of the Class M5 Principal Distribution Amount on
such Distribution Date), (vii) the aggregate Certificate Balance of the Class M6
Certificates (after taking into account the distribution of the Class M6
Principal Distribution Amount on such Distribution Date), (viii) the aggregate
Certificate Balance of the Class M7 Certificates (after taking into account the
distribution of the Class M7 Principal Distribution Amount on such Distribution
Date), (ix) the aggregate Certificate Balance of the Class M8 Certificates
(after taking into account the distribution of the Class M8 Principal
Distribution Amount on such Distribution Date), (x) the aggregate Certificate
Balance of the Class M9 Certificates (after taking into account the distribution
of the Class M9 Principal Distribution Amount on such Distribution Date), (xi)
the aggregate Certificate Balance of the Class M10 Certificates (after taking
into account the distribution of the Class M10 Principal Distribution Amount on
such Distribution Date) and (xii) the aggregate Certificate Balance of the Class
M11 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 97.70% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor Amount.
Class P Certificates: All Certificates bearing the Class designation of
"Class P Certificates" representing the right to distributions as set forth
herein and therein and representing a regular interest in REMIC II for purposes
of the REMIC Provisions.
Class R Certificates: All Certificates bearing the Class designation of
"Class R Certificates" and evidencing the ownership of the "residual interest"
in each of REMIC I and REMIC II for purposes of the REMIC Provisions. The Class
R Certificate represents the ownership of the Class R-I Interest and the Class
R-II Interest.
Class R-I Interest: The residual interest in REMIC I for purposes of the
REMIC Provisions.
Class R-II Interest: The residual interest in REMIC II for purposes of the
REMIC Provisions.
Fremont 2005-B
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15
Closing Date: May 6, 2005.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: As defined in Section 3.10.
Compensating Interest: For any Distribution Date, the lesser of (a) the
Prepayment Interest Shortfall, if any, for such Distribution Date, with respect
to voluntary Principal Prepayments in full by the Mortgagor (excluding any
payments made upon liquidation of the Mortgage Loan), and (b) the amount of the
Servicing Fee payable to the Servicer for such Distribution Date.
Condemnation Proceeds: All awards, compensation and/or settlements in
respect of a Mortgaged Property, whether permanent or temporary, partial or
entire, by exercise of the power of eminent domain or condemnation.
Corporate Trust Office. The designated office of the Trustee or the Trust
Administrator, as the case may be, at which at any particular time its corporate
trust business with respect to this Agreement is administered, which office at
the date of the execution of this Agreement is located at (i) with respect to
the Trustee, HSBC Bank USA, National Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other address as the Trustee may designate from time
to time by notice to the Certificateholders, the Depositor, the Servicer, the
Master Servicer, the Originator and the Trust Administrator, or (ii) with
respect to the Trust Administrator, (A) for certificate transfer purposes, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Trust Services-Fremont 2005-B, (B) for matters relating to the Custodial Files,
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Fremont
2005-B, and (C) for all other purposes, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: Client Manager-Fremont 2005-B, facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇
and which is the address to which notices to and correspondence with the Trust
Administrator should be directed.
Corridor Agreement: Any or all of the Group 1 Corridor Agreement, the
Group 2 Corridor Agreement and/or the Subordinate Corridor Agreement.
Corridor Agreement Payments: The payments made to, and received by, the
Trust Administrator, on behalf of the Issuer, under any or all of the Group 1
Corridor Agreement, the Group 2 Corridor Agreement and/or the Subordinate
Corridor Agreement.
Corresponding Class: The Class of interests in one Trust REMIC created
under this Agreement that corresponds to the Class of interests in the other
Trust REMIC or to a Class of Certificates in the manner set out below:
CORRESPONDING REMIC I CLASSES CORRESPONDING REMIC II CLASSES
----------------------------- ------------------------------
LT1A1 Class 1-A-1 Certificates
LT1A2 Class 1-A-2 Certificates
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LT2A1 Class 2-A-1 Certificates
LT2A2 Class 2-A-2 Certificates
LT2A3 Class 2-A-3 Certificates
LTM1 Class M1 Certificates
LTM2 Class M2 Certificates
LTM3 Class M3 Certificates
LTM4 Class M4 Certificates
LTM5 Class M5 Certificates
LTM6 Class M6 Certificates
LTM7 Class M7 Certificates
LTM8 Class M8 Certificates
LTM9 Class M9 Certificates
LTM10 Class M10 Certificates
LTM11 Class M11 Certificates
LTP Class P Certificates
N/A Class C Certificate
Counterparty: The Royal Bank of Scotland plc, and its successors in
interest.
Credit Enhancement Percentage: With respect to any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinate Certificates and (ii) the
Overcollateralized Amount (in each case after taking into account the
distributions of the Principal Distribution Amount for such Distribution Date)
by (y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
Current Interest: With respect to any Distribution Date for each Class of
the LIBOR Certificates and the Class M11 Certificates, the amount of interest
accrued during the related Interest Accrual Period at the applicable
Pass-Through Rate on the related Class Certificate Balance immediately prior to
such Distribution Date, as reduced by such Class's share of Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for the related Due
Period allocated to such Class pursuant to Section 4.02.
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Custodial File: With respect to each Mortgage Loan, the file retained by
the Trust Administrator consisting of items (a) - (h) as listed on Exhibit K
hereto.
Cut-off Date: With respect to each Mortgage Loan (other than a Substitute
Mortgage Loan), May 1, 2005. With respect to all Substitute Mortgage Loans,
their respective dates of substitution. References herein to the "Cut-off Date,"
when used with respect to more than one Mortgage Loan, shall be to the
respective Cut-off Dates for such Mortgage Loans.
Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the close of business on the Cut-off Date
(after giving effect to payments of principal due on that date).
Data Tape Information: The information provided by the Originator as of
the Cut-off Date to the Depositor setting forth the following information with
respect to each Mortgage Loan: (1) the Originator's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the city, state and zip code; (4) a code indicating whether
the Mortgaged Property is owner-occupied, a second home or investment property;
(5) the number and type of residential units constituting the Mortgaged Property
(i.e., a single family residence, a 2-4 family residence, a unit in a
condominium project or a unit in a planned unit development, manufactured
housing); (6) the original months to maturity or the remaining months to
maturity from the Cut-off Date, in any case based on the original amortization
schedule and, if different, the maturity expressed in the same manner but based
on the actual amortization schedule; (7) the Loan-to-Value Ratio at origination;
(8) the Mortgage Interest Rate as of the Cut-off Date; (9) the date on which the
Scheduled Payment was due on the Mortgage Loan and, if such date is not
consistent with the Due Date currently in effect, such Due Date; (10) the stated
maturity date; (11) the amount of the Scheduled Payment as of the Cut-off Date;
(12) the last payment date on which a Scheduled Payment was actually applied to
pay interest and, if applicable, the outstanding principal balance; (13) the
original principal amount of the Mortgage Loan; (14) the principal balance of
the Mortgage Loan as of the close of business on the Cut-off Date, after
deduction of payments of principal due and collected on or before the Cut-off
Date; (15) with respect to Adjustable Rate Mortgage Loans, the Adjustment Date;
(16) with respect to Adjustable Rate Mortgage Loans, the Gross Margin; (17) with
respect to Adjustable Rate Mortgage Loans, the Lifetime Rate Cap under the terms
of the Mortgage Note; (18) with respect to Adjustable Rate Mortgage Loans, a
code indicating the type of Index; (19) with respect to Adjustable Rate Mortgage
Loans, the Periodic Mortgage Interest Rate Cap under the terms of the Mortgage
Note; (20) the type of Mortgage Loan (i.e., fixed rate, adjustable rate, first
lien); (21) a code indicating the purpose of the loan (i.e., purchase, rate and
term refinance, equity take-out refinance); (22) a code indicating the
documentation style (i.e., full documentation, easy documentation or stated
income); (23) the loan credit classification (as described in the Underwriting
Guidelines); (24) whether such Mortgage Loan provides for a Prepayment Premium;
(25) the Prepayment Premium period of such Mortgage Loan, if applicable; (26) a
description of the Prepayment Premium, if applicable; (27) the Mortgage Interest
Rate as of origination; (28) the credit risk score at origination; (29) the date
of origination; (30) the Mortgage Interest Rate adjustment period; (31)the
Minimum Mortgage Interest Rate; (32) the Mortgage Interest Rate calculation
method (i.e., 30/360, simple interest, other); (33) a code indicating whether
the Mortgage Loan is a High Cost Mortgage Loan; (34) a code indicating whether
the Mortgage Loan has been modified; (35) the current Loan-to-Value
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Ratio; (36) [Reserved]; (37) the Due Date for the first Scheduled Payment; (38)
the original Scheduled Payment due; (39) with respect to the related Mortgagor,
the debt-to-income ratio; (40) the Appraised Value of the Mortgaged Property;
(41) the sales price of the Mortgaged Property if the Mortgage Loan was
originated in connection with the purchase of the Mortgaged Property; (42) the
MERS identification number; and (43) a code indicating if a Mortgage Loan is a
30-Day Delinquency. With respect to the Mortgage Loans in the aggregate: (1) the
number of Mortgage Loans; (2) the current aggregate outstanding principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Interest Rate
of the Mortgage Loans; and (4) the weighted average maturity of the Mortgage
Loans.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction by
a court of competent jurisdiction in a proceeding under the United States
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except for such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the United States 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).
Deleted Mortgage Loan: As defined in Section 2.03(d).
Delinquency Rate: With respect to any month, the quotient (expressed as a
percentage) of (1) the Stated Principal Balance of the 60+ Day Delinquent
Mortgage Loans, divided by (2) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related month.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Certificate Balance of this Certificate" or the
Percentage Interest appearing on the face thereof.
Depositor: Fremont Mortgage Securities Corporation, a Delaware
corporation, and its successors 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 Institution: Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and
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(c) has outstanding unsecured commercial paper or other short-term unsecured
debt obligations that are rated P-1 by Moody's and A-1 by Standard & Poor's.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to each Distribution Date, the 18th of
the calendar month in which such Distribution Date occurs or, if such day is not
a Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and maintained
by the Trust Administrator pursuant to Section 3.27(b) in the name of the Trust
Administrator for the benefit of the Certificateholders and designated "▇▇▇▇▇
Fargo Bank, N.A. in trust for registered holders of Fremont Home Loan Trust
2005-B Mortgage-Backed Certificates, Series 2005-B." Funds in the Distribution
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement and may be invested in Permitted
Investments.
Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such day is not a Business Day, the next
succeeding Business Day, commencing in June, 2005.
Document Certification and Exception Report: The report attached to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is due on a
Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Distribution Date, the period commencing
on the second day of the calendar month preceding the month in which the
Distribution Date occurs and ending on the first day of the calendar month in
which the Distribution Date occurs.
Eligible Account: Either (i) an account 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 a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1 by Standard & Poor's and P-1
by Moody's (and a comparable rating if another Rating Agency is specified by the
Depositor by written notice to the Servicer) at the time any amounts are held on
deposit therein, (ii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity or (iii) 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.
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 Prohibited
Transaction Exemption ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002) (or any
successor thereto), or any substantially similar administrative exemption
granted by the U.S. Department of Labor.
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ERISA-Restricted Certificate: As specified in the Preliminary Statement.
Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b) of this Agreement.
Event of Default: Any (i) Servicer Event of Default or (ii) Master
Servicer Event of Termination, each as defined in Section 7.01.
Excess Cashflow: As to any Distribution Date, an amount equal to the
excess if any, of (i) the interest collected on the Mortgage Loans received by
the Servicer on or prior to the related Determination Date or advanced by the
Servicer for the related Remittance Date (net of Expense Fees) over (ii) the sum
of the amounts payable to the Classes of Certificates on such Distribution Date
pursuant to Section 4.02(a)(i).
Excess Overcollateralized Amount: With respect to any Distribution Date,
the excess, if any, of (a) the Overcollateralized Amount on such Distribution
Date over (b) the Overcollateralization Target Amount for such Distribution
Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: As to each Mortgage Loan, a per annum rate equal to the
sum of the Servicing Fee Rate, the Master Servicing Fee Rate and the Trust
Administration Fee Rate.
Expense Fees: As to each Mortgage Loan, the sum of the Servicing Fee, the
Master Servicing Fee and the Trust Administration Fee.
Extra Principal Distribution Amount: As of any Distribution Date, the
lesser of (x) the Excess Cashflow for such Distribution Date and (y) the related
Overcollateralization Deficiency for such Distribution Date.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Final Recovery Determination: With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Originator as contemplated by this Agreement), a determination made by the
Servicer that all Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby and deliver a
certificate of a Servicing Officer evidencing such determination to the Master
Servicer.
Final Scheduled Distribution Date: The Final Scheduled Distribution Date
for each Class of Certificates is the Distribution Date occurring in April 2035.
Fremont: Fremont Investment & Loan, a California state chartered
industrial bank, and its successors in interest.
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Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note to be added to
the applicable Index to determine the Mortgage Interest Rate.
Group 1 Allocation Percentage: For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is (i) the Principal Remittance
Amount for the Group 1 Mortgage Loans for such Distribution Date, and the
denominator of which is (ii) the Principal Remittance Amount for such
Distribution Date.
Group 1 Corridor Agreement: The cap agreement, dated as of May 6, 2005,
between the Trustee, on behalf of the Issuer, and the Counterparty, having an
initial notional amount of $251,799,478.79.
Group 1 Interest Remittance Amount: With respect to any Distribution Date,
that portion of the Available Funds for such Distribution Date attributable to
interest received or advanced with respect to the Group 1 Mortgage Loans,
reduced by the pro rata portion of the amounts specified in clause (y) of the
definition of Available Funds for such Distribution Date.
Group 1 Mortgage Loans: The Mortgage Loans identified on the Mortgage Loan
Schedule as Group 1 Mortgage Loans.
Group 1 Net WAC Rate: For any Distribution Date and each Class of Class
1-A Certificates, a per annum rate equal to (a) the weighted average of the
Adjusted Net Mortgage Interest Rates then in effect at the beginning of the
related Due Period on the Group 1 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) multiplied by (b) 30 divided by the actual number of
days in such Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
the Uncertificated REMIC I Pass-Through Rate on REMIC I Regular Interest LT1GRP,
weighted on the basis of the Uncertificated Balance of such REMIC I Regular
Interest.
Group 1 Principal Distribution Amount: With respect to any Distribution
Date is the sum of (i) the excess of (x) the Principal Remittance Amount
relating to the Group 1 Mortgage Loans over (y) the Overcollateralization
Release Amount multiplied by the Group 1 Allocation Percentage for such
Distribution Date and (ii) the Extra Principal Distribution Amount for such
Distribution Date multiplied by the Group 1 Allocation Percentage.
Group 1 Senior Principal Distribution Amount: An amount equal to the
excess of (x) the aggregate Certificate Balance of the Class 1-A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 52.00% and (ii) the aggregate Stated Principal Balance of the
Group 1 Mortgage Loans as of the last day of the related Due Period (after
giving effect to Scheduled Payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group 1 Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
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unscheduled collections of principal received during the related Prepayment
Period) minus $1,666,228.16.
Group 2 Allocation Percentage: For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is (i) the Principal Remittance
Amount for the Group 2 Mortgage Loans for such Distribution Date, and the
denominator of which is (ii) the Principal Remittance Amount for such
Distribution Date.
Group 2 Corridor Agreement: The cap agreement, dated as of May 6, 2005,
between the Trustee, on behalf of the Issuer, and the Counterparty, having an
initial notional amount of $493,466,591.01.
Group 2 Interest Remittance Amount: With respect to any Distribution Date,
that portion of the Available Funds for such Distribution Date attributable to
interest received or advanced with respect to the Group 2 Mortgage Loans,
reduced by the pro rata portion of the amounts specified in clause (y) of the
definition of Available Funds for such Distribution Date.
Group 2 Mortgage Loans: The Mortgage Loans identified on the Mortgage Loan
Schedule as Group 2 Mortgage Loans.
Group 2 Net WAC Rate: For any Distribution Date and each Class of Class
2-A Certificates, a per annum rate equal to (a) the weighted average of the
Adjusted Net Mortgage Interest Rates then in effect at the beginning of the
related Due Period on the Group 2 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) multiplied by (b) 30 divided by the actual number of
days in such Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
the Uncertificated REMIC I Pass-Through Rate on REMIC I Regular Interest LT2GRP,
weighted on the basis of the Uncertificated Balance of such REMIC I Regular
Interest.
Group 2 Principal Distribution Amount: With respect to any Distribution
Date is the sum of (i) the excess of (x) the Principal Remittance Amount
relating to the Group 2 Mortgage Loans over (y) the Overcollateralization
Release Amount multiplied by the Group 2 Allocation Percentage for such
Distribution Date and (ii) the Extra Principal Distribution Amount for such
Distribution Date multiplied by the Group 2 Allocation Percentage.
Group 2 Senior Principal Distribution Amount: An amount equal to the
excess of (x) the aggregate Certificate Balance of the Class 2-A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 52.00% and (ii) the aggregate Stated Principal Balance of the
Group 2 Mortgage Loans as of the last day of the related Due Period (after
giving effect to Scheduled Payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group 2 Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) minus $3,248,106.80.
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High Cost Mortgage Loan: A Mortgage Loan classified as (a) a "high cost"
loan under the Home Ownership and Equity Protection Act of 1994, (b) a "high
cost," "threshold," "covered" or "predatory" loan under any other applicable
state, federal or local law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest rates,
points and/or fees) or (c) a High Cost Loan or Covered Loan as defined in the
Standard & Poor's LEVELS(R) Glossary attached as Exhibit P (the "Glossary")
where (x) a "High Cost Loan" is each loan identified in the column "Category
under applicable anti-predatory lending law" of the table entitled "Standard &
Poor's High Cost Loan Categorization" in the Glossary as each such loan is
defined in the applicable anti-predatory lending law of the State or
jurisdiction specified in such table and (y) "Covered Loan" is each loan
identified in the column "Category under applicable anti-predatory lending law"
of the table entitled "Standard & Poor's High Covered Loan Categorization" in
the Glossary as each such loan is defined in the applicable anti-predatory
lending law of the State of jurisdiction specified in such table.
Index: As to each Adjustable Rate Mortgage Loan, the index from time to
time in effect for the adjustment of the Mortgage Interest Rate set forth as
such on the related Mortgage Note.
Initial Mortgage Interest Rate Cap: With respect to each Adjustable Rate
Mortgage Loan, the absolute maximum amount set forth in a provision of each
Mortgage Note by which the Mortgage Interest Rate therein may increase or
decrease on the first Adjustment Date above or below the Mortgage Interest Rate
previously in effect.
Initial Overcollateralization Amount: $11,302,991.63.
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: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Accrual Period: With respect to each Class of LIBOR Certificates
and the Class C Certificates and any Distribution Date, the period commencing on
the Distribution Date occurring in the month preceding the month in which the
current Distribution Date occurs and ending on the day immediately preceding the
current Distribution Date (or, in the case of the first Distribution Date, the
period from and including the Closing Date to but excluding such first
Distribution Date). For purposes of computing interest accruals on each Class of
LIBOR Certificates and the Class C Certificates, each Interest Accrual Period
has the actual number of days in such month and each year is assumed to have 360
days. For purposes of computing interest accruals on the REMIC I Regular
Interests and the Class M11 Certificates, each Interest Accrual Period will be
the prior calendar month, and each such month is assumed to have 30 days and
each year is assumed to have 360 days.
Investment Account: As defined in Section 3.12(a).
Issuer: Fremont Home Loan Trust 2005-B,
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Late Collections: With respect to any Mortgage Loan and any Due Period,
all amounts received after the Remittance Date immediately following such Due
Period, whether as late payments of Scheduled Payments or as Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.
LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Trust Administrator on the related
LIBOR Determination Date on the basis of the offered rate for one-month U.S.
dollar deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on such date; provided, that if such rate does not appear on
Telerate Page 3750, the rate for such date will be determined on the basis of
the rates at which one-month U.S. dollar deposits are offered by the Reference
Banks at approximately 11:00 a.m. (London time) on such date to prime banks in
the London interbank market. In such event, the Trust Administrator will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that date will be the arithmetic mean of the quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If fewer than two quotations
are provided as requested, the rate for that date will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Trust
Administrator (after consultation with the Depositor), at approximately 11:00
a.m. (New York City time) on such date for one-month U.S. dollar loan to leading
European banks.
LIBOR Determination Date: With respect to any Interest Accrual Period for
the LIBOR Certificates, the second London Business Day preceding the
commencement of such Interest Accrual Period.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the amount per annum set forth on the Mortgage Loan Schedule.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (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 any REO Property.
Liquidation Event: With respect to any Mortgage Loan, any of the following
events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from coverage under this Agreement by reason of its being purchased,
sold or replaced pursuant to or as contemplated by this Agreement. With respect
to any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from coverage under this Agreement by reason of its being purchased
pursuant to this Agreement.
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Liquidation Proceeds: The amounts, other than Insurance Proceeds,
Condemnation Proceeds or those received following the acquisition of REO
Property, received in connection with the liquidation of a defaulted Mortgage
Loan, whether through the sale or assignment of such Mortgage Loan, trustee's
sale, foreclosure sale or otherwise.
Loan Group: The Group 1 Mortgage Loans and the Group 2 Mortgage Loans, as
applicable.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio
(expressed as a percentage) of the original outstanding principal amount of the
Mortgage Loan (or, in the case of a second-lien Mortgage Loan, the combined
original outstanding principal amount of such Mortgage Loan and any first-lien
mortgage loan on the same Mortgaged Property) as of the Cut-off Date (unless
otherwise indicated), to either (a) if the Mortgage Loan was made to finance the
acquisition of the related Mortgaged Property, the least of (i) the purchase
price of the Mortgaged Property, or (ii) the Appraisal Value of the Mortgaged
Property at origination, or (b) if the Mortgage Loan was a refinancing or
modification, the Appraisal Value of the Mortgaged Property at the time of the
refinancing or modification.
London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
Marker Rate: With respect to the Class C Certificates and any Distribution
Date, a per annum rate equal to two (2) times the weighted average of the
Uncertificated REMIC I Pass-Through Rates for REMIC I Regular Interest LT1A1,
REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A1, REMIC I Regular
Interest LT2A2, REMIC I Regular Interest LT2A3, REMIC I Regular Interest LTM1,
REMIC I Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular
Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest LTM6,
REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I Regular
Interest LTM9, REMIC I Regular Interest LTM10, REMIC I Regular Interest LTM11
and REMIC I Regular Interest LTZZ, (i) with the rate on each such REMIC I
Regular Interest (other than REMIC I Regular Interest LTZZ) subject to a cap
equal to the lesser of (a) the Base Rate of its Corresponding Class and (b) the
Group 1 Net WAC Rate, the Group 2 Net WAC Rate or the Subordinate Net WAC Rate,
as applicable, of its Corresponding Class for the purposes of this calculation
and (ii) with the rate on REMIC I Regular Interest LTZZ subject to a cap of zero
for the purpose of this calculation; provided, however, that for this purpose,
calculations of the Uncertificated REMIC I Pass-Through Rate and the related
caps with respect to each such REMIC I Regular Interest (other than REMIC I
Regular Interest LTM11 and REMIC I Regular Interest LTZZ) shall be multiplied by
a fraction, the numerator of which is the actual number of days in the Interest
Accrual Period and the denominator of which is 30.
Master Servicer: As of the Closing Date, ▇▇▇▇▇ Fargo Bank, N.A. and
thereafter, its respective successors in interest who meet the qualifications of
this Agreement. As long as a Master Servicer is required under this Agreement,
the Master Servicer and the Trust Administrator shall at all times be the same
Person.
Master Servicer Event of Termination: One or more of the events described
in Section 7.01(c).
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Master Servicing Fee: With respect to the Mortgage Loans and for any
calendar month, an amount, payable as provided in Section 3A.09, equal to the
Master Servicing Fee Rate accrued for one month on the same principal amount on
which interest on each Mortgage Loan accrues for such calendar month.
Master Servicing Fee Rate: 0.005% per annum; provided, however, if Fremont
Investment & Loan has been removed as Servicer or has resigned as Servicer, and
in either such case if a Master Servicer is no longer required hereunder, then
the Master Servicing Fee Rate shall be 0.00% per annum.
Master Servicing Officer: Any employee of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans,
whose name and specimen signature appear on a list of Master Servicing Officers
furnished by the Master Servicer to the Trustee, the Trust Administrator, the
Servicer and the Depositor on the Closing Date, as such list may from time to
time be amended.
Maximum Mortgage Interest Rate: With respect to an Adjustable Rate
Mortgage Loan, the specified maximum mortgage rate over the life of such
mortgage loan; with respect to a Mortgage Loan with a fixed rate, the Mortgage
Interest Rate.
Maximum LTZZ Uncertificated Accrued Interest Deferral Amount: With respect
to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC I Pass-Through Rate applicable to REMIC I Regular Interest
LTZZ for such Distribution Date on a balance equal to the Uncertificated
Principal Balance of REMIC I Regular Interest LTZZ minus the REMIC I
Overcollateralized Amount, in each case for such Distribution Date, over (b)
REMIC I Regular Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular
Interest LT2A1, REMIC I Regular Interest LT2A2, REMIC I Regular Interest LT2A3,
REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular
Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular Interest LTM5,
REMIC I Regular Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular
Interest LTM8, REMIC I Regular Interest LTM9, REMIC I Regular Interest LTM10 and
REMIC I Regular Interest LTM11, each subject to a cap equal to the lesser of (i)
the Base Rate of its Corresponding Class and (ii) the Group 1 Net WAC Rate, the
Group 2 Net WAC Rate or the Subordinate Net WAC Rate, as applicable, of its
Corresponding Class for the purposes of this calculation; provided, however,
that for this purpose, calculations of the Uncertificated REMIC I Pass-Through
Rate and the related caps with respect to each such REMIC I Regular Interest
(other than REMIC I Regular Interest LTM11 and REMIC I Regular Interest LTZZ)
shall be multiplied by a fraction, the numerator of which is the actual number
of days in the Interest Accrual Period and the denominator of which is 30.
MERS: As defined in Section 2.01.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the Originator
has designated or will designate MERS as, and has taken or will take such action
as is necessary to cause MERS to be, the mortgagee of record, as nominee for the
Originator, in accordance with MERS Procedure Manual and (b) the Originator has
designated or will designate the Trustee as the Investor on the MERS(R) System.
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MERS Procedure Manual: The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Minimum Mortgage Interest Rate: With respect to an Adjustable Rate
Mortgage Loan, the specified minimum mortgage rate over the life of such
mortgage loan; with respect to a Mortgage Loan with a fixed rate, the Mortgage
Interest Rate.
Monthly Statement: The statement made available to the Certificateholders
pursuant to Section 4.03.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. 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 Mortgage
Pass-Through Group, or such other address as Moody's may hereafter furnish to
the Depositor, the Servicer, the Master Servicer, the Trust Administrator and
the Trustee.
Mortgage: The mortgage, deed of trust or other instrument identified on
the Mortgage Loan Schedule as securing a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note with respect to each Mortgage Loan.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the Custodial File, the Servicing File,
the Scheduled Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition proceeds, Prepayment
Premiums and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan, excluding replaced or repurchased
Mortgage Loans.
Mortgage Loan Documents: The mortgage loan documents pertaining to each
Mortgage Loan.
Mortgage Loan Schedule: As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, attached hereto as Schedule I. The
Mortgage Loan Schedule shall set forth by Loan Group the following information
with respect to each Mortgage Loan in such Loan Group :
(i) the Mortgagor's name and the Originator's Mortgage Loan identifying
number;
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(ii) the street address of the Mortgaged Property including the state and
zip code;
(iii) a code indicating whether the Mortgaged Property is owner-occupied;
(iv) the number and type of residential dwelling constituting the
Mortgaged Property (i.e., a single family residence, a 2-4 family residence, a
unit in a condominium project or a unit in a planned unit development,
manufactured housing);
(v) the original months to maturity;
(vi) the Loan-to-Value Ratio, at origination;
(vii) the Mortgage Interest Rate in effect immediately following the
Cut-off Date;
(viii) the date on which the first monthly payment was due on the Mortgage
Loan;
(ix) the stated maturity date of such Mortgage Loan;
(x) the amount of the monthly payment (a) at origination and (b) due on
the first Due Date after the Cut-off Date;
(xi) the last Due Date on which a monthly payment was actually applied to
the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage Loan as of the date of
origination;
(xiii) the Stated Principal Balance of the Mortgage Loan as of the close
of business on the Cut-off Date;
(xiv) with respect to each Adjustable Rate Mortgage Loan, the Applicable
Index and Gross Margin;
(xv) a code indicating the purpose of the Mortgage Loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(xvi) with respect to each Adjustable Rate Mortgage Loan, the Maximum
Mortgage Interest Rate;
(xvii) with respect to each Adjustable Rate Mortgage Loan, the Minimum
Mortgage Interest Rate;
(xviii) the Mortgage Interest Rate at origination;
(xix) with respect to each Adjustable Rate Mortgage Loan, the Periodic
Mortgage Interest Rate Cap and the Initial Mortgage Interest Rate Cap;
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(xx) a code indicating the documentation program;
(xxi) with respect to each Adjustable Rate Mortgage Loan, the first
Adjustment Date immediately following the Cut-off Date and the Adjustment Date
frequency;
(xxii) the value of the Mortgaged Property used to calculate the LTV for
the related Mortgage Loan;
(xxiii) the sale price of the Mortgaged Property, if applicable;
(xxiv) the Originator's risk grade;
(xxv) the actual interest "paid to date" of the Mortgage Loan as of the
Cut-off Date;
(xxvi) the number of years any Prepayment Premium is in effect;
(xxvii) the loan type (i.e. fixed, adjustable; 2/28, 3/27, etc.);
(xxviii) the actual unpaid principal balance of the Mortgage Loan as of
the Cut-off Date;
(xxix) a code indicating whether such Mortgage Loan is a Group 1 Mortgage
Loan or a Group 2 Mortgage Loan;
(xxx) a code indicating whether the Mortgage Loan is a MERS Designated
Mortgage Loan and, if so, its corresponding mortgage identification number; and
(xxxi) a code indicating whether the Mortgage Loan is subject to a
Prepayment Premium, if any.
The Mortgage Loan Schedule shall set forth the following information
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall set forth the aggregate Stated Principal Balance of the Mortgage
Loans. The Mortgage Loan Schedule shall be amended from time to time by the
Depositor in accordance with the provisions of this Agreement. With respect to
any Substitute Mortgage Loan, the Cut-off Date shall refer to the related
Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
Mortgaged Property: The real property (or leasehold estate, if applicable)
identified on the Mortgage Loan Schedule as securing repayment of the debt
evidenced by a Mortgage Note.
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Mortgagor: The obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date the amount
remaining for distribution pursuant to subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such subsection).
Net Prepayment Interest Shortfall: For any Distribution Date, the amount
by which the sum of the Prepayment Interest Shortfalls exceeds the sum of the
Compensating Interest payments made on such Distribution Date.
Net WAC Rate: The Group 1 Net WAC Rate, the Group 2 Net WAC Rate and/or
the Subordinate Net WAC Rate, as appropriate.
Net WAC Rate Carryover Amount: With respect to each Class of LIBOR
Certificates and the Class M11 Certificates, as of any Distribution Date, if on
such Distribution Date there are unpaid Net WAC Rate Carryover Amounts from
prior Distribution Dates or the Pass-Through Rate for any Class of LIBOR
Certificates or the Class M11 Certificates is based upon its applicable Net WAC
Rate, the sum of (A) the excess of the Base Rate for that Class of Certificates
over (i) with respect to the Class 1-A Certificates, the Group 1 Net WAC Rate,
(ii) with respect to the Class 2-A Certificates, the Group 2 Net WAC Rate, and
(iii) with respect to the Subordinate Certificates, the Subordinate Net WAC
Rate, and (B) the Net WAC Rate Carryover Amount for such Class of Certificates
for all previous Distribution Dates not previously paid, together with interest
thereon at the applicable Pass-Through Rate for such Class (without giving
effect to any such limitations) of Certificates for such Distribution Date.
Net WAC Rate Carryover Payment: For any Distribution Date, an amount equal
to the aggregate of the Net WAC Rate Carryover Amounts for such Distribution
Date.
Net WAC Rate Carryover Reserve Account: The separate Eligible Account
created and maintained by the Trustee pursuant to Sections 3.27(a) in the name
of the Trust Administrator for the benefit of the Holders of Regular
Certificates and designated "▇▇▇▇▇ Fargo Bank, N.A. in trust for registered
holders of Fremont Home Loan Trust 2005-B, Mortgage-Backed Certificates, Series
2005-B." Funds in the Net WAC Rate Carryover Reserve Account shall be held in
trust for the Holders of Regular Certificates for the uses and purposes set
forth in this Agreement. Amounts on deposit in the Net WAC Rate Carryover
Reserve Account shall not be invested. The Net WAC Rate Carryover Reserve
Account shall not be an asset of REMIC I or REMIC II.
NIM Trust: Fremont NIM Trust 2005-B, a Delaware statutory trust, or other
special purpose entity created to securitize the cashflows relating to the Class
C and/or Class P Certificates.
Nonrecoverable P&I Advance: Any P&I Advance previously made or proposed to
be made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related late payments,
Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
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Nonrecoverable Servicing Advance: Any Servicing Advances previously made
or proposed to be made in respect of a Mortgage Loan or REO Property, which, in
the good faith business judgment of the Servicer, will not or, in the case of a
proposed Servicing Advance, would not, be ultimately recoverable from related
Insurance Proceeds, Condemnation Proceeds, 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: With respect to the Class C Certificates, a notional
amount equal to the aggregate principal balance of the REMIC I Regular Interests
(other than REMIC I Regular Interest LTP).
Offered Certificates: As defined in the Preliminary Statement.
Officer's Certificate: A certificate signed by an officer of the Servicer
with responsibility for the servicing of the Mortgage Loans required to be
serviced by the Servicer and listed on a list delivered to the Trustee or Trust
Administrator, as applicable, pursuant to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer or a Subservicer, the Master Servicer, the Originator
or the Depositor, reasonably acceptable to the Trustee and the Trust
Administrator; provided, that any Opinion of Counsel relating to (a)
qualification of any Trust REMIC as a REMIC or (b) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Servicer of the
Mortgage Loans, (ii) does not have any material direct or indirect financial
interest in the Servicer of the Mortgage Loans or in an affiliate of either and
(iii) is not connected with the Servicer of the Mortgage Loans as an officer,
employee, director or person performing similar functions.
Optional Termination Date: Any Distribution Date when the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is equal to 10% or less of the Cut-off Date Pool Principal Balance that
has been designated as an Optional Termination Date by the Servicer or holder of
the Class R Certificate.
Originator: Fremont.
OTS: Office of Thrift Supervision, and any successor thereto.
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 the Trust
Administrator or delivered to the Trustee or the Trust Administrator for
cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee or the Trust
Administrator pursuant to this Agreement.
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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 Amount: As of any Distribution Date, the excess, if
any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties for such Distribution Date over (b) the aggregate of the Class
Certificate Balances of the Senior Certificates, the Subordinate Certificates
and the Class P Certificate as of such Distribution Date (after giving effect to
the payment of the Principal Remittance Amount on such Certificates on such
Distribution Date).
Overcollateralization Deficiency: With respect to any Distribution Date,
the excess, if any, of (a) the Overcollateralization Target Amount applicable to
such Distribution Date over (b) the Overcollateralized Amount applicable to such
Distribution Date.
Overcollateralization Floor Amount: With respect to any Distribution Date,
0.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date.
Overcollateralization Release Amount: With respect to any Distribution
Date, an amount equal to the lesser of (a) the Excess Overcollateralized Amount
and (b) the Excess Cashflow.
Overcollateralization Target Amount: With respect to any Distribution Date
(i) prior to the Stepdown Date, an amount equal to 1.15% of the Cut-off Date
Pool Principal Balance, (ii) on and after the Stepdown Date provided a Trigger
Event is not in effect, an amount equal to the greater of (A) the lesser of (x)
2.30% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (y) 1.15% of the aggregate Cut-off Date Pool Principal Balance of
all of the Mortgage Loans and (B) 0.50% of the aggregate Cut-off Date Pool
Principal Balance of all of the Mortgage Loans and (iii) on or after the
Stepdown Date if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution Date.
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.
P&I Advance: As to any Mortgage Loan or REO Property, any advance made by
the Servicer in respect of any Remittance Date representing the aggregate of all
payments of principal and interest, net of the Servicing Fee, that were due
during the related Due Period on the Mortgage Loans and that were delinquent on
the related Remittance Date, plus certain amounts representing assumed payments
not covered by any current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure as determined pursuant to Section
4.01.
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Pass-Through Margin: With respect to each Class of LIBOR Certificates, the
following percentages:
ON OR PRIOR
TO OPTIONAL AFTER THE OPTIONAL
TERMINATION DATE TERMINATION DATE
Class 1-A-1 Certificates 0.210% 0.420%
Class 1-A-2 Certificates 0.250% 0.500%
Class 2-A-1 Certificates 0.090% 0.180%
Class 2-A-2 Certificates 0.200% 0.400%
Class 2-A-3 Certificates 0.300% 0.600%
Class M1 Certificates 0.370% 0.555%
Class M2 Certificates 0.400% 0.600%
Class M3 Certificates 0.430% 0.645%
Class M4 Certificates 0.470% 0.705%
Class M5 Certificates 0.620% 0.930%
Class M6 Certificates 0.640% 0.960%
Class M7 Certificates 0.670% 1.005%
Class M8 Certificates 1.270% 1.905%
Class M9 Certificates 1.320% 1.980%
Class M10 Certificates 1.750% 2.625%
Pass-Through Rate: For any Distribution Date
(i) with respect to each Class of Class 1-A Certificates, a rate equal to
the lesser of (a) the related Base Rate for such Class and (b) the Group 1 Net
WAC Rate;
(ii) with respect to each Class of Class 2-A Certificates, a rate equal to
the lesser of (a) the related Base Rate for such Class and (b) the Group 2 Net
WAC Rate;
(iii) with respect to each Class of the Subordinate Certificates, a rate
equal to the lesser of (a) the related Base Rate for such Class and (b) the
Subordinate Net WAC Rate;
(iv) with respect to any REMIC I Regular Interest, the Uncertificated
REMIC I Pass-Through Rate; and
(v) with respect to the Class C Certificates, a per annum rate equal to
the percentage equivalent of a fraction, the numerator of which is the sum of
the amounts calculated pursuant to clauses (A) through (S) below, and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC I Regular Interest LTAA, REMIC I Regular Interest LT1A1, REMIC I
Regular Interest LT1A2, REMIC I Regular Interest LT2A1, REMIC I Regular Interest
LT2A2, REMIC I Regular Interest LT2A3, REMIC I Regular Interest LTM1, REMIC I
Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest
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LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I
Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest
LTM9, REMIC I Regular Interest LTM10, REMIC I Regular Interest LTM11 and REMIC I
Regular Interest LTZZ. For purposes of calculating the Pass-Through Rate for the
Class C Certificates, the numerator is equal to the sum of the following
components:
(A)the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTAA minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTAA;
(B) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT1A1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT1A1;
(C) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT1A2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT1A2;
(D) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT2A1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT2A1;
(E) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT2A2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT2A2;
(F) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT2A3 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT2A3;
(G) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM1;
(H) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM2;
(I) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM3 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM3;
(J) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM4 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM4;
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(K) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM5 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM5;
(L) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM6 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM6;
(M) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM7 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM7;
(N) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM8 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM8;
(O) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM9 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM9;
(P) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM10 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM10;
(Q) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM11 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM11;
(R) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTZZ minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTZZ; and
(S) 100% of the Interest on REMIC I Regular Interest LTP.
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.
Periodic Mortgage Interest Rate Cap: With respect to each Adjustable Rate
Mortgage Loan, the absolute maximum amount set forth in a provision of each
Mortgage Note by which the Mortgage Interest Rate therein may increase or
decrease on an Adjustment Date (other than the first Adjustment Date) above or
below the Mortgage Interest Rate previously in effect. The Periodic Mortgage
Interest Rate Cap for each Adjustable Rate Mortgage Loan is the rate set forth
on the Mortgage Loan Schedule.
Permitted Investments: Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued by the
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Depositor, the Servicer, the Master Servicer, the Trust
Administrator, the Trustee or any of their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of, or
bankers' acceptances (which shall each have an original maturity of not
more than 90 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States dollars and
issued by any Depository Institution and rated P-1 by Moody's and A-1+ by
Standard & Poor's;
(iii) repurchase obligations with respect to any security described
in clause (i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United States
of America or any state thereof and that are rated by each Rating Agency
that rates such securities in its highest long-term unsecured rating
categories at the time of such investment or contractual commitment
providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition
thereof) that is rated by each Rating Agency that rates such securities in
its highest short-term unsecured debt rating available at the time of such
investment;
(vi) units of money market funds, including money market funds
advised or managed by the Depositor, the Trustee or the Trust
Administrator or an Affiliate thereof, that have been rated "Aaa" by
Moody's, "AAAm" or "AAAMG" by Standard & Poor's; and
(vii) if previously confirmed in writing to the Trustee and the
Trust Administrator, any other demand, money market or time deposit, or
any other obligation, security or investment, as may be acceptable to the
Rating Agencies as a permitted investment of funds backing "Aaa" or "AAA"
rated securities;
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
Permitted Transferee: Any 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
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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) a Person that is not a U.S. Person or a U.S.
Person with respect to whom income from a Residual Certificate is attributable
to a foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of such Person or any other U.S. Person, (vi) an
"electing large partnership" within the meaning of Section 775 of the Code 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 any Trust REMIC 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 ▇▇▇▇▇▇▇ Mac, 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 Certificates: 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 for such Distribution
Date that were Outstanding Mortgage Loans on the Due Date in the related Due
Period.
Prepayment Interest Excess: With respect to any Remittance Date, the sum
of, for each Mortgage Loan that was, during the related Prepayment Period, the
subject of a Principal Prepayment in Full that was applied by the Servicer to
reduce the outstanding principal balance of such Mortgage Loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
the product of (a) the Mortgage Interest Rate net of the Servicing Fee Rate for
such Mortgage Loan, (b) the amount of the Principal Prepayment in Full for such
Mortgage Loan, (c) 1/360 and (d) the number of days commencing on the first day
of the calendar month in which such Remittance Date occurs and ending on the
date on which such Principal Prepayment in Full was applied.
Prepayment Interest Shortfall: With respect to any Remittance Date, the
sum of, for each Mortgage Loan that was, during the related Prepayment Period,
the subject of a Principal Prepayment in Full that was applied by the Servicer
to reduce the outstanding principal balance of such Mortgage Loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
the product of (a) the Mortgage Interest Rate net of the Servicing Fee Rate for
such Mortgage Loan, with respect to the Servicer's obligation in respect of any
Prepayment Interest Shortfall, or the sum of the Servicing Fee Rate and the
Master Servicing Fee Rate, with respect to the Master Servicer's obligation in
respect of any Prepayment Interest Shortfall,
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(b) the amount of the Principal Prepayment for such Mortgage Loan, (c) 1/360 and
(d) the number of days commencing on the date on which such Principal Prepayment
was applied and ending on the last day of the related Prepayment Period.
Prepayment Period: With respect to any Remittance Date, (a) with respect
to a Principal Prepayment in Full, the period from and including the 16th day of
the month preceding the month in which such Remittance Date occurs to and
including the 15th day of the month in which such Remittance Date occurs, and
(b) with respect to Principal Prepayments in part, the calendar month prior to
such Remittance Date.
Prepayment Premium: Any prepayment premium, penalty or charge collected by
the Servicer with respect to a Mortgage Loan from a Mortgagor in connection with
any voluntary Principal Prepayment in Full pursuant to the terms of the related
Mortgage Note.
Principal Distribution Amount: For any Distribution Date, the sum of (i)
the Group 1 Principal Distribution Amount for such Distribution Date and (ii)
the Group 2 Principal Distribution Amount for such Distribution Date
Principal Prepayment: Any partial payment or other recovery of principal
on a Mortgage Loan (including upon liquidation of a Mortgage Loan) which is
received in advance of its scheduled Due Date, excluding any Prepayment Premium
and which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date, the
amount equal to the sum of the following amounts (without duplication) with
respect to the related Due Period: (i) each scheduled payment of principal on a
Mortgage Loan due during such Due Period and received by the Servicer on or
prior to the Determination Date or advanced by the Servicer prior to the related
Remittance Date (including the portion of Insurance Proceeds or Condemnation
Proceeds allocable to principal), and all Principal Prepayments received during
the related Prepayment Period, (ii) the Liquidation Proceeds on the Mortgage
Loans allocable to principal actually collected by the Servicer during the
related Prepayment Period, (iii) the portion of the purchase price allocable to
principal with respect to each Deleted Mortgage Loan, the repurchase obligation
for which arose during the related Prepayment Period, that was repurchased
during the period from the prior Distribution Date through the Remittance Date
for the current Distribution Date, (iv) the principal portion of all
Substitution Adjustment Amounts with respect to the substitutions of Mortgage
Loans that occur during the calendar month in which such Distribution Date
occurs and (v) the allocable portion of the proceeds received with respect to
the termination of the Trust Fund (to the extent such proceeds relate to
principal), less any amounts payable or reimbursable to the Servicer, the Master
Servicer, the Trust Administrator or the Trustee hereunder on such Distribution
Date to the extent not already reimbursed or paid from the Group 1 Interest
Remittance Amount or the Group 2 Interest Remittance Amount.
Private Certificates: As defined in the Preliminary Statement.
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Prospectus Supplement: The Prospectus Supplement, dated May 3, 2005,
relating to the Offered Certificates.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A planned unit development.
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as of May
1, 2005, by and between Fremont and the Depositor.
Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If 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 herein to
a given rating or rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers. For purposes of Section
10.05(c), the addresses for notices to each Rating Agency shall be the address
specified therefor in the definition corresponding to the name of such Rating
Agency, or such other address as either such Rating Agency may hereafter furnish
to the Depositor and the Servicer.
Realized Loss Percentage: For purposes of the Servicer Termination Test
and the Servicer Enhanced Review Test, the percentage produced by the following
calculation: (i) (a) the aggregate amount of cumulative Realized Losses incurred
on the Mortgage Loans since the Cut-off Date through the last day of the related
Due Period, minus (b) any amount received with respect to Realized Losses on the
Mortgage Loans subsequent to a Final Recovery Determination being made with
respect to the Mortgage Loans, divided by (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date; provided however, that for
purposes of this definition, the term "Realized Losses" shall not include Debt
Service Reductions or Deficient Valuations.
Realized Losses: With respect to any date of determination and any
Liquidated Mortgage Loan, the amount, if any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan together with accrued and unpaid
interest thereon exceeds (b) the Liquidation Proceeds with respect thereto net
of the expenses incurred by the Servicer in connection with the liquidation of
such Liquidated Mortgage Loan and net of any amount of unreimbursed Servicing
Advances with respect to such Liquidated Mortgage Loan.
Record Date: With respect to any Distribution Date, the close of business
on the Business Day immediately preceding such Distribution Date; provided,
however, that for any Class M11 Certificate or Certificate issued in definitive
form, the Record Date shall be the close of business on the last day of the
calendar month immediately preceding the related Distribution Date (or if such
day is not a Business Day, on the immediately preceding Business Day).
Reference Bank: As defined in Section 4.04.
Regular Certificates: As defined in the Preliminary Statement.
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Relief Act Interest Shortfall: With respect to any Distribution Date and
any Mortgage Loan, any reduction in the amount of interest collectible on such
Mortgage Loan for the most recently ended Due Period as a result of the
application of the Servicemembers Civil Relief Act, as amended, or any similar
state statutes.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC I Interest Loss Allocation Amount: With respect to any Distribution
Date, an amount equal to (a) the product of (i) 50% of the aggregate Principal
Balance of the Mortgage Loans and related REO Properties then outstanding and
(ii) the Uncertificated REMIC I Pass-Through Rate for REMIC I Regular Interest
LTAA minus the Marker Rate, divided by (b) 12.
REMIC I Marker Allocation Percentage: 50% of any amount payable from or
loss attributable to the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest LTAA, REMIC I Regular Interest LT1A1, REMIC I Regular Interest
LT1A2, REMIC I Regular Interest LT2A1, REMIC I Regular Interest LT2A2, REMIC I
Regular Interest LT2A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest
LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I
Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest
LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC I
Regular Interest LTM10, REMIC I Regular Interest LTM11, REMIC I Regular Interest
LTZZ and REMIC I Regular Interest LTP.
REMIC I Overcollateralization Target Amount: 0.50% of the
Overcollateralization Target Amount.
REMIC I Overcollateralized Amount: With respect to any date of
determination, (i) 0.50% of the aggregate Uncertificated Principal Balances of
the REMIC I Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC I Regular Interest LT1A1, REMIC I Regular Interest
LT1A2, REMIC I Regular Interest LT2A1, REMIC I Regular Interest LT2A2, REMIC I
Regular Interest LT2A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest
LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I
Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest
LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC I
Regular Interest LTM10, REMIC I Regular Interest LTM11 and REMIC I Regular
Interest LTP, in each case as of such date of determination.
REMIC I Principal Loss Allocation Amount: With respect to any Distribution
Date, an amount equal to (a) the product of (i) 50% of the aggregate Principal
Balance of the Mortgage Loans and related REO Properties then outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the aggregate of
the Uncertificated Principal Balances of REMIC I Regular Interest LT1A1, REMIC I
Regular Interest LT1A2, REMIC I Regular Interest LT2A1, REMIC I Regular Interest
LT2A2, REMIC I Regular Interest LT2A3, REMIC I Regular Interest LTM1, REMIC I
Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest
LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I
Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest
LTM9, REMIC I Regular Interest LTM10, REMIC I Regular Interest LTM11 and the
denominator of which is the
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aggregate of the Uncertificated Principal Balances of REMIC I Regular Interest
LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A1, REMIC I
Regular Interest LT2A2, REMIC I Regular Interest LT2A3, REMIC I Regular Interest
LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I
Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest
LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I
Regular Interest LTM9, REMIC I Regular Interest LTM10, REMIC I Regular Interest
LTM11 and REMIC I Regular Interest LTZZ.
REMIC I Regular Interest LTAA: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTAA shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular ▇▇▇▇▇▇▇▇ ▇▇▇▇▇: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT1A1 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular ▇▇▇▇▇▇▇▇ ▇▇▇▇▇: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT1A2 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular ▇▇▇▇▇▇▇▇ ▇▇▇▇▇: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT2A1 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular ▇▇▇▇▇▇▇▇ ▇▇▇▇▇: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT2A2 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
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REMIC I Regular ▇▇▇▇▇▇▇▇ ▇▇▇▇▇: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT2A3 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM1 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM2: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM2 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM3: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM3 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM4: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM4 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM5: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM5 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
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REMIC I Regular Interest LTM6: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM6 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM7: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM7 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM8: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM8 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM9: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM9 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM10: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM10 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTM11: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTM11 shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
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REMIC I Regular Interest LTP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTP shall accrue interest at the related Uncertificated REMIC I
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LT1SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT1SUB shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance asset
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LT1GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT1GRP shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance asset
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LT2SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT2SUB shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance asset
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LT2GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LT2GRP shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance asset
forth in the Preliminary Statement hereto.
REMIC I Regular Interest LTXX: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTXX shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance asset
forth in the Preliminary Statement hereto.
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REMIC I Regular Interest LTZZ: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
regular interest in REMIC I for purposes of the REMIC Provisions. REMIC I
Regular Interest LTZZ shall accrue interest at the related Uncertificated REMIC
I Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Interests: REMIC I Regular Interest LTAA, REMIC I Regular
Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A1,
REMIC I Regular Interest LT2A2, REMIC I Regular Interest LT2A3, REMIC I Regular
Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest LTM3,
REMIC I Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular
Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8,
REMIC I Regular Interest LTM9, REMIC I Regular Interest LTM10, REMIC I Regular
Interest LTM11, REMIC I Regular Interest LT1SUB, REMIC I Regular Interest
LT1GRP, REMIC I Regular Interest LT2SUB, REMIC I Regular Interest LT2GRP, REMIC
I Regular Interest LTXX, REMIC I Regular Interest LTP and REMIC I Regular
Interest LTZZ.
REMIC I Sub WAC Allocation Percentage: 50% of any amount payable from or
loss attributable to the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest LT1SUB, REMIC I Regular Interest LT1GRP, REMIC I Regular
Interest LT2SUB, REMIC I Regular Interest LT2GRP and REMIC I Regular Interest
LTXX.
REMIC I Subordinated Balance Ratio: The ratio among the Uncertificated
Principal Balances of each REMIC I Regular Interest ending with the designation
"SUB," equal to the ratio among, with respect to each such REMIC I Regular
Interest, the excess of (x) the aggregate Stated Principal Balance of the
Mortgage Loans in the related Loan Group over (y) the current aggregate Class
Certificate Balances of the Class A Certificates in the related Loan Group.
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.
Remittance Date: With respect to any Distribution Date, no later than
12:00 PM, Central Time on the Business Day immediately preceding such
Distribution Date.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Imputed Interest: As to any REO Property, for any period, an amount
equivalent to interest (at the Mortgage Interest Rate net of the Servicing Fee
Rate that would have been applicable to the related Mortgage Loan had it been
outstanding) on the unpaid principal balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is reduced pursuant to Section 3.15 by
any income from the REO Property treated as a recovery of principal).
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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.
Reporting Date: The 18th day of each calendar month or the immediately
preceding Business Day if the 18th is not a Business Day.
Repurchase Price: With respect to any Mortgage Loan, an amount equal to
the sum of (i) the unpaid principal balance of such Mortgage Loan as of the date
of repurchase, (ii) interest on such unpaid principal balance of such Mortgage
Loan at the Mortgage Interest Rate from the last date through which interest has
been paid and distributed to the Trustee to the date of repurchase, (iii) all
unreimbursed Servicing Advances and (iv) all expenses incurred by the Servicer,
the Trust, the Trust Administrator or the Trustee, as the case may be, in
respect of a breach or defect, including, without limitation, (a) expenses
arising out of the Servicer's, the Trust Administrator's or Trustee's, as the
case may be, enforcement of the Originator's repurchase obligation, to the
extent not included in clause (iii), and (b) any costs and damages incurred by
the Trust in connection with any violation by such Mortgage Loan of any
predatory lending law or abusive lending law.
Request for Release: The Request for Release submitted by the Servicer to
the Trust Administrator, substantially in the form of Exhibit J.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee means any
officer in the Corporate Trust Office with direct responsibility for the
administration of this Agreement and any other officer to whom a particular
matter is referred because of such officer's knowledge of and familiarity with
the particular subject; and when used with respect to the Trust Administrator
means any vice president, any assistant vice president, any assistant secretary,
any assistant treasurer, any associate or any other officer of the Trustee or
the Trust Administrator customarily performing functions similar to those
performed by any of the above designated officers who at such time shall be
officers to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Agreement.
Rolling Three-Month Delinquency Rate: With respect to any Distribution
Date, the weighted average of the Delinquency Rates for each of three calendar
months immediately preceding such Distribution Date; provided, that with respect
to the first two Distribution Dates, it shall refer to the preceding one or two
calendar months, as appropriate.
Rule 144A Letter: As defined in Section 5.02(b).
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 herein, 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.
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Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of the Group 1 Senior Principal Distribution Amount and Group 2
Senior Principal Distribution Amount, as applicable.
Servicer: Fremont, and if a successor servicer is appointed hereunder,
such successor servicer.
Servicer Certification: A written certification signed by an officer of
the Servicer that complies with (i) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended
from time to time, and (ii) the February 21, 2003 Statement by the Staff of the
Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superseded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Servicer, materially more
onerous than the form of the required certification as of the Closing Date, the
Servicer Certification shall be as agreed to by the Servicer and the Depositor
following a negotiation in good faith to determine how to comply with any such
new requirements.
Servicer Enhanced Review Test: With respect to any Distribution Date, the
Servicer will fail the Servicer Enhanced Review Test if both (i) the outstanding
rating by ▇▇▇▇▇'▇ of Fremont as a servicer of residential mortgage loans is not
"SQ2" or better (including any +/- designation), and (ii) the Realized Loss
Percentage for the Mortgage Loans exceeds the applicable percentages set forth
below:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
June 2006 through May 2007 1.50%
June 2007 through May 2008 2.50%
June 2008 through May 2009 3.50%
June 2009 through May 2010 5.25%
June 2010 through May 2011 6.75%
June 2011 and thereafter 7.30%
Servicer Event of Default: One or more of the events described in Section
7.01(a).
Servicer Remittance Report: As defined in Section 4.03(d).
Servicer Termination Test: With respect to any Distribution Date, the
Servicer will fail the Servicer Termination Test if the Realized Loss Percentage
for the Mortgage Loans exceeds the applicable percentages set forth below or
such other higher amounts as set by any of the Rating Agencies with respect to
such Distribution Date:
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DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
June 2006 through May 2007 1.75%
June 2007 through May 2008 2.75%
June 2008 through May 2009 3.75%
June 2009 through May 2010 5.50%
June 2010 through May 2012 7.00%
June 2011 through May 2012 8.00%
June 2012 and thereafter 8.00%
Servicing Advances: The reasonable "out-of-pocket" costs and expenses
(including legal fees) incurred by the Servicer in the performance of its
servicing obligations in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of a Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures and
litigation, in respect of a particular Mortgage Loan, (iii) the management
(including reasonable fees in connection therewith) and liquidation of any REO
Property, and (iv) the performance of its obligations under Sections 3.01, 3.09,
3.13 and 3.15. Servicing Advances also include any reasonable "out-of-pocket"
costs and expenses (including legal fees) incurred by the Servicer in connection
with executing and recording instruments of satisfaction, deeds of reconveyance
or Assignments of Mortgage in connection with any satisfaction or foreclosures
in respect of any Mortgage Loan to the extent not recovered from the Mortgagor
or otherwise payable under this Agreement. The Servicer shall not be required to
make any Nonrecoverable Servicing Advances.
Servicing Fee: With respect to each Mortgage Loan and any Distribution
Date, an amount equal to the product of (i) one-twelfth of the Servicing Fee
Rate, and (ii) the Stated Principal Balance of such Mortgage Loan as of the
first day of the calendar month preceding the month in which such Distribution
Date occurs. Such fee shall be payable monthly, and shall be pro rated for any
portion of a month during which the Mortgage Loan is serviced by the Servicer
under this Agreement. The Servicing Fee is payable solely from the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds and proceeds received with
respect to REO Properties, to the extent permitted by Section 3.11) of such
Scheduled Payment collected by the Servicer or as otherwise provided under
Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per annum.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Servicer consisting of originals or copies of all documents in the Mortgage
File which are not delivered to the Trust Administrator in the Custodial File
and copies of the Mortgage Loan Documents set forth in Exhibit K hereto.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee, the Master Servicer, the Trust Administrator and the Depositor by the
Servicer on the Closing Date pursuant to this Agreement, as such list may from
time to time be amended.
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Servicing Rights: Any and all of the following: (a) all rights and
obligations to service the Mortgage Loans; (b) any compensation for servicing
the Mortgage Loans; (c) any late fees, penalties or similar payments with
respect to the Mortgage Loans (other than prepayment penalties); (d) all
agreements or documents creating, defining or evidencing any such servicing
rights to the extent they relate to such servicing rights; (e) any interest on
Escrow Accounts allowed by law or other similar payments with respect to the
Mortgage Loans and any amounts actually collected with respect thereto; (f) all
accounts and other rights to payment related to any of the property described in
this paragraph; (g) the right to possess and use any and all servicing files,
servicing records, data tapes, computer records, or other information pertaining
to the Mortgage Loans to the extent relating to the past, present or prospective
servicing of the Mortgage Loans; and (h) all rights, powers and privileges
incident to any of the foregoing.
Servicing Transfer Costs: All reasonable out-of-pocket costs and expenses
(including all extraordinary expenses) incurred by the Master Servicer in
connection with the transfer of servicing from a terminated Servicer, including,
without limitation, any such costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Master Servicer to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Master Servicer (or any successor Servicer appointed pursuant to Section 7.02)
to service the Mortgage Loans properly and effectively.
Six-Month LIBOR Index: With respect to each applicable Adjustable Rate
Mortgage Loan, the rate as determined on the basis of rates at which six-month
U.S. dollar deposits are offered to prime banks in the London interbank market
on such date as provided in the related Mortgage Note.
60+ Day Delinquent Mortgage Loan: Each Mortgage Loan with respect to which
any portion of a Scheduled Payment is, as of the last day of the prior Due
Period, two months or more past due (without giving effect to any grace period),
each Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for
which the Mortgagor has filed for bankruptcy.
Standard & Poor's: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. If Standard & Poor's is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 10.05(b) the address for notices
to Standard & Poor's shall be Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Surveillance Group - Fremont 2005-B,
or such other address as Standard & Poor's may hereafter furnish to the
Depositor, the Servicer, the Master Servicer, the Trust Administrator and the
Trustee.
Start-up Day: As defined in Section 11.01(b).
Stated Principal Balance: As to each Mortgage Loan and as of any date of
determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
minus (ii) all amounts previously remitted to the Trustee with respect to the
related Mortgage Loan representing payments or recoveries of principal including
advances in respect of scheduled payments of principal. For purposes of any
Distribution Date, the Stated Principal Balance of any Mortgage Loan will give
effect to any
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50
scheduled payments of principal received by the Servicer on or
prior to the related Determination Date or advanced by the Servicer for the
related Remittance Date and any unscheduled principal payments and other
unscheduled principal collections received during the related Prepayment Period.
Stepdown Date: The earlier to occur of (a) the date on which the aggregate
Class Certificate Balances of the Senior Certificates have been reduced to zero,
and (b) the later to occur of (i) the Distribution Date in June 2008, and (ii)
the first Distribution Date on which the Credit Enhancement Percentage
(calculated for this purpose only after taking into account distributions of
principal on the Mortgage Loans but prior to distribution of the Group 1
Principal Distribution Amount and the Group 2 Principal Distribution Amount to
the holders of the Certificates then entitled to distributions of principal on
such Distribution Date) is greater than or equal to 48.00%.
Subordinate Certificates: As specified in the Preliminary Statement.
Subordinate Corridor Agreement: The cap agreement, dated as of May 6,
2005, between the Trustee, on behalf of the Issuer, and the Counterparty, having
an initial notional amount of $211,872,000.00.
Subordinate Net WAC Rate: A per annum rate equal to (a) the weighted
average of the Group 1 Net WAC Rate and the Group 2 Net WAC Rate, weighted based
on (i) the excess of (x) the balance of the Group 1 Mortgage Loans over (y) the
aggregate Class Certificate Balances of the Class 1-A Certificates and (ii) the
excess of (x) the balance of the Group 2 Mortgage Loans over (y) the aggregate
Class Certificate Balances of the Class 2-A Certificates, multiplied by (b)
other than with respect to the Class M11 Certificates, 30 divided by the actual
number of days in the Interest Accrual Period. For federal income tax purposes,
the economic equivalent of such rate shall be expressed as the weighted average
of the Uncertificated REMIC I Pass-through Rate on (a) REMIC I Regular Interest
LT1SUB, subject to a cap and floor equal to the weighted average of the Adjusted
Net Mortgage Interest Rates of the Group 1 Mortgage Loans and (b) REMIC I
Regular Interest LT2SUB, subject to a cap and floor equal to the weighted
average of the Adjusted Net Mortgage Interest Rates of the Group 2 Mortgage
Loans, weighted on the basis of the Uncertificated Balance of each such REMIC I
Regular Interest.
Subsequent Recoveries: Amounts recovered by the Servicer in respect of a
liquidated Mortgage Loan in regard to which a Realized Loss has occurred.
Subservicer: As defined in Section 3.02(a).
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the Originator
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 J, (i)
have a Stated Principal Balance, after
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51
deduction of the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) be accruing interest at a rate no lower than and not more
than 1.00% 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; and (v) 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(g).
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on the Bridge
Telerate Service (or such other page as may replace that page on that service
for displaying comparable rates or prices).
Termination Price: As defined in Section 9.01.
30-Day Delinquency: Each Mortgage Loan with respect to which any portion
of a Scheduled Payment is, as of the last day of the prior Due Period, one month
past due (without giving effect to any grace period).
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: With respect to any Distribution Date, a Trigger Event
exists if (i) the Rolling Three Month Delinquency Rate as of the last day of the
related Due Period, equals or exceeds 33.30% of the Credit Enhancement
Percentage as of the last day of the prior Due Period or (ii) the quotient
(expressed as a percentage) of (x) the aggregate amount of Realized Losses
incurred since the Cut-off Date through the last day of the related Prepayment
Period divided by (y) the Cut-off Date Pool Principal Balance, exceeds the
applicable percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN LOSS PERCENTAGE
------------------------------ ---------------
June 2007 through May 2008 1.75% for the first month, plus an additional 1/12 th
of 1.75% for each month thereafter
June 2008 through May 2009 3.50% for the first month, plus an additional 1/12 th
of 2.00% for each month thereafter
June 2009 through May 2010 5.50% for the first month, plus an additional 1/12 th
of 1.50% for each month thereafter
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June 2010 through May 2011 7.00% for the first month, plus an additional 1/12 th
of 0.60% for each month thereafter
June 2011 and thereafter 7.60%
Trust: The express trust created hereunder in Section 2.01(c).
Trust Administration Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to the product of (i) one-twelfth of the Trust
Administration Fee Rate, and (ii) the Stated Principal Balance of such Mortgage
Loan as of the first day of the calendar month preceding the month in which such
Distribution Date occurs.
Trust Administration Fee Rate: 0.0075% per annum.
Trust Administrator: ▇▇▇▇▇ Fargo Bank, N.A., and its successors in
interest and, if a successor trust administrator is appointed hereunder, such
successor.
Trust Fund: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest and principal received on or with respect
thereto after the related Cut-off Date, other than such amounts which were due
on the Mortgage Loans on or before the related Cut-off Date; (ii) the Collection
Account, Net WAC Rate Carryover Reserve Account, 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) the Corridor
Agreements, and (v) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing.
Trust REMIC: Either of REMIC I and REMIC II.
Trustee: HSBC Bank USA, National Association, and its successors in
interest and, if a successor trustee is appointed hereunder, such successor.
Uncertificated Accrued Interest: With respect to each REMIC I Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated REMIC I Pass-Through Rate on the Uncertificated
Principal Balance of such REMIC I Regular Interest. In each case, Uncertificated
Accrued Interest will be reduced by any Prepayment Interest Shortfalls and
Relief Act Interest Shortfalls (allocated to such REMIC I Regular Interests
based on their respective entitlements to interest irrespective of any
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date). Uncertificated Accrued Interest with respect to each
Distribution Date and each REMIC I Regular Interest shall be reduced by Realized
Losses, if any, allocated to such REMIC I Regular Interest unless such Realized
Loss is restored through Subsequent Recoveries.
Uncertificated Principal Balance: The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Principal
Balance of each REMIC I Regular Interest shall be reduced by all distributions
of principal made on such REMIC I Regular Interest on such Distribution Date
pursuant to Section
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4.08 and, if and to the extent necessary and appropriate, shall be further
reduced on such Distribution Date by Realized Losses as provided in Section 4.08
or increased by Subsequent Recoveries through Available Funds. The
Uncertificated Balance of REMIC I Regular Interest LTZZ shall be increased by
interest deferrals as provided in Section 4.08. The Uncertificated Balance of
each REMIC I Regular Interest shall never be less than zero.
Uncertificated REMIC I Pass-Through Rate: With respect to REMIC I Regular
Interest LTAA, REMIC I Regular Interest LT1A1, REMIC I Regular Interest LT1A2,
REMIC I Regular Interest LT2A1, REMIC I Regular Interest LT2A2, REMIC I Regular
Interest LT2A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2,
REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular
Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest LTM7,
REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC I Regular
Interest LTM10, REMIC I Regular Interest LTM11, REMIC I Regular Interest LT1SUB,
REMIC I Regular Interest LT2SUB, REMIC I Regular Interest LTXX, REMIC I Regular
Interest LTZZ, and REMIC I Regular Interest LTP, the weighted average of the
Adjusted Net Mortgage Interest Rate. With respect to REMIC I Regular Interest
LT1GRP, the Group 1 Net WAC Rate. With respect REMIC I Regular Interest LT2GRP,
the Group 2 Net WAC Rate.
Underwriters' Exemption: Any exemption listed in footnote 1 of, and
amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (2002),
or any successor exemption.
Underwriting Guidelines: The underwriting guidelines attached to the
Purchase Agreement.
Unpaid Interest Amounts: As of any Distribution Date and any Class of
Certificates, the sum of (a) the portion of the Current Interest from prior
Distribution Dates remaining unpaid and (b) interest on such unpaid amount at
the applicable Pass-Through Rate (to the extent permitted by applicable law).
U.S. Person: (i) A citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
State thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) 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 U.S. Persons have authority to control all substantial decisions of the
trust. Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.
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
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54
allocated to the Class C 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), (b) 1% of all Voting Rights shall
be allocated to the Class P Certificates, if any, and (c) the remaining Voting
Rights shall be allocated among Holders of the remaining Classes of Certificates
in proportion to the Certificate Balances of their respective Certificates on
such date.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, hereby
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 all rights
of the Depositor under the Corridor Agreements (if any), and the Trustee, on
behalf of the Trust, hereby accepts the Trust Fund.
(a) In connection with the transfer and assignment of each Mortgage Loan,
the Depositor has delivered or caused to be delivered to the Trustee or the
Trust Administrator, as applicable, for the benefit of the Certificateholders,
the following documents or instruments with respect to each Mortgage Loan so
assigned:
(i) the original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsement from the originator to the last
endorsee, endorsed "Pay to the order of _____________, without recourse"
and signed (which may be by facsimile signature) in the name of the last
endorsee by an authorized officer. To the extent that there is no room on
the face of the Mortgage Notes for endorsements, the endorsement may be
contained on an allonge, if state law so allows and the Trustee is so
advised by the Depositor that state law so allows;
(ii) the original of any guarantee executed in connection with the
Mortgage Note;
(iii) with respect to each Mortgage Loan, the original Mortgage with
evidence of recording thereon or a certified true copy of such Mortgage
submitted for recording. If in connection with any Mortgage Loan, the
Originator cannot deliver or cause to be delivered the original Mortgage
with evidence of recording thereon on or prior to the Closing Date because
of a delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost or
because such public recording office retains the original recorded
Mortgage, the Originator (to the extent that it has not previously
delivered the same to the Depositor, the Trustee or the Trust
Administrator) shall deliver or cause to be delivered to the Trustee or
Trust Administrator, (1) a photocopy of such Mortgage, certified by the
Originator (or certified by the title company, escrow agent, or closing
attorney) to be a true and complete copy of such Mortgage dispatched to
the appropriate public recording office for recordation; and (2) upon
receipt thereof by the Originator, the original recorded Mortgage, or, in
the case of a Mortgage where a public recording office retains the
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original recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage;
(iv) the originals of all assumption, modification, consolidation or
extension agreements (if provided), with evidence of recording thereon or
a certified true copy of such agreement submitted for recording;
(v) except with respect to each MERS Designated Mortgage Loan, the
original Assignment of Mortgage for each Mortgage Loan endorsed in blank
and in recordable form;
(vi) with respect to each Mortgage Loan, the originals of all
intervening Assignments of Mortgage (if any) evidencing a complete chain
of assignment from the applicable originator (or MERS with respect to each
MERS Designated Mortgage Loan) to the last endorsee with evidence of
recording thereon, or if any such intervening assignment has not been
returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded Assignments of
Mortgage, the Originator (to the extent that it has not previously
delivered the same to the Depositor, the Trustee or the Trust
Administrator) shall deliver or cause to be delivered to the Trustee or
the Trust Administrator, (1) a photocopy of such intervening assignment,
certified by the Originator (or certified by the title company, escrow
agent, or closing attorney) to be a complete copy of such intervening
Assignment of Mortgage dispatched to the appropriate public recording
office for recordation upon receipt thereof by the Originator, and (2) the
original recorded intervening assignment or in the case where an
intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;
(vii) the original or duplicate lender's title policy and any riders
thereto or, any one of an original title binder, an original or copy of
the preliminary title report or an original or copy of the title
commitment, and if, copies then certified by the title company;
(viii) a security agreement, chattel mortgage or equivalent document
executed in connection with the Mortgage (if provided); and
(ix) original powers of attorney, if applicable, with evidence of
recording thereon, if required.
Each Mortgage Loan for which a Mortgage Note is missing shall be evidenced
by a lost note affidavit as of the Closing Date. In the event, for purposes of
the Closing Date, one or more lost note affidavits are provided to cover
multiple missing Mortgage Notes, the Originator shall deliver to the Trustee or
the Trust Administrator the applicable individual lost note affidavits within
ten (10) Business Days of the Closing Date. If the Originator fails to deliver
the required individual lost note affidavits within the specified period of
time, the Trustee or the Trust Administrator shall notify the Originator to take
such remedial actions, including, without
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limitation, the repurchase by the Originator of such Mortgage Loan within 30
days of the Closing Date.
The Originator shall deliver to the Trustee or the Trust Administrator the
applicable recorded document promptly upon receipt from the respective recording
office but in no event later than 150 days from the Closing Date.
If any Mortgage has been recorded in the name of Mortgage Electronic
Registration System, Inc. ("MERS") or its designee, no Assignment of Mortgage in
favor of the Trustee will be required to be prepared or delivered and instead,
the Servicer shall take all reasonable actions as are necessary at the expense
of the Depositor to cause the Trustee to be shown as the owner of the related
Mortgage Loan on the records of MERS for the purpose of the system of recording
transfers of beneficial ownership of mortgages maintained by MERS.
From time to time, the Originator shall forward with respect to the
Mortgage Loans, to the Trustee or the Trust Administrator additional original
documents, and additional documents evidencing an assumption, modification,
consolidation or extension of a Mortgage Loan approved by the Originator in
accordance with the terms of this Agreement. All such mortgage documents held by
the Trustee or the Trust Administrator as to each Mortgage Loan shall constitute
the "Custodial File."
The requirements of this paragraph relate only to Mortgage Loans that are
not MERS Designated Mortgage Loans. On or prior to the Closing Date, the
Originator shall deliver to the Trustee or Trust Administrator Assignments of
Mortgages, in blank, for each Mortgage Loan (except with respect to each MERS
Designated Mortgage Loan). The Originator shall cause such Assignments of
Mortgage with completed recording information to be provided to the Trustee or
the Trust Administrator in a reasonably acceptable manner. No later than thirty
(30) Business Days following the later of the Closing Date and the date of
receipt by the Servicer of the fully completed Assignments of Mortgages in
recordable form, the Servicer shall promptly submit or cause to be submitted for
recording, at the expense of the Originator at no expense to the Trust Fund, the
Master Servicer, the Trust Administrator, the Trustee or the Depositor in the
appropriate public office for real property records, each Assignment of Mortgage
referred to in Section 2.01(a)(vi). Notwithstanding the foregoing, however, for
administrative convenience and facilitation of servicing and to reduce closing
costs, the Assignments of Mortgage shall not be required to be completed and
submitted for recording with respect to any Mortgage Loan if the Trustee, the
Trust Administrator and each Rating Agency have received an opinion of counsel,
satisfactory in form and substance to the Trustee and Trust Administrator and
each Rating Agency, to the effect that the recordation of such Assignments of
Mortgage in any specific jurisdiction is not necessary to protect the Trustee's
interest in the related Mortgage Note. If the Assignment of Mortgage is to be
recorded, the Mortgage shall be assigned by the Originator at the Originator's
expense to "HSBC Bank USA, National Association, as trustee under the Pooling
and Servicing Agreement dated as of May 1, 2005, Fremont Home Loan Trust
2005-B." In the event that any such assignment is lost or returned unrecorded
because of a defect therein, the Originator shall promptly prepare a substitute
assignment to cure such defect and thereafter cause each such assignment to be
duly recorded.
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On or prior to the Closing Date, the Depositor shall deliver to the
Trustee, the Servicer and the Trust Administrator a copy of the Data Tape
Information in an electronic, machine readable medium in a form mutually
acceptable to the Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee. Within ten (10) Business Days of the Closing
Date, the Depositor shall deliver a copy of the complete Mortgage Loan Schedule
to the Trustee, the Master Servicer, the Trust Administrator and the Servicer.
In the event, with respect to any Mortgage Loans, that such original or
copy of any document submitted for recordation to the appropriate public
recording office is not so delivered to the Trustee or the Trust Administrator
within 150 days following the Closing Date, and in the event that the Originator
does not cure such failure within 30 days of discovery or receipt of written
notification of such failure from the Depositor, the related Mortgage Loan
shall, upon the request of the Depositor, be repurchased by the Originator at
the price and in the manner specified in Section 2.03. The foregoing repurchase
remedy shall not apply in the event that the Originator cannot deliver such
original or copy of any document submitted for recordation to the appropriate
public recording office within the specified period due to a delay caused by the
recording office in the applicable jurisdiction; provided, that the Originator
shall instead deliver a recording receipt of such recording office or, if such
recording receipt is not available, an officer's certificate of an officer of
the Originator confirming that such document has been accepted for recording.
Notwithstanding anything to the contrary contained in this Section 2.01,
in those instances where the public recording office retains or loses the
original Mortgage or assignment after it has been recorded, the obligations of
the Originator shall be deemed to have been satisfied upon delivery by the
Originator to the Trustee or the Trust Administrator prior to the Closing Date
of a copy of such Mortgage or assignment, as the case may be, certified (such
certification to be an original thereof) by the public recording office to be a
true and complete copy of the recorded original thereof.
(b) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust (the "Trust") to be known, for convenience, as "Fremont Home Loan Trust
2005-B" and HSBC Bank USA, N.A. is hereby appointed as Trustee in accordance
with the provisions of this Agreement.
(c) The Trust shall have the capacity, power and authority, and the
Trustee on behalf of the Trust is hereby authorized, to accept the sale,
transfer, assignment, set over and conveyance by the Depositor to the Trust of
all the right, title and interest of the Depositor in and to the Trust Fund
(including, without limitation, the Mortgage Loans) pursuant to Section 2.01(a)
and, solely in its capacity as Trustee on behalf of the Certificateholders, to
enter into the Corridor Agreements.
Section 2.02. Acceptance by the Trustee or Trust Administrator of the
Mortgage Loans.
The Trustee or the Trust Administrator on its behalf acknowledges receipt
of the documents identified in its initial certification in the form annexed
hereto as Exhibit E (the "Initial Certification"), and declares that it, or the
Trust Administrator on its behalf, holds and will hold such documents and the
other documents delivered to it pursuant to Section 2.01, and
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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. Each of the Trustee and the Trust Administrator, as
applicable, on its behalf acknowledges that it will maintain possession of the
related Mortgage Notes in any of the states of Minnesota, California or Utah,
unless otherwise permitted by the Rating Agencies.
Prior to and as a condition to the Closing, the Trustee shall deliver, or
cause the Trust Administrator to deliver, via facsimile (with original to follow
the next Business Day) to the Depositor, the Master Servicer and the Servicer
the Initial Certification prior to the Closing Date, or as the Depositor agrees,
on the Closing Date, certifying receipt of a Mortgage Note and Assignment of
Mortgage for each Mortgage Loan with any exceptions thereon. The Trustee or the
Trust Administrator, as applicable, shall not be responsible to verify the
validity, sufficiency or genuineness of any document in any Custodial File.
The Trustee or the Trust Administrator, as applicable, shall ascertain
that all documents in the Custodial File required to be reviewed by it are in
its possession, and shall deliver to the Depositor, the Master Servicer and the
Servicer the Initial Certification on the Closing Date, and shall deliver to the
Depositor and the Servicer a Document Certification and Exception Report, in the
form annexed hereto as Exhibit F, within 90 days after the Closing Date to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as an exception and not covered by such
certification): (i) all documents required to be received by it are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan; (iii) based on its examination and
only as to the foregoing documents, the information set forth in items (i), (ii)
and (xii) of the Mortgage Loan Schedule and items (1), (2), (3) and (13) of the
Data Tape Information respecting such Mortgage Loan is correct; and (iv) each
Mortgage Note has been endorsed as provided in Section 2.01 of this Agreement.
The Trustee or Trust Administrator, as applicable, shall not be responsible to
verify the validity, sufficiency or genuineness of any document in any Custodial
File.
The Trustee or the Trust Administrator, as applicable, shall retain
possession and custody of each Custodial File in accordance with and subject to
the terms and conditions set forth herein. The Servicer shall promptly deliver
to the Trustee or the Trust Administrator, as applicable, upon the execution or
receipt thereof, the originals of such other documents or instruments
constituting the Custodial File as come into the possession of the Servicer from
time to time.
The Originator shall deliver to the Servicer copies of all trailing
documents required to be included in the Custodial File at the same time the
original or certified copies thereof are delivered to the Trustee or the Trust
Administrator, as applicable, including but not limited to such documents as the
title insurance policy and any other Mortgage Loan documents upon return from
the public recording office. The documents shall be delivered by the Originator
at the Originator's expense to the Servicer and in no event shall the Servicer
be responsible for such expense.
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Section 2.03. Representations, Warranties and Covenants of the Originator
and the Servicer.
(a) The Originator hereby makes the representations and warranties set
forth in Schedule IV hereto to the Depositor, the Trust Administrator and the
Trustee as of the Closing Date.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.03 shall survive the transfer of the Mortgage Loans
by the Depositor to the Trustee, and shall inure to the benefit of the
Depositor, the Trust Administrator and the Trustee notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Mortgage File. Upon
discovery by any of the Originator, the Depositor, the Trustee, the Trust
Administrator, the Master Servicer or the Servicer of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the others.
(c) Within 30 days of the earlier of either discovery by or notice to the
Originator that any Mortgage Loan does not conform to the requirements as
determined in the Trustee's or the Trust Administrator's review of the related
Custodial File or within 60 days of the earlier of either discovery by or notice
to the Originator of any breach of a representation or warranty set forth in
Section 2.03(b), that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Originator shall use its best efforts to cause to be remedied a material defect
in a document constituting part of a Mortgage File or promptly to cure such
breach in all material respects and, if such defect or breach cannot be
remedied, the Originator shall, (i) if such 30- or 60-day period, as applicable,
expires prior to the second anniversary of the Closing Date, remove such related
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 2.03, or (ii) repurchase such Mortgage Loan
at the Repurchase Price; provided, however, that any such substitution pursuant
to clause (i) above shall not be effected prior to the delivery to the Trustee
and the Trust Administrator of the Opinion of Counsel required by Section 2.04,
if any, and a Request for Release substantially in the form of Exhibit J, and
the Mortgage File for any such Substitute Mortgage Loan; provided, further, that
with respect to any representations and warranties which are made to the best of
the Originator's knowledge, if it is discovered by the Originator, the Servicer,
the Master Servicer, the Trust Administrator, the Depositor 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
Loans or materially and adversely affects the interests of the Trustee or the
Certificateholders therein or such inaccuracy materially and adversely affects
the value of the related Mortgage Loan or materially and adversely affects the
interests of the Trustee or the Certificateholders therein in the case of a
representation and warranty relating to a particular Mortgage Loan,
notwithstanding the Originator's lack of knowledge with respect to the substance
of such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation and warranty. In the event that a breach which
materially and adversely affects the value of the related Mortgage Loan or
Mortgage Loans, as the case may be, or the interests of the Trustee or the
Certificateholders therein, shall involve any representation or warranty set
forth in Schedule IV, and such breach cannot be cured within 60 days of the
earlier of either discovery by or notice to the Originator of
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such breach, all of the Mortgage Loans shall, at the Depositor's option, be
repurchased by the Originator at the Repurchase Price. Notwithstanding the
foregoing, a breach which causes a Mortgage Loan not to constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, or by the
Originator of any of the representations and warranties set forth in clauses
I(tt), I(uu) or I(lll) of Schedule IV, in each case, will be deemed
automatically to materially and adversely affect the value of such Mortgage Loan
and the interests of the Trustee and Certificateholders in such Mortgage Loan.
In the event that the Trustee or the Trust Administrator receives notice of a
breach by the Originator of any of the representations and warranties set forth
in clauses I(tt), I(uu) or I(lll) of Schedule IV, the Trustee shall give notice
of such breach to the Originator and request the Originator to repurchase the
Mortgage Loan at the Repurchase Price within sixty (60) days of the Originator's
receipt of such notice. The Originator shall repurchase each such Deleted
Mortgage Loan within 60 days of the earlier of discovery or receipt of notice
with respect to each such Deleted Mortgage Loan.
(d) With respect to any Substitute Mortgage Loan or Loans, the Originator
shall deliver to the Trustee or the Trust Administrator 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 Due Period of substitution shall not be part
of the Trust Fund and will be retained by the Originator on the next succeeding
Distribution Date. For the Due Period of substitution, distributions to
Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the Originator shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan.
(e) In connection with any repurchase or substitution of a Mortgage Loan
pursuant to this Section 2.03, the Servicer shall, based on information provided
by the Originator, 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 Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee, the Trust
Administrator and the Master Servicer. Upon such substitution, the Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Originator 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 Collection
Account of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph, the Trustee or the Trust
Administrator, as applicable, shall release the Mortgage File held for the
benefit of the Certificateholders relating to such Deleted Mortgage Loan to the
Originator and shall execute and deliver at the direction of the Originator such
instruments of transfer or assignment prepared by the Originator in each case
without recourse, as shall be necessary to vest title in the Originator or its
designee, the Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this Section 2.03.
(f) For any month in which the Originator substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (if any) by which the aggregate unpaid principal
balance of all such Substitute Mortgage
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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 Scheduled Payments due in the Due Period 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 remitted by the Originator to
the Servicer for deposit into the Collection Account on or before the next
Remittance Date.
(g) In addition to such repurchase or substitution obligations, the
Originator shall indemnify the Depositor, any of its Affiliates, the Servicer,
the Master Servicer, the Trust Administrator and the Trustee and hold such
parties harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, a breach by the Originator of any of its
representations and warranties contained in this Agreement.
(h) In the event that a Mortgage Loan shall have been repurchased pursuant
to this Agreement, the proceeds from such repurchase shall be deposited in the
Collection Account by the Servicer pursuant to Section 3.10 on or before the
next Remittance Date and upon such deposit of the Repurchase Price, the delivery
of the Opinion of Counsel required by Section 2.04, if applicable, and receipt
of a Request for Release in the form of Exhibit J hereto, the Trustee or the
Trust Administrator, as applicable, shall release the related Custodial File
held for the benefit of the Certificateholders to such Person as directed by the
Servicer, and the Trustee shall execute and deliver at such 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 any Person
to cure, repurchase or replace any Mortgage Loan as to which a breach has
occurred and is continuing, together with any related indemnification
obligations, shall constitute the sole remedy against such Persons respecting
such breach available to Certificateholders, the Depositor, the Servicer, the
Master Servicer, the Trust Administrator or the Trustee on their behalf.
The representations and warranties made pursuant to this Section 2.03
shall survive delivery of the respective Custodial Files to the Trustee or Trust
Administrator for the benefit of the Certificateholders.
Section 2.04. Delivery of Opinion of Counsel in Connection with
Substitution; Non-Qualified Mortgages.
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 90 days after the
Closing Date unless the Originator delivers to the Trustee and the Trust
Administrator an Opinion of Counsel, which Opinion of Counsel shall not be at
the expense of either the Trustee, the Trust Administrator or the Trust Fund,
addressed to the Trustee and the Trust Administrator, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on any Trust REMIC or contributions after the Start-up Day, as
defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
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(b) Upon discovery by the Depositor, the Originator, the Master Servicer,
the Trust Administrator, the Servicer or the Trustee that any Mortgage Loan does
not constitute a "qualified mortgage" within the meaning of Section 860G(a)(3)
of the Code, the party discovering such fact shall promptly (and in any event
within five (5) Business Days of discovery) give written notice thereof to the
other parties. In connection therewith, the Trustee shall require the Originator
to repurchase the affected Mortgage Loan within 30 days of the earlier of
discovery or receipt of notice 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 Originator the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.
Section 2.05. 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, the Trust
Administrator 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.
Section 2.06. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Trust Administrator, the Master Servicer, the Servicer and the Originator
that as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Depositor is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer, the Originator and the Trustee, constitutes or will constitute the
legal, valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the
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Depositor of any of the transactions contemplated hereby, except as have been
made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby or thereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (i) conflicts or
will conflict with or results or will result in a breach of, or constitutes or
will constitute a default or results or will result in an acceleration under (A)
the charter or bylaws of the Depositor, or (B) of any term, condition or
provision of any material indenture, deed of trust, contract or other agreement
or instrument to which the Depositor or any of its subsidiaries is a party or by
which it or any of its subsidiaries is bound; (ii) results or will result in a
violation of any law, rule, regulation, order, judgment or decree applicable to
the Depositor of any court or governmental authority having jurisdiction over
the Depositor or its subsidiaries; or (iii) results in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency that may materially and adversely affect its performance
hereunder;
(h) Immediately prior to the transfer and assignment by the Depositor to
the Trustee on the Closing Date, the Depositor had good title to, and was the
sole owner of each Mortgage Loan, free of any interest of any other Person, and
the Depositor has transferred all right, title and interest in each Mortgage
Loan to the Trustee. The transfer of each Mortgage Note and each Mortgage as and
in the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Trustee, for the benefit of the Certificateholders, all right,
title, and interest of the Depositor thereto as note holder and mortgagee or
(ii) to grant to the Trustee, for the benefit of the Certificateholders, the
security interest referred to in Section 10.04;
(i) None of the Mortgage Loans has a prepayment penalty period in excess
of three years;
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.06 shall survive delivery of the
respective Custodial Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee.
Within 60 days of the earlier of either discovery by or notice to the
Depositor of a breach of the representations and warranties set forth in clause
(h) or (i) above that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Depositor shall use its best efforts to promptly cure such breach in
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all material respects and if such defect or breach cannot be remedied, the
Depositor shall either (i) if such 60-day period expires prior to the second
anniversary of the Closing Date, remove such 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 Section 2.03, or (ii) repurchase such
Mortgage Loan at the Repurchase Price. The obligations of the Depositor to cure
such breach or to substitute or purchase any Mortgage Loan constitute the sole
remedies respecting a material breach of any such representation or warranty to
the Holders of the Certificates and the Trustee.
Section 2.07. Representations, Warranties and Covenants of the Servicer,
the Originator and the Master Servicer.
(a) The Servicer hereby represents, warrants and covenants to the Trustee,
the Trust Administrator, the Master Servicer, the Originator and the Depositor
that as of the Closing Date or as of such date specifically provided herein:
(i) The Servicer is a state chartered industrial bank duly
organized, validly existing and in good standing under the laws of the
State of California and is duly authorized and qualified to transact any
and all business contemplated by this Agreement to be conducted by the
Servicer in any state in which a Mortgaged Property related to a Mortgage
Loan 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 serviced and to service the
Mortgage Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to service each
Mortgage Loan which the Servicer is required to service hereunder, and to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and has duly authorized by all
necessary action on the part of the Servicer the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery thereof by the Depositor, the
Originator, the Master Servicer, the Trust Administrator and the Trustee,
constitutes a legal, valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its terms, except to
the extent that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(iii) The execution and delivery of this Agreement by the Servicer,
the servicing of the Mortgage Loans by the Servicer hereunder, the
consummation by the Servicer of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Servicer and will not (A)
result in a breach of any term or provision of the organizational
documents of the Servicer or (B) conflict with, result in a breach,
violation or acceleration of, or result in a default under, the terms of
any other material agreement or instrument to which the Servicer is a
party or by which it may be bound, or any statute,
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order or regulation applicable to the Servicer of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
the Servicer; and the Servicer is not a party to, bound by, or in breach
or violation of any indenture or other agreement or instrument, or subject
to or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to the
Servicer's knowledge, would in the future materially and adversely affect,
(x) the ability of the Servicer to perform its obligations under this
Agreement or (y) the business, operations, financial condition, properties
or assets of the Servicer taken as a whole;
(iv) The Servicer is a HUD-approved non-supervised mortgagee
pursuant to Section 203 and Section 211 of the National Housing Act, and
no event has occurred, including but not limited to a change in insurance
coverage, that would make the Servicer unable to comply with HUD
eligibility requirements or which would require notification to HUD;
(v) No litigation is pending or, to the best knowledge of the
Servicer, threatened against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans or
to perform any of its other obligations hereunder in accordance with the
terms hereof;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation by the Servicer of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date;
(vii) The Servicer will not waive any Prepayment Premium or part of
a Prepayment Premium unless such waiver would, in the reasonable opinion
of the Servicer, maximize recovery of total proceeds taking into account
the value of such Prepayment Premium and related Mortgage Loan and doing
so is standard and customary in servicing mortgage loans similar to the
Mortgage Loans (including any waiver of a Prepayment Premium in connection
with a refinancing of a Mortgage Loan that is related to a default or an
imminent default), and in no event will it waive a Prepayment Premium in
connection with a refinancing of a Mortgage Loan that is not related to a
default or an imminent default. Notwithstanding the previous sentence, if
the Servicer has not received any document or information necessary for
the Servicer to verify the existence or amount of the related Prepayment
Premium or if the Servicer determines that any Prepayment Premium is not
legally enforceable under the circumstances in which the related Principal
Prepayment occurs, then the Servicer shall not be required to attempt to
collect the applicable Prepayment Premium, and shall have no liability or
obligation with respect to such Prepayment Premium pursuant to Section
3.07(a) hereof;
(viii) For each Mortgage Loan, the Servicer will accurately, fully
and in a timely manner report its borrower credit files to each of the
three credit repositories; and
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(ix) the Servicer 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 Designated Mortgage Loans for as
long as such Mortgage Loans are registered with MERS.
(b) The Originator hereby represents, warrants and covenants to the
Trustee, the Trust Administrator, the Master Servicer, the Servicer and the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Originator is a state chartered industrial bank duly
organized, validly existing and in good standing under the laws of the
state of California;
(ii) The Originator has full power and authority to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement;
(iii) The execution and delivery by the Originator of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Originator; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated herein, nor
compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
the Originator or its properties or the certificate of incorporation or
by-laws of the Originator, except those conflicts, breaches or defaults
which would not reasonably be expected to have a material adverse effect
on the Originator's ability to enter into this Agreement and to consummate
the transactions contemplated hereby;
(iv) The execution, delivery and performance by the Originator of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any state, federal or other governmental authority or agency, except those
consents, approvals, notices, registrations or other actions as have
already been obtained, given or made and, in connection with the
recordation of the Mortgages, powers of attorney or assignments of
Mortgages not yet completed;
(v) This Agreement has been duly executed and delivered by the
Originator and, assuming due authorization, execution and delivery by the
Trustee, the Servicer, the Master Servicer, the Trust Administrator and
the Depositor, constitutes a valid and binding obligation of the
Originator, enforceable against it in accordance with its terms (subject
to applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally);
(vi) There are no actions, litigation, suits or proceedings pending
or, to the knowledge of the Originator, threatened against the Originator
before or by any court, administrative agency, arbitrator or governmental
body (i) with respect to any of the transactions contemplated by this
Agreement or (ii) with respect to any other matter which in the judgment
of the Originator if determined adversely to the Originator would
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reasonably be expected to materially and adversely affect the Originator's
ability to perform its obligations under this Agreement; and the
Originator is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by this Agreement;
(vii) The Originator hereby makes the representations and warranties
set forth in Exhibit A to the Mortgage Loan Purchase Agreement, as of the
Closing Date, or the date specified therein, with respect to the Mortgage
Loans identified on Schedule I hereto; and
(viii) The Originator 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.
(c) The Master Servicer hereby represents, warrants and covenants to the
Servicer, the Originator, the Depositor and the Trustee, for the benefit of each
of the Trustee and the Certificateholders, that as of the Closing Date or as of
such date specifically provided herein:
(i) The Master Servicer is a national banking association duly
formed, validly existing and in good standing under the laws of the United
States of America and is duly authorized and qualified to transact any and
all business contemplated by this Agreement to be conducted by the Master
Servicer;
(ii) The Master Servicer has the full power and authority to conduct
its business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated
by this Agreement. The Master Servicer has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Depositor, the Originator, the Servicer and
the Trustee, constitutes a legal, valid and binding obligation of the
Master Servicer, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the Master
Servicer, the consummation by the Master Servicer of any other of the
transactions herein contemplated, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the Master
Servicer and will not (A) result in a breach of any term or provision of
charter and by-laws of the Master Servicer or (B) conflict with, result in
a breach, violation or acceleration of, or result in a default under, the
terms of any other material agreement or instrument to which the Master
Servicer is a party or by which it may be bound, or any statute, order or
regulation applicable to the Master Servicer of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
the Master Servicer; and the Master Servicer is not a party to, bound by,
or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body,
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administrative agency or governmental body having jurisdiction over it,
which materially and adversely affects or, to the Master Servicer's
knowledge, would in the future materially and adversely affect, the
ability of the Master Servicer to perform its obligations under this
Agreement;
(iv) The Master Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
made by it and contained in this Agreement;
(v) No litigation is pending against the Master Servicer that would
materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Master Servicer to perform any of
its other obligations hereunder in accordance with the terms hereof;
(vi) There are no actions or proceedings against, or investigations
known to it of, the Master Servicer before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the consummation of the transactions contemplated
by this Agreement or (C) that might prohibit or materially and adversely
affect the performance by the Master Servicer of its obligations under, or
validity or enforceability of, this Agreement; and
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the consummation by it of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior
to the Closing Date.
(d) It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.07 shall survive delivery of the Mortgage
Files to the Trustee. Upon discovery by any of the Depositor, the Originator,
the Master Servicer, the Trust Administrator, the Servicer or the Trustee of a
breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Premium or the interests therein of the Certificateholders, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such discovery) to the other such parties. The
obligation of the Originator set forth in Section 2.03(d) to cure breaches shall
constitute the sole remedy against the Originator available to the
Certificateholders, the Depositor, the Trust Administrator or the Trustee on
behalf of the Certificateholders respecting a breach of the Originator's
representations, warranties and covenants contained in paragraph (b)(vii) of
this Section 2.07. The obligation of the Servicer set forth in Section 3.07(a)
to pay the amount of any waived Prepayment Premium shall constitute the sole
remedy against the Servicer available to the Certificateholders, the Depositor,
the Trust Administrator or the Trustee on behalf of the Certificateholders
respecting a breach of the Servicer's representations, warranties and covenants
contained in paragraph (a)(vii) of this Section 2.07.
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ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Servicer to Service Mortgage Loans.
(a) For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with the terms of this
Agreement and the respective Mortgage Loans, to the extent consistent with such
terms and in accordance with Accepted Servicing Practices but without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
related Mortgage Notes. Subject only to the above-described servicing standards
and the terms of this Agreement and of the respective Mortgage Loans, the
Servicer shall have full power and authority, acting alone or through
Subservicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Servicer in its own name or in the name of a Subservicer is hereby authorized
and empowered by the Trustee when the Servicer believes it appropriate in its
best judgment in accordance with the Accepted Servicing Practices, to execute
and deliver any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Mortgage Loans and the Mortgaged Properties and to institute
foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as to convert
the ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.16, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such documents as are necessary or appropriate to enable the Servicer or any
Subservicer to carry out their servicing and administrative duties hereunder,
and the Trustee hereby grants to the Servicer, and this Agreement shall
constitute, a power of attorney to carry out such duties including a power of
attorney to take title to Mortgaged Properties after foreclosure on behalf of
the Trustee. The Trustee shall execute any power of attorney, in the form
annexed hereto as Exhibit L, furnished to it by the Servicer in favor of the
Servicer for the purposes described herein to the
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extent necessary or desirable to enable the Servicer to perform its duties
hereunder. The Trustee shall not be liable for the actions of the Servicer or
any Subservicers under such powers of attorney.
(b) Subject to Section 3.09(b), in accordance with Accepted Servicing
Practices, the Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the timely payment of taxes and assessments on the
Mortgaged Properties, which advances shall be Servicing Advances reimbursable in
the first instance from related collections from the Mortgagors pursuant to
Section 3.09(b), and further as provided in Section 3.11. Any cost incurred by
the Servicer or by Subservicers in effecting the timely payment of taxes and
assessments on a Mortgaged Property shall not be added to the unpaid principal
balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit.
(c) Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (except for (A) a reduction of interest payments resulting
from the application of the Servicemembers Civil Relief Act, as amended, or any
similar state statutes or (B) as provided in Section 3.07, if the Mortgagor is
in default with respect to the Mortgage Loan or such default is, in the judgment
of the Servicer, reasonably foreseeable) or (ii) permit any modification, waiver
or amendment of any term of any Mortgage Loan that would both (A) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
final, temporary or proposed Treasury regulations promulgated thereunder) and
(B) cause any Trust REMIC to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions after the
start-up day" under the REMIC Provisions, or (iii) except as provided in Section
3.07(a), waive any Prepayment Premiums.
(d) The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement.
(e) In the event of any change in the outstanding rating by ▇▇▇▇▇'▇ of the
Servicer as a servicer of residential mortgage loans, the Servicer shall provide
written notice of such change to the Master Servicer within five (5) Business
Days of such change.
(f) If, on any date of determination, the Servicer fails the Servicer
Enhanced Review Test, the Servicer shall promptly submit a completed form in the
form of Exhibit Q to the Master Servicer with respect to any Realized Losses,
together with any supporting documentation reasonably requested by the Master
Servicer, and shall continue to submit completed forms in the form of Exhibit Q,
and related supporting documentation as requested by the Master Servicer, in
connection with any subsequent Realized Losses.
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Section 3.02. Subservicing Agreements between the Servicer and
Subservicers.
(a) The Servicer may enter into subservicing agreements with subservicers
(each, a "Subservicer"), for the servicing and administration of the Mortgage
Loans ("Subservicing Agreements").
(b) Each Subservicer shall be (i) authorized to transact business in the
state or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement and (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution that has deposit accounts
insured by the FDIC. Each Subservicing Agreement must impose on the Subservicer
requirements conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Subservicing Agreement and will be familiar with
the terms thereof. The terms of any Subservicing Agreement will not be
inconsistent with any of the provisions of this Agreement. The Servicer and the
Subservicers may enter into and make amendments to the Subservicing Agreements
or enter into different forms of Subservicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Trustee, without the consent of
the Trustee. Any variation without the consent of the Trustee from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee, the Master Servicer, the Trust Administrator and the Depositor copies
of all Subservicing Agreements, and any amendments or modifications thereof,
promptly upon the Servicer's execution and delivery of such instruments.
Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be deemed to be between the
Subservicer and the Servicer alone, and the Depositor, the Master Servicer and
the Trust Administrator and the Trustee shall have no obligations, duties or
liabilities with respect to a Subservicer including no obligation, duty or
liability of the Depositor, the Master Servicer and the Trust Administrator or
Trustee, to pay a Subservicer's fees and expenses.
For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the related
Mortgage Loans that are received by a related Subservicer regardless of whether
such payments are remitted by the Subservicer to the Servicer.
(c) As part of its servicing activities hereunder, the Servicer (except as
otherwise provided in the last sentence of this paragraph), for the benefit of
the Trustee, shall enforce the obligations of each Subservicer under the related
Subservicing Agreement to which the Servicer is a party, including, without
limitation, any obligation to make advances in respect of delinquent payments as
required by a Subservicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Subservicing
Agreements, and the
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pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
The Servicer shall pay all fees, expenses or penalties necessary in order
to terminate the rights and responsibilities of its Subservicer from the
Servicer's own funds without any right of reimbursement from the Depositor, the
Trustee, the Master Servicer, the Trust Administrator or the Collection Account.
Section 3.03. Successor Subservicers.
The Servicer shall be entitled to terminate any Subservicing Agreement to
which the Servicer is a party and the rights and obligations of any Subservicer
pursuant to any Subservicing Agreement in accordance with the terms and
conditions of such Subservicing Agreement. In the event of termination of any
Subservicer, all servicing obligations of such Subservicer shall be assumed
simultaneously by the Servicer party to the related Subservicing Agreement
without any act or deed on the part of such Subservicer or the Servicer, and the
Servicer either shall service directly the related Mortgage Loans or shall enter
into a Subservicing Agreement with a successor Subservicer which qualifies under
Section 3.02.
Any Subservicing Agreement shall include the provision that such agreement
may be immediately terminated by the Master Servicer, the Trustee or the Trust
Administrator without fee, in accordance with the terms of this Agreement, in
the event that the Servicer (or the Master Servicer, the Trust Administrator or
the Trustee, if then acting as Servicer) shall, for any reason, no longer be the
Servicer (including termination due to a Servicer Event of Default).
Section 3.04. Liability of the Servicer.
Notwithstanding any Subservicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
such Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Servicer by such Subservicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
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Section 3.05. No Contractual Relationship between Subservicers and the
Trustee, Master Servicer, Trust Administrator or Certificateholder.
Any Subservicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Subservicer in its
capacity as such shall be deemed to be between the Subservicer and the Servicer
alone, and the Trustee, the Master Servicer, the Trust Administrator and the
Certificateholder (or any successor to the Servicer) shall not be deemed a party
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Subservicer except as set forth in Section 3.06. The
Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.
Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee or Trust Administrator.
In the event the Servicer at any time shall for any reason no longer be
the Servicer (including by reason of the occurrence of a Servicer Event of
Default), the Master Servicer or any other successor to Servicer pursuant to
this Agreement, shall thereupon assume all of the rights and obligations of the
Servicer under each Subservicing Agreement that the Servicer may have entered
into, with copies thereof provided to the Master Servicer prior to the Master
Servicer assuming such rights and obligations, unless the Master Servicer elects
to terminate any Subservicing Agreement in accordance with its terms as provided
in Section 3.03.
Upon such assumption, the Master Servicer, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Trustee, the Trust Administrator, the Master Servicer, their designees or any
successor to the Servicer shall be deemed to have assumed any liability or
obligation of the Servicer that arose before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Master Servicer,
the Trust Administrator or the Trustee, deliver to the assuming party all
documents and records relating to each Subservicing Agreement and the Mortgage
Loans then being serviced by it and an accounting of amounts collected and held
by or on behalf of it, and otherwise use its best efforts to effect the orderly
and efficient transfer of the Subservicing Agreements to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans and shall, to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any applicable Insurance Policies, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Consistent with the foregoing and
Accepted Servicing Practices, the Servicer may (i) waive any late payment charge
or, if
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applicable, any penalty interest, or (ii) extend the due dates for the Scheduled
Payments due on a Mortgage Note for a period of not greater than 180 days;
provided, that any extension pursuant to clause (ii) above shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation
hereunder, except as provided below. In the event of any such arrangement
pursuant to clause (ii) above, the Servicer shall make timely advances on such
Mortgage Loan during such extension pursuant to Section 4.01 and in accordance
with the amortization schedule of such Mortgage Loan without modification
thereof by reason of such arrangements, subject to Section 4.01(d) pursuant to
which the Servicer shall not be required to make any such advances that are
Nonrecoverable P&I Advances. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or is a 60+ Day Delinquent Mortgage Loan, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Interest Rate, forgive the payment of principal
or interest, extend the final maturity date of such Mortgage Loan or waive, in
whole or in part, a Prepayment Premium), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
(any and all such waivers, modifications, variances, forgiveness of principal or
interest, postponements, or indulgences collectively referred to herein as
"forbearance"); provided, however, that the Servicer's approval of a
modification of a Due Date shall not be considered a modification for purposes
of this sentence; provided, further, that the final maturity date of any
Mortgage Loan may not be extended beyond the Final Scheduled Distribution Date
for the Offered Certificates. The Servicer's analysis supporting any forbearance
and the conclusion that any forbearance meets the standards of Section 3.01
shall be reflected in writing in the applicable Servicing File. In addition,
notwithstanding the foregoing, the Servicer may also waive, in whole or in part,
a Prepayment Premium if such Prepayment Premium is (i) not permitted to be
collected by applicable law or the collection thereof would be considered
"predatory" pursuant to written guidance published by any applicable federal,
state or local regulatory authority having jurisdiction over such matters, or
(ii) the enforceability thereof is limited (1) by bankruptcy, insolvency,
moratorium, receivership or other similar laws relating to creditor's rights or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment. In order to waive a Prepayment Premium other than as permitted above,
then the Servicer, as a condition to any such waiver of Prepayment Premium, is
required to first pay the amount of such waived Prepayment Premium, for the
benefit of the Holders of the Class P Certificates, by depositing such amount
into the Collection Account together with and at the time that the amount
prepaid on the related Mortgage Loan is required to be deposited into the
Collection Account; provided, however, that (i) the Servicer shall not have an
obligation to pay the amount of any uncollected Prepayment Premium if the
failure to collect such amount is the direct result of inaccurate or incomplete
information on the Mortgage Loan Schedule in effect at such time and (ii) any
such amount shall be deemed paid outside REMIC I or REMIC II from the Servicer
to the holder of the Class P Certificate.
(b) The Servicer shall give notice to the Trustee, the Trust
Administrator, the Master Servicer, each Rating Agency and the Depositor of any
proposed change of the location of the Collection Account within a reasonable
period of time prior to any change thereof.
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Section 3.08. Subservicing Accounts.
In those cases where a Subservicer is servicing a Mortgage Loan pursuant
to a Subservicing Agreement, the Subservicer will be required to establish and
maintain one or more accounts (collectively, the "Subservicing Account"). The
Subservicing Account shall be an Eligible Account and shall otherwise be
acceptable to the Servicer. The Subservicer shall deposit in the clearing
account (which account must be an Eligible Account) in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Subservicer's receipt thereof, all proceeds of
Mortgage Loans received by the Subservicer less its servicing compensation to
the extent permitted by the Subservicing Agreement, and shall thereafter deposit
such amounts in the Subservicing Account, in no event more than two Business
Days after the deposit of such funds into the clearing account. The Subservicer
shall thereafter deposit such proceeds in the Collection Account of the Servicer
or remit such proceeds to the Servicer for deposit in the Collection Account of
the Servicer not later than two Business Days after the deposit of such amounts
in the Subservicing Account. For purposes of this Agreement, the Servicer shall
be deemed to have received payments on the Mortgage Loans when the Subservicer
receives such payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
(a) The Servicer shall ensure that each of the related Mortgage Loans
shall be covered by a paid-in-full, life-of-the-loan tax service contract in
effect with respect to each related Mortgage Loan (each, a "Tax Service
Contract"). Each Tax Service Contract shall be assigned to the Trustee, or its
designee, at the Servicer's expense in the event that the Servicer is terminated
as Servicer of the related Mortgage Loan.
(b) To the extent that the services described in this paragraph (b) are
not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) hereof, the Servicer undertakes to perform such functions. To the
extent the related Mortgage Loan provides for Escrow Payments, the Servicer
shall establish and maintain, or cause to be established and maintained, one or
more accounts (the "Escrow Accounts"), which shall be Eligible Accounts. The
Servicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, all collections from the Mortgagors (or related advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in no event more than two Business Days
after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from an Escrow Account may be made only to (i)
effect payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse the Servicer (or a Subservicer to the extent provided in
the related Subservicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.13 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) apply
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to the restoration or repair of the Mortgaged Property in accordance with the
Section 3.13; (v) transfer to the Collection Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note; (vi) pay interest to the Servicer and, if
required and as described below, to Mortgagors on balances in the Escrow
Account; (vii) clear and terminate the Escrow Account at the termination of the
Servicer's obligations and responsibilities in respect of the related Mortgage
Loans under this Agreement; or (viii) recover amounts deposited in error. As
part of its servicing duties, the Servicer or Subservicers shall pay to the
Mortgagors interest on funds in Escrow Accounts, to the extent required by law
and, to the extent that interest earned on funds in the Escrow Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. To the extent that a Mortgage does not provide for
Escrow Payments, the Servicer shall use commercially reasonable efforts
consistent with Accepted Servicing Practices to determine whether any such
payments are made by the Mortgagor in a manner and at a time that avoids the
loss of the Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax lien. The Servicer assumes full responsibility for the payment of all
such bills within such time and shall effect payments of all such bills
irrespective of the Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make advances from its own funds to
effect such payments; provided, however, that such advances are deemed to be
Servicing Advances.
Section 3.10. Collection Account.
(a) On behalf of the Trustee, the Servicer shall establish and maintain,
or cause to be established and maintained, one or more Eligible Accounts (such
account or accounts, the "Collection Account"), held in trust for the benefit of
the Trustee. On behalf of the Trustee, the Servicer shall deposit or cause to be
deposited in the clearing account (which account must be an Eligible Account) in
which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and in
no event more than one Business Day after the Servicer's receipt thereof, and
shall thereafter deposit in the Collection Account, in no event more than two
Business Days after the deposit of such funds into the clearing account, as and
when received or as otherwise required hereunder, the following payments and
collections received or made by it subsequent to the Cut-off Date (other than in
respect of principal or interest on the related Mortgage Loans due on or before
the Cut-off Date), or payments (other than Principal Prepayments) received by it
on or prior to the related Cut-off Date but allocable to a Due Period subsequent
thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the Servicing Fee)
on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds (to the
extent such Insurance Proceeds and Condemnation Proceeds are not to be
applied to the restoration of the related Mortgaged Property or released
to the related Mortgagor in accordance with the express requirements of
law or in accordance with prudent and customary servicing practices) and
all Liquidation Proceeds;
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(iv) any amounts required to be deposited pursuant to Section 3.12
in connection with any losses realized on Permitted Investments with
respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant to
the second paragraph of Section 3.13(a) in respect of any blanket policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with this Agreement;
(vii) all Substitution Shortfall Amounts; and
(viii) all Prepayment Premiums collected by the Servicer.
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, NSF fees,
reconveyance fees, assumption fees and other similar fees and charges need not
be deposited by the Servicer in the Collection Account and shall, upon
collection, belong to the Servicer as additional compensation for its servicing
activities. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(b) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Servicer shall give notice to the Trust Administrator, the Master Servicer and
the Depositor of the location of the Collection Account maintained by it when
established and prior to any change thereof.
Section 3.11. Withdrawals from the Collection Account.
(a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in Section
4.01:
(i) on or prior to the Remittance Date, to remit to the Trust
Administrator for deposit into the Distribution Account all Available
Funds in respect of the related Distribution Date together with all
amounts representing Prepayment Premiums from the Mortgage Loans received
during the related Prepayment Period;
(ii) to reimburse the Servicer for P&I Advances, but only to the
extent of amounts received which represent Late Collections (net of the
related Servicing Fees) of Scheduled Payments on Mortgage Loans with
respect to which such P&I Advances were made in accordance with the
provisions of Section 4.01;
(iii) to pay the Servicer or any Subservicer (A) any unpaid
Servicing Fees or (B) any unreimbursed Servicing Advances with respect to
each Mortgage Loan, but only to the extent of any Late Collections,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds or other
amounts as may be collected by the Servicer from a
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Mortgagor, or otherwise received with respect to such Mortgage Loan (or
the related REO Property);
(iv) to pay to the Servicer as servicing compensation (in addition
to the Servicing Fee) on the Remittance Date any interest or investment
income earned on funds deposited in the Collection Account;
(v) to pay to the Originator, with respect to each Mortgage Loan
that has previously been repurchased or replaced pursuant to this
Agreement all amounts received thereon subsequent to the date of purchase
or substitution, as the case may be;
(vi) to reimburse the Servicer for (A) any P&I Advance or Servicing
Advance previously made which the Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
accordance with the provisions of Section 4.01 and (B) any unpaid
Servicing Fees to the extent not recoverable from Liquidation Proceeds,
Insurance Proceeds or other amounts received with respect to the related
Mortgage Loan under Section 3.11(a)(iii);
(vii) to pay, or to reimburse the Servicer for advances in respect
of, expenses incurred in connection with any Mortgage Loan pursuant to
Section 3.15;
(viii) to reimburse the Servicer, the Depositor, the Master
Servicer, the Trust Administrator or the Trustee for expenses incurred by
or reimbursable to the Servicer, the Depositor, the Trustee, the Master
Servicer or the Trust Administrator, as the case may be, pursuant to this
Agreement;
(ix) to reimburse the Servicer, the Master Servicer, the Trust
Administrator or the Trustee, as the case may be, for expenses reasonably
incurred in respect of the breach or defect giving rise to the repurchase
obligation under Section 2.03 of this Agreement that were included in the
Repurchase Price of the Mortgage Loan, including any expenses arising out
of the enforcement of the repurchase obligation, to the extent not
otherwise paid pursuant to the terms hereof;
(x) to withdraw any amounts deposited in the Collection Account in
error; and
(xi) to clear and terminate the Collection Account upon termination
of this Agreement.
To the extent that the Servicer does not timely make the remittance
referred to in clause (i) above, the Servicer shall pay the Trust Administrator
for the account of the Trust Administrator interest on any amount not timely
remitted at the prime rate, from and including the applicable Remittance Date to
but excluding the date such remittance is actually made.
(b) The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii), (iv), (v), (vi), (vii), (viii) and
(ix) above. The Servicer shall provide written notification to the Depositor, on
or prior
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to the next succeeding Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclause (a)(vi) above.
Section 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may invest the funds in the Collection Account and the
Trust Administrator may invest funds in the Distribution Account (for purposes
of this Section 3.12, each such Account is referred to as an "Investment
Account"), in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, no later than the Business Day
on which such funds are required to be withdrawn from such account pursuant to
this Agreement. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trust Administrator. The Trust Administrator shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account and any income and gain realized thereon)
over each such investment, and any certificate or other instrument evidencing
any such investment shall be delivered directly to the Trust Administrator or
its agent, together with any document of transfer necessary to transfer title to
such investment to the Trust Administrator. In the event amounts on deposit in
an Investment Account are at any time invested in a Permitted Investment payable
on demand, the Trust Administrator may:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand payment of all amounts due thereunder to the extent
that such Permitted Investment would not constitute a
Permitted Investment in respect of funds thereafter on deposit
in the Investment Account.
(b) All income and gain realized from the investment of funds deposited in
the Collection Account and Escrow Account held by or on behalf of the Servicer,
shall be for the benefit of the Servicer and shall be subject to its withdrawal
in the manner set forth in Section 3.11. Any other benefit derived from the
Collection Account and Escrow Account associated with the receipt, disbursement
and accumulation of principal, interest, taxes, hazard insurance, mortgage
blanket insurance, and like sources, shall accrue to the benefit of the
Servicer, except that the Servicer shall not realize any economic benefit from
any forced charging of services. The Servicer shall deposit in the Collection
Account and Escrow Account the amount of any loss of principal incurred in
respect of any such Permitted Investment made with funds in such accounts
immediately upon realization of such loss.
(c) All income and gain realized from the investment of funds deposited in
the Distribution Account held by the Trust Administrator, shall be for the
benefit of the Trust Administrator. The Trust Administrator shall deposit in the
Distribution Account the amount of any loss of principal incurred in respect of
any such Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
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(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings.
(e) The Trustee and the Trust Administrator or their respective Affiliates
are permitted to receive additional compensation that could be deemed to be in
their respective economic self-interest for (i) serving as investment adviser,
administrator, shareholder, servicing agent, custodian or sub-custodian with
respect to certain of the Permitted Investments, (ii) using Affiliates to effect
transactions in certain Permitted Investments and (iii) effecting transactions
in certain Permitted Investments.
Section 3.13. Maintenance of Hazard Insurance, Errors and Omissions and
Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each Mortgage Loan fire
insurance with extended coverage on the related Mortgaged Property in an amount
which is at least equal to the least of (i) the current principal balance of
such Mortgage Loan, (ii) the amount necessary to fully compensate for any damage
or loss to the improvements that are a part of such property on a replacement
cost basis, (iii) the maximum insurable value of the improvements which are a
part of such Mortgaged Property, and (iv) the amount determined by applicable
federal or state law, in each case in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. The Servicer shall also cause to be maintained
fire insurance with extended coverage on each REO Property in an amount which is
at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding
principal balance of the related Mortgage Loan at the time it became an REO
Property, plus accrued interest at the Mortgage Interest Rate and related
Servicing Advances. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by any Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.11. If the Mortgagor fails
to provide Mortgage Loan hazard insurance coverage after thirty (30) days of
Servicer's written notification, the Servicer shall put in place such hazard
insurance coverage on the Mortgagor's behalf. Any out-of-pocket expense or
advance made by the Servicer on such force placed hazard insurance coverage
shall be deemed a Servicing Advance. Any cost incurred by any Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to the Trustee, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is
at any time in an area identified in the Federal Register by the Federal
Emergency Management Agency as having
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special flood hazards and flood insurance has been made available, the Servicer
will cause to be maintained a flood insurance policy in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the minimum
amount required, under the terms of coverage, to compensate for any damage or
loss on a replacement cost basis (or the unpaid principal balance of the related
Mortgage Loan if replacement cost coverage is not available for the type of
building insured) and (ii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. If at any time
during the term of the Mortgage Loan, the Servicer determines in accordance with
applicable law and pursuant to the Federal Emergency Management Agency Guides
that a Mortgaged Property is located in a special flood hazard area and is not
covered by flood insurance or is covered in an amount less than the amount
required by the Flood Disaster Protection Act of 1973, as amended, the Servicer
shall notify the related Mortgagor to obtain such flood insurance coverage, and
if said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor's behalf. Any
out-of-pocket expense or advance made by the Servicer on such force placed flood
insurance coverage shall be deemed a Servicing Advance.
In the event that any Servicer shall obtain and maintain a blanket policy
with an insurer having a General Policy Rating of "B" or better in Best's (or
such other rating that is comparable to such rating) insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy complying with the first two sentences of this Section 3.13, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee claims under any such blanket policy in a timely fashion in accordance
with the terms of such policy.
(b) The Servicer shall keep in force during the term of this Agreement a
policy or policies of insurance covering errors and omissions for failure in the
performance of the Servicer's obligations under this Agreement. The Servicer
shall provide the Trustee or Trust Administrator upon request with copies of any
such insurance policies and fidelity bond. The Servicer shall be deemed to have
complied with this provision if an Affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. Any
such errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Subservicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or
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by contract of sale, and whether or not the Mortgagor remains or is to remain
liable under the Mortgage Note and/or the Mortgage), exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause, if
any, applicable thereto; provided, however, that the Servicer shall not be
required to take such action if, in its sole business judgment, the Servicer
believes it is not in the best interests of the Trust Fund and shall not
exercise any such rights if prohibited by law from doing so. If the Servicer
reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause or if any of the other conditions set forth in the proviso
to the preceding sentence apply, the Servicer will enter into an assumption and
modification agreement from or with the person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note, and, to the extent permitted by applicable state
law, the Mortgagor remains liable thereon. The Servicer is also authorized to
enter into a substitution of liability agreement with such person, pursuant to
which the original Mortgagor is released from liability and such person is
substituted as the Mortgagor and becomes liable under the Mortgage Note;
provided, that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer and such substitution is in
the best interest of the Certificateholders as determined by the Servicer. In
connection with any assumption, modification or substitution, the Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely by it. The Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Servicer in respect of an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Interest Rate
and the amount of the Scheduled Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof and in accordance with Section
3.01(c) herein. The Servicer shall notify the Trustee that any such
substitution, modification or assumption agreement has been completed by
forwarding to the Trustee the executed original of such substitution or
assumption agreement, which document shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.14, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
Section 3.15. Realization upon Defaulted Mortgage Loans.
The Servicer shall use its best efforts, consistent with Accepted
Servicing Practices, to foreclose upon or otherwise comparably convert (which
may include an acquisition of REO Property) the ownership of properties securing
such of the Mortgage Loans as come into
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and continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 3.07, and which are
not released from this Agreement pursuant to any other provision hereof. The
Servicer shall use reasonable efforts to realize upon such defaulted Mortgage
Loans in such manner as will maximize the receipt of principal and interest by
the Trustee, taking into account, among other things, the timing of foreclosure
proceedings. The foregoing is subject to the provisions that, in any case in
which a Mortgaged Property shall have suffered damage from an uninsured cause,
the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its sole discretion
(i) that such restoration will increase the net proceeds of liquidation of the
related Mortgage Loan to the Trustee, after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the Servicer
through Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds from
the related Mortgaged Property, as contemplated in Section 3.11. The Servicer
shall be responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related property, as contemplated in Section 3.11.
The proceeds of any Liquidation Event or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds or any income from an REO Property, will be
applied in the following order of priority: first, to reimburse the Servicer or
any Subservicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11 or 3.17; second, to accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the Mortgage Interest Rate, to the date of the
liquidation or REO Disposition, or to the Due Date prior to the Remittance Date
on which such amounts are to be distributed if not in connection with a
Liquidation Event or REO Disposition; third, to reimburse any Servicer for any
related ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances, pursuant to Section 3.11; and fourth, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, that amount will be
allocated as follows: first, to unpaid Servicing Fees; and second, as interest
at the Mortgage Interest Rate (net of the Servicing Fee Rate). The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer or any Subservicer pursuant to Section 3.11 or 3.17. The portions of
the recovery so allocated to interest at the Mortgage Interest Rate (net of the
Servicing Fee Rate) and to principal of the Mortgage Loan shall be applied as
follows: first, to reimburse the Servicer or any Subservicer for any related
unreimbursed Servicing Advances in accordance with Section 3.11 or 3.17, and
second, to the Trust Administrator for distribution in accordance with the
provisions of Section 4.02, subject to the last paragraph of Section 3.17 with
respect to certain excess recoveries from an REO Disposition.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Servicer has received actual notice of, or has actual knowledge of the
presence of, hazardous or toxic substances or wastes on the related Mortgaged
Property, or if the Trustee otherwise requests, the Servicer shall cause an
environmental inspection or review of such Mortgaged Property to be conducted by
a qualified inspector. Upon completion of the inspection, the Servicer shall
promptly provide the Trustee and the Depositor with a written report of the
environmental inspection.
After reviewing the environmental inspection report, the Depositor shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
In the event (a) the
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environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (b) the Depositor
directs the Servicer to proceed with foreclosure or acceptance of a deed in lieu
of foreclosure, the Servicer shall be reimbursed for all reasonable costs
associated with such foreclosure or acceptance of a deed in lieu of foreclosure
and any related environmental clean-up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse the Servicer, the Servicer shall be entitled to be reimbursed from
amounts in the Collection Account pursuant to Section 3.11. In the event the
Depositor directs the Servicer not to proceed with foreclosure or acceptance of
a deed in lieu of foreclosure, the Servicer shall be reimbursed from general
collections for all Servicing Advances made with respect to the related
Mortgaged Property from the Collection Account pursuant to Section 3.11. Neither
the Trustee nor the Master Servicer shall be responsible for any direction given
by the Depositor to the Servicer pursuant to this paragraph.
Section 3.16. Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer will, within five (5) Business Days of
the payment in full, notify the Trustee or the Trust Administrator, as
applicable, by a certification (which certification shall include a statement to
the effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.10 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Custodial File by completing a Request for Release
(in the form of Exhibit J or in an electronic format acceptable to the Trust
Administrator). Upon receipt of such certification and Request for Release, the
Trustee or Trust Administrator shall promptly release the related Custodial File
to the Servicer within three (3) Business Days. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
Insurance Policy relating to the Mortgage Loans, the Trustee or Trust
Administrator, as applicable, shall, upon request of the Servicer and delivery
to the Trustee or Trust Administrator, as applicable, of a Request for Release
(in the form of Exhibit J or in an electronic format acceptable to the Trust
Administrator), release the related Custodial File to the Servicer, and the
Trustee or Trust Administrator shall, at the direction of the Servicer, execute
such documents provided to it as shall be necessary to the prosecution of any
such proceedings and the Servicer shall retain the Mortgage File in trust for
the benefit of the Trustee. Such Request for Release shall obligate the Servicer
to return each and every document previously requested from the Custodial File
to the Trustee or Trust Administrator, as applicable, when the need therefor by
the Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the Collection Account or the Mortgage File or such document has been delivered
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Trustee or Trust
Administrator, as applicable, a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
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document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation that are required to be deposited into the Collection
Account have been so deposited, or that such Mortgage Loan has become an REO
Property, a copy of the Request for Release shall be released by the Trustee or
Trust Administrator, as applicable, to the Servicer or its designee. Upon
receipt of a Request for Release under this Section 3.16, the Trustee or Trust
Administrator, as applicable, shall deliver the related Custodial File to the
Servicer by overnight courier (such delivery to be at the Servicer's expense);
provided, however, that in the event the Servicer has not previously received
copies of the relevant Mortgage Loan Documents necessary to service the related
Mortgage Loan in accordance with Accepted Servicing Practices, the Originator
shall reimburse the Servicer for any overnight courier charges incurred for the
requested Custodial Files.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to any Servicer copies of any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity, or shall exercise and deliver to the Servicer a power of attorney
sufficient to authorize the Servicer to execute such documents on its behalf.
Each such certification shall include a request that such pleadings or documents
be executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.17. Title, Conservation and Disposition of REO Property.
(a) This Section shall apply only to REO Properties acquired for the
account of the Trustee and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or repurchased from the Trustee pursuant to
any provision hereof. In the event that title to any such REO Property is
acquired, the Servicer shall cause the deed or certificate of sale to be issued
in the name of the Trustee, on behalf of the Certificateholders, or the
Trustee's nominee.
(b) The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee.
(c) [Reserved.]
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(d) The Servicer shall segregate and hold all funds collected and received
in connection with the operation of any REO Property separate and apart from its
own funds and general assets and shall deposit such funds in the Collection
Account.
(e) The Servicer shall deposit net of reimbursement to the Servicer for
any related outstanding Servicing Advances and unpaid Servicing Fees provided in
Section 3.11, or cause to be deposited, on a daily basis in the Collection
Account all revenues received with respect to the related REO Property and shall
withdraw therefrom funds necessary for the proper operation, management and
maintenance of the REO Property.
(f) The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances as well as any
unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.11.
(g) Any net proceeds from an REO Disposition which are in excess of the
unpaid principal balance of the related Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date of the REO Disposition shall be
retained by the Servicer as additional servicing compensation.
(h) The Servicer shall use Accepted Servicing Practices, to sell, or cause
the Subservicer to sell, any REO Property as soon as possible, but in no event
later than the conclusion of the third calendar year beginning after the year of
its acquisition by the REMIC unless (i) the Servicer applies for, and is
granted, an extension of such period from the Internal Revenue Service pursuant
to the REMIC Provisions and Code Section 856(e)(3), in which event such REO
Property shall be sold within the applicable extension period, or (ii) the
Servicer obtains for the Trustee an Opinion of Counsel, addressed to the
Depositor, the Trustee, the Trust Administrator and the Servicer, to the effect
that the holding by REMIC I of such REO Property subsequent to such period will
not result in the imposition of taxes on "prohibited transactions" as defined in
Section 860F of the Code or cause any Trust REMIC to fail to qualify as a REMIC
under the REMIC Provisions or comparable provisions of relevant state laws at
any time. The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) or result in the
receipt by any REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under Section 860G(a)(1) of the Code.
Pursuant to its efforts to sell such REO Property, the Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Trustee on behalf of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Trustee on behalf of the Certificateholders for
the period prior to the sale of such REO Property; provided, however, that any
rent received or accrued with respect to such REO Property qualifies as "rents
from real property" as defined in Section 856(d) of the Code. Neither the
Trustee nor the Master Servicer has any obligation with respect to REO
Dispositions.
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Section 3.18. Notification of Adjustments.
With respect to each Mortgage Loan, the Servicer shall adjust the Mortgage
Interest Rate on the related Adjustment Date and shall adjust the Scheduled
Payment on the related mortgage payment adjustment date, if applicable, in
compliance with the requirements of applicable law and the related Mortgage and
Mortgage Note. The Servicer shall execute and deliver any and all necessary
notices required under applicable law and the terms of the related Mortgage Note
and Mortgage regarding the Mortgage Interest Rate and Scheduled Payment
adjustments. The Servicer shall promptly, upon written request therefor, deliver
to the Trustee, the Trust Administrator and the Master Servicer such
notifications and any additional applicable data regarding such adjustments and
the methods used to calculate and implement such adjustments. Upon the discovery
by the Servicer or the receipt of notice from the Trustee, the Trust
Administrator or the Master Servicer that the Servicer has failed to adjust a
Mortgage Interest Rate or Scheduled Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall deposit in the Collection Account from
its own funds the amount of any interest loss caused as such interest loss
occurs.
Section 3.19. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Servicer shall provide, or cause the Subservicer to provide, to the
Depositor, the Trustee, the Trust Administrator, the Master Servicer, the OTS or
the FDIC and the examiners and supervisory agents thereof, access to the
documentation regarding the Mortgage Loans in its possession required by
applicable regulations of the OTS. Such access shall be afforded without charge,
but only upon 15 days' (or, if a Servicer Event of Default has occurred and is
continuing, 2 days') prior written request and during normal business hours at
the offices of the Servicer or any Subservicer. Nothing in this Section shall
derogate from the obligation of any such party to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of any such party to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
Section 3.20. Documents, Records and Funds in Possession of the Servicer
to Be Held for the Trustee.
The Servicer shall account fully to the Trustee for any funds received by
the Servicer or which otherwise are collected by the Servicer as Liquidation
Proceeds, Condemnation Proceeds or Insurance Proceeds in respect of any Mortgage
Loan. All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including, but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account, the 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
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on, or in connection with, a Mortgage Loan, except, however, that the Servicer
shall be entitled to set off against and deduct from any such funds any amounts
that are properly due and payable to the Servicer under this Agreement.
Section 3.21. Servicing Compensation.
(a) As compensation for its activities hereunder, the Servicer shall, with
respect to each Mortgage Loan, be entitled to retain from deposits to the
Collection Account and from Liquidation Proceeds, Insurance Proceeds, and
Condemnation Proceeds related to such Mortgage Loan, the Servicing Fee with
respect to each Mortgage Loan (less any portion of such amounts retained by any
Subservicer). In addition, the Servicer shall be entitled to recover unpaid
Servicing Fees out of related late collections and as otherwise permitted in
Section 3.11. Except as provided in Section 6.06, the right to receive the
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Servicer's responsibilities and obligations
under this Agreement; provided, however, that the Servicer may pay from the
Servicing Fee any amounts due to a Subservicer pursuant to a Subservicing
Agreement entered into under Section 3.02.
(b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Premiums) shall be retained by
the Servicer only to the extent such fees or charges are received by the
Servicer. The Servicer shall also be entitled pursuant to Sections 3.09(b)(vi)
and 3.11(a)(iv) to withdraw from the Collection Account, as additional servicing
compensation, interest or other income earned on deposits therein.
(c) The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13, servicing compensation of any Subservicer to the extent not
retained by such Subservicer and the fees and expenses of independent
accountants and any agents appointed by the Servicer), and shall not be entitled
to reimbursement therefor except as specifically provided in Section 3.11.
Section 3.22. Annual Statement as to Compliance.
The Servicer will deliver or cause to be delivered to the Depositor, the
Master Servicer, the Trust Administrator, the Rating Agencies and the Trustee on
or before March 15th of each calendar year, commencing in 2006, an Officer's
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding calendar year and of performance
under this Agreement or a similar agreement has been made under such officer's
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof. Promptly after receipt of such Officer's Certificate,
the Depositor shall review such Officer's Certificate and, if applicable,
consult with the Servicer as to the nature of any defaults by the Servicer in
the fulfillment of any of the Servicer's obligations.
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Section 3.23. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
Not later than March 15th of each calendar year commencing in 2006, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Depositor, the Master
Servicer, the Trust Administrator, the Rating Agencies and the Trustee a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination conducted by
such firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by Subservicers,
upon comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those
Subservicers. Promptly after receipt of such report, the Depositor shall review
such report and, if applicable, consult with the Servicer as to the nature of
any defaults by the Servicer in the fulfillment of any of the Servicer's
obligations.
Section 3.24. Master Servicer to Act as Servicer.
(a) In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of a Servicer Event of Default), the
Master Servicer or its successor shall thereupon assume all of the rights and
obligations of the Servicer hereunder arising thereafter (except that the Master
Servicer shall not be (i) liable for losses of such predecessor Servicer
pursuant to Section 3.10 or any acts or omissions of such predecessor Servicer
hereunder, (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 pursuant to Section 2.03, (iv) responsible for expenses of the
Servicer pursuant to Section 2.03 or (v) deemed to have made any representations
and warranties of the Servicer hereunder). Any such assumption shall be subject
to Section 7.02.
(b) If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Servicer Event of Default), the Master Servicer (or
any other successor Servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any Subservicing Agreement in accordance with
the terms thereof; provided, that the Master Servicer (or any other successor
Servicer) shall not incur any liability or have any obligations in its capacity
as successor Servicer under a Subservicing Agreement arising prior to the date
of such succession unless it expressly elects to succeed to the rights and
obligations of the Servicer thereunder; and the Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement
arising prior to the date of such succession.
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(c) The Servicer shall, upon request of the Master Servicer, but at the
expense of the Servicer, deliver to the assuming party all documents and records
relating to each Subservicing Agreement (if any) and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected and held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Subservicing Agreement to the assuming party.
Section 3.25. Compensating Interest.
The Servicer shall remit to the Trust Administrator for deposit into the
Distribution Account on each Remittance Date an amount from its own funds equal
to Compensating Interest payable by the Servicer for such Remittance Date.
Section 3.26. Credit Reporting; ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(a) With respect to each Mortgage Loan, the Servicer shall fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on the related Mortgagor credit files to three of the national credit
repositories, on a monthly basis.
(b) The Servicer shall comply with Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
of 1999 and all applicable regulations promulgated thereunder relating to the
Mortgage Loans and the related borrowers, and shall provide all required notices
thereunder.
Section 3.27. Net WAC Rate Carryover Reserve Account; Distribution
Account.
(a) The Trust Administrator shall establish and maintain the Net WAC Rate
Carryover Reserve Account, on behalf of the Holders of the Class C Certificates,
to receive any Net WAC Rate Carryover Payments and any Corridor Agreement
Payments and to pay to the Holders of the LIBOR Certificates and the Class M11
Certificates any Net WAC Rate Carryover Amounts. On each Distribution Date, the
Trust Administrator shall deposit the amount of any Corridor Agreement Payments
for such date into the Net WAC Rate Carryover Reserve Account.
On each Distribution Date on which there exists a Net WAC Rate Carryover
Amount on any Class of LIBOR Certificates or the Class M11 Certificates, the
Trust Administrator shall (1) withdraw from the Distribution Account and deposit
in the Net WAC Rate Carryover Reserve Account, as set forth in Section
4.02(a)(iii)(N), the lesser of the Class C Distributable Amount (to the extent
remaining after the distributions specified in Sections 4.02(a)(iii)(A)-(M)) and
the aggregate Net WAC Rate Carryover Amount and (2) withdraw from the Net WAC
Rate Carryover Reserve Account amounts necessary to pay to such Class or Classes
of Certificates the applicable Net WAC Rate Carryover Amounts. Such payments
shall be allocated to those Classes based upon the amount of Net WAC Rate
Carryover Amount owed to each such Class and shall be paid in the priority set
forth in Sections 4.02(a)(iii)(O)-(P). In the event that the Certificate Balance
of any Class of Subordinate Certificates is permanently reduced because of
Applied Realized Loss Amounts, the applicable Certificateholders will not be
entitled (except to the extent of Subsequent Recoveries and as otherwise set
forth herein) to receive Net WAC Rate Carryover Amounts on the written down
amounts on such Distribution Date or any future
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Distribution Dates, even if funds are otherwise available for distribution,
unless the Certificate Balance of such Certificate is later restored through
Subsequent Recoveries.
The Trust Administrator shall account for the Net WAC Rate Carryover
Reserve Account as an outside reserve fund within the meaning of Treasury
Regulations Section 1.860G-2(h) and not as an asset of any Trust REMIC created
pursuant to this Agreement. The beneficial owners of the Net WAC Rate Carryover
Reserve Account are the Holders of the Class C Certificates. For all federal
income tax purposes, amounts transferred by REMIC II to the Net WAC Rate
Carryover Reserve Account shall be treated as first distributed by the Trust
Administrator to the Holders of the Class C Certificates, and then contributed
by the Holders of the Class C Certificates to the Net WAC Rate Carryover Reserve
Account.
Any Net WAC Rate Carryover Amounts paid by the Trust Administrator to the
Holders of the LIBOR Certificates and the Class M11 Certificates shall be
accounted for by the Trust Administrator as amounts paid first to the Holders of
the Class C Certificates and then to the respective Class or Classes of LIBOR
Certificates or Class M11 Certificates. In addition, the Trust Administrator
shall account for the rights of Holders of each Class of LIBOR Certificates and
the Class M11 Certificates to receive payments of Net WAC Rate Carryover Amounts
as rights in a separate limited recourse interest rate cap contract written by
the Holders of the Class C Certificates in favor of Holders of each such Class.
Notwithstanding any provision contained in this Agreement, the Trust
Administrator shall not be required to make any payments from the Net WAC Rate
Carryover Reserve Account except as expressly set forth in this Section 3.27(a).
(b) The Trust Administrator shall establish and maintain the Distribution
Account on behalf of the Certificateholders. The Trust Administrator shall,
promptly on the Business Day received, deposit in the Distribution Account and
retain therein the following:
(i) the aggregate amount remitted by the Servicer to the Trust
Administrator pursuant to Section 3.11;
(ii) any amount deposited by the Servicer pursuant to Section
3.12(b) 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 Servicer shall remit any amount not required to be
remitted, the Servicer may at any time direct the Trust Administrator in writing
to withdraw such amount from the Distribution Account, any provision herein to
the contrary notwithstanding. Such direction may be accomplished by delivering
notice to the Trust Administrator which describes the amounts deposited in error
in the Distribution Account. All funds deposited in the Distribution Account
shall be held by the Trust Administrator in trust for the Certificateholders
until disbursed in accordance with this Agreement or withdrawn in accordance
with Section 4.02.
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Section 3.28. Optional Purchase of Delinquent Mortgage Loans.
The Depositor, in its sole discretion, shall have the option, but shall
not be obligated, to purchase any 90+ Delinquent Mortgage Loans from the Trust
Fund. The purchase price for any such Mortgage Loan shall be 100% of the unpaid
principal balance of such Mortgage Loan plus accrued and unpaid interest on the
related Mortgage Loan at the applicable Mortgage Interest Rate, plus the amount
of any unreimbursed Servicing Advances made by the Servicer. Upon receipt of
such purchase price, the Servicer shall provide to the Trustee or Trust
Administrator, as applicable, a Request for Release and the Trustee or Trust
Administrator, as applicable, shall promptly release to the Depositor, the
Mortgage File relating to the Mortgage Loan being repurchased.
Section 3.29. REMIC-Related Covenants.
For as long as each Trust REMIC shall exist, the Servicer shall act in
accordance herewith to treat such Trust REMIC as a REMIC, and the Servicer shall
comply with any directions of the Trustee or the Trust Administrator to assure
such continuing treatment. In particular, the Servicer shall not (a) sell or
permit the sale of all or any portion of the Mortgage Loans or of any investment
of deposits in either the Collection Account or the Distribution Account unless
such sale is as a result of a repurchase of the Mortgage Loans pursuant to this
Agreement or the Trustee and Trust Administrator has received an Opinion of
Counsel prepared at the expense of the Trust Fund stating that such contribution
will not result in an Adverse REMIC Event (as defined in Section 11.01(f)); and
(b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.03 of this Agreement, as applicable, accept any
contribution to any Trust REMIC after the Startup Day (as defined in Section
11.01(b)) without receipt of an Opinion of Counsel stating that such
contribution will not result in an Adverse REMIC Event (as defined in Section
11.01(f)).
ARTICLE IIIA
ADMINISTRATION AND MASTER SERVICING OF
THE MORTGAGE LOANS BY THE MASTER SERVICER
Section 3A.01 Master Servicer.
The Master Servicer shall supervise, monitor and oversee the obligation of
the Servicer to service and administer the Mortgage Loans in accordance with the
terms of the Agreement and shall have full power and authority to do any and all
things which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with the
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by the Servicer and
shall cause the Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by the Servicer under this Agreement. The
Master Servicer shall independently and separately monitor the Servicer's
servicing activities with respect to each related Mortgage Loan, reconcile the
results of such monitoring
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with such information provided in the previous sentence on a monthly basis and
coordinate corrective adjustments to the Servicer's and Master Servicer's
records. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicer to the Distribution
Account pursuant to the terms hereof based on information provided to the Master
Servicer by the Trust Administrator pursuant to the third paragraph of Section
8.01. Notwithstanding any provision of this Agreement to the contrary, the
Master Servicer shall have no duty or obligation to confirm or verify the
amounts reported by the Servicer as Realized Losses with respect to any
Determination Date unless the Servicer shall have failed the Servicer Enhanced
Review Test for such Determination Date.
The Trustee shall furnish the Master Servicer with any limited powers of
attorney and other documents in form as provided to it necessary or appropriate
to enable the Master Servicer to perform its master servicing obligations. The
Trustee shall have no responsibility for any action of the Master Servicer
pursuant to any such limited power of attorney and shall be indemnified by the
Master Servicer, as applicable, for any cost, liability or expense incurred by
the Trustee in connection with the Master Servicer's misuse of any such power of
attorney.
The Master Servicer shall provide access to the records and documentation
in possession of the Master Servicer regarding the related Mortgage Loans and
REO Property and the servicing thereof to the Certificateholders, the FDIC, and
the supervisory agents and examiners of the FDIC, such access being afforded
only upon reasonable prior written request and during normal business hours at
the office of the Master Servicer; provided, however, that, unless otherwise
required by law, the Master Servicer shall not be required to provide access to
such records and documentation if the provision thereof would violate the legal
right to privacy of any Mortgagor. The Master Servicer shall allow
representatives of the above entities to photocopy any of the records and
documentation and shall provide equipment for that purpose at a charge that
covers the Master Servicer's actual costs.
Section 3A.02 REMIC-Related Covenants.
For as long as each Trust REMIC shall exist, the Master Servicer shall act
in accordance herewith to treat such Trust REMIC as a REMIC, and the Master
Servicer shall comply with any directions of the Trustee or the Trust
Administrator to assure such continuing treatment. In particular, the Master
Servicer shall not (a) sell all or any portion of the Mortgage Loans or of any
investment of deposits in either the Collection Account or the Distribution
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee and Trust Administrator has received
an Opinion of Counsel prepared at the expense of the Trust Fund stating that
such contribution will not result in an Adverse REMIC Event (as defined in
Section 11.01(f)); and (b) other than with respect to a substitution pursuant to
the Mortgage Loan Purchase Agreement or Section 2.03 of this Agreement, as
applicable, accept any contribution to any Trust REMIC after the Startup Day (as
defined in Section 11.01(b)) without receipt of an Opinion of Counsel stating
that such contribution will not result in an Adverse REMIC Event (as defined in
Section 11.01(f)).
Section 3A.03 Monitoring of Servicer.
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(a) Subject to Section 3A.01, The Master Servicer shall be responsible for
monitoring compliance by the Servicer with its duties under this Agreement. In
the review of the Servicer's activities, the Master Servicer may rely upon an
Officer's Certificate of the Servicer with regard to the Servicer's compliance
with the terms of this Agreement. In the event that the Master Servicer, in its
judgment, determines that the Servicer should be terminated in accordance with
the terms hereof, or that a notice should be sent pursuant to the terms hereof
with respect to the occurrence of an event that, unless cured, would constitute
a Servicer Event of Default, the Master Servicer shall notify the Servicer and
the Trustee thereof and the Master Servicer shall issue such notice or take such
other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under this
Agreement, and shall, in the event that the Servicer fails to perform its
obligations in accordance with this Agreement, subject to the preceding
paragraph and Article VII, cause the Trustee to terminate the rights and
obligations of the Servicer hereunder in accordance with the provisions of
Article VII. Such enforcement, including, without limitation, the legal
prosecution of claims and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall not be
required to prosecute or defend any legal action except to the extent that the
Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.
(c) The Master Servicer shall be entitled to be reimbursed by the Servicer
(or from amounts on deposit in the Distribution Account if the Servicer does not
timely fulfill its obligations hereunder) for all reasonable out-of-pocket or
third party costs associated with the transfer of servicing from the predecessor
Servicer (or if the predecessor Servicer is the Master Servicer, from the
Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.
(d) Subject to Section 3A.01, the Master Servicer shall require the
Servicer to comply with the remittance requirements and other obligations set
forth in this Agreement.
(e) If the Master Servicer acts as successor Servicer, it will not assume
liability for the representations and warranties of the terminated Servicer.
(f) The Master Servicer shall not be liable for any acts or omissions of
the Servicer.
Section 3A.04 Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a blanket
fidelity bond and an errors and omissions insurance policy, affording coverage
with respect to all directors, officers,
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employees and other Persons acting on such Master Servicer's behalf, and
covering errors and omissions in the performance of the Master Servicer's
obligations hereunder. The errors and omissions insurance policy and the
fidelity bond shall be in such form and amount generally acceptable for entities
serving as master servicers or trustees.
Section 3A.05 Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and shall have
full power and authority, subject to the REMIC Provisions and the provisions of
Article XI, to do any and all things that it may deem necessary or desirable in
connection with the master servicing and administration of the Mortgage Loans;
provided, however, that the Master Servicer shall not knowingly or intentionally
take any action, or fail to take (or fail to cause to be taken) any action
reasonably within its control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, would cause any REMIC created hereunder to fail to qualify as a
REMIC or result in the imposition of a tax upon the Trust Fund (including but
not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Master Servicer has received an Opinion
of Counsel (but not at the expense of the Master Servicer) to the effect that
the contemplated action will not cause any REMIC created hereunder to fail to
qualify as a REMIC or result in the imposition of a tax upon any REMIC created
hereunder. The Trustee shall execute and deliver such other documents, as the
Master Servicer or the Servicer may request, to enable the Master Servicer to
master service and administer the Mortgage Loans and carry out its duties
hereunder, in each case in accordance with Accepted Master Servicing Practices.
If the Master Servicer or the Trustee has been advised that it is likely that
the laws of the state in which action is to be taken prohibit such action if
taken in the name of the Trustee or that the Trustee would be adversely affected
under the "doing business" or tax laws of such state if such action is taken in
its name, the Master Servicer shall join with the Trustee in the appointment of
a co-trustee pursuant to Section 8.10. In the performance of its duties
hereunder, the Master Servicer shall be an independent contractor and shall not,
except in those instances where it is taking action in the name of the Trustee,
be deemed to be the agent of the Trustee.
Section 3A.06 Due-on-Sale Clauses; Assumption Agreements.
To the extent Mortgage Loans contain enforceable due-on-sale clauses, the
Master Servicer shall cause the Servicer to enforce such clauses in accordance
with this Agreement.
Section 3A.07 Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.
(a) The Master Servicer shall transmit to the Trustee or the Trust
Administrator such documents and instruments coming into the possession of the
Master Servicer from time to time as are required by the terms hereof to be
delivered to the Trustee or the Trust Administrator. Any funds received by the
Master Servicer in respect of any Mortgage Loan or which otherwise are collected
by the Master Servicer as Liquidation Proceeds or Insurance Proceeds in respect
of any Mortgage Loan shall be remitted to the Trust Administrator for deposit in
the Distribution Account. The Master Servicer shall, and, subject to Section
3.19, shall cause the Servicer to,
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provide access to information and documentation regarding the Mortgage Loans to
the Trustee, its agents and accountants at any time upon reasonable request and
during normal business hours, and to Certificateholders that are savings and
loan associations, banks or insurance companies, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of such Office
and Corporation or examiners of any other federal or state banking or insurance
regulatory authority if so required by applicable regulations of the Office of
Thrift Supervision or other regulatory authority, such access to be afforded
without charge but only upon reasonable request in writing and during normal
business hours at the offices of the Master Servicer designated by it. In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
(b) All 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 or Insurance
Proceeds, shall be remitted to the Trust Administrator for deposit in the
Distribution Account.
Section 3A.08 [RESERVED].
Section 3A.09 Compensation for the Master Servicer.
As compensation for the activities of the Master Servicer hereunder, the
Master Servicer shall be entitled to the Master Servicing Fee, payable to the
Master Servicer by the Trust Administrator on each Distribution Date (with
respect to the calendar month that immediately preceded the month of such
Distribution Date) from funds in the Distribution Account. The Master Servicing
Fee payable to the Master Servicer in respect of any Distribution Date shall be
reduced as applicable in accordance with Section 3A.12. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
ordinary activities hereunder and shall not be entitled to reimbursement
therefor except as provided in this Agreement.
Section 3A.10 Annual Officer's Certificate as to Compliance.
(a) Not later than the earlier of (a) March 15th of each calendar year
(other than the calendar year during which the Closing Date occurs) or (b) with
respect to any calendar year during which the Depositor's annual report on Form
10-K is required to be filed pursuant to Section 4.07(b), 15 calendar days
before each date on which the Depositor's annual report on Form 10-K is required
to be filed pursuant to Section 4.07(b)(or if such day is not a Business Day,
the immediately preceding Business Day), the Master Servicer shall deliver to
the Depositor, the Servicer, the Trust Administrator, the Trustee and the Rating
Agencies an Officer's Certificate certifying that with respect to the period
ending December 31 of the prior year: (i) such Master Servicing Officer has
reviewed the activities of such Master Servicer during the preceding calendar
year or portion thereof and its performance under this Agreement, (ii) to the
best of such Master Servicing Officer's knowledge, based on such review, such
Master Servicer has performed and fulfilled its duties, responsibilities and
obligations under this Agreement in all material respects throughout such year,
or, if there has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Master Servicing Officer and the nature and status thereof, (iii) nothing has
come to the attention of such Master Servicing Officer to lead such Master
Servicing Officer to believe that
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the Master Servicer has failed to perform any of its duties, responsibilities
and obligations under this Agreement in all material respects throughout such
year, or, if there has been a material default in the performance or fulfillment
of any such duties, responsibilities or obligations, specifying each such
default known to such Master Servicing Officer and the nature and status
thereof.
(b) Copies of such Officer's Certificate shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trust
Administrator at the Master Servicer's expense if the Master Servicer failed to
provide such copies (unless (i) the Master Servicer shall have failed to provide
the Trust Administrator with such statement or (ii) the Trust Administrator
shall be unaware of the Master Servicer's failure to provide such statement).
Section 3A.11 Annual Independent Accountant's Servicing Report.
Not later than the earlier of (a) March 15 of each calendar year (other
than the calendar year during which the Closing Date occurs) or (b) with respect
to any calendar year during which the Depositor's annual report on Form 10-K is
required to be filed pursuant to Section 4.07(b), 15 calendar days before each
date on which the Depositor's annual report on Form 10-K is required to be filed
pursuant to Section 4.07(b)(or if such day is not a Business Day, the
immediately preceding Business Day), if the Master Servicer has, during the
course of any calendar year, directly serviced any of the Mortgage Loans, then
the Master Servicer at its expense shall cause a nationally recognized firm of
independent certified public accountants to furnish a statement to the Trustee,
the Trust Administrator, the Rating Agencies and the Depositor to the effect
that, with respect to the most recently ended fiscal year, such firm has
examined certain records and documents relating to the Master Servicer's
performance of its servicing obligations under this Agreement and pooling and
servicing and trust agreements in material respects similar to this Agreement
and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
▇▇▇▇▇▇▇ Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by ▇▇▇▇▇▇▇ Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trust
Administrator at the expense of the Master Servicer if the Master Servicer shall
fail to provide such copies. If such report discloses exceptions that are
material, the Master Servicer shall advise the Trustee and the Trust
Administrator whether such exceptions have been cured or are susceptible of
cure, and will take prompt action to do so.
Section 3A.12 Obligation of the Master Servicer in Respect of Prepayment
Interest Shortfalls.
In the event that the Servicer fails to perform on any Remittance Date its
obligations pursuant to Section 3.25, the Master Servicer shall remit to the
Trust Administrator not later than the Distribution Date an amount equal to the
lesser of (i) the aggregate amounts required to be
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paid by the Servicer with respect to Prepayment Interest Shortfalls attributable
to Principal Prepayments on the related Mortgage Loans for the related
Distribution Date, and not so paid by the Servicer and (ii) the Master Servicing
Fee for such Distribution Date, without reimbursement therefor.
ARTICLE IV
DISTRIBUTIONS AND ADVANCES BY THE SERVICER
Section 4.01. Advances.
(a) The amount of P&I Advances to be made by the Servicer for any
Remittance Date shall equal, subject to Section 4.01(c), the sum of (i) the
aggregate amount of Scheduled Payments (with each interest portion thereof net
of the Servicing Fee), due during the Due Period immediately preceding such
Remittance Date in respect of the Mortgage Loans, which Scheduled Payments were
not received as of the close of business on the related Determination Date, plus
(ii) with respect to each REO Property, which REO Property was acquired during
or prior to the related Prepayment Period and as to which such REO Property an
REO Disposition did not occur during the related Prepayment Period, an amount
equal to the excess, if any, of the Scheduled Payments (with REO Imputed
Interest) that would have been due on the related Due Date in respect of the
related Mortgage Loan, over the net income from such REO Property transferred to
the Collection Account for distribution on such Remittance Date.
(b) On the Remittance Date, the Servicer shall remit in immediately
available funds to the Trust Administrator for deposit into the Distribution
Account an amount equal to the aggregate amount of P&I Advances, if any, to be
made in respect of the Mortgage Loans and REO Properties for the related
Remittance Date either (i) from its own funds or (ii) from the Collection
Account, to the extent of funds held therein for future distribution (in which
case, it will cause to be made an appropriate entry in the records of the
Collection Account that Amounts Held for Future Distribution have been, as
permitted by this Section 4.01, used by the Servicer in discharge of any such
P&I Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer with respect to the
Mortgage Loans and REO Properties. Any Amounts Held for Future Distribution and
so used shall be appropriately reflected in the Servicer's records and replaced
by the Servicer by deposit in the Collection Account on or before any future
Remittance Date to the extent required.
(c) The obligation of the Servicer to make such P&I Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below,
and, with respect to any Mortgage Loan or REO Property, shall continue until a
Final Recovery Determination in connection therewith or the removal thereof from
coverage under this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
P&I Advance or Servicing Advance would, if made, constitute a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance. The determination by the Servicer
that it has made a Nonrecoverable P&I Advance or a Nonrecoverable Servicing
Advance or that any proposed P&I Advance
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or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
a Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officer's Certificate of the Servicer delivered to the Trustee, the Master
Servicer and the Trust Administrator. The Master Servicer shall be entitled to
rely on any non-recoverability analysis made by the Servicer.
(e) Except as otherwise provided herein, the Servicer shall be entitled to
reimbursement pursuant to Section 3.11 for Advances from recoveries from the
related Mortgagor or from all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds and Condemnation Proceeds) with respect
to the related Mortgage Loan.
Section 4.02. Priorities of Distribution.
(a) On each Distribution Date, the Trust Administrator shall make the
disbursements and transfers from amounts then on deposit in the Distribution
Account in the following order of priority and to the extent of the Available
Funds remaining:
(i) Interest remittances shall be distributed as follows:
(I) the Group 1 Interest Remittance Amount for such
Distribution Date will be distributed in the following
manner:
(A) concurrently, to the Holders of the Class 1-A-1
Certificates and Class 1-A-2 Certificates, on a
pro rata basis based on the entitlement of each
such Class, the Current Interest and the Unpaid
Interest Amount, if any, for each such Class;
(B) to the Holders of the Class 2-A Certificates, on a
pro rata basis based on the entitlement of each
such Class, an amount equal to the excess if any,
of (x) the amount required to be distributed
pursuant to clause (II)(A) for such Distribution
Date over (y) the amount actually distributed
pursuant to such clause from the related interest
remittance amount.
(II) the Group 2 Interest Remittance Amount for such
Distribution Date will be distributed in the following
manner:
(A) concurrently, to the Holders of the Class 2-A-1
Certificates, Class 2-A-2 Certificates and Class
2-A-3 Certificates, on a pro rata basis based on
the entitlement of each such Class, the Current
Interest and the Unpaid Interest Amount, if any,
for each such Class;
(B) to the Holders of the Class 1-A Certificates, on a
pro rata basis based on the entitlement of each
such Class, an amount equal to the excess if any,
of (x) the amount required to be distributed
pursuant to clause (I)(A) for
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such Distribution Date over (y) the amount
actually distributed pursuant to such clause from
the related interest remittance amount; and
(III) following the distributions made pursuant to clauses (I)
and (II) above, the remaining Group 1 Interest
Remittance Amount and Group 2 Interest Remittance Amount
will be distributed in the following manner:
(A) first, to the Holders of the Class M1
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(B) second, to the Holders of the Class M2
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(C) third, to the Holders of the Class M3
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(D) fourth, to the Holders of the Class M4
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(E) fifth, to the Holders of the Class M5
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(F) sixth, to the Holders of the Class M6
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(G) seventh, to the Holders of the Class M7
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(H) eighth, to the Holders of the Class M8
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(I) ninth, to the Holders of the Class M9
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
(J) tenth, to the Holders of the Class M10
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class;
and
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(K) eleventh, to the Holders of the Class M11
Certificates, the related Current Interest and the
Unpaid Interest Amount, if any, for such Class.
(ii) Principal remittances shall be distributed as follows:
(I) On each Distribution Date (x) prior to the Stepdown Date
or (y) if a Trigger Event is in effect:
(A)(X) if a Trigger Event is in effect, distributions of
principal to the extent of the Group 1 Principal
Distribution Amount shall be distributed in the
following amounts and order of priority:
(1) first, to the Holders of the Class 1-A-1
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(2) second, to the Holders of the Class 1-A-2
Certificates, until the Certificate Balance
thereof has been reduced to zero; and
(3) third, after taking into account the amount
distributed to the Holders of the Class 2-A
Certificates on such Distribution Date in
respect of principal, to the holders of the
Class 2-A Certificates, based on the
entitlement of each such Class pursuant to
the priorities set forth in clause
(ii)(I)(B), until the Certificate Balances
thereof have been reduced to zero.
(Y) If no Trigger Event is in effect, distributions of
principal to the extent of the Group 1 Principal
Distribution Amount shall be distributed in the
following amounts and order of priority:
(1) first, to the Holders of the Class 1-A-1
Certificates and Class 1-A-2 Certificates,
pro rata based on the outstanding
Certificate Balances of each such Class,
until the Certificate Balances thereof have
been reduced to zero; and
(2) second, after taking into account the amount
distributed to the Holders of the Class 2-A
Certificates on such Distribution Date in
respect of principal, to the holders of the
Class 2-A Certificates, based on the
entitlement of each such
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Class pursuant to the priorities set forth
in clause (ii)(I)(B), until the Certificate
Balances thereof have been reduced to zero.
(B) Distributions in respect of principal to the
extent of the Group 2 Principal Distribution
Amount shall be distributed in the following
amounts and order of priority:
(1) first, to the Holders of the Class 2-A-1
Certificates until the Certificate Balance
thereof has been reduced to zero;
(2) second, to the Holders of the Class 2-A-2
Certificates until the Certificate Balance
thereof has been reduced to zero;
(3) third, to the Holders of the Class 2-A-3
Certificates until the Certificate Balance
thereof has been reduced to zero; and
(4) fourth, after taking into account the amount
distributed to the Holders of the Class 1-A
Certificates in respect of principal, to the
Holders of the Class 1-A Certificates, based
on the entitlement of each such Class
pursuant to the priorities set forth in
clause (ii)(I)(A), until the Certificate
Balance thereof has been reduced to zero.
(C) Distributions in respect of principal to the
extent of the sum of the Group 1 Principal
Distribution Amount and the Group 2 Principal
Distribution Amount remaining undistributed for
such Distribution Date after the reduction of the
Certificate Balance of each of the Class A
Certificates to zero (after giving effect to
clauses (A) and (B) above) shall be distributed in
the following amounts and order of priority:
(1) first, to the Holders of the Class M1
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(2) second, to the Holders of the Class M2
Certificates, until the Certificate Balance
thereof has been reduced to zero;
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(3) third, to the Holders of the Class M3
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(4) fourth, to the Holders of the Class M4
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(5) fifth, to the Holders of the Class M5
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(6) sixth, to the Holders of the Class M6
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(7) seventh, to the Holders of the Class M7
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(8) eighth, to the Holders of the Class M8
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(9) ninth, to the Holders of the Class M9
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(10) tenth, to the Holders of the Class M10
Certificates, until the Certificate Balance
thereof has been reduced to zero; and
(11) eleventh, to the Holders of the Class M11
Certificates, until the Certificate Balance
thereof has been reduced to zero.
(II) On each Distribution Date (x) on or after the Stepdown
Date and (y) on which a Trigger Event is not in effect:
(A) Distributions in respect of principal to the
extent of the Group 1 Principal Distribution
Amount shall be distributed in the following
amounts and order of priority:
(1) first, to the Holders of the Class 1-A-1
Certificates and Class 1-A-2 Certificates,
pro rata, based on the outstanding
Certificate Balance of each such class, the
Group 1 Senior Principal Distribution Amount
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until the Certificate Balance thereof has
been reduced to zero; and
(2) second, to the Holders of the Class 2-A
Certificates, up to an amount equal to the
excess, if any, of (x) the amount required
to be distributed pursuant to clause (II)(B)
for each Class on such Distribution Date
over (y) the amount actually distributed
pursuant to clause (II)(B) for each Class
from the Group 2 Principal Distribution
Amount, as applicable, on such Distribution
Date, to be distributed in accordance with
clause (II)(B).
(B) Distributions in respect of principal to the
extent of the Group 2 Principal Distribution
Amount shall be distributed in the following
amounts and order of priority:
(1) first, to the Holders of the Class 2-A-1
Certificates, the Group 2 Senior Principal
Distribution Amount until the Certificate
Balance thereof has been reduced to zero;
(2) second, to the Holders of the Class 2-A-2
Certificates, the Group 2 Senior Principal
Distribution Amount until the Certificate
Balance thereof has been reduced to zero;
(3) third, to the Holders of the Class 2-A-3
Certificates, the Group 2 Senior Principal
Distribution Amount until the Certificate
Balance thereof has been reduced to zero;
and
(4) fourth, to the Holders of the Class 1-A
Certificates, pro rata, up to an amount
equal to the excess, if any, of (x) the
amount required to be distributed pursuant
to clause (II)(A) for each Class on such
Distribution Date over (y) the amount
actually distributed pursuant to clause
(II)(A) for each Class from the Group 1
Principal Distribution Amount on such
Distribution Date, to be distributed in
accordance with clause (II)(A).
(C) Distributions in respect of principal to the
extent of the sum of the Group 1 Principal
Distribution Amount and the Group 2 Principal
Distribution Amount remaining undistributed for
such Distribution Date (after giving
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effect to distributions pursuant to clauses (A)
and (B) above) shall be distributed in the
following amounts and order of priority:
(1) first, to the Holders of the Class M1
Certificates, the Class M1 Principal
Distribution Amount until the Certificate
Balance thereof has been reduced to zero;
(2) second, to the Holders of the Class M2
Certificates, the Class M2 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(3) third, to the Holders of the Class M3
Certificates, the Class M3 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(4) fourth, to the Holders of the Class M4
Certificates, the Class M4 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(5) fifth, to the Holders of the Class M5
Certificates, the Class M5 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(6) sixth, to the Holders of the Class M6
Certificates, the Class M6 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(7) seventh, to the Holders of the Class M7
Certificates, the Class M7 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(8) eighth, to the Holders of the Class M8
Certificates, the Class M8 Principal
Distribution Amount, until
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the Certificate Balance thereof has been
reduced to zero;
(9) ninth, to the Holders of the Class M9
Certificates, the Class M9 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
(10) tenth, to the Holders of the Class M10
Certificates, the Class M10 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero;
and
(1) eleventh, to the Holders of the Class M11
Certificates, the Class M11 Principal
Distribution Amount, until the Certificate
Balance thereof has been reduced to zero.
(iii) On each Distribution Date, the Excess Cashflow, if any, will
be distributed as follows:
(A) to the Trustee, Master Servicer or Trust
Administrator any amounts to which such Persons
are entitled to under this Agreement to the extent
such amounts have not otherwise been paid or
reimbursed;
(B) to the Holders of the Class or Classes of
Certificates then entitled to receive
distributions in respect of principal, in an
amount equal to any Extra Principal Distribution
Amount, distributable to such Holders as part of
the Group 1 Principal Distribution Amount and/or
the Group 2 Principal Distribution Amount;
(C) to the Holders of the Class M1 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M1 Certificates;
(D) to the Holders of the Class M2 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M2 Certificates;
(E) to the Holders of the Class M3 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M3 Certificates;
(F) to the Holders of the Class M4 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M4 Certificates;
(G) to the Holders of the Class M5 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M5 Certificates;
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(H) to the Holders of the Class M6 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M6 Certificates;
(I) to the Holders of the Class M7 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M7 Certificates;
(J) to the Holders of the Class M8 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M8 Certificates;
(K) to the Holders of the Class M9 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M9 Certificates;
(L) to the Holders of the Class M10 Certificates, in
an amount equal to the Applied Realized Loss
Amount allocable to the Class M10 Certificates;
(M) to the Holders of the Class M11 Certificates, in
an amount equal to the Applied Realized Loss
Amount allocable to the Class M11 Certificates;
(N) to the Net WAC Rate Carryover Reserve Account, the
amount by which any Net WAC Rate Carryover Amounts
for such Distribution Date exceed Corridor
Agreement Payments on deposit in the Net WAC Rate
Carryover Reserve Account for such Distribution
Date;
(O) from funds on deposit in the Net WAC Rate
Carryover Reserve Account (including any Corridor
Agreement Payments included in such account), an
amount equal to any Net WAC Rate Carryover Amount
with respect to the Class A Certificates for such
Distribution Date, to such Certificates in the
same order and priority in which the Current
Interest is allocated among those Classes of Class
A Certificates;
(P) from funds on deposit in the Net WAC Rate
Carryover Reserve Account (including any Corridor
Agreement Payments included in such account), an
amount equal to any Net WAC Rate Carryover Amount
with respect to the Class M1, Class M2, Class M3,
Class M4, Class M5, Class M6, Class M7, Class M8,
Class M9, Class M10 and Class M11 Certificates for
such Distribution Date, to such Certificates in
the same order and priority in which the
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Current Interest is allocated among those Classes
of Certificates;
(Q) to the holders of the Class C Certificates, the
remainder of the Class C Distributable Amount and
any remaining Corridor Agreement Payments not
distributed pursuant to Sections 4.02(a)(iii)(O)
and (P) (provided, however, that in the event that
the principal balances of all outstanding notes
issued by the NIM Trust have been reduced to zero,
any such remaining Corridor Agreement Payments
shall be paid to the Counterparty pursuant to the
related Corridor Agreement); and
(R) to the holders of the Class R Certificates (in
respect of the Class R-II Interest), any remaining
amount.
If on any Distribution Date, as a result of the foregoing allocation
rules, any Class of Senior Certificates does not receive the related Current
Interest or the related Unpaid Interest Amounts, if any, then that unpaid amount
will be recoverable by the holders of those Classes, with interest thereon, on
future Distribution Dates, as Unpaid Interest Amounts, subject to the priorities
described above. In the event the Class Certificate Balance of any Class of
Subordinate Certificates has been reduced to zero, that Class of Certificates
shall no longer be entitled to receive any related unpaid Net WAC Rate Carryover
Amounts.
(b) On each Distribution Date, all amounts representing Prepayment
Premiums from the Mortgage Loans received during the related Prepayment Period
shall be distributed to the holders of the Class P Certificates. Such
distributions shall not be applied to reduce the Certificate Balance of the
Class P Certificates. On the Distribution Date in June 2008, the Class P
Certificates shall be entitled to receive $100.00 in retirement of the principal
balance of the REMIC regular interest represented by Class P, which distribution
shall be made immediately before any distributions pursuant to Section
4.02(a)(iii) on such Distribution Date.
(c) Notwithstanding the provisions of this Section 4.02, if on any
Distribution Date Senior Certificates related to a Loan Group are no longer
outstanding, the pro rata portion of the applicable Principal Distribution
Amount, otherwise allocable to such Senior Certificates will be allocated among
the remaining group or groups of Senior Certificates, on a pro rata basis based
on the outstanding aggregate Certificate Balance for such groups, in the same
manner and order of priority described in Section 4.02(a).
(d) On any Distribution Date, any Relief Act Interest Shortfalls and Net
Prepayment Interest Shortfalls for such Distribution Date will be allocated pro
rata, as a reduction of the Current Interest for the LIBOR Certificates and the
Class M11 Certificates, based on the amount of interest to which such Classes
would otherwise be entitled on such Distribution Date.
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Section 4.03. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trust Administrator shall
make available to each Certificateholder, the Servicer, the Master Servicer, the
Trustee, 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 Unpaid Interest
Amounts included in such distribution and any remaining Unpaid Interest
Amounts after giving effect to such distribution, any Net WAC Rate
Carryover Amount for such Distribution Date and the amount of all Net WAC
Rate Carryover Amount covered by withdrawals from the Net WAC Rate
Carryover Reserve Account on such Distribution Date;
(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, including any Net WAC Rate Carryover Amount not covered by
amounts in the Net WAC Rate Carryover Reserve Account;
(iv) the Class Certificate Balance 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) the amount of the Servicing Fees paid to or retained by the
Servicer or any Subservicer (with respect to the Subservicers, in the
aggregate) with respect to such Distribution Date;
(vii) the amount of the Master Servicing Fees to be paid to or
retained by the Master Servicer with respect to such Distribution Date;
(viii) the amount of the Trust Administration Fees to be paid to or
retained by the Trust Administrator with respect to such Distribution
Date;
(ix) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(x) the amount of P&I Advances included in the distribution on such
Distribution Date and the aggregate amount of P&I Advances reported by the
Servicer as outstanding as of the close of business on the Determination
Date immediately preceding such Distribution Date;
(xi) the number and aggregate outstanding principal balances of
Mortgage Loans (1) as to which the Scheduled Payment is delinquent 31 to
60 days, 61 to 90 days and 91 or more days, (2) that have become REO
Property, (3) that are in foreclosure and
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(4) that are in bankruptcy, in each case as of the close of business on
the last Business Day of the immediately preceding month;
(xii) For each of the preceding 12 calendar months, or all calendar
months since the related Cut-off Date, whichever is less, the aggregate
dollar amount of the Scheduled Payments (A) due on all Outstanding
Mortgage Loans on each of the Due Dates in each such month and (B)
delinquent 60 days or more on each of the Due Dates in each such month;
(xiii) with respect to all Mortgage Loans that became REO Properties
during the preceding calendar month, the aggregate number of such Mortgage
Loans and the aggregate Stated Principal Balance of such Mortgage Loans as
of the close of business on the Determination Date preceding such
Distribution Date and on the date of acquisition thereof;
(xiv) 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;
(xv) whether a Trigger Event has occurred and is continuing
(including the calculation thereof and the aggregate outstanding balance
of all 60+ Day Delinquent Mortgage Loans);
(xvi) the amount on deposit in the Net WAC Rate Carryover Reserve
Account (after giving effect to distributions on such Distribution Date);
(xvii) the aggregate amount of Applied Realized Loss Amounts
incurred during the preceding calendar month and aggregate Applied
Realized Loss Amounts through such Distribution Date;
(xviii) the amount of any Net Monthly Excess Cash Flow on such
Distribution Date and the allocation thereof to the Certificateholders
with respect to Applied Realized Loss Amounts and Unpaid Interest Amounts;
(xix) the Overcollateralized Amount and Overcollateralization Target
Amount;
(xx) Prepayment Premiums collected by the Servicer;
(xxi) the Corridor Agreement Payments, if any, for such Distribution
Date; and
(xxii) the amount distributed on the Class C Certificates.
(b) The Trust Administrator's responsibility for providing the above
statement to the Certificateholders, each Rating Agency, the Servicer, the
Originator and the Depositor is limited to the availability, timeliness and
accuracy of the information derived from the Servicer. The Trust Administrator
will make the above statement available via the Trust Administrator's internet
website. The Trust Administrator's website will initially be located at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and assistance in using the website can be obtained by
calling the Trust
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Administrator's customer service desk at ▇-▇▇▇-▇▇▇-▇▇▇▇. Parties that are unable
to use the above distribution method are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Trust Administrator shall have the right to change the manner in which
the above statement is distributed in order to make such distribution more
convenient and/or more accessible, and the Trust Administrator shall provide
timely and adequate notification to the Certificateholders and the parties
hereto regarding any such changes.
The Trust Administrator shall also be entitled to rely on, but shall not
be responsible for the content or accuracy of, any information provided by the
Servicer for purposes of preparing the above statement and may affix thereto any
disclaimer it deems appropriate in its reasonable discretion (without suggesting
liability on the part of any other party hereto).
As a condition to access the Trust Administrator's internet website, the
Trust Administrator may require registration and the acceptance of a disclaimer.
The Trust Administrator will not be liable for the dissemination of information
in accordance with this Agreement.
Upon written request from any Certificateholder, the Trust Administrator
shall provide the information provided for in Sections 4.03(d) to such
Certificateholder, at the expense of the requesting Certificateholder. The Trust
Administrator's responsibility for providing the information provided for in
Sections 4.03(d) to the Certificateholders is limited to the availability and
timeliness of the information provided by the Servicer. The Trust Administrator
shall provide the information provided for in Sections 4.03(d) in the same
format as received from the Servicer upon request by the Certificateholders. The
Trust Administrator shall have no duty or obligation to monitor, review or take
any action regarding such information received pursuant to Section 4.03(d) other
than forwarding copies to Certificateholders. The Trust Administrator shall have
no liability for the accuracy, completeness or otherwise for such information.
(c) Upon request, within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall cause to be furnished each Person
who at any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i) and (a)(ii) of this
Section 4.03 aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trust
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trust
Administrator pursuant to any requirements of the Code as are from time to time
in effect.
(d) Not later than the Reporting Date, the Servicer shall furnish to the
Trust Administrator and the Master Servicer a monthly remittance advice
statement (in a format mutually agreed upon by the Servicer and the Trust
Administrator) containing such information as shall be reasonably requested by
the Trust Administrator to provide the reports required by Section 4.03(a) as to
the accompanying remittance and the period ending on the close of business on
the last Business Day of the immediately preceding month (the "Servicer
Remittance Report").
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The Servicer shall furnish to the Trust Administrator an individual loan
accounting report, as of the last Business Day of each month, to document
Mortgage Loan payment activity on an individual Mortgage Loan basis. With
respect to each month, the corresponding individual loan accounting report (in
electronic format) shall be received by the Trust Administrator no later than
the Reporting Date, which report shall contain the following:
(i) with respect to each Scheduled Payment, the amount of such
remittance allocable to principal (including a separate breakdown of any
Principal Prepayment, including the date of such prepayment, and any
Prepayment Premiums, along with a detailed report of interest on principal
prepayment amounts remitted in accordance with Section 3.25);
(ii) with respect to each Scheduled Payment, the amount of such
remittance allocable to interest;
(iii) the amount of servicing compensation received by the Servicer
during the prior distribution period;
(iv) the individual and aggregate Stated Principal Balance of the
Mortgage Loans;
(v) the aggregate of any expenses reimbursed to the Servicer during
the prior distribution period pursuant to Section 3.11;
(vi) the number and aggregate outstanding principal balances of
Mortgage Loans (a) delinquent (1) 31 to 60 days, (2) 61 to 90 days, or (3)
91 days or more; (b) as to which foreclosure has commenced; and (c) as to
which REO Property has been acquired;
(vii) each Mortgage Loan which has been altered, modified or varied
during such month, and the reason for such modification (i.e., extension
of maturity date, Mortgage Interest Rate);
(viii) with respect to each Mortgage Loan, the amount of any
Realized Losses for such Mortgage Loan; and
(ix) any other information reasonably required by the Trust
Administrator to enable it to prepare the monthly statement referred to in
Section 4.03(a).
Section 4.04. Certain Matters Relating to the Determination of LIBOR.
Until all of the LIBOR Certificates are paid in full, the Trust
Administrator will at all times retain at least four Reference Banks for the
purpose of determining LIBOR with respect to each LIBOR Determination Date. The
Trust Administrator initially shall designate the Reference Banks (after
consultation with the Depositor). Each "Reference Bank" shall be a leading bank
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market, shall not control, be controlled by, or be under common control with,
the Trust Administrator and shall have an established place of business in
London. If any such Reference Bank should be unwilling or unable to act as such
or if the Trust Administrator should terminate
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its appointment as Reference Bank, the Trust Administrator shall promptly
appoint or cause to be appointed another Reference Bank (after consultation with
the Depositor). The Trust Administrator shall have no liability or
responsibility to any Person for (i) the selection of any Reference Bank for
purposes of determining LIBOR or (ii) any inability to retain at least four
Reference Banks which is caused by circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trust Administrator on each
LIBOR Determination Date so long as the LIBOR Certificates are outstanding on
the basis of LIBOR and the respective formulae appearing in footnotes
corresponding to the LIBOR Certificates in the table relating to the
Certificates in the Preliminary Statement. The Trust Administrator shall not
have any liability or responsibility to any Person for its inability, following
a good-faith reasonable effort, to obtain quotations from the Reference Banks or
to determine the arithmetic mean referred to in the definition of LIBOR, all as
provided for in this Section 4.04 and the definition of LIBOR. The establishment
of LIBOR and each Pass-Through Rate for the LIBOR Certificates by the Trust
Administrator shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Certificate and the Trustee.
Section 4.05. Allocation of Realized Loss Amounts.
Any Applied Realized Loss Amounts will be allocated to the most junior
Class of Subordinate Certificates then outstanding in reduction of the Class
Certificate Balance thereof. In the event Applied Realized Loss Amounts are
allocated to any Class of Subordinate Certificates, their Class Principal
Balances shall be permanently reduced by the amount so allocated, and no funds
will be distributable (except to the extent of Subsequent Recoveries and as
provided in Section 4.02(a)(iii) herein) with respect to the written down
amounts (including without limitation Net WAC Rate Carryover Amounts) or with
respect to interest on the written down amounts on that Distribution Date or any
future Distribution Dates, even if funds are otherwise available for
distribution.
Section 4.06. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee and the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trustee and the Trust Administrator reasonably believe are applicable
under the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trust Administrator does withhold any amount from
interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trust
Administrator shall indicate the amount withheld to such Certificateholders.
Section 4.07. Commission Reporting.
(a) The Trust Administrator, the Master Servicer and the Servicer shall
reasonably cooperate with the Depositor in connection with the Trust's
satisfying the reporting requirements under the Exchange Act. Except for the
initial current report on Form 8-K in connection with the filing of this
Agreement, the Trust Administrator shall prepare on behalf of the Trust any
Forms
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8-K described below, and the Trust Administrator shall execute and file such
Forms 8-K (via ▇▇▇▇▇) on behalf of the Depositor. The Depositor hereby grants to
the Trust Administrator a limited power of attorney to execute and file each
such document on behalf of the Depositor. Such power of attorney shall continue
until the earlier of (i) receipt by the Trust Administrator or the Master
Servicer, as applicable, from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust.
(b) The Trust Administrator shall file a Form 8-K (or other comparable
form containing the same or comparable information or other information mutually
agreed upon) within 15 days after each Distribution Date, with a copy of the
statement to the Certificateholders for such Distribution Date as an exhibit
thereto. The Depositor hereby grants to the Trust Administrator a limited power
of attorney to execute and file each Form 8-K on behalf of the Depositor. Such
power of attorney shall continue until either the earlier of (i) receipt by the
Trust Administrator from the Depositor of written termination of such power of
attorney and (ii) the termination of the Trust Fund.
(c) Upon any filing with the Commission, the Trust Administrator shall
promptly deliver to the Depositor a copy of any executed report filed by it with
the Commission.
(d) Prior to January 31, 2006, the Trust Administrator shall, in
accordance with industry standards, file a Form 15 Suspension Notification with
respect to the Trust Fund, if applicable. Prior to March 31, 2006, the Trust
Administrator shall file (but will not execute) a Form 10-K, in substance
conforming to industry standards, with respect to the Trust Fund, and shall
forward such Form 10-K to the Servicer for execution, and the Servicer shall
execute the Form 10-K and return it to the Trust Administrator for filing with
the Commission by such date. The Depositor hereby grants to the Servicer a
limited power of attorney to execute the Form 10-K, and to the Trust
Administrator a limited power of attorney to execute the Form 15 Suspension
Notice and to file each such document on behalf of the Depositor. Such Form 10-K
shall include as exhibits (i) the Servicer's annual statement of compliance
described under Section 3.22 and the accountant's report described under Section
3.23, (ii) the Servicer Certification and (iii) the Master Servicer's annual
statement of compliance described under Section 3A.10 and, if applicable, the
accountant's report described under Section 3A.11. If the documents listed in
the preceding sentence are not timely delivered, the Trust Administrator shall
file an amended Form 10-K including such documents as exhibits promptly after
they are delivered to the Trust Administrator. The Trust Administrator shall
have no liability with respect to any failure to properly or timely prepare or
file such periodic reports resulting from or relating to the Trust
Administrator's inability or failure to obtain any information not resulting
from its own negligence or willful misconduct. The Trust Administrator shall
have no responsibility to file any items other than those specified in this
Section 4.07.
(e) The Trust Administrator shall deliver to the Depositor, on or before
March 15 of each calendar year beginning in 2006 (or, if any such day is not a
Business Day, the immediately preceding Business Day) or such alternative date
reasonably specified by the Servicer which shall occur not earlier than 15 days
prior to the date any Form 10-K is required to be filed with the Commission in
connection with the transactions contemplated by this Agreement, a certification
in the form attached hereto as Exhibit M. Such certification shall be signed by
a senior officer of the Trust Administrator.
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The Servicer shall deliver to the Trust Administrator, at such time agreed
upon between the Master Servicer and the Trust Administrator, but in no event
later than March 30th of any calendar year in which the Trust Administrator is
required to file a Form 10-K on behalf of the Trust, the Servicer Certification.
Such certification shall be signed by the senior officer in charge of servicing
of the Servicer. In addition, the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer which shall be required to enable the Trust
Administrator to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended pursuant to Section 4.07 hereof.
(f) If the Commission issues additional interpretative guidance or
promulgates additional rules or regulations, or if other changes in applicable
law occur, that would require the reporting arrangements, or the allocation of
responsibilities with respect thereto, described in this Section 4.07, to be
conducted differently than as described, the Depositor, the Originator, the
Master Servicer, the Trust Administrator, the Servicer and the Trustee will
reasonably cooperate to amend the provisions of this Section 4.07 (or other
sections of this Agreement, if necessary) in order to comply with such amended
reporting requirements and such amendment of this Section 4.07. Any such
amendment shall be made in accordance with Section 10.01 without further consent
of the Certificateholders, and may result in the reduction of the reports filed
by the Trust Administrator on behalf of the Trust under the Exchange Act.
Notwithstanding the foregoing, the Depositor, the Originator, the Master
Servicer, the Trust Administrator, Servicer and Trustee shall not be obligated
to enter into any amendment pursuant to this Section 4.07 that adversely affects
its obligations and immunities under this Agreement.
(g) In filing any Form 8-K or Form 10-K, the Trust Administrator or the
Master Servicer, respectively, shall not undertake any analysis of, and shall
have no responsibility for, any financial information, accountant's report,
certification or other matter contained therein, except for computations
performed by the Trust Administrator and reflected in distribution reports.
Section 4.08. REMIC Distributions and Allocation of Losses.
(a) On each Distribution Date, the Trust Administrator shall cause in the
following order of priority, the following amounts to be distributed by REMIC I
to REMIC II on account of the REMIC I Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R Certificates
(in respect of the Class R-I Interest), as the case may be:
(i) to Holders of REMIC I Regular Interest LTAA, REMIC I Regular
Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest
LT2A1, REMIC I Regular Interest LT2A2, REMIC I Regular Interest LT2A3,
REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC I
Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular
Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest
LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC
I Regular Interest LTM10, REMIC I Regular Interest LTM11, REMIC I Regular
Interest LTZZ and REMIC I Regular Interest LTP, pro rata, in an amount
equal to (A) the Uncertificated Accrued Interest for such Distribution
Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates. Amounts payable as Uncertificated Accrued
Interest in respect of REMIC I
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Regular Interest LTZZ shall be reduced and deferred when the REMIC I
Overcollateralized Amount is less than the REMIC I Overcollateralization
Target Amount, by the lesser of (x) the amount of such difference and (y)
the Maximum LTZZ Uncertificated Accrued Interest Deferral Amount and such
amount will be payable to the Holders of REMIC I Regular Interest LT1A1,
REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A1, REMIC I
Regular Interest LT2A2, REMIC I Regular Interest LTM1, REMIC I Regular
Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest
LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC
I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I Regular
Interest LTM9, REMIC I Regular Interest LTM10 and REMIC I Regular Interest
LTM11 in the same proportion as the Overcollateralization Deficiency is
allocated to the Corresponding Certificates;
(ii) to Holders of REMIC I Regular Interest LT1SUB, REMIC I Regular
Interest LT1GRP, REMIC I Regular Interest LT2SUB, REMIC I Regular Interest
LT2GRP and REMIC I Regular Interest LTXX, pro rata, in an amount equal to
(A) the Uncertificated Accrued Interest for such Distribution Date, plus
(B) any amounts in respect thereof remaining unpaid from previous
Distribution Dates;
(iii) to the Holders of REMIC I Regular Interests, in an amount
equal to the remainder of the REMIC I Marker Allocation Percentage of the
Available Funds for such Distribution Date after the distributions made
pursuant to clause (i) above, allocated as follows:
(1) 98% of such remainder to REMIC I Regular Interest LTAA and
REMIC I Regular Interest LTP, until the Uncertificated
Principal Balance of such Uncertificated REMIC I Regular
Interests is reduced to zero; provided, however, that the
Uncertificated Principal Balance of REMIC I Regular Interest
LTP shall not be reduced until June 2008, at which point such
amount shall be distributed to REMIC I Regular Interest LTP
until $100 has been distributed pursuant to this clause;
(2) 1.00% of such remainder to REMIC I Regular Interest LT1A1,
REMIC I Regular Interest LT1A2, REMIC I Regular Interest
LT2A1, REMIC I Regular Interest LT2A2, REMIC I Regular
Interest LT2A3, REMIC I Regular Interest LTM1, REMIC I Regular
Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular
Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular
Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular
Interest LTM8, REMIC I Regular Interest LTM9, REMIC I Regular
Interest LTM10 and REMIC I Regular Interest LTM11 in the same
proportion as principal payments are allocated to the
Corresponding Certificates, until the Uncertificated Principal
Balances of such REMIC I Regular Interests are reduced to
zero; and 1.00% of such remainder to REMIC I Regular Interest
LTZZ until the Uncertificated Principal Balance of such REMIC
I Regular Interest is reduced to zero;
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(3) any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-I Interest);
provided, however, that (i) 98.00% and (ii) 2.00% of any principal payments that
are attributable to an Overcollateralization Release Amount shall be allocated
to (i) REMIC I Regular Interest LTAA and REMIC I Regular Interest LTP and (ii)
REMIC I Regular Interest LTZZ, respectively; provided that the Uncertificated
Principal Balance of REMIC I Regular Interest LTP shall not be reduced until the
Distribution Date in June 2008, at which point such amount shall be distributed
to REMIC I Regular Interest LTP until $100 has been distributed pursuant to
Section 4.08(a)(iii)(1); and
(iv) to the Holders of REMIC I Regular Interests, in an amount equal to
the REMIC I Sub WAC Allocation Percentage of Available Funds for such
Distribution Date after the distributions made pursuant to clause (i) above,
such that distributions of principal shall be deemed to be made to the REMIC I
Regular Interests first, so as to keep the Uncertificated Principal Balance of
each REMIC I Regular Interest ending with the designation "GRP" equal to 0.01%
of the aggregate Principal Balance of the Mortgage Loans in the related group of
Mortgage Loans; second, to each REMIC I Regular Interest ending with the
designation "SUB," so that the Uncertificated Principal Balance of each such
REMIC I Regular Interest is equal to 0.01% of the excess of (x) the aggregate
Principal Balance of the Mortgage Loans in the related group of Mortgage Loans
over (y) the aggregate current Class Certificate Balances of the Class A
Certificates in the related group of Mortgage Loans (except that if any such
excess is a larger number than in the preceding distribution period, the least
amount of principal shall be distributed to such REMIC I Regular Interests such
that the REMIC I Subordinated Balance Ratio is maintained); and third, any
remaining principal to REMIC I Regular Interest LTXX.
(b) The Trust Administrator shall cause the following allocation of
losses:
(i) The REMIC I Marker Allocation Percentage of the aggregate amount
of any Prepayment Interest Shortfalls and the REMIC I Marker Allocation
Percentage of the aggregate amount of any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date shall
be allocated first, to Uncertificated Accrued Interest payable to (i)
REMIC I Regular Interest LTAA and REMIC I Regular Interest LTP and (ii)
REMIC I Regular Interest LTZZ up to an aggregate amount equal to the REMIC
I Interest Loss Allocation Amount, 98% and 2%, respectively, and
thereafter among REMIC I Regular Interest LTAA, REMIC I Regular Interest
LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A1,
REMIC I Regular Interest LT2A2, REMIC I Regular Interest LT2A3, REMIC I
Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular
Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular Interest
LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest LTM7, REMIC
I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC I Regular
Interest LTM10, REMIC I Regular Interest LTM11, and REMIC I Regular
Interest LTZZ pro rata based on, and to the extent of, one month's
interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate on the respective Uncertificated Principal Balance of
each such REMIC I Regular Interest;
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(ii) The REMIC I Sub WAC Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls and the REMIC I Sub WAC
Allocation Percentage of the aggregate amount of any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution
Date shall be allocated first, to Uncertificated Accrued Interest payable
to REMIC I Regular Interest LT1SUB, REMIC I Regular Interest LT1GRP, REMIC
I Regular Interest LT2SUB, REMIC I Regular Interest LT2GRP and REMIC I
Regular Interest LTXX, pro rata, based on, and to the extent of, one
month's interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate on the respective Uncertificated Principal Balance of
each such REMIC I Regular Interest;
(iii) The REMIC I Marker Allocation Percentage of all Realized
Losses on the Mortgage Loans shall be allocated by the Trustee on each
Distribution Date to the following REMIC I Regular Interests in the
specified percentages, as follows: first, to Uncertificated Accrued
Interest payable to (a) REMIC I Regular Interest LTAA and REMIC I Regular
Interest LTP and (b) REMIC I Regular Interest LTZZ up to an aggregate
amount equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%,
respectively; second, to the Uncertificated Principal Balances of REMIC I
Regular Interest LTAA and REMIC I Regular Interest LTZZ up to an aggregate
amount equal to the REMIC I Principal Loss Allocation Amount, 98% and 2%,
respectively; third, to the Uncertificated Principal Balances of REMIC I
Regular Interest LTAA, REMIC I Regular Interest LTZZ, and to each of the
REMIC I Regular Interests corresponding to the Class M Certificates,
sequentially and in reverse order of priority, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of each such
REMIC I Regular Interest has been reduced to zero; and
(iv) The REMIC I Sub WAC Allocation Percentage of all Realized
Losses shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Principal
Balance of each REMIC I Regular Interest ending with the designation "GRP"
equal to 0.01% of the aggregate Stated Principal Balance of the Mortgage
Loans in the related Loan Group; second, to each REMIC I Regular Interest
ending with the designation "SUB," so that the Uncertificated Principal
Balance of each such REMIC I Regular Interest is equal to 0.01% of the
excess of (x) the aggregate Principal Balance of the Mortgage Loans in the
related Loan Group over (y) the aggregate current Certificate Principal
Balances of the Class A Certificates in the related group of Mortgage
Loans (except that if any such excess is a larger number than in the
preceding distribution period, the least amount of Realized Losses shall
be applied to such REMIC I Regular Interests such that the REMIC I
Subordinated Balance Ratio is maintained); and third, any remaining
Realized Losses shall be allocated to REMIC I Regular Interest LTXX.
(c) On each Distribution Date, all amounts representing Prepayment
Premiums will be distributed to REMIC I Regular Interest LTP and from REMIC I
Regular Interest LTP to the holder of the Class P Certificate. Such amounts
shall not reduce the Certificate Balance of the Class P Certificate.
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(d) Notwithstanding anything to the contrary contained herein, the above
distributions in this Section 4.08 (other than on the Certificates) are deemed
distributions, and distributions of funds from the Distribution Account shall be
made only in accordance with Sections 4.01 and 4.02 hereof.
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.
The Depositor hereby directs the Trust Administrator to register the Class
C Certificates and the Class P Certificates in the name of Fremont or its
designee. Pursuant to written direction by Fremont on the date specified
thereon, the Trust Administrator shall transfer the Class C Certificates and the
Class P Certificates as follows: "▇▇▇▇▇ Fargo Bank, N.A., as Indenture Trustee
on behalf of the Noteholders of the Fremont NIM Trust 2005-B", and deliver such
Class C Certificates and Class P Certificates to ▇▇▇▇▇ Fargo Bank, N.A., as
indenture trustee of the NIM Trust.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trust Administrator 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 as
directed by that Certificateholder by written wire instructions provided to the
Trust Administrator or (y), in the event that no wire instructions are provided
to the Trust Administrator, 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 Trust Administrator by an authorized officer. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trust Administrator
shall bind the Trust Administrator, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the countersignature and
delivery of any 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 Trust
Administrator 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
Trust Administrator shall countersign the Certificates to be issued at the
direction of the Depositor, or any affiliate thereof.
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The Depositor shall provide, or cause to be provided, to the Trust
Administrator 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 Trust Administrator 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 Trust Administrator
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Trust Administrator 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.
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 Trust Administrator. Whenever any
Certificates are so surrendered for exchange, the Trust Administrator 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 Trust Administrator
duly executed by the holder thereof or his attorney duly authorized in writing.
In the event the Depositor or an Affiliate transfers the Class C Certificates,
or a portion thereof, to another Affiliate, it shall notify the Trust
Administrator in writing of the affiliated status of the transferee. The Trust
Administrator shall have no liability regarding the lack of notice with respect
thereto.
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 Trust Administrator in
accordance with the Trust Administrator'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. Except
with respect to the initial transfer of the Class C and Class P Certificates to
the NIM Trust, in the event that a transfer of a Private Certificate which is a
Physical Certificate 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 shall
certify to the Trust Administrator in writing the facts surrounding the transfer
in substantially the form set forth in Exhibit H (the "Transferor Certificate")
and either (i) there shall be delivered to the Trust Administrator a letter in
substantially the form of
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Exhibit I (the "Rule 144A Letter") or (ii) in the case of the Class C
Certificates, there shall be delivered to the Trustee and the Trust
Administrator at the expense of the transferor an Opinion of Counsel that such
transfer may be made without registration under the Securities Act. In the event
that a transfer of a Private Certificate which is a Book-Entry Certificate 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 will be deemed to have made
as of the transfer date each of the certifications set forth in the Transferor
Certificate in respect of such Certificate and the transferee will be deemed to
have made as of the transfer date each of the certifications set forth in the
Rule 144A Letter in respect of such Certificate, in each case as if such
Certificate were evidenced by a Physical Certificate. 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, the
Trust Administrator, the Master Servicer and the 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, the Trust
Administrator, the Master Servicer, the Depositor and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
Except with respect to the transfer of the Class C and Class P
Certificates to the NIM Trust, no transfer of an ERISA-Restricted Certificate
shall be made unless the Trust Administrator shall have received either (i) a
representation from the transferee of such Certificate acceptable to and in form
and substance satisfactory to the Trust Administrator (in the event such
Certificate is a Private Certificate or a Residual Certificate, such requirement
is satisfied only by the Trust Administrator's receipt of a representation
letter from the transferee substantially in the form of Exhibit I), to the
effect that such transferee is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or to Section 4975 of the Code or a person
acting for, on behalf of or with the assets of, any such plan or arrangement,
(ii) in the case of an ERISA-Restricted Certificate (other than a Residual
Certificate, a Class C Certificate or a Class P Certificate) that has been the
subject of an ERISA-Qualifying Underwriting and the purchaser is an insurance
company, a representation that the purchaser is an insurance company that 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 (iii) in the case of an ERISA-Restricted Certificate (other than a Residual
Certificate) presented for registration in the name of an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code (or comparable
provisions of any subsequent enactments) or a person acting for, on behalf of or
with the assets of, any such plan or arrangement, an Opinion of Counsel
satisfactory to the Trustee, the Trust Administrator and the Servicer, which
Opinion of Counsel shall not be an expense of the Trustee, the Trust
Administrator, the Master Servicer, the Servicer or the Trust Fund, addressed to
the Trustee and
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the Trust Administrator, to the effect that the purchase or holding of such
ERISA-Restricted Certificate will not result in a non-exempt prohibited
transaction under Section 406 of ERISA and/or Section 4975 of the Code and will
not subject the Trustee, the Trust Administrator, the Master Servicer, or the
Servicer to any obligation in addition to those expressly undertaken in this
Agreement or to any liability. For purposes of clauses (i) and (ii) above, with
respect to an ERISA-Restricted Certificate that is not a Private Certificate or
a Residual Certificate, in the event the representation letter referred to above
is not furnished, such representation shall be deemed to have been made to the
Trustee and the Trust Administrator by the transferee's (including an initial
acquirer's) acceptance of the ERISA-Restricted Certificates. In the event that
such representation is violated, or any attempt to transfer to a plan or
arrangement subject to Section 406 of ERISA or Section 4975 of the Code or a
person acting for, on behalf of or with the assets of, any such plan or
arrangement, without such Opinion of Counsel, such attempted transfer or
acquisition shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trust Administrator shall be under no liability to any Person
for any registration or transfer of any ERISA-Restricted Certificate that is in
fact not permitted by this Section 5.02(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 Trust Administrator 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 Trust
Administrator shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to the
Trust Administrator under subparagraph (b) above, the Trust Administrator
shall have been furnished with an affidavit (a "Transfer Affidavit") of
the initial owner or the proposed transferee in the form attached hereto
as Exhibit G;
(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;
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(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 Trust Administrator 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 the Rule 144A Letter. The Trust Administrator 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 Trust
Administrator shall be paid and delivered by the Trust Administrator, to
the last preceding Permitted Transferee of such Certificate; and
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trust Administrator, 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 Trust Administrator of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trust Fund, the Trustee, the
Trust Administrator, the Master Servicer, the Originator or the Servicer, to the
effect that the elimination of such restrictions will not cause any Trust REMIC
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 Trust Administrator, is
reasonably necessary (a) to ensure that the record ownership 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 Trust
Administrator except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and
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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 Trust
Administrator 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 Trust Administrator 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 (i) the Depository or the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trust Administrator or the
Depositor is unable to locate a qualified successor, the Trust Administrator
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 Trust Administrator of the related Class of
Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trust Administrator shall issue the Definitive
Certificates. None of the Servicer, the Master Servicer, the Trust
Administrator, the Depositor or 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 Depositor shall provide the
Trust Administrator with an adequate inventory of Certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates and the Trust Administrator shall recognize the Holders
of the Definitive Certificates as Certificateholders hereunder; provided, that
the Trust Administrator 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.
(f) Each Private Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
and accompanied by IRS Form W-8ECI, W-8BEN, W-8IMY (and all appropriate
attachments) or W-9 in form satisfactory to the Trust Administrator and the
Certificate Registrar, duly executed by the Certificateholder or his attorney
duly authorized in writing. Each Certificate presented or surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Certificate Registrar in accordance with its customary practice. No
service charge shall be made for any
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registration of transfer or exchange of Private Certificates, but the Trust
Administrator or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Private Certificates.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate and (b) there is delivered
to the Depositor, the Servicer and the Trust Administrator such security or
indemnity as may be required by them to hold each of them harmless, then, in the
absence of notice to the Trust Administrator that such Certificate has been
acquired by a protected purchaser, the Trust Administrator 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 Trust Administrator 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 Trust Administrator) 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 Servicer, the Master Servicer, the Trust Administrator, the Trustee,
the Depositor and any agent of the Servicer, the Master Servicer, the Trust
Administrator, the Depositor 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 none of the Servicer, the Trustee, the Depositor or any
agent of the Servicer, the Master Servicer, the Trust Administrator, the
Depositor or the Trustee shall be affected by any notice to the contrary.
Section 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trust Administrator, (b) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or the Servicer shall request such information in writing from the
Trust Administrator, then the Trust Administrator shall, within ten Business
Days after the receipt of such request, provide the Depositor, the Servicer or
such Certificateholders at such recipients' expense the most recent list of the
Certificateholders of such Trust Fund held by the Trust Administrator, if any.
The Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Trust Administrator shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
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Section 5.06. Maintenance of Office or Agency.
The Trust Administrator will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in Minneapolis, Minnesota
where Certificates may be surrendered for registration of transfer or exchange.
The Trust Administrator initially designates its offices located at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ for such purposes. The Trust
Administrator will give prompt written notice to the Certificateholders of any
change in such location of any such office or agency.
ARTICLE VI
THE DEPOSITOR, THE ORIGINATOR, THE MASTER SERVICER AND THE SERVICER
Section 6.01. Respective Liabilities of the Depositor, the Originator, the
Master Servicer and the Servicer.
The Depositor, the Originator, the Master Servicer and the Servicer shall
each be liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
Section 6.02. Merger or Consolidation of the Depositor, the Originator,
the Master Servicer or the Servicer.
The Depositor, the Originator, the Master Servicer and the Servicer will
each keep in full effect its existence, rights and franchises as a corporation,
national bank or state chartered industrial bank, as the case may be, under the
laws of the United States or under the laws of one of the states thereof and
will each obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor, the Originator, the Master Servicer
or the Servicer may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Depositor, the Originator, the Master
Servicer or the Servicer shall be a party, or any person succeeding to the
business of the Depositor, the Originator, the Master Servicer or the Servicer,
shall be the successor of the Depositor, the Originator, the Master Servicer or
the Servicer, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that such merger,
consolidation or succession does not adversely affect the then current rating or
ratings on the Offered Certificates.
Section 6.03. Limitation on Liability of the Depositor, the Originator,
the Master Servicer, the Trust Administrator, the Servicer
and Others.
None of the Depositor, the Originator, the Master Servicer, the Trust
Administrator, the Servicer nor any of their respective directors, officers,
employees or agents 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,
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that this provision shall not protect the Depositor, the Servicer or any such
Person against any breach of representations or warranties made by it herein or
protect the Depositor, the Originator, the Master Servicer, the Servicer or any
such Person from any liability which would otherwise be imposed by reasons of
willful misfeasance, bad faith or negligence (or gross negligence in the case of
the Depositor) in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Depositor, the Originator, the Master
Servicer, the Servicer and any director, officer, employee or agent of the
Depositor, the Originator, the Master Servicer and the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Depositor, the
Originator, the Master Servicer, the Servicer and any director, officer,
employee or agent of the Depositor, the Originator, the Master Servicer and the
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any audit, controversy,
judicial proceeding or legal action relating to a governmental taxing authority
or to this Agreement, the Certificates or the Mortgage Loans or any other
unanticipated or extraordinary expense, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence (or
gross negligence in the case of the Depositor) in the performance of their
respective duties hereunder or by reason of reckless disregard of their
respective obligations and duties hereunder. Neither the Originator, the Master
Servicer, the Depositor nor the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and which in its opinion may involve it in any
expense or liability; provided, however, that each of the Depositor, the
Originator, the Master Servicer and the Servicer may in its discretion undertake
any such action (or direct the Trustee or the Trust Administrator to undertake
such actions pursuant to Section 2.03 for the benefit of the Certificateholders)
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 Originator, the Trust
Administrator, the Trustee the Master Servicer and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account.
The Master Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from a breach of the
Master Servicer's obligations and duties under this Agreement. Such indemnity
shall survive the termination or discharge of this Agreement and the resignation
or removal of the Trustee. Any payment hereunder made by the Master Servicer to
the Trustee shall be from the Master Servicer's own funds, without reimbursement
from the Trust Fund.
Section 6.04. Limitation on Resignation of the Servicer.
The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except (i) by mutual consent of the
Servicer, the Depositor, the Master Servicer, the Trust Administrator and the
Trustee or (ii) upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer without the incurrence of unreasonable expense. Any such determination
permitting the resignation of the Servicer under clause (ii) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Depositor,
the Master Servicer, the Trust Administrator
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and the Trustee which Opinion of Counsel shall be in form and substance
acceptable to the Depositor, the Trust Administrator, the Master Servicer and
the Trustee. No such resignation shall become effective until a successor shall
have assumed the Servicer's responsibilities and obligations hereunder.
Section 6.05. Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Originator, the Depositor, the Master
Servicer, the Trust Administrator and the Trustee and hold them harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that any of them may sustain in any way related to any breach by
the Servicer of (i) any of its representations and warranties referred to in
Section 2.03(a), (ii) any error in any tax or information return prepared by the
Servicer, or (iii) the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this Agreement. The Servicer
immediately shall notify the Depositor, the Master Servicer, the Trust
Administrator and the Trustee if such claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the prior written
consent of the Depositor, the Trust Administrator, the Master Servicer and the
Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the
Originator, the Depositor, the Master Servicer, the Trust Administrator or the
Trustee in respect of such claim.
Section 6.06. Rights of the Depositor, the Master Servicer, the Trust
Administrator and the Trustee in Respect of the Servicer.
The Servicer shall afford (and any Subservicing Agreement shall provide
that each Subservicer shall afford) the Depositor, the Master Servicer, the
Trust Administrator and the Trustee, upon reasonable notice, during normal
business hours, access to all records maintained by the Servicer (and any such
Subservicer) in respect of the Servicer's rights and obligations hereunder and
access to officers of the Servicer (and those of any such Sub-Servicer)
responsible for such obligations. Upon request, the Servicer shall furnish to
the Depositor, the Master Servicer, the Trust Administrator and the Trustee its
(and any such Sub-Servicer's) most recent financial statements and such other
information relating to the Servicer's capacity to perform its obligations under
this Agreement that it possesses. To the extent such information is not
otherwise available to the public or is deemed confidential by the Servicer, the
Depositor, the Master Servicer, the Trust Administrator and the Trustee shall
not disseminate any information obtained pursuant to the preceding two sentences
without the Servicer's (or any such Subservicer's) written consent, except as
required pursuant to this Agreement or to the extent that it is necessary to do
so (i) in working with legal counsel, auditors, taxing authorities or other
governmental agencies, rating agencies or reinsurers or (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Depositor, the Trustee,
the Master Servicer, the Trust Administrator or the Trust Fund, and in either
case, the Depositor, the Master Servicer, the Trust Administrator or the
Trustee, as the case may be, shall each use its best efforts to assure the
confidentiality of any such disseminated non-public information. Nothing in this
Section shall limit the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the
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Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section. Nothing in this Section 6.06 shall require the Servicer to collect,
create, collate or otherwise generate any information that it does not generate
in its usual course of business. The Servicer shall not be required to make
copies of or ship documents to any party unless provisions have been made for
the reimbursement of the costs thereof.
The Depositor may, but is not obligated to, enforce the obligations of the
Servicer under this Agreement and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Servicer under this
Agreement or exercise the rights of the Servicer under this Agreement; provided
that the Servicer shall not be relieved of any of its obligations under this
Agreement by virtue of such performance by the Depositor or its designee. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Servicer and is not obligated to supervise the performance
of the Servicer under this Agreement or otherwise.
Section 6.07. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) with written confirmation
from each Rating Agency (which confirmation shall be furnished to the Depositor,
the Trust Administrator, the Master Servicer and the Trustee) that such
resignation will not cause such Rating Agency to reduce the then current rating
of any Class of Offered Certificates. Any such determination pursuant to clause
(i) of the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Trust
Administrator. No resignation of the Master Servicer shall become effective
until a successor master servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Section 6.08. Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and delegate its duties
and obligations in their entirety as Master Servicer under this Agreement;
provided, however, that: (i) the purchaser or transferee accept in writing such
assignment and delegation and assume the obligations of the Master Servicer
hereunder and that the purchaser or transferee (a) have a net worth of not less
than $5,000,000 (unless otherwise approved by each Rating Agency pursuant to
clause (ii) below); (b) be reasonably satisfactory to the Trustee, the Servicer
and the Depositor (as evidenced in a writing signed by the Trustee and the
Depositor); and (c) execute and deliver to the Trustee and the Depositor an
agreement, in form and substance reasonably satisfactory to the Trustee and the
Depositor, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it after the date of such assumption as master servicer under this
Agreement; (ii) each Rating Agency shall be given prior written notice of the
identity of the proposed successor to the Master Servicer and each Rating
Agency's rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
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as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer, the Depositor and the Trustee; and
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee and the Depositor an officer's certificate and an Opinion
of Independent counsel, each stating that all conditions precedent to such
action under this Agreement have been completed and such action is permitted by
and complies with the terms of this Agreement. No such assignment or delegation
shall affect any liability of the Master Servicer arising out of acts or
omissions prior to the effective date thereof.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
(a) "Servicer Event of Default," wherever used herein, means any one of
the following events:
(i) any failure by the Servicer to remit to the Trust Administrator
any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Depositor, the Trustee, the
Master Servicer or the Trust Administrator, or to the Servicer, the
Depositor, the Master Servicer, the Trust Administrator and the Trustee by
Certificateholders entitled to at least 25% of the Voting Rights; or
(ii) the failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Servicer set forth in this Agreement which continues
unremedied for a period of thirty days after the earlier of (i) the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Depositor, the
Trustee, the Master Servicer or the Trust Administrator, or to the
Servicer, the Depositor, the Master Servicer, the Trust Administrator and
the Trustee by Certificateholders entitled to at least 25% of the Voting
Rights and (ii) actual knowledge of such failure by a Servicing Officer of
the Servicer; provided, however, that in the case of a failure or breach
that cannot be cured within 30 days after notice or actual knowledge by
the Servicer, the cure period may be extended for an additional 30 days
upon delivery by the Servicer to the Master Servicer, the Trust
Administrator and the Trustee of a certificate to the effect that the
Servicer believes in good faith that the failure or breach can be cured
within such additional time period and the Servicer is diligently pursuing
remedial action; or
(iii) the failure by the Servicer in any month to deliver the
Servicer Remittance Report to the Trust Administrator, and such failure
continues uncured for more than 30 days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Depositor, the Trustee, the Master Servicer
or the Trust Administrator, or to the Servicer, the Depositor, the Master
Servicer, the Trust Administrator and the Trustee by Certificateholders
entitled to at least 25% of the Voting Rights; or
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(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, 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 Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of sixty days; or
(v) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, bankruptcy, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
its property; or
(vi) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vii) for so long as Fremont Investment & Loan is the Servicer, any
failure by the Servicer of the Servicer Termination Test; or
(viii) any failure of the Servicer to make any P&I Advance on any
Remittance Date required to be made from its own funds pursuant to Section
4.01 which continues unremedied for one Business Day immediately following
the Remittance Date; or
(ix) a breach of any representation and warranty of the Servicer
referred to in Section 2.03(a), which materially and adversely affects the
interests of the Certificateholders and which continues unremedied for a
period of thirty days after the date upon which written notice of such
breach is given to the Servicer by the Trustee, the Master Servicer, the
Trust Administrator or the Depositor, or to the Servicer, the Trustee, the
Master Servicer, the Trust Administrator and the Depositor by
Certificateholders entitled to at least 25% of the Voting Rights in the
Certificates; or
(x) any failure by the Servicer to duly perform within the required
time period, its obligations under Section 3.22, Section 3.23 or Section
4.07(c), which failure continues unremedied for a period of 10 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, the Master
Servicer, the Trust Administrator or the Depositor, or to the Servicer,
the Trustee, the Master Servicer, the Trust Administrator and the
Depositor by Certificateholders entitled to at least 25% of the Voting
Rights in the Certificates.
If a Servicer Event of Default shall occur, then, and in each and every
such case, so long as such Servicer Event of Default shall not have been
remedied, the Master Servicer, Trust Administrator or the Trustee may, or at the
direction of Certificateholders entitled to a majority of the Voting Rights, the
Trust Administrator shall direct the Trustee, and the Trustee shall, by notice
in writing to the Servicer (with a copy to each Rating Agency), terminate all of
the rights and obligations of the Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder; provided, however,
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that the Master Servicer or the Trustee shall not be required to give written
notice to the Servicer of the occurrence of a Servicer Event of Default
described in clauses (ii) through (x) of this Section 7.01(a) unless and until a
Responsible Officer of the Trustee or a Master Servicing Officer has actual
knowledge of the occurrence of such a Servicer Event of Default. In the event
that a Responsible Officer of the Trustee or a Master Servicing Officer has
actual knowledge of the occurrence of an event of default described in clause
(i) of this Section 7.01(a), the Master Servicer, the Trust Administrator or the
Trustee shall give written notice to the Servicer of the occurrence of such an
event within one Business Day of the first day on which the Responsible Officer
obtains actual knowledge of such occurrence; provided that failure to give such
notice shall not constitute a waiver of such Servicer Event of Default. On and
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Master Servicer. The Master
Servicer is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Servicer to pay
amounts owed pursuant to Article VIII. The Servicer agrees to cooperate with the
Master Servicer in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to the Master
Servicer of all cash amounts which shall at the time be credited to the
Collection Account of such predecessor Servicer, or thereafter be received with
respect to the Mortgage Loans.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive from the Trust Fund, prior
to transfer of its servicing obligations hereunder, payment of all accrued and
unpaid portion of the Servicing Fees to which the Servicer would have been
entitled and reimbursement for all outstanding P&I Advances and Servicing
Advances, including Servicing Advances incurred prior to but not invoiced until
after the date of termination, in accordance with the terms of this Agreement.
In addition, the Servicer shall continue to be entitled to the benefits of
Section 6.03, notwithstanding any termination hereunder, with respect to events
occurring prior to such termination.
(b) On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Master Servicer pursuant
to and under this Section and, without limitation, the Master Servicer is hereby
authorized and empowered, as attorney-in-fact or otherwise, to execute and
deliver on behalf of and at the expense of the Servicer, any and all documents
and other instruments and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Servicer agrees, at its sole cost and
expense, promptly (and in any event no later than ten Business Days subsequent
to such notice) to provide the Master Servicer with all documents and records
requested by it to enable it to assume the Servicer's functions under this
Agreement, and to cooperate with the Master Servicer in effecting the
termination of the Servicer's responsibilities and rights under this Agreement,
including, without limitation, the transfer within one Business Day to the
Master Servicer for
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administration by it of all cash amounts which at the time shall be or should
have been credited by the Servicer to the Collection Account held by or on
behalf of the Servicer, or any REO Account or Servicing Account held by or on
behalf of the Servicer or thereafter be received with respect to the Mortgage
Loans or any REO Property. For purposes of this Section 7.01, the Master
Servicer shall not be deemed to have knowledge of a Servicer Event of Default
unless a Master Servicing Officer of the Master Servicer has actual knowledge
thereof or unless written notice of any event which is in fact such a Servicer
Event of Default is received by the Master Servicer and such notice references
any of the Certificates, the Trust, the REMICs or this Agreement.
The Master Servicer shall be entitled to be reimbursed by the defaulting
Servicer (or by the Trust Fund if such Servicer is unable to fulfill its
obligations hereunder) for all reasonable out-of-pocket or third party costs
associated with the transfer of servicing from the predecessor Servicer (or if
the predecessor Servicer is the Master Servicer, from the Servicer immediately
preceding the Master Servicer), including without limitation, any reasonable
out-of-pocket or third party costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Master Servicer to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Master Servicer to service the Mortgage Loans properly and effectively, upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any Late Collection
of a Monthly Payment on a Mortgage Loan which was due prior to the notice
terminating such Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which such Servicer would
have been entitled pursuant to Section 3.11, and any other amounts payable to
such Servicer hereunder the entitlement to which arose in accordance with
Section 3.11 and in the time period specified in Section 3.11 prior to the
termination of its activities hereunder. The Servicer shall continue to be
entitled to the benefits of Section 6.03, notwithstanding any termination
hereunder with respect to events occurring prior to such termination.
(c) If any one of the following events ("Master Servicer Events of
Termination") shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the
Distribution Account any amount required to be deposited by it under the
terms of this Agreement (including an Advance required to be made pursuant
to Section 4.01 hereof), which failure shall continue unremedied for one
Business Day 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 51% of the Voting Rights evidenced by
the Certificates; or
(ii) any failure on the part of the Master Servicer duly to observe
or perform in any material respect any of the covenants or agreements on
the part of the Master Servicer contained in this Agreement, or the breach
by the Master Servicer of any representation and warranty contained in
Section 2.08, which continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the
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same to be remedied, shall have been given to the Master Servicer by the
Depositor, the Trustee, or to the Master Servicer, the Depositor and the
Trustee by the Holders of Certificates entitled to at least 25% of the
Voting Rights; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under
any present or future federal or state bankruptcy, insolvency or similar
law or the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceeding, 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 90 days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its
property; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations.
If a Master Servicer Event of Termination described in clause (i) of this
Section 7.03(c) shall occur, the Trustee shall, by notice to the Master Servicer
and the Depositor, immediately terminate all of the rights and obligations of
the Master Servicer under this Agreement (other than as a Holder of any
Certificate) and in and to the Mortgage Loans and the proceeds thereof. If a
Master Servicer Event of Termination described in clauses (ii) through (v) of
this Section 7.03(c) shall occur, then, and in each and every such case, so long
as such Master Servicer Event of Termination shall not have been remedied, the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of the Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor) with a copy to each Rating Agency,
terminate all of the rights and obligations of the Master Servicer in its
capacity as Master Servicer under this Agreement, to the extent permitted by
law, in and to the Mortgage Loans and the proceeds thereof. Upon such
termination, or on or after receipt by the Master Servicer of such written
notice, as the case may be, all authority, power and obligations of the Master
Servicer under this Agreement, whether with respect to the Certificates (other
than as a Holder of any Certificate) or the Mortgage Loans or otherwise
including, without limitation, the compensation payable to the Master Servicer
under this Agreement after the date of such termination, shall pass to and be
vested in the Trustee pursuant to and under this Section, and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver, on behalf of and at the expense of the
Master Servicer, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees promptly (and in any event no later than
ten Business Days subsequent to such notice) to provide the Trustee with all
documents and records requested by it to enable it to assume the Master
Servicer's functions
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under this Agreement, and to cooperate with the Trustee in effecting the
termination of the Master Servicer's responsibilities and rights under this
Agreement (provided, however, that the Master Servicer shall continue to be
entitled to receive all amounts accrued or owing to it under this Agreement on
or prior to the date of such termination and shall continue to be entitled to
the benefits of Section 6.03, notwithstanding any such termination, with respect
to events occurring prior to such termination). For purposes of this Section
7.01(c), the Trustee shall not be deemed to have knowledge of a Master Servicer
Event of Termination unless a Responsible Officer of the Trustee assigned to and
working in the Trustee's Corporate Trust Office has actual knowledge thereof or
unless written notice of any event which is in fact such a Master Servicer Event
of Termination is received by the Trustee and such notice references the
Certificates, the Trust or this Agreement. The Trustee shall promptly notify the
Rating Agencies of the occurrence of a Master Servicer Event of Termination of
which it has knowledge as provided above.
To the extent that the costs and expenses of the Trustee related to the
termination of the Master Servicer, appointment of a successor Master Servicer
or the transfer and assumption of the master servicing by the Trustee
(including, without limitation, (i) all legal costs and expenses and all due
diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Termination and (ii) all costs and expenses associated with the complete
transfer of the master servicing, including all master servicing files and all
master servicing data and the completion, correction or manipulation of such
master servicing data as may be required by the successor Master Servicer to
correct any errors or insufficiencies in the master servicing data or otherwise
to enable the successor Master Servicer to master service the Mortgage Loans in
accordance with this Agreement) and any other master servicing transfer costs
applicable with respect to a transfer of master servicing are not fully and
timely reimbursed by the terminated Master Servicer, the Trustee shall be
entitled to reimbursement of such costs and expenses from the Distribution
Account.
Section 7.02. Master Servicer to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01, the Master Servicer shall, subject to and to the
extent provided in Section 3.06, be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein, and shall immediately assume all the
responsibilities, duties and liabilities relating thereto and arising thereafter
(except for any representations or warranties of the Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.03(d)-(i)) by the terms and provisions hereof including, without limitation,
the Servicer's obligations to make P&I Advances pursuant to Section 4.01;
provided, however, that if the Master Servicer is prohibited by law or
regulation from obligating itself to make advances regarding delinquent mortgage
loans, then the Master Servicer shall not be obligated to make P&I Advances
pursuant to Section 4.01; and provided further, that any failure to perform such
duties or responsibilities caused by the Servicer's failure to deliver or
provide, or delay in delivering or providing, information, documents, records or
cash as required under this Agreement shall not be considered a default by the
Master Servicer as successor to the Servicer hereunder; and provided further,
that it is understood and acknowledged by the parties hereto that there will be
a period of transition (not to exceed 90 days) before the actual servicing
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functions (other than the obligation to advance P&I Advances, which obligation
shall arise upon the receipt by the Servicer of notice of termination pursuant
to Section 7.01) can be fully transferred to the Master Servicer or any
successor Servicer appointed in accordance with this Agreement. As compensation
therefor, the Master Servicer shall be entitled to the Servicing Fee and all
funds relating to the Mortgage Loans to which the Servicer would have been
entitled if it had continued to act as Servicer hereunder. Notwithstanding the
above and subject to the immediately following paragraph, the Master Servicer
may, if it shall be unwilling to so act, or shall, if it is unable to so act
promptly appoint or petition a court of competent jurisdiction to appoint, a
Person that satisfies the eligibility criteria set forth below as the successor
Servicer under this Agreement in the assumption of the responsibilities, duties
or liabilities of the Servicer under this Agreement.
Notwithstanding anything herein to the contrary, in no event shall the
Trustee, the Trust Administrator or the Master Servicer be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Servicer to act as
successor Servicer under this Agreement and the transactions set forth or
provided for herein.
Any successor Servicer appointed under this Agreement must (i) be an
established mortgage loan servicing institution, (ii) be approved by each Rating
Agency by a written confirmation from each Rating Agency that the appointment of
such successor Servicer would not result in the reduction or withdrawal of the
then current ratings of any outstanding Class of Certificates, (iii) have a net
worth of not less than $30,000,000 and (iv) assume all the responsibilities,
duties or liabilities of the Servicer (other than liabilities of the Servicer
hereunder incurred prior to termination of the Servicer under Section 7.01
herein) under this Agreement as if originally named as a party to this
Agreement.
(b) (i)All Servicing Transfer Costs incurred by the Trustee, the Trust
Administrator, the Master Servicer and any successor Servicer under
paragraph (b)(2) below shall be paid immediately by the terminated
Servicer upon presentation of reasonable documentation of such costs, and
if such predecessor or initial Servicer, as applicable, defaults in its
obligation to pay such costs, the successor Servicer, the Master Servicer,
the Trust Administrator and the Trustee shall be entitled to reimbursement
therefor from the assets of the Trust Fund.
(i) No appointment of a successor to the Servicer under this
Agreement shall be effective until the assumption by the successor of all
of the Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the
Trustee, the Trust Administrator or the Master Servicer may make such
arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however,
that no such compensation shall be in excess of that permitted the
Servicer as such hereunder. The Depositor, the Trustee, the Trust
Administrator, the Master Servicer and such successor shall take such
action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Pending appointment of a successor to the
Servicer under this Agreement, the Master Servicer shall act in such
capacity as hereinabove provided.
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Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of Servicer, in accordance with applicable federal and
state law, and shall, during the term of its service as Servicer, maintain in
force the policy or policies that the Servicer is required to maintain pursuant
to Section 3.13.
Any such successor Servicer shall be required to satisfy the requirements
of a successor Servicer under this Section 7.02.
Section 7.03. Notification to Certificateholders.
(a) Upon any termination of a Servicer or appointment of a successor
Servicer, the Trust Administrator shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Servicer Event of Default
or Master Servicer Event of Termination, the Trust Administrator or Trustee
respectively shall transmit by mail to all Certificateholders and each Rating
Agency notice of each such Servicer Event of Default or Master Servicer Event of
Termination hereunder known to the Trustee or the Trust Administrator, as
applicable, unless such Servicer Event of Default or Master Servicer Event of
Termination shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
Section 8.01. Duties of the Trustee.
The Trustee, before the occurrence of a Servicer Event of Default or
Master Servicer Event of Termination and after the curing of all Servicer Events
of Default or Master Servicer Events of Termination that may have occurred,
shall undertake to perform such duties and only such duties as are specifically
set forth in this Agreement. In case a Master Servicer Event of Termination 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.
Each of the Trustee and the Trust Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to it 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. Neither the Trustee nor
the Trust Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order, or other
instrument.
The Trust Administrator agrees to notify the Master Servicer in writing no
later than 5:00 p.m. New York time on each Remittance Date of the aggregate
dollar amount of the funds received by the Trust Administrator from the Servicer
on such Remittance Date and any other information reasonably requested by the
Master Servicer, so as to enable the Master Servicer to make the reconciliations
and verifications required to be made by it pursuant to ▇▇▇▇▇▇▇ ▇▇.▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇-▇
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138
Neither the Trustee nor the Trust Administrator shall be deemed to have
knowledge of a Servicer Event of Default or Master Servicer Event of Termination
unless a Responsible Officer of the Trustee or the Trust Administrator,
respectively, has actual knowledge thereof or unless written notice of any event
which is in fact such a Servicer Event of Default or Master Servicer Event of
Termination is received by the Trustee or the Trust Administrator, respectively,
and such notice references any of the Certificates, the Trust, the REMICs or
this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
or the Trust Administrator from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) The duties and obligations of the Trust Administrator, and with
respect to the duties and obligations of the Trustee, prior to the
occurrence of a Servicer Event of Default or Master Servicer Event of
Termination, and after the curing of all such Servicer Events of Default
or Master Servicer Events of Termination which may have occurred, shall be
determined solely by the express provisions of this Agreement, the Trustee
and the Trust Administrator 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 or the Trust Administrator and, in the
absence of bad faith on the part of the Trustee or the Trust
Administrator, as applicable, the Trustee or the Trust Administrator, as
applicable, may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates
or opinions furnished to it that conform to the requirements of this
Agreement;
(ii) Neither the Trustee nor the Trust Administrator shall be
personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or the Trust
Administrator, as applicable, unless it shall be proved that the Trustee
or the Trust Administrator, as the case may be, was negligent in
ascertaining the pertinent facts; and
Neither the Trustee nor the Trust Administrator shall be personally liable
with respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Certificates entitled
to at least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or the Trust
Administrator, or exercising any trust or power conferred upon the Trustee or
the Trust Administrator, under this Agreement.
Section 8.02. Certain Matters Affecting the Trustee and the Trust
Administrator.
(a) Except as otherwise provided in Section 8.01:
(i) Each of the Trustee or the Trust Administrator may request and
rely conclusively upon and shall be fully protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or
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other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) Each of the Trustee and the Trust Administrator may consult
with counsel and any written advice or Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken
or suffered or omitted by it hereunder in good faith and in accordance
with such written advice or Opinion of Counsel;
(iii) Neither the Trustee nor the Trust Administrator shall be under
any obligation to exercise any of the trusts or powers vested in it by
this Agreement or to institute, conduct or defend any litigation hereunder
or in relation hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to it security or indemnity
satisfactory to it against the costs, expenses and liabilities which may
be incurred therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of a Servicer
Event of Default or Master Servicer Event of Termination (which has not
been cured or waived), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such Person's own affairs;
(iv) Neither the Trustee nor the Trust Administrator shall be
personally liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) The Trust Administrator shall not, and prior to the occurrence
of a Servicer Event of Default or a Master Servicer Event of Termination
hereunder and after the curing of all Master Servicer Events of
Termination which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Certificates entitled to
at least 25% of the Voting Rights; provided, however, that if the payment
within a reasonable time to the Trustee or the Trust Administrator, as
applicable, of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the Trustee
or the Trust Administrator, as applicable, not reasonably assured to the
Trustee or the Trust Administrator, as applicable, by such
Certificateholders, the Trustee or the Trust Administrator, as applicable,
may require reasonable indemnity against such expense, or liability from
such Certificateholders as a condition to taking any such action;
(vi) Each of the Trustee and the Trust Administrator may execute any
of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or attorneys and
shall not be responsible for any willful misconduct or negligence of such
agents, custodians, nominees or attorneys (as long as such agents,
custodians, nominees or attorneys were appointed with due and proper
care);
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(vii) Neither the Trustee nor the Trust Administrator shall be
personally liable for any loss resulting from the investment of funds held
in the Collection Account by the Servicer pursuant to Section 3.12;
(viii) Except as otherwise expressly provided herein, none of the
provisions of this Agreement shall require the Trustee or the Trust
Administrator to expend or risk its own funds or otherwise to incur any
liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or
indemnity satisfactory to it against such risk or liability is not assured
to it (not including expenses, disbursements and advances incurred or made
by the Trustee or the Trust Administrator, as applicable, including the
compensation and the expenses and disbursements of its agents and counsel,
in the ordinary course of its performance in accordance with the
provisions of this Agreement); and
(ix) Neither the Trustee nor the Trust Administrator shall be
personally liable for any loss resulting from any failure or omission of
any other party to this Agreement to comply with its obligations
hereunder.
(b) All rights of action under this Agreement or under any of the
Certificates enforceable by the Trustee or the Trust Administrator, as
applicable, may be enforced by it without the possession of any of the
Certificates, or the production thereof at the trial or any other proceeding
relating thereto, and any such suit, action or proceeding instituted by the
Trustee or the Trust Administrator, as applicable, shall be brought in its name
for the benefit of all the Holders of such Certificates, subject to the
provisions of this Agreement.
Section 8.03. Neither the Trustee Nor the Trust Administrator Liable for
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature of the Trust Administrator, the authentication of the Trust
Administrator on the Certificates, the acknowledgments of the Trustee and the
Trust Administrator contained in Article II and the representations and
warranties of the Trustee and the Trust Administrator in Section 8.11) shall be
taken as the statements of the Depositor, and the Trustee does not assume any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representation or warranty as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.11) or of the Certificates (other than the signature of the Trustee and the
Trust Administrator and authentication of the Certificate Registrar on the
Certificates) or the Corridor Agreements (other than the signature of the
Trustee) or of any Mortgage Loan or related document or of the MERS(R) System.
Neither the Trustee nor the Trust Administrator shall be accountable for the use
or application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer.
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Section 8.04. Trustee and Trust Administrator May Own Certificates.
Each of the Trustee and the Trust Administrator 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 or the Trust Administrator,
as applicable.
Section 8.05. Fees and Expenses of the Trustee and Trust Administrator.
(a) The Trust Administrator shall withdraw from the Distribution Account
on each Distribution Date and pay to itself the Trust Administration Fee with
respect to the calendar month that immediately preceded the month of such
Distribution Date. As additional compensation for all services rendered by it in
the execution of the Trust hereby created and in the exercise and performance of
any of the powers and duties of the Trust Administrator hereunder, the Trust
Administrator shall be permitted to retain the income, payable to the Trust
Administrator from time to time, from all income and gains (net of losses) on
amounts on deposit in the Distribution Account. The annual fees of the Trustee
hereunder shall be paid in accordance with a side letter agreement with the
Trust Administrator and at the sole expense of the Trust Administrator. The
initial fees of the custodian hereunder shall be paid in accordance with a side
letter agreement between the Originator and the Trust Administrator, as initial
custodian, and ongoing fees, if any, at the sole expense of the Trust
Administrator. Subject to Section 8.05(b), the Trustee and the Trust
Administrator, and any director, officer, employee or agent of either, shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense (including any unreimbursed fees or expenses for work relating to an
appointment of a successor Servicer or a successor Master Servicer under Article
VII herein, but not including expenses, disbursements and advances incurred or
made by the Trustee (or its custodian) or the Trust Administrator, as
applicable, including the reasonable compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of its
performance in accordance with the provisions of this Agreement) incurred by the
Trustee or the Trust Administrator arising out of or in connection with the
acceptance or administration of its obligations and duties under this Agreement
or any Corridor Agreement, the Certificates or the Mortgage Loans, other than
any loss, liability or expense (i) resulting from the Trustee's or the Trust
Administrator's actions or omissions in connection with this Agreement and the
Mortgage Loans, (ii) that constitutes a specific liability of the Trustee or the
Trust Administrator pursuant to Section 11.01(c), or (iii) any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder or as a result of a breach of the its
respective obligations under Article XI hereof. Any amounts payable to the
Trustee (or its custodian) or the Trust Administrator, and any director,
officer, employee or agent of the Trustee (or its custodian) or the Trust
Administrator, in respect of the indemnification provided by this paragraph (a),
or pursuant to any other right of reimbursement from the Trust Fund that the
Trustee (or its Custodian), the Trust Administrator and any director, officer,
employee or agent of the Trustee (or its custodian) or the Trust Administrator,
may have hereunder in its capacity as such, may be withdrawn by the Trust
Administrator from the Distribution Account at any time. Such indemnity shall
survive the termination of this Agreement and the resignation of the Trustee or
the Trust Administrator, as applicable.
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(b) The foregoing indemnity shall survive the resignation or removal of
the Trustee or the Trust Administrator.
(c) Without limiting the Servicer's indemnification obligations under
Section 6.03, the Servicer agrees to indemnify the Trustee, the Master Servicer,
and the Trust Administrator from, and hold it harmless against, any loss,
liability or expense resulting from a breach of the Servicer's obligations and
duties under this Agreement. Such indemnity shall survive the termination or
discharge of this Agreement and the resignation or removal of the Trustee or the
Trust Administrator. Any payment hereunder made by the Servicer to the Trustee
or the Trust Administrator shall be from the Servicer's own funds, without
reimbursement from the Trust Fund.
The Trustee agrees to indemnify each of the Master Servicer and the Trust
Administrator from, and hold it harmless against, any loss, liability or expense
resulting from a breach of the Trustee's obligations and duties under this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Master Servicer or the Trust
Administrator. Any payment hereunder made by the Trustee to the Master Servicer
or the Trust Administrator, as the case may be, shall be from the Trustee's own
funds, without reimbursement from the Trust Fund.
The Trust Administrator agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from a breach of the
Trust Administrator's obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trust Administrator. Any payment hereunder made by
the Trust Administrator to the Trustee shall be from the Trust Administrator's
own funds, without reimbursement from the Trust Fund.
(d) The Servicer shall pay any annual rating agency fees of S&P and
▇▇▇▇▇'▇ for ongoing surveillance from its own funds without right of
reimbursement.
Section 8.06. Eligibility Requirements for the Trustee and Trust
Administrator.
Each of the Trustee and the Trust Administrator hereunder shall at all
times be a corporation or an association (other than the Depositor, the
Originator, the Servicer or any Affiliate of the foregoing) organized and doing
business under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In case at any time either
the Trustee or the Trust Administrator shall cease to be eligible in accordance
with the provisions of this Section, the Trustee or the Trust Administrator, as
applicable, shall resign immediately in the manner and with the effect specified
in Section 8.07.
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Section 8.07. Resignation and Removal of the Trustee or Trust Administrator.
The Trustee or the Trust Administrator may at any time resign and be
discharged from the trust hereby created by giving written notice thereof to the
Depositor, the Servicer, the Master Servicer, if the Trustee is resigning to the
Trust Administrator and if the Trust Administrator is resigning to the Trustee
and the Certificateholders. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee or successor trust
administrator, as applicable, by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee or Trust Administrator,
as applicable, and to the successor trustee or successor trust administrator, as
applicable. The Depositor shall deliver a copy of such instrument to the
Certificateholders, the Master Servicer and the Servicer. If no successor
trustee or successor trust administrator, as applicable, shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or Trust Administrator, as
applicable, may petition any court of competent jurisdiction for the appointment
of a successor.
If at any time the Trustee or the Trust Administrator shall cease to be
eligible in accordance with the provisions of Section 8.06 and shall fail to
resign after written request by the Depositor, or if at any time the Trustee or
the Trust Administrator shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or the Trust Administrator
or of its respective property shall be appointed, or any public officer shall
take charge or control of the Trustee or the Trust Administrator or of its
respective property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Depositor may remove the Trustee or the Trust
Administrator, as applicable, and appoint a successor by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Trust
Administrator, as applicable, so removed and to the successor. The Depositor
shall deliver a copy of such instrument to the Certificateholders, the Master
Servicer and the Servicer.
The Holders of Certificates entitled to at least 25% of the Voting Rights
may at any time remove the Trustee or the Trust Administrator and appoint a
successor by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the Trustee
or Trust Administrator so removed and one complete set to the successor so
appointed. The Depositor shall deliver a copy of such instrument to the
Certificateholders, the Master Servicer and the Servicer.
Any resignation or removal of the Trustee or the Trust Administrator and
appointment of a successor pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor as
provided in Section 8.08.
Any resignation or removal of the initial Trust Administrator will result
in the removal of the initial Master Servicer.
Section 8.08. Successor Trustee or Trust Administrator.
Any successor appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor an instrument
accepting such appointment
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hereunder, and thereupon the resignation or removal of the predecessor shall
become effective and such successor, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee or trust administrator shall
deliver to its successor all Mortgage Files and related documents and
statements, as well as all moneys, held by it hereunder (other than any Mortgage
Files at the time held by a custodian, if any, which custodian shall become the
agent of any successor trustee hereunder), and the Depositor and the predecessor
trustee or trust administrator 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 or trust administrator shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
shall be eligible under the provisions of Section 8.06 and the appointment of
such successor shall not result in a downgrading of any Class of Certificates by
either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee or trust
administrator as provided in this Section, the Depositor shall mail notice of
the succession to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor, the successor shall cause such
notice to be mailed at the expense of the Depositor.
Section 8.09. Merger or Consolidation of the Trustee or the Trust
Administrator.
Any corporation into which the Trustee or the Trust Administrator 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 or
the Trust Administrator shall be a party, or any corporation succeeding to the
business of the Trustee or the Trust Administrator, shall be the successor of
the Trustee or the Trust Administrator, as applicable, hereunder; provided, that
such corporation shall be eligible under Section 8.06 without the execution or
filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee, acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case a Servicer Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power
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to make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
8.06 hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof. Any reasonable and necessary expense of the Trustee related to the
appointment of a co-trustee or a separate trustee for the limited purpose of
performing the Trustee's duties pursuant to this Section 8.10 shall be
reimbursable from the Trust Fund.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the defaulting Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trust conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11. Representations and Warranties of the Trustee and Trust
Administrator.
(a) The Trustee hereby represents and warrants to the Servicer, the Master
Servicer, the Trust Administrator and the Depositor, as of the Closing Date,
that:
(i) It is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of New York.
(ii) The execution and delivery of this Agreement by it, and the
performance and compliance with the terms of this Agreement by it, will
not violate its charter or articles of association or bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any
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material agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties, constitutes a valid, legal and binding
obligation of it, enforceable against it in accordance with the terms
hereof, subject to (A) applicable bankruptcy, insolvency, receivership,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, and (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
(b) The Trust Administrator hereby represents and warrants to the
Servicer, the Trustee and the Depositor, as of the Closing Date, that:
(i) It is a national banking association duly organized, validly
existing and in good standing under the laws of the United States.
(ii) The execution and delivery of this Agreement by it, and the
performance and compliance with the terms of this Agreement by it, will
not violate its charter or articles of association or bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties, constitutes a valid, legal and binding
obligation of it, enforceable against it in accordance with the terms
hereof, subject to (A) applicable bankruptcy, insolvency, receivership,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, and (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation or Purchase of the Mortgage
Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer, the Master Servicer, the Trust Administrator and the
Trustee created hereby with respect to the Trust Fund shall terminate upon the
earlier of (a) the purchase, on or after the Optional Termination Date, by the
Servicer, of all Mortgage Loans (and REO Properties) at the price equal to the
sum of (i) 100% of the unpaid principal balance of each Mortgage Loan (other
than
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in respect of REO Property) plus accrued and unpaid interest thereon at the
applicable Mortgage Interest Rate, together with any unpaid remaining Net WAC
Rate Carryover Amounts and (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 Person seeking to purchase such Mortgage
Loans, at the expense of such Person, plus accrued and unpaid interest on the
related Mortgage Loan at the applicable Mortgage Interest Rates and (y) the
unpaid principal balance of each Mortgage Loan related to any REO Property, in
each case plus accrued and unpaid interest thereon at the applicable Mortgage
Interest Rate ("Termination Price"); and (b) the later of (i) the maturity or
other Liquidation Event (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 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 hereof.
Section 9.02. Final Distribution on the Certificates.
If on any Remittance Date, the 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 Collection Account, the Servicer shall direct the Trustee
and the Trust Administrator promptly to send a Notice of Final Distribution to
each Certificateholder. If the Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date the
Notice of Final Distribution is to be mailed to the affected Certificateholders,
the Depositor shall notify the Servicer, the Trustee and the Trust Administrator
of the date the Depositor intends to terminate the Trust Fund and of the
applicable repurchase price of the Mortgage Loans and REO Properties.
A Notice of Final Distribution, 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 Trust
Administrator by letter to Certificateholders mailed not later than the 15th day
of the month of such final distribution. Any such Notice of Final Distribution
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 Date otherwise applicable to such Distribution
Date is not applicable, distributions being made only upon presentation and
surrender of the Certificates at the office therein specified. The Trustee will
give such Notice of Final Distribution to each Rating Agency at the time such
Notice of Final Distribution is given to Certificateholders.
In the event such Notice of Final Distribution is given, the Servicer
shall cause all funds in the Collection Account to be remitted to the Trust
Administrator for deposit in the Distribution Account on the Business Day prior
to the applicable Distribution Date in an amount equal to the final distribution
in respect of the Certificates. Upon such final deposit with respect to the
Trust Fund and the receipt by the Trustee or the Trust Administrator of a
Request for Release therefor, the Trustee or the Trust Administrator shall
promptly release to the Depositor or its designee the Custodial Files for the
Mortgage Loans.
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Upon presentation and surrender of the Certificates, the Trust
Administrator shall cause to be distributed to the Certificateholders of each
Class (after reimbursement of all amounts due to the Servicer, the Depositor,
the Master Servicer, the Trust Administrator and the Trustee hereunder), 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 up to an amount equal to (i) as
to each Class of Regular Certificates (except the Class C Certificates), the
Certificate Balance thereof plus for each such Class and the Class C
Certificates accrued interest thereon in the case of an interest-bearing
Certificate and all other amounts to which such Classes are entitled pursuant to
Section 4.02, (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 Trust Administrator 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 Holders of the Class R Certificates shall be entitled to all unclaimed funds
and other assets of the Trust Fund which remain subject hereto.
Section 9.03. Additional Termination Requirements.
In the event the Servicer exercises its purchase option with respect to
the Mortgage Loans as provided in Section 9.01, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless the
Trustee and the Trust Administrator have been supplied with an Opinion of
Counsel, at the expense of the Depositor, 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" or "prohibited contributions"
on any Trust REMIC as defined in the REMIC Provisions, or (ii) cause any Trust
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(a) The Trustee shall sell all of the assets of the Trust Fund to the Servicer
for cash, and, within 90 days of such sale, shall distribute to the
Certificateholders the proceeds of such sale in complete liquidation of each of
the Trust REMICs, with final payment made to the Residual Certificates; and
(b) The Trustee or the Trust Administrator, as applicable, shall attach a
statement to the final federal income tax return for each of the Trust REMICs
stating that pursuant to Treasury Regulations Section 1.860F-1, the first day of
the 90-day liquidation period for each such Trust REMIC was the date on which
the Trustee sold the assets of the Trust Fund to the Servicer.
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By their acceptance of the Certificates, the Holders thereof hereby agree
to authorize the Trustee or Trust Administrator to specify the 90-day
liquidation period for each REMIC created hereunder, which authorization shall
be binding upon all successor Certificateholders.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Originator, the Servicer, the Master Servicer, the Trust Administrator and the
Trustee without the consent of any of the Certificateholders (i) to cure any
ambiguity or mistake, (ii) to correct any defective provision herein or to
supplement any provision herein which may be inconsistent with any other
provision herein, (iii) to add to the duties of the Depositor, the Master
Servicer or the Servicer, the Trust Administrator or the Trustee, (iv) to comply
with any requirements in the Code, (v) to conform the provisions of this
Agreement to the descriptions thereof in the Prospectus Supplement, (vi) to add
any other provisions with respect to matters or questions arising hereunder or
(vii) to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; provided, that any action pursuant to clause (vi)
or (vii) above shall not, as evidenced by an Opinion of Counsel (which Opinion
of Counsel shall not be an expense of the Trustee, the Trust Administrator or
the Trust Fund), adversely affect in any material respect the interests of any
Certificateholder; provided, further, 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. The
Trustee, the Depositor, the Originator, the Master Servicer, the Trust
Administrator and the Servicer also may at any time and from time to time amend
this Agreement, but 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 each Trust REMIC under the REMIC
Provisions, (ii) avoid or minimize the risk of the imposition of any tax on any
Trust 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 and the Trust Administrator have 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
Servicer, the Originator, the Master Servicer, the Trust Administrator and the
Trustee with the consent of the Holders of Certificates evidencing Percentage
Interests aggregating not less than 66 2/3% of each Class of Certificates
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
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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 clause (i), without the consent of the Holders of Certificates
of such Class evidencing, as to such Class, Percentage Interests aggregating not
less than 66 2/3%, 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, neither of the
Trustee nor the Trust Administrator shall consent to any amendment to this
Agreement unless (i) it shall have first received an Opinion of Counsel, which
opinion shall not be an expense of the Trustee, the Trust Administrator or the
Trust Fund, to the effect that such amendment will not adversely affect in any
material respect the interest of any Certificateholder and will not cause the
imposition of any tax on any Trust REMIC or the Certificateholders or cause any
Trust REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding and (ii) the party seeking such amendment shall have provided
written notice to the Rating Agencies (with a copy of such notice to the Trustee
and the Trust Administrator) of such amendment, stating the provisions of the
Agreement to be amended.
Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee, the Trust Administrator, the Master Servicer or the Servicer, any
Certificate beneficially owned by the Depositor or any of its Affiliates or by
the Originator shall be deemed not to be outstanding (and shall not be
considered when determining the percentage of Certificateholders consenting or
when calculating the total number of Certificates entitled to consent) for
purposes of determining if the requisite consents of Certificateholders under
this Section 10.01 have been obtained.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trust Administrator 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 10.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require either of the Trustee or the
Trust Administrator to enter into an amendment which modifies its obligations or
liabilities without its consent and in all cases without receiving an Opinion of
Counsel (which Opinion shall not be an expense of the Trustee, the Trust
Administrator or the Trust Fund), satisfactory to the Trustee or the Trust
Administrator, as applicable, 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.
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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 Servicer at the expense of the Trust, but only upon
receipt of an Opinion of Counsel to the effect that such recordation materially
and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS RULES
(EXCEPT FOR GENERAL OBLIGATIONS LAW 5-1401 WHICH SHALL APPLY HERETO) 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 (i) of
the Mortgage Loans by the Depositor and (ii) of the Trust Fund by the Depositor
to the Trustee each be, and be construed as, an absolute sale thereof. 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 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 and (ii) the conveyances provided for in this Agreement
shall be deemed to be an assignment and a grant by the Depositor to the Trustee,
for the benefit of the Certificateholders, of a security interest in all of the
assets transferred, whether now owned or hereafter acquired.
The Depositor, for the benefit of the Certificateholders, shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Trust Fund, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of the Agreement. The Depositor shall arrange for filing any
Uniform Commercial Code continuation statements in connection with any security
interest granted or assigned to the Trustee for the benefit of the
Certificateholders.
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Section 10.05. Notices.
(a) The Trust Administrator shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Servicer, the Master
Servicer, the Trust Administrator or the Trustee and the appointment of
any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.03, 2.07 or 3.28; and
(v) The final payment to Certificateholders.
(b) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency of a Master Servicer Event of Termination to the extent it
has actual knowledge thereof.
(c) In addition, the Trust Administrator shall promptly make available on
its internet website to each Rating Agency copies of each report to
Certificateholders described in Section 4.03.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Fremont Mortgage Securities Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, or such other address as
may be hereafter furnished to the Trustee and the Servicer by the Depositor in
writing; (b) in the case of the Originator and the Servicer, Fremont Investment
& Loan, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopy number
(▇▇▇) ▇▇▇-▇▇▇▇, or such other address as may be hereafter furnished to the
Depositor, the Master Servicer, the Trust Administrator and the Trustee by the
Servicer in writing; (c) in the case of the Trustee, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, or such other address or
telecopy number as may hereafter be furnished to the other parties hereto; (d)
in the case of the Trust Administrator, its Corporate Trust Office; in the case
of the Master Servicer, to ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Services- Fremont 2005-B; and in the
case of any direction, demand or notice relating to any Custodial File, to ▇▇▇▇▇
Fargo Bank, N.A., ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Fremont 2005-B; or such other address as the Trust Administrator may
hereafter furnish to the Depositor, the Trustee or the Servicer and (f) in the
case of each 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.
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Section 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07. Assignment; Sales; Advance Facilities.
(a) Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may be assigned by the Servicer with
the prior written consent of the Depositor, the Master Servicer, the Trust
Administrator and the Trustee. In addition, for so long as the Servicer is
acting as the Servicer hereunder (i) the Servicer is hereby authorized to enter
into an advance facility ("Advance Facility") under which (A) the Servicer
sells, assigns or pledges to an Advancing Person the Servicer's rights under
this Agreement to be reimbursed for any P&I Advances or Servicing Advances
and/or (B) an Advancing Person agrees to fund some or all P&I Advances or
Servicing Advances required to be made by the Servicer pursuant to this
Agreement and (ii) the Servicer is hereby authorized to assign its rights to the
Servicing Fee; it being understood neither the Trust Fund nor any party hereto
shall have a right or claim (including without limitation any right of offset)
to the portion of the Servicing Fee so assigned; it being further understood
that upon the resignation or termination of the Servicer, such Advance Facility
(in the case of clause (i)) and such assignment (in the case of clause (ii))
shall be terminated. No consent of the Trustee, the Trust Administrator,
Certificateholders or any other party is required before the Servicer may enter
into an Advance Facility. Notwithstanding the existence of any Advance Facility
under which an Advancing Person agrees to fund P&I Advances and/or Servicing
Advances on the Servicer's behalf, the Servicer shall remain obligated pursuant
to this Agreement to make P&I Advances and Servicing Advances pursuant to and as
required by this Agreement, and shall not be relieved of such obligations by
virtue of such Advance Facility.
(b) Reimbursement amounts shall consist solely of amounts in respect of
P&I Advances and/or Servicing Advances made with respect to the Mortgage Loans
for which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related P&I Advance(s) and/or
Servicing Advance(s).
(c) The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in such
information.
(d) An Advancing Person who purchases or receives an assignment or pledge
of the rights to be reimbursed for P&I Advances and/or Servicing Advances,
and/or whose obligations hereunder are limited to the funding of P&I Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a Subservicer set forth in this Agreement.
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(e) The documentation establishing any Advance Facility shall require that
such reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first-in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or its designee loan-by-loan information with
respect to each such reimbursement amount distributed to such Advancing Person
or Advance Facility trustee on each Distribution Date, to enable the Advancing
Person or Advance Facility trustee to make the FIFO allocation of each such
reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the Advancing Person or Advance Facility
trustee for all P&I Advances and Servicing Advances funded by the Servicer to
the extent the related rights to be reimbursed therefor have not been sold,
assigned or pledged to an Advancing Person.
(f) Any amendment to this Section 10.07 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Depositor, the Master Servicer, the Trust Administrator and the
Servicer without the consent of any Certificateholder, notwithstanding anything
to the contrary in this Agreement, provided, that the Trustee and the Trust
Administrator have been provided an Opinion of Counsel that such amendment has
no material adverse effect on the Certificateholders which opinion shall be an
expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee, the Trust Administrator or the Trust Fund; provided,
further, 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 (instead of
obtaining an Opinion of Counsel) 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 rating 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. Prior to entering into an Advance Facility, the
Servicer shall notify the lender under such facility in writing that: (a) the
Advances financed by and/or pledged to the lender are obligations owed to the
Servicer on a non-recourse basis payable only from the cash flows and proceeds
received under this Agreement for reimbursement of Advances only to the extent
provided herein, and the Trustee, the Trust Administrator and the Trust are not
otherwise obligated or liable to repay any Advances financed by the lender; (b)
the Servicer will be responsible for remitting to the lender the applicable
amounts collected by it as reimbursement for Advances funded by the lender,
subject to the restrictions and priorities created in this Agreement; and (c)
neither the Trustee nor the Trust Administrator shall have any responsibility to
track or monitor the administration of the financing arrangement between the
Servicer and the lender.
Section 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
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No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of a Servicer
Event of Default or a Master Servicer Event of Termination and of the
continuance thereof, as herein provided, 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 herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 10.08, each
and every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 10.09. Inspection and Audit Rights.
The Servicer agrees that on 15 days' prior notice, it will permit any
representative of the Depositor or the Trustee during such Person's normal
business hours, to examine all the books of account, records, reports and other
papers of such Person 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, the Master Servicer, the Trust
Administrator or the Trustee and to discuss its affairs, finances and accounts
relating to such Mortgage Loans with its officers, employees and independent
public accountants (and by this provision the 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 reasonable out-of-pocket expense of the Servicer incident to the
exercise by the Depositor, the Master Servicer, the Trust Administrator or the
Trustee of any right under this Section 10.09 shall be borne by the Servicer.
Section 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates
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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. Waiver of Jury Trial.
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF
ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH
DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
ARTICLE XI
REMIC PROVISIONS
Section 11.01. REMIC Administration.
(a) The Trustee shall elect to treat each REMIC created hereunder as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. In
addition, the Trustee will prepare and file IRS Forms SS-4 and 8811 for each
REMIC in a timely manner. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the regular
interests in REMIC I and the Class R-I Interest shall be designated as the
residual interest in REMIC I, each for purposes of the REMIC Provisions. The
Certificates (other than the Class R Certificates and exclusive of any right to
receive Basis Risk Carryforward Amounts) shall be designated as the "regular
interests" in REMIC II and the Class R-II Interest shall be designated as the
residual interest in REMIC II, each for purposes of the REMIC Provisions. The
Trustee shall not permit the creation of any "interests" in any REMIC created
hereunder (within the meaning of Section 860G of the Code) other than the REMIC
I Regular Interests, the Regular Certificates and the interests represented by
the Class R Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(c) The Trust Administrator shall pay out of funds on deposit in the
Distribution Account, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any REMIC created
hereunder that involve the Internal Revenue Service or state tax authorities)
unless such expenses, professional fees or any administrative or judicial
proceedings are incurred by reason of the Trustee's or the Trust Administrator's
willful misfeasance, bad faith or negligence. The Trust Administrator, as agent
for all of REMIC I's and REMIC II's tax matters persons, shall (i) act on behalf
of the Trust Fund in relation to any tax matter or controversy involving any
REMIC created hereunder and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto and will be entitled to reimbursement from
the Trust Fund for any expenses
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incurred by the Trust Administrator in connection therewith unless such
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority is incurred by reason of the Trust Administrator's
willful misfeasance, bad faith or negligence. The holder of the largest
Percentage Interest of each Class of Residual Certificates shall be designated,
in the manner provided under Treasury regulations section 1.860F-4(d) and
Treasury regulations section 301.6231(a)(7)-1, as the tax matters person of the
related REMIC created hereunder. By its acceptance thereof, the holder of the
largest Percentage Interest of the Residual Certificates hereby agrees to
irrevocably appoint the Trust Administrator or an Affiliate as its agent to
perform all of the duties of the tax matters person for the Trust Fund.
(d) The Trust Administrator shall prepare and file, and the Trustee shall
sign, in a timely manner all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Trust Administrator without any right of reimbursement for such expenses.
The Servicer shall provide on a timely basis to the Trust Administrator or its
designee such information with respect to the assets of the Trust Fund as is in
its possession and reasonably required by the Trust Administrator to enable it
to perform its obligations under this Article.
(e) The Trust Administrator shall perform on behalf of each REMIC created
hereunder all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trust Administrator shall
provide (i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of each
REMIC created hereunder. The Servicer shall provide on a timely basis to the
Trust Administrator such information with respect to the assets of the Trust
Fund, including, without limitation, the Mortgage Loans, as is in its possession
and reasonably required by the Trust Administrator to enable it to perform its
obligations under this subsection. In addition, the Depositor shall provide or
cause to be provided to the Trust Administrator, within ten (10) days after the
Closing Date, all information or data that the Trust Administrator reasonably
determines to be relevant for tax purposes as to the valuations and issue prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trust Administrator and the Trustee shall take such action and
shall cause each REMIC created hereunder to take such action as shall be
necessary to create or maintain the status thereof as a REMIC under the REMIC
Provisions (and the Servicer shall assist the Trustee and the Trust
Administrator, to the extent reasonably requested by the Trustee or the Trust
Administrator to do specific actions in order to assist in the maintenance of
such status). Neither the Trustee nor the Trust Administrator shall take any
action, cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of any REMIC created
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hereunder as a REMIC or (ii) result in the imposition of any tax upon the Trust
Fund (including but not limited to the tax on prohibited transactions as defined
in Section 860F(a)(2) of the Code, the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code) (either (i) or (ii), an "Adverse REMIC Event")
unless each of the Trustee and the Trust Administrator has received an Opinion
of Counsel, addressed to the Trustee and the Trust Administrator (at the expense
of the party seeking to take such action but in no event at the expense of the
Trustee or the Trust Administrator) to the effect that the contemplated action
will not, with respect to any REMIC created hereunder, endanger such status or
result in the imposition of such a tax, nor shall the Servicer or the Master
Servicer take or fail to take any action (whether or not authorized hereunder)
as to which the Trustee and the Trust Administrator has advised it in writing
that it has received an Opinion of Counsel to the effect that an Adverse REMIC
Event could occur with respect to such action; provided that the Servicer or the
Master Servicer may conclusively rely on such Opinion of Counsel and shall incur
no liability for its action or failure to act in accordance with such Opinion of
Counsel. In addition, prior to taking any action with respect to any REMIC
created hereunder or the respective assets of each, or causing any REMIC created
hereunder to take any action, which is not contemplated under the terms of this
Agreement, the Servicer and the Master Servicer will consult with the Trust
Administrator or its designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to any REMIC created
hereunder, and neither the Servicer nor the Master Servicer shall take any such
action or cause any REMIC created hereunder to take such action as to which the
Trust Administrator has advised it in writing that an Adverse REMIC Event could
occur; provided that the Servicer and the Master Servicer may conclusively rely
on such writing and shall incur no liability for its action or failure to act in
accordance with such writing. The Trust Administrator may consult with counsel
to make such written advice, and the cost of same shall be borne by the party
seeking to take the action not permitted by this Agreement, but in no event
shall such cost be an expense of the Trust Administrator. At all times as may be
required by the Code, the Trust Administrator will ensure that substantially all
of the assets of each REMIC created hereunder will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of any such REMIC as defined in Section
860G(c) of the Code, on any contributions to any such REMIC after the Startup
Day pursuant to Section 860G(d) of the Code, or any other tax is imposed by the
Code or any applicable provisions of state or local tax laws, such tax shall be
charged (i) to the Trustee pursuant to Section 11.03 hereof, if such tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Article XI, (ii) to the Trust Administrator pursuant to Section 11.03
hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article XI, (iii) to the
Servicer pursuant to Section 11.03 hereof, if such tax arises out of or results
from a breach by the Servicer of any of its obligations under Article III or
this Article XI, or otherwise (iv) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) On or before April 15th of each calendar year (other than the calendar
year during which the Closing Date occurs), the Trust Administrator shall
deliver to the Servicer, the Depositor, the Trustee, each Rating Agency and the
Counterparty an Officer's Certificate from a Responsible Officer of the Trust
Administrator stating, without regard to any actions taken by
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159
any party other than the Trust Administrator, the Trust Administrator's
compliance with this Article XI.
(i) The Trust Administrator shall, for federal income tax purposes,
maintain books and records with respect to each REMIC created hereunder on both
a calendar year basis and an accrual basis.
(j) Following the Startup Day, neither the Trustee nor the Trust
Administrator shall accept any contributions of assets to any REMIC created
hereunder other than in connection with any Substitute Mortgage Loan delivered
in accordance with Section 2.03 unless the Trustee and the Trust Administrator
shall have received an Opinion of Counsel to the effect that the inclusion of
such assets in the Trust Fund will not cause the related Trust REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding or subject
such REMIC to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
(k) Neither the Trustee, the Trust Administrator, the Master Servicer nor
the Servicer shall enter into any arrangement by which any REMIC created
hereunder will receive a fee or other compensation for services nor permit any
such REMIC to receive any income from assets other than "qualified mortgages" as
defined in Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
(l) The Trustee and the Trust Administrator shall treat the Net WAC Rate
Carryover Reserve Account as an outside reserve fund within the meaning of
Treasury Regulation 1.860G-2(h) that is owned by the Holders of the Class C
Certificates and that is not an asset of any REMIC. The Trustee and the Trust
Administrator shall treat the rights of the Holders of the Offered Certificates
and the Class M11 Certificates to receive payments from the Net WAC Rate
Carryover Reserve Account as rights in an interest rate cap contract written by
the Holder of the Class C Certificates in favor of the other Certificateholders.
Thus, each Certificate other than the Class R, Class C and Class P Certificates
shall be treated as representing ownership of not only Regular Certificates, but
also ownership of an interest in an interest rate cap contract. For purposes of
determining the issue price of the Regular Certificates, the Trustee and the
Trust Administrator shall assume that the interest rate cap contract has a value
of $10,000 and shall allocate such value proportionately to each Class of
Certificates entitled to receive Net WAC Rate Carryover Amounts based on such
Class's initial Certificate Balance.
(m) The Trust Administrator shall apply for an Employee Identification
Number from the IRS via a Form SS-4 or any other applicable method for all tax
entities and will also file a Form 8811.
Section 11.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer, the Master Servicer, the Trust
Administrator or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of the Trust Fund pursuant to Article IX of
this Agreement, (iv) a
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160
substitution pursuant to Article II of this Agreement or (v) a purchase of
Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire any
assets for any REMIC created hereunder (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Collection Account or the Distribution Account for gain, nor accept any
contributions to any REMIC created hereunder after the Closing Date (other than
a Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03),
unless it has received an Opinion of Counsel, addressed to the Trustee and the
Trust Administrator (at the expense of the party seeking to cause such sale,
disposition, substitution, acquisition or contribution but in no event at the
expense of the Trustee or the Trust Administrator) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of any REMIC created hereunder as a REMIC at any time that any
Certificates are outstanding or (b) cause any REMIC created hereunder to be
subject to a tax on "prohibited transactions" or "prohibited contributions"
pursuant to the REMIC Provisions.
Section 11.03. Indemnification.
(a) The Trustee agrees to indemnify, severally and not jointly, the Trust
Fund, the Depositor, the Trust Administrator, the Master Servicer and the
Servicer for any taxes and costs including, without limitation, any reasonable
attorneys fees imposed on or incurred by the Trust Fund, the Depositor, the
Trust Administrator, the Master Servicer or the Servicer, as a result of a
breach of its respective covenants set forth in this Article XI.
(b) The Servicer agrees to indemnify the Trust Fund, the Depositor, the
Master Servicer, the Trust Administrator and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer, the Trust
Administrator or the Trustee, as a result of a breach of the Servicer's
covenants set forth in Article III or this Article XI.
(c) The Trust Administrator agrees to indemnify, severally and not
jointly, the Trust Fund, the Depositor, the Trustee and the Servicer for any
taxes and costs including, without limitation, any reasonable attorneys' fees
imposed on or incurred by the Trust Fund, the Depositor, the Trustee or the
Servicer, as a result of a breach of its covenants set forth in this Article XI.
(d) The Master Servicer agrees to indemnify, severally and not jointly,
the Trust Fund, the Depositor, the Trustee, the Trust Administrator and the
Servicer for any taxes and costs including, without limitation, any reasonable
attorneys' fees imposed on or incurred by the Trust Fund, the Depositor, the
Trustee, the Trust Administrator or the Servicer, as a result of a breach of its
covenants set forth in this Article XI.
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IN WITNESS WHEREOF, the Depositor, the Trustee, the Master Servicer, the
Trust Administrator, the Servicer and the Originator have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
FREMONT MORTGAGE SECURITIES CORPORATION,
as Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ FARGO BANK, N.A.,
as Master Servicer and Trust Administrator
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
FREMONT INVESTMENT & LOAN,
as Servicer and Originator
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
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SCHEDULE I
Mortgage Loan Schedule
[On File With The Depositor]
S-I-1
SCHEDULE II
[Reserved]
S-II-1
SCHEDULE III
[Reserved]
S-III-1
SCHEDULE IV
Representations and Warranties of Fremont Investment &
Loan as to the Mortgage Loans
I. The Originator hereby represents and warrants to the Purchaser, with
respect to each Mortgage Loan that is a Mortgage Loan as of the Closing Date (or
in the case of certain specified representations and warranties, as of the
Cut-off Date) or as of such other date specifically provided herein (except that
with respect to any Qualified Substitute Mortgage Loan such representations and
warranties shall be as of the date of substitution and made by the Originator),
that:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule is complete, true and correct in all material respects as
of the Cut-off Date;
(b) Payments Current. As of the Closing Date, other than with
respect to not more than 1% of the Mortgage Loans, all payments required to be
made up to the Closing Date for the Mortgage Loan under the terms of the
Mortgage Note, other than payments not yet one month delinquent, have been made
and credited. Other than with respect to not more than 1% of the Mortgage Loans,
no payment required under the Mortgage Loan is one month or more delinquent nor
has any payment under the Mortgage Loan been delinquent for more than one month
at any time since the origination of the Mortgage Loan;
(c) No Outstanding Charges. As of the Closing Date, other than with
respect to not more than 1% of the Mortgage Loans, and except for payment
defaults of less than one month, there are no defaults in complying with the
terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. The
Originator has not advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is earlier, to the date
which precedes by one month the Due Date of the first installment of principal
and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the Mortgage Loan
Schedule. No Mortgage Loan has been modified so as to restructure the payment
obligations or re-age the Mortgage Loan. The substance of any such waiver,
alteration or modification has been approved by the title insurer, if any, to
the extent required by the policy, and its terms are reflected on the Mortgage
Loan Schedule, if applicable. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement, approved by the title
S-IV-1
insurer, to the extent required by the policy, and which assumption agreement is
part of the Mortgage Loan File delivered to the Custodian or to such other
Person as the Purchaser shall designate in writing and the terms of which are
reflected in the Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and no Mortgagor
was a debtor in any state or federal bankruptcy or insolvency proceeding at, or
subsequent to, the time the Mortgage Loan was originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located. If required by the National Flood Insurance Act of 1968, as amended,
each Mortgage Loan is covered by a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
as in effect. All individual insurance policies contain a standard mortgagee
clause naming the Originator and its successors and assigns as mortgagee, and
all premiums thereon have been paid and such policies may not be reduced,
terminated or cancelled without 30 days' prior written notice to the mortgagee.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the Mortgagor. Where required by state law or regulation, the Mortgagor has been
given an opportunity to choose the carrier of the required hazard insurance,
provided the policy is not a "master" or "blanket" hazard insurance policy
covering a condominium, or any hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the transactions contemplated by this Agreement. The
Originator has not engaged in, and has no knowledge of the Mortgagor's or any
servicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of such policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items have been
received, retained or realized by the Originator;
(g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity and disclosure laws, all predatory and abusive lending
laws or unfair and deceptive practices laws applicable to the Mortgage Loan,
including, without limitation, any provisions relating to Prepayment Penalties,
have been complied with; the consummation of the transactions contemplated
hereby will not involve the violation of any such laws or regulations.
Originator shall maintain in its possession,
S-IV-2
available for the Purchaser's inspection, and shall deliver to the Purchaser
upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. The Originator has not
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has the Originator waived any default resulting from any action or inaction
by the Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged Property
is a fee simple property located in the state identified in the Mortgage Loan
Schedule except that with respect to real property located in jurisdictions in
which the use of leasehold estates for residential properties is a
widely-accepted practice, the Mortgaged Property may be a leasehold estate and
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a low-rise condominium project, or an individual
unit in a planned unit development and that no residence or dwelling is (i) a
mobile home or (ii) a manufactured home. As of the date of origination, no
portion of the Mortgaged Property was used for commercial purposes, and since
the date of origination, no portion of the Mortgaged Property has been used for
commercial purposes; provided, that Mortgaged Properties which contain a home
office shall not be considered as being used for commercial purposes as long as
the Mortgaged Property has not been altered for commercial purposes and is not
storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes;
(j) Valid First or Second Lien. Each Mortgage is a valid and
subsisting first or second lien of record on a single parcel of real estate
constituting the Mortgaged Property, including all buildings and improvements on
the Mortgaged Property and all installations and mechanical, electrical,
plumbing, heating and air conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements made at any time,
with respect to the related Mortgage Loan, which exceptions are generally
acceptable to prudent mortgage lending companies, and such other exceptions to
which similar properties are commonly subject and which do not individually, or
in the aggregate, materially and adversely affect the benefits of the security
intended to be provided by such Mortgage. The lien of the Mortgage is subject
only to:
(i) the lien of current real property taxes and assessments
not yet due and payable;
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan or (B) which
do not adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal;
S-IV-3
(iii) with respect to each second lien Mortgage, the first or
senior lien on the related Mortgaged Property; and
(iv) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein and the Originator has full right to
sell and assign the same to Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor in
connection with a Mortgage Loan are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in accordance with its terms
(including, without limitation, any provisions therein relating to Prepayment
Penalties), except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered a proceeding in equity or
a law). All parties to the Mortgage Note, the Mortgage and any other such
related agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement, and
the Mortgage Note, the Mortgage and any other such related agreement have been
duly and properly executed by other such related parties. The documents,
instruments and agreements submitted for loan underwriting were not falsified
and contain no untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the information and
statements therein not misleading. No fraud, error, omission, misrepresentation,
gross negligence or similar occurrence with respect to a Mortgage Loan has taken
place on the part of any Person, including without limitation, the Mortgagor,
any appraiser, any builder or developer, or any other party involved in the
origination or servicing of the Mortgage Loan. The Originator has reviewed all
of the documents constituting the Servicing File;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. Immediately prior to the sale of the Mortgage Loan
hereunder on the Closing Date, the Originator is the sole owner of record and
holder of the Mortgage Loan and the indebtedness evidenced by each Mortgage Note
and upon the sale of the Mortgage Loans to the Purchaser, the Originator will
retain the Mortgage Files or any part thereof not delivered to the Custodian,
the Purchaser or the Purchaser's designee, in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan. The Mortgage Loan
is not
S-IV-4
assigned or pledged, and the Originator has good, indefeasible and marketable
title thereto, and has full right to transfer and sell the Mortgage Loan to the
Purchaser free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and has full right and
authority subject to no interest or participation of, or agreement with, any
other party, to sell and assign each Mortgage Loan pursuant to this Agreement
and following the sale of each Mortgage Loan, the Purchaser will own such
Mortgage Loan free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest. The Originator intends to
relinquish all rights to possess, control and monitor the Mortgage Loan. After
the Closing Date, the Originator will have no right to modify or alter the terms
of the sale of the Mortgage Loan and the Originator will have no obligation or
right to repurchase the Mortgage Loan or substitute another Mortgage Loan,
except as provided in this Agreement;
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, or (B) qualified to do business in such state, or
(C) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (iii) not doing business in such
state;
(o) LTV. No Mortgage Loan was originated with an LTV greater than
100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, and each such title insurance policy is issued by a title
insurer and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the Originator, its successors and assigns, as to
the first or second priority lien of the Mortgage in the original principal
amount of the Mortgage Loan, subject only to the exceptions contained in clauses
(i), (ii) and (iv) of paragraph (j) above and in the case of second liens, the
exception contained in clause (iii) of paragraph (j) above, and in the case of
Adjustable Rate Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress, and against encroachments by or upon the Mortgaged Property or any
interest therein. The title policy does not contain any special exceptions
(other than the standard exclusions) for zoning and uses and has been marked to
delete the standard survey exception or to replace the standard survey exception
with a specific survey reading. The Originator, its successor and assigns, are
the sole insureds of such lender's title insurance policy, and such lender's
title insurance policy is valid and remains in full force and effect and will be
in force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims are pending under such lender's title insurance
policy, and no prior holder of the related Mortgage, including the Originator,
has done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy, including without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will
S-IV-5
be received, retained or realized by any attorney, firm or other person or
entity, and no such unlawful items have been received, retained or realized by
the Originator;
(q) No Defaults. As of the Closing Date, other than with respect to
not more than 1%, 1% and 1% of the Mortgage Loans, the Group 1 Mortgage Loans
and the Group 2 Mortgage Loans, respectively, that are 30-59 days delinquent,
and other than payment delinquencies of less than one month, there is no
default, breach, violation or event which would permit acceleration existing
under the Mortgage or the Mortgage Note and no event which, with the passage of
time or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event which would permit
acceleration, and as of the Closing Date neither the Originator nor any of its
affiliates nor any of their respective predecessors, have waived any default,
breach, violation or event which would permit acceleration; in addition, as of
the Closing Date, no Mortgage Loan was in foreclosure, nor are foreclosure
proceedings imminent with respect to any Mortgage Loan;
(r) No Mechanics' Liens. As of the Closing Date, there are no
mechanics' or similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under law could give rise to such
liens) affecting the related Mortgaged Property which are or may be liens prior
to, or equal or coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. The documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary to
make the information and statements therein not misleading. No Mortgage Loan
contains terms or provisions which would result in negative amortization.
Principal payments on the Mortgage Loan (other than a Mortgage Loan that does
not provide for payment of principal for a period of twenty-four to thirty-six
months after the date of origination (such Mortgage Loan, an "Interest Only
Mortgage Loan")) commenced no more than sixty days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate as well as the
Lifetime Rate Cap and the Periodic Mortgage Interest Rate Cap are as set forth
on the Mortgage Loan Schedule. With respect to any Mortgage Loan other than an
Interest Only Mortgage Loan, the Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of interest, with
respect to Adjustable Rate Mortgage Loans, are subject to change due to the
adjustments to the Mortgage Interest Rate on each Mortgage Interest Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an original
term of not more than thirty years from
S-IV-6
commencement of amortization. None of the Mortgage Loans allows for conversion
of the interest rate thereon from an adjustable rate to a fixed rate. No
Mortgage Loan is a simple interest mortgage loan;
(u) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver good
and merchantable title to the Mortgaged Property. There is no homestead or other
exemption available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Underwriting Guidelines. The Mortgage Loan was
underwritten in accordance with the Underwriting Guidelines in effect as of the
date of origination of such Mortgage Loan (as described in the Prospectus
Supplement). The Mortgage Note and Mortgage are on forms generally acceptable to
▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae and the Originator has not made any representations to
a Mortgagor that are inconsistent with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the Closing Date the
Mortgaged Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Purchaser to
the trustee under the deed of trust, except in connection with a reconveyance of
the deed of trust or a trustee's sale after default by the Mortgagor;
(z) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project is acceptable to Originator and underwritten in accordance with the
Underwriting Guidelines;
(aa) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the
S-IV-7
jurisdiction in which the Mortgaged Property is located. The transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the
Originator is not subject to the bulk transfer or similar statutory provisions
in effect in any applicable jurisdiction;
(bb) Due-On-Sale. The Mortgage contains an enforceable provision
(except as such enforcement may be effected by bankruptcy and insolvency laws or
by general principals of equity) for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the
mortgagee thereunder, and to the best of the Originator's knowledge, such
provision is enforceable;
(cc) Assumability. None of the Mortgage Loans are, by their terms,
assumable;
(dd) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Originator, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;
(ee) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the Cut-off Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having first or second lien priority, as applicable, by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan; (ff)
Mortgaged Property Undamaged; No Condemnation Proceedings. There is no
proceeding pending or, to the best of the Originator's knowledge, threatened for
the total or partial condemnation of the Mortgaged Property. As of the Closing
Date, the Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended and each Mortgaged Property is inhabitable
under applicable state and local laws;
(gg) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Originator with respect to the Mortgage Loan have been in all respects in
compliance with Accepted Servicing Practices, applicable laws and regulations,
and have been in all respects legal and proper and prudent in the mortgage
origination and servicing business. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of, or under the control of,
the Originator and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law and
the provisions of the related Mortgage Note and
S-IV-8
Mortgage. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due the Originator have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage and Mortgage Note on the related Interest Rate
Adjustment Date. If, pursuant to the terms of the Mortgage Note, another index
was selected for determining the Mortgage Interest Rate, the same index was used
with respect to each Mortgage Note which required a new index to be selected,
and such selection did not conflict with the terms of the related Mortgage Note.
The Originator executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(hh) Conversion to Fixed Interest Rate. With respect to Adjustable
Rate Mortgage Loans, the Mortgage Loan is not a Convertible Mortgage Loan;
(ii) No Violation of Environmental Laws. To the best of the
Originator's knowledge, the Mortgaged Property is free from any and all toxic or
hazardous substances and there exists no violation of any local, state or
federal environmental law, rule or regulation. To the best of the Originator's
knowledge, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(jj) Servicemembers Civil Relief Act. The Mortgagor has not notified
the Originator, and the Originator has no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers Civil Relief Act;
(kk) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the related originator,
who had no interest, direct or indirect in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and appraiser
both satisfy the requirements of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 and the regulations promulgated thereunder, all as
in effect on the date the Mortgage Loan was originated;
(ll) Disclosure Materials. The Mortgagor has received all disclosure
materials required by, and the Originator has complied with, all applicable law
with respect to the making of the Mortgage Loans;
(mm) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
S-IV-9
(nn) Value of Mortgaged Property. The Originator has no knowledge of
any circumstances existing that could reasonably be expected to adversely affect
the value or the marketability of any Mortgaged Property or Mortgage Loan or to
cause the Mortgage Loans to prepay during any period materially faster or slower
than similar mortgage loans originated to the same Underwriting Guidelines held
by the Originator generally secured by properties in the same geographic area as
the related Mortgaged Property;
(oo) No Defense to Insurance Coverage. The Originator has caused or
will cause to be performed any and all acts required to preserve the rights and
remedies of the Purchaser in any insurance policies applicable to the Mortgage
Loans including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of coinsured,
joint loss payee and mortgagee rights in favor of the Purchaser. No action has
been taken or failed to be taken, no event has occurred and no state of facts
exists or has existed on or prior to the Closing Date (whether or not known to
the Originator on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any applicable, special
hazard insurance policy, or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured) whether arising out of actions, representations, errors, omissions,
negligence, or fraud of the Originator, the related Mortgagor or any party
involved in the application for such coverage, including the appraisal, plans
and specifications and other exhibits or documents submitted therewith to the
insurer under such insurance policy, or for any other reason under such
coverage, but not including the failure of such insurer to pay by reason of such
insurer's breach of such insurance policy or such insurer's financial inability
to pay;
(pp) Escrow Analysis. With respect to each Mortgage with an Escrow
Account, the Originator has within the last twelve months (unless such Mortgage
was originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(qq) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in compliance with Accepted Servicing Practices and the
Originator has reported or caused to be reported, the Mortgagor credit files to
each of the three primary credit repositories monthly in a timely manner;
(rr) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (i) the lessor under the lease holds a fee simple interest in
the land; (ii) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (iii) the terms of such lease
do not (A) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (B) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (C)
prohibit the
S-IV-10
holder of the Mortgage from being insured (or receiving proceeds of insurance)
under the hazard insurance policy or policies relating to the Mortgaged Property
or (D) permit any increase in rent other than pre-established increases set
forth in the lease; (iv) the original term of such lease is not less than 15
years; (v) the term of such lease does not terminate earlier than five years
after the maturity date of the Mortgage Note; and (vi) the Mortgaged Property is
located in a jurisdiction in which the use of leasehold estates in transferring
ownership in residential properties is a widely accepted practice;
(ss) Prepayment Penalty. The Mortgage Loan is subject to a
prepayment penalty as provided in the related Mortgage Note except as set forth
on the Mortgage Loan Schedule. With respect to each Mortgage Loan that has a
prepayment penalty feature, each such prepayment penalty is enforceable and will
be enforced by the Originator, as servicer of the Mortgage Loan, for the benefit
of the Purchaser, and each prepayment penalty is permitted pursuant to federal,
state and local law. Each such prepayment penalty is in an amount equal to the
maximum amount permitted under applicable law and no such prepayment penalty may
be imposed for a term in excess of three (3) years. With respect to any Mortgage
Loan that contains a provision permitting imposition of a prepayment penalty
upon a prepayment prior to maturity: (i) prior to the loan's origination, the
borrower agreed to such prepayment penalty in exchange for a monetary benefit,
including but not limited to a rate or fee reduction, (ii) originator has
available programs that offered the option of obtaining a mortgage loan that did
not require payment of such a prepayment penalty and prior to the Mortgage
Loan's origination, the Mortgage Loan was available to the Mortgagor with and
without the prepayment penalty, (iii) the prepayment penalty was disclosed to
the borrower in the loan documents pursuant to applicable state and federal law,
and (iv) notwithstanding any state or federal law to the contrary, the Servicer
shall not impose such prepayment penalty in any instance when the mortgage debt
is accelerated as the result of the borrower's default in making the loan
payments;
(tt) Predatory Lending Regulations. None of the Mortgage Loans are
(i) covered by the Home Ownership and Equity Protection Act of 1994 as amended
or (ii) in violation of, or classified as "high cost", "threshold", "covered",
"high risk" or "predatory" loans under, any other applicable state, federal or
local law (or a similarly classified loan using different terminology under a
law imposing heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or fees);
(uu) Single-Premium Credit Life Insurance Policy. In connection with
the origination of any Mortgage Loan, no proceeds from any Mortgage Loan were
used to finance or acquire single-premium credit insurance policies; No
Mortgagor was required to purchase any credit life, disability, accident or
health insurance product as a condition of obtaining the extension of credit. No
Mortgagor obtained a prepaid single-premium credit life, disability, accident or
health insurance policy in connection with the origination of the Mortgage Loan;
(vv) Tax Service Contract; Flood Certification Contract. Each
Mortgage Loan is covered by a paid in full, life of loan, tax service contract
and a paid in full, life of loan, flood certification contract and each of these
contracts is assignable to the Purchaser;
(ww) Qualified Mortgage. Each Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
S-IV-11
(xx) Regarding the Mortgagor. The Mortgagor is one or more natural
persons and/or trustees for an Illinois land trust;
(yy) Recordation. Each original Mortgage was recorded and, except
for those Mortgage Loans subject to the MERS identification system, all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) have been recorded in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors of the
Originator, or is in the process of being recorded;
(zz) Credit Scores. Except as permitted by the Underwriting
Guidelines, each Mortgagor has a non-zero credit score;
(aaa) Compliance with Anti-Money Laundering Laws. The Originator has
complied with all applicable anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); to the extent required to comply with the
Anti-Money Laundering Laws, as of the Closing Date, the Originator has
established an anti-money laundering compliance program as required by the
Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Loan for purposes of the
Anti-Money Laundering Laws, including with respect to the legitimacy of the
applicable Mortgagor and the origin of the assets used by the said Mortgagor to
purchase the property in question, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor for purposes of the Anti-Money
Laundering Laws;
(bbb) Georgia Fair Lending Act. There is no Mortgage Loan that was
originated on or after October 1, 2002 and on or prior to March 7, 2003, which
is secured by property located in the State of Georgia. There is no Mortgage
Loan that was originated on or after March 7, 2003 that is a "high cost home
loan" as defined under the Georgia Fair Lending Act;
(ccc) New York State Banking Law. There is no Mortgage Loan that (a)
is secured by property located in the State of New York; (b) had an original
principal balance of $300,000 or less, and (c) has an application date on or
after April 1, 2003, the terms of which loan equal or exceed either the annual
percentage rate or the points and fees threshold for "high-cost home loans," as
defined in Section 6-L of the New York State Banking Law;
(ddd) New Jersey Mortgage Loans. All Mortgage Loans originated in
New Jersey on or after November 27, 2003 are ratable by Standard & Poor's and
▇▇▇▇▇'▇;
(eee) New Mexico Mortgage Loans. There is no Mortgage Loan that was
originated on or after January 1, 2004, and is a "high-cost" loan subject to the
New Mexico Home Loan Protection Act.
(fff) MERS Designations. With respect to each MERS Designated
Mortgage Loan, the Originator has designated the Custodian as the Investor and
no Person is listed as Interim Funder on the MERS(R) System;
(ggg) Delivery to the Custodian. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered with
respect to each
S-IV-12
Mortgage Loan pursuant to this Agreement and the Pooling and Servicing
Agreement, have been delivered to the Trust Administrator in its capacity as
Custodian all in compliance with the specific requirements of this Agreement and
the Pooling and Servicing Agreement;
(hhh) Reports. On or prior to the Closing Date, the Originator has
provided the Custodian and the Purchaser with a MERS Report listing the
Custodian as the Investor with respect to each MERS Designated Mortgage Loan;
(iii) Payoffs. No Mortgage Loans prepaid in full prior to the
Closing Date;
(jjj) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Originator to the Purchaser, the Originator has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded by the terms of
the Mortgage Loan Documents from furnishing the same to any subsequent or
prospective purchaser of such Mortgage. The Originator shall hold the Purchaser
harmless from any and all damages, losses, costs and expenses (including
attorney's fees) arising from disclosure of credit information in connection
with the Purchaser's secondary marketing operations and the purchase and sale of
mortgages. The Originator has or has caused the related servicer to, for each
Mortgage Loan, fully furnish, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian and
Trans Union Credit Information Company (three of the credit repositories), on a
monthly basis;
(kkk) Origination Practices. Each Mortgagor was assigned the highest
credit grade available with respect to a mortgage loan product offered by such
Mortgage Loan's originator, taking into account the credit history, debt to
income ratio and loan requirement of such Mortgagor;
(lll) No Arbitration Provision. No mortgage loan originated on or
after August 1, 2004 requires the borrower to submit to arbitration to resolve
any dispute arising out of or relating in any way to the mortgage loan
transaction;
(mmm) S&P Glossary. No Mortgage Loan is a High Cost Loan or Covered
Loan, as applicable (as such terms are defined in Appendix E of the Standard &
Poor's Glossary For File Format For LEVELS(R) Version 5.6b Revised, attached
hereto as Exhibit B); and
(nnn) Manufactured Housing. The manufactured home securing each
manufactured housing contract is a "single family residence" as defined in
section 25(e)(10) of the Code, i.e., it is used as a single family residence,
has a minimum living space of 400 square feet and a minimum width of over 102
inches and is of the kind customarily used at a fixed location. The manufactured
home securing each manufactured housing contract is a "manufactured home" as
defined in 42 U.S.C. section 5402(6).
II. The Originator hereby further represents and warrants to the
Purchaser, with respect to each Group 1 Mortgage Loan as of the Closing Date or
as of such other date specifically provided herein (except that with respect to
any Qualified Substitute Mortgage Loan
S-IV-13
such representations and warranties shall be as of the date of substitution and
made by the Originator), that:
(a) Each Mortgage Loan is in compliance with the anti-predatory
lending eligibility for purchase requirements of ▇▇▇▇▇▇ Mae's Selling Guide;
(b) No Mortgage Loan is a "High-Cost Home Loan" as defined in the
Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 of 2003);
(c) No Mortgage Loan is a "High-Cost Home Loan" as defined in the
Kentucky high-cost home loan statute effective June 24, 2003 (Ky. Rev. Stat.
Section 360.100);
(d) No Mortgage Loan is a "High-Cost Home Loan" as defined in the
New Jersey Home Ownership Act effective November 27, 2003 (N.J.S.A. 46:10B-22 et
seq.);
(e) No Mortgage Loan is a "High-Cost Home Loan" as defined in the
New Mexico Home Loan Protection Act effective January 1, 2004 (N.M. Stat.
▇▇▇.Sections 58-21A-1 et seq.);
(f) No Mortgage Loan is a "High-Risk Home Loan" as defined in the
Illinois High-Risk Home Loan Act effective January 1, 2004 (815 Ill. Comp. Stat.
137/1 et seq.);
(g) Each Mortgagor was assigned the highest credit grade available
with respect to a mortgage loan product offered by such Mortgage Loan's
originator, taking into account the credit history, debt to income ratio and
loan requirement of such Mortgagor;
(h) The methodology used in underwriting the extension of credit for
each Mortgage Loan employs, in part, objective mathematical principles which
relate the borrower's income, assets and liabilities to the proposed payment and
such underwriting methodology does not rely on the extent of the borrower's
equity in the collateral as the principal determining factor in approving such
credit extension. Such underwriting methodology is designed to determine that at
the time of origination (application/approval) the borrower had a reasonable
ability to make timely payments on the Mortgage Loan;
(i) All points and fees related to each Mortgage Loan were disclosed
in writing to the borrower in accordance with applicable state and federal law
and regulation. Except in the case of a Mortgage Loan in an original principal
amount of less than $60,000 which would have resulted in an unprofitable
origination, no borrower was charged "points and fees" (whether or not financed)
in an amount greater than 5% of the principal amount of such loan, such 5%
limitation is calculated in accordance with ▇▇▇▇▇▇ Mae's anti-predatory lending
requirements as set forth in the ▇▇▇▇▇▇ ▇▇▇ Selling Guide;
(j) All fees and charges (including finance charges) and whether or
not financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan has been disclosed in writing to
the borrower in accordance with applicable state and federal law and regulation;
and
S-IV-14
(k) The Servicer will transmit full-file credit reporting data for
each Mortgage Loan pursuant to ▇▇▇▇▇▇ Mae Guide Announcement 95-19 and that for
each Mortgage Loan, Servicer agrees it shall report one of the following
statuses each month as follows: new origination, current, delinquent (30-, 60-,
90-days, etc.), foreclosed, or charged-off.
S-IV-15
EXHIBIT A
FORM OF CLASS [A] [M]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND CERTAIN OTHER
ASSETS.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED IF ITS RATING IS BELOW
INVESTMENT GRADE UPON ACQUISITION UNLESS THE PROSPECTIVE TRANSFEREE PROVIDES THE
TRUSTEE AND TRUST ADMINISTRATOR WITH (A) A REPRESENTATION TO THE EFFECT THAT
SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), (COLLECTIVELY, A "PLAN") NOR A PERSON ACTING
FOR, ON BEHALF OF OR WITH THE ASSETS OF, ANY SUCH PLAN OR (2) IF SUCH TRANSFEREE
IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATES WITH
FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS
DEFINED IN SECTION V(e) OF THE 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 (B) AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE, THE TRUST ADMINISTRATOR AND THE SERVICER, AND UPON
WHICH THE TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER SERVICER AND THE SERVICER
SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE PURCHASE OR HOLDING OF SUCH
CERTIFICATE BY THE PROSPECTIVE TRANSFEREE 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, THE TRUST ADMINISTRATOR, THE MASTER SERVICER
OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN BY SUCH
ENTITIES IN THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL
NOT BE AN EXPENSE OF THE
A-1
TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER OR THE TRUST
FUND. A TRANSFEREE OF A BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO HAVE MADE A
REPRESENTATION AS REQUIRED HEREIN.
A-2
Certificate No. :
Cut-off Date : May 1, 2005
First Distribution Date : The Distribution Date in June, 2005
Initial Certificate Balance of
this Certificate ("Denomination") :
Initial Certificate Balances of
all Certificates of this Class : Class Principal Amount
1-A-1 $202,612,000
1-A-2 $50,654,000
2-A-1 $221,575,000
2-A-2 $253,176,000
2-A-3 $18,961,000
M1 $17,201,000
M2 $41,771,000
M3 $39,807,000
M4 $19,657,000
M5 $19,657,000
M6 $17,200,000
M7 $14,743,000
M8 $14,743,000
M9 $12,286,000
M10 $13,269,000
M11 $14,252,000
A-3
CUSIP : Class CUSIP ▇▇.
▇-▇-▇ ▇▇▇▇▇▇▇▇▇
▇-▇-▇ ▇▇▇▇▇▇▇▇▇
▇-▇-▇ ▇▇▇▇▇▇▇▇▇
▇-▇-▇ ▇▇▇▇▇▇▇▇▇
▇-▇-▇ ▇▇▇▇▇▇▇▇▇
M1 ▇▇▇▇▇▇▇▇▇
M2 ▇▇▇▇▇▇▇▇▇
M3 ▇▇▇▇▇▇▇▇▇
M4 ▇▇▇▇▇▇▇▇▇
M5 ▇▇▇▇▇▇▇▇▇
M6 ▇▇▇▇▇▇▇▇▇
M7 ▇▇▇▇▇▇▇▇▇
M8 ▇▇▇▇▇▇▇▇▇
M9 ▇▇▇▇▇▇▇▇▇
M10 ▇▇▇▇▇▇▇▇▇
M11 ▇▇▇▇▇▇▇▇▇
ISIN : ▇-▇-▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇-▇-▇ ▇▇▇▇▇▇▇▇▇▇▇▇
2-A-1 US35729PJS02
2-A-2 US35729PJT84
2-A-3 US35729PJU57
M1 US35729PJV31
M2 US35729PJW14
M3 US35729PJX96
M4 US35729PJY79
M5 US35729PJZ45
M6 US35729PKA74
M7 US35729PKB57
M8 US35729PKC31
M9 US35729PKD14
M10 US35729PKE96
M11 US35729PKF61
A-4
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust
Mortgage-Backed Certificates, Series 2005-B
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class.
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Servicer, the Trust Administrator, the Master Servicer or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement, dated as of May 1,
2005 (the "Agreement"), among Fremont Mortgage Securities Corporation, as
depositor (the "Depositor"), Fremont Investment & Loan, as originator and
servicer ("Fremont"), ▇▇▇▇▇ Fargo Bank, N.A., as master servicer and trust
administrator, and HSBC Bank USA, National Association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.
* * *
A-5
IN WITNESS WHEREOF, the Trust Administrator has caused this Certificate
to be duly executed.
Dated: __________, 2005
▇▇▇▇▇ FARGO BANK, N.A.,
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Classes of Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Certificate Registrar
By:_________________________________
Authorized Signatory
A-6
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2005-B Mortgage-Backed Certificates, of
the Series specified on the face hereof (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trust Administrator is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust Administrator.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trust Administrator in writing at least five Business
Days prior to the related Record Date and such Certificateholder shall satisfy
the conditions to receive such form of payment set forth in the Agreement, or,
if not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trust
Administrator for such purposes, or such other location specified in the notice
to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust Administrator and the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Originator, the Servicer,
the Master Servicer, the Trust Administrator and the
A-7
Trustee with the consent of the Holders of Certificates affected by such
amendment evidencing the requisite Percentage Interest, as provided in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trust Administrator upon surrender of this
Certificate for registration of transfer at the offices designated by the Trust
Administrator for such purposes or the office or agency maintained by the Trust
Administrator, accompanied by a written instrument of transfer in form
satisfactory to the Trust Administrator duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trust Administrator may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee and any agent of the Depositor, the Servicer, the
Master Servicer, the Trust Administrator or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Servicer, the Master Servicer, the Trust
Administrator, the Trustee, nor any such agent shall be affected by any notice
to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Person specified in Section 9.01 of the Agreement
will have the option to repurchase, in whole, from the Trust Fund all remaining
Mortgage Loans and all property acquired in respect of the Mortgage Loans at a
purchase price determined as provided in the Agreement. The obligations and
responsibilities created by the Agreement will terminate as provided in Section
9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
A-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trust Administrator to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________.
Dated:
Signature by or on behalf of assignor
A-9
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to,________________________________________________,
_______________________________________________________________________________,
for the account of_____________________________________________________________,
account number ________, or, if mailed by check, to____________________________.
Applicable statements should be mailed to______________________________________,
_______________________________________________________________________________.
This information is provided by____________________________________,
the assignee named above, or___________________________________________________,
as its agent.
A-10
EXHIBIT B
FORM OF CLASS [P] CERTIFICATE
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE AND THE TRUST ADMINISTRATOR A
TRANSFEROR LETTER IN THE FORM OF EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN
AND EITHER (i) THE TRUSTEE AND THE TRUST ADMINISTRATOR RECEIVE A RULE 144A
LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED TO HEREIN OR (ii) THE
TRUSTEE AND THE TRUST ADMINISTRATOR RECEIVE AN OPINION OF COUNSEL, DELIVERED AT
THE EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND CERTAIN OTHER
ASSETS.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUST ADMINISTRATOR WITH (A) A REPRESENTATION TO THE
EFFECT THAT SUCH TRANSFEREE IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (COLLECTIVELY, A "PLAN") NOR A
PERSON ACTING FOR, ON BEHALF OF OR WITH THE ASSETS OF, ANY SUCH PLAN OR (B) AN
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE, THE TRUST ADMINISTRATOR AND THE
SERVICER, AND UPON WHICH THE TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER
SERVICER AND THE SERVICER SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE 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, THE TRUST
ADMINISTRATOR, THE MASTER SERVICER OR THE SERVICER TO ANY OBLIGATION IN ADDITION
TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT,
WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE TRUST
ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER OR THE TRUST FUND.
Certificate No. : 1
Cut-off Date : May 1, 2005
First Distribution Date : The Distribution Date in June, 2005
Percentage Interest of this
Certificate : [100]%
B-1
("Denomination")
CUSIP : ▇▇▇▇▇▇▇▇▇
ISIN : US35729PKH28
B-2
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates, Series 2005-B
Class [P]
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Trust Administrator, the Master Servicer or the Trustee referred to below or any
of their respective affiliates. Neither this Certificate nor the Mortgage Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that [_____________________] is the registered owner
of the Percentage Interest evidenced by this Certificate (obtained by dividing
the denomination of this Certificate by the aggregate of the denominations of
all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions pursuant to a Pooling and Servicing Agreement dated as of
May 1, 2005 (the "Agreement") among Fremont Mortgage Securities Corporation, as
depositor (the "Depositor"), Fremont Investment & Loan, as originator and
servicer ("Fremont"), ▇▇▇▇▇ Fargo Bank, N.A., as master servicer and trust
administrator, and HSBC Bank USA, National Association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trust Administrator for such purpose, or the office or
agency maintained by the Trust Administrator.
No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and such laws. In the event of any
such transfer, the Trustee and the Trust Administrator shall require the
transferor to execute a transferor certificate (in substantially the form
attached to the Pooling and Servicing Agreement) and deliver either (i) a Rule
144A Letter, in either case substantially in the form attached to the Agreement,
or (ii) a written Opinion of Counsel to the Trustee and the Trust Administrator
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the 1933 Act or is being made
pursuant to the 1933 Act, which Opinion of Counsel shall be an expense of the
transferor.
No transfer of a Certificate of this Class shall be made, except as
provided in section 5.02 of the Agreement, unless the Trustee and the Trust
Administrator shall have
B-3
received a representation letter from the transferee of such Certificate,
acceptable to and in form and substance satisfactory to the Trustee and the
Trust Administrator, to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA, Section 4975 of the Code or any
materially similar provisions of applicable Federal, state or local law
("Similar Law"), or a person acting on behalf of or investing plan assets of any
such plan, which representation letter shall not be an expense of the Trustee,
the Trust Administrator or the Trust Fund.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.
* * *
B-4
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: ___________, 2005
▇▇▇▇▇ FARGO BANK, N.A.,
as Trust Administrator
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Classes of Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Certificate Registrar
By:_________________________________
Authorized Signatory
B-5
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Fremont Home Loan Trust 2005-B Mortgage-Backed Certificates, of
the Series specified on the face hereof (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trust Administrator is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust Administrator.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trust Administrator in writing at least five Business
Days prior to the related Record Date and such Certificateholder shall satisfy
the conditions to receive such form of payment set forth in the Agreement, or,
if not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trust
Administrator for such purposes, or such other location specified in the notice
to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust Administrator and the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Originator, the Servicer,
the Master Servicer, the Trust Administrator and the Trustee with the consent of
the Holders of Certificates affected by such amendment evidencing
B-6
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trust Administrator upon surrender of this
Certificate for registration of transfer at the offices designated by the Trust
Administrator for such purposes or the office or agency maintained by the Trust
Administrator, accompanied by a written instrument of transfer in form
satisfactory to the Trust Administrator duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trust Administrator may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee and any agent of the Depositor, the Servicer, the
Master Servicer, the Trust Administrator or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Servicer, the Master Servicer, the Trust
Administrator, the Trustee, nor any such agent shall be affected by any notice
to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Person specified in Section 9.01 of the Agreement
will have the option to repurchase, in whole, from the Trust Fund all remaining
Mortgage Loans and all property acquired in respect of the Mortgage Loans at a
purchase price determined as provided in the Agreement. The obligations and
responsibilities created by the Agreement will terminate as provided in Section
9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
B-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trust Administrator to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: ____________________________.
Dated:
Signature by or on behalf of assignor
B-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number ________, or, if mailed by check, to ___________________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
B-9
EXHIBIT C
FORM OF CLASS [R] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUST ADMINISTRATOR A TRANSFER AFFIDAVIT IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE AND THE TRUST ADMINISTRATOR A
TRANSFEROR LETTER IN THE FORM OF EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN
AND EITHER (I) THE TRUSTEE AND THE TRUST ADMINISTRATOR RECEIVE A RULE 144A
LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED TO HEREIN OR (II) THE
TRUSTEE AND THE TRUST ADMINISTRATOR RECEIVE AN OPINION OF COUNSEL, DELIVERED AT
THE EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUST ADMINISTRATOR WITH A REPRESENTATION TO THE EFFECT
THAT SUCH TRANSFEREE IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), (COLLECTIVELY, A "PLAN") NOR A PERSON ACTING
FOR, ON BEHALF OF OR WITH THE ASSETS OF, ANY SUCH PLAN.
Certificate No. : 1
Cut-off Date : May 1, 2005
First Distribution Date : The Distribution Date in June, 2005
Percentage Interest of this :
Certificate ("Denomination") [100]%
CUSIP : ▇▇▇▇▇▇▇▇▇
ISIN US35729PKJ83
C-1
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates, Series 2005-B
Class [R]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Class R Certificate has no Certificate Balance
and is not entitled to distributions in respect of principal or interest. This
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Trust Administrator, the Master
Servicer or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that [_____________________] is the registered
owner of the Percentage Interest specified above of any monthly distributions
due to the Class R Certificates pursuant to a Pooling and Servicing Agreement
dated as of May 1, 2005 (the "Agreement") among Fremont Mortgage Securities
Corporation, as depositor (the "Depositor"), Fremont Investment & Loan, as
servicer ("Fremont"), ▇▇▇▇▇ Fargo Bank, N.A., as master servicer and trust
administrator, and HSBC Bank USA, National Association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of
the Trust Fund will be made only upon presentment and surrender of this Class R
Certificate at the offices designated by the Trust Administrator for such
purposes or the office or agency maintained by the Trust Administrator.
No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee and the Trust Administrator shall
require the transferor to execute a transferor certificate (in substantially the
form attached to the Pooling and Servicing Agreement) and deliver either (i) a
Rule 144A Letter, in either case substantially in the form attached to the
Agreement, or (ii) a written Opinion of Counsel to the Trustee and the Trust
Administrator that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the 1933 Act or
is being made pursuant to the 1933 Act, which Opinion of Counsel shall be an
expense of the transferor.
No transfer of a Class R Certificate shall be made unless the
Trustee and the Trust Administrator shall have received a representation letter
from the transferee of such Certificate,
C-2
acceptable to and in form and substance satisfactory to the Trustee and the
Trust Administrator, to the effect that such transferee is not an employee
benefit plan or arrangement subject to Section 406 of ERISA, a plan or
arrangement subject to Section 4975 of the Code or a plan subject to Similar
Law, or a person acting on behalf of any such plan or arrangement nor using the
assets of any such plan or arrangement to effect such transfer, which
representation letter shall not be an expense of the Trustee, the Servicer or
the Trust Fund. In the event that such representation is violated, or any
attempt is made to transfer to a plan or arrangement subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a plan subject to Similar
Law, or a person acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement, such attempted transfer or acquisition
shall be void and of no effect.
Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R Certificate shall be a
Permitted Transferee and shall promptly notify the Trust Administrator of any
change or impending change in its status as a Permitted Transferee, (ii) no
Ownership Interest in this Class R Certificate may be registered on the Closing
Date or thereafter transferred, and the Trust Administrator shall not register
the Transfer of this Certificate unless, in addition to the certificates
required to be delivered to the Trust Administrator under Section 5.02(c) of the
Agreement, the Trust Administrator shall have been furnished with a Transfer
Affidavit of the initial owner or the proposed transferee in the form attached
as Exhibit G to the Agreement, (iii) each Person holding or acquiring any
Ownership Interest in this Class R Certificate shall agree (A) to obtain a
Transfer Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest this Class R Certificate, (B) to obtain a
Transfer Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of this Class R Certificate,
(C) not to cause income with respect to the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of such Person or any other U.S.
Person and (D) not to Transfer the Ownership Interest in this Class R
Certificate or to cause the Transfer of the Ownership Interest in this Class R
Certificate to any other Person if it has actual knowledge that such Person is
not a Permitted Transferee and (iv) any attempted or purported Transfer of the
Ownership Interest in this Class R Certificate in violation of the provisions
herein shall be absolutely null and void and shall vest no rights in the
purported Transferee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.
C-3
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: ______________, 2005
▇▇▇▇▇ FARGO BANK, N.A.,
as Trust Administrator
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Classes of Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
C-4
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates
This Certificate is one of a duly authorized issue of
Certificates designated as Fremont Home Loan Trust 2005-B Mortgage-Backed
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Distribution
Account for payment hereunder and that the Trust Administrator is not liable to
the Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust Administrator.
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trust Administrator in writing at
least five Business Days prior to the related Record Date and such
Certificateholder shall satisfy the conditions to receive such form of payment
set forth in the Agreement, or, if not, by check mailed by first class mail to
the address of such Certificateholder appearing in the Certificate Register. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the offices designated by
the Trust Administrator for such purposes, or such other location specified in
the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trust Administrator and the
C-5
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Originator, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trust Administrator upon surrender of this
Certificate for registration of transfer at the offices designated by the Trust
Administrator for such purposes or the office or agency maintained by the Trust
Administrator, accompanied by a written instrument of transfer in form
satisfactory to the Trust Administrator duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee and any agent of the Depositor, the Servicer, the
Master Servicer, the Trust Administrator or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Servicer, the Master Servicer, the Trust
Administrator, the Trustee, nor any such agent shall be affected by any notice
to the contrary.
On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
Cut-off Date Pool Principal Balance, the Person specified in Section 9.01 of the
Agreement will have the option to repurchase, in whole, from the Trust Fund all
remaining Mortgage Loans and all property acquired in respect of the Mortgage
Loans at a purchase price determined as provided in the Agreement. The
obligations and responsibilities created by the Agreement will terminate as
provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
C-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trust Administrator to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: ___________________________.
Dated:
Signature by or on behalf of assignor
C-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise,
in immediately available funds to_____________________________________________,
______________________________________________________________________________,
for the account of____________________________________________________________,
account number ___________, or, if mailed by check, to________________________.
Applicable statements should be mailed to_____________________________________,
______________________________________________________________________________.
This information is provided by__________________________,
the assignee named above, or__________________________________________________,
as its agent.
C-8
EXHIBIT D
FORM OF CLASS [C] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND CERTAIN OTHER
ASSETS.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE AND THE TRUST ADMINISTRATOR A
TRANSFEROR LETTER IN THE FORM OF EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN
AND EITHER (I) THE TRUSTEE AND THE TRUST ADMINISTRATOR RECEIVE A RULE 144A
LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED TO HEREIN OR (II) THE
TRUSTEE AND THE TRUST ADMINISTRATOR RECEIVE AN OPINION OF COUNSEL, DELIVERED AT
THE EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUST ADMINISTRATOR WITH (A) A REPRESENTATION TO THE
EFFECT THAT SUCH TRANSFEREE IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (COLLECTIVELY, A "PLAN") NOR A
PERSON ACTING FOR, ON BEHALF OF OR WITH THE ASSETS OF, ANY SUCH PLAN OR (B) AN
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE, THE TRUST ADMINISTRATOR AND THE
SERVICER, AND UPON WHICH THE TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER
SERVICER AND THE SERVICER SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE 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, THE TRUST
ADMINISTRATOR, THE MASTER SERVICER OR THE SERVICER TO ANY OBLIGATION IN ADDITION
TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT,
WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE TRUST
ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER OR THE TRUST FUND.
Certificate No. : [ ]
Cut-off Date : May 1, 2005
First Distribution Date : The Distribution Date in June, 2005
Percentage Interest of this
Certificate ("Denomination") : [100]%
CUSIP : ▇▇▇▇▇▇▇▇▇
▇▇▇▇: : US35729PKG45
▇-▇
▇-▇
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates, Series 2005-B
Class [C]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Trust Administrator, the Master Servicer or the Trustee referred to below or any
of their respective affiliates. Neither this Certificate nor the Mortgage Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that FREMONT INVESTMENT & LOAN is the
registered owner of the Percentage Interest evidenced by this Certificate
(obtained by dividing the denomination of this Certificate by the aggregate of
the denominations of all Certificates of the Class to which this Certificate
belongs) in certain monthly distributions pursuant to a Pooling and Servicing
Agreement dated as of May 1, 2005 (the "Agreement") among Fremont Mortgage
Securities Corporation, as depositor (the "Depositor"), Fremont Investment &
Loan, as originator and servicer ("Fremont"), ▇▇▇▇▇ Fargo Bank, N.A., as master
servicer and trust administrator, and HSBC Bank USA, National Association, as
trustee (the "Trustee"). To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
This Certificate will be entitled to distributions only to the
extent set forth in the Agreement. In addition, any distribution of the proceeds
of any remaining assets of the Trust will be made only upon presentment and
surrender of this Certificate at the offices designated by the Trust
Administrator for such purposes or the office or agency maintained by the Trust
Administrator.
No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee and the Trust Administrator shall
require the transferor to execute a transferor certificate (in substantially the
form attached to the Pooling and Servicing Agreement) and deliver either (i) a
Rule 144A Letter, in either case substantially in the form attached to the
Agreement, or (ii) a written Opinion of Counsel to the Trustee and the Trust
Administrator that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the 1933 Act or
is being made pursuant to the 1933 Act, which Opinion of Counsel shall be an
expense of the transferor.
D-3
No transfer of a Certificate of this Class shall be made,
except as provided in section 5.02 of the Agreement, unless the Trustee and the
Trust Administrator shall have received a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Trust Administrator, to the effect that such
transferee is not an employee benefit plan subject to Section 406 of ERISA,
Section 4975 of the Code or any materially similar provisions of applicable
Federal, state or local law ("Similar Law"), or a person acting on behalf of or
investing plan assets of any such plan, which representation letter shall not be
an expense of the Trustee, the Trust Administrator or the Trust Fund.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trust Administrator.
* * *
D-4
IN WITNESS WHEREOF, the Trust Administrator has caused this
Certificate to be duly executed.
Dated: ____________, 2005
▇▇▇▇▇ FARGO BANK, N.A.,
as Trust Administrator
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Classes of Certificates referred to in the
within-mentioned Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
D-5
FREMONT MORTGAGE SECURITIES CORPORATION
Fremont Home Loan Trust 2005-B
Mortgage-Backed Certificates
This Certificate is one of a duly authorized issue of
Certificates designated as Fremont Home Loan Trust 2005-B Mortgage-Backed
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Distribution
Account for payment hereunder and that the Trust Administrator is not liable to
the Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trust Administrator.
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trust Administrator in writing at
least five Business Days prior to the related Record Date and such
Certificateholder shall satisfy the conditions to receive such form of payment
set forth in the Agreement, or, if not, by check mailed by first class mail to
the address of such Certificateholder appearing in the Certificate Register. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the offices designated by
the Trust Administrator for such purposes, or such other location specified in
the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trust Administrator and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Originator, the Servicer, the Master Servicer, the Trust Administrator and the
Trustee with the consent of the Holders of Certificates affected by such
amendment evidencing
D-6
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trust Administrator upon surrender of this
Certificate for registration of transfer at the offices designated by the Trust
Administrator for such purposes or the office or agency maintained by the Trust
Administrator, accompanied by a written instrument of transfer in form
satisfactory to the Trust Administrator duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trust Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee and any agent of the Depositor, the Servicer, the
Master Servicer, the Trust Administrator or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Servicer, the Master Servicer, the Trust
Administrator, the Trustee, nor any such agent shall be affected by any notice
to the contrary.
On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
Cut-off Date Pool Principal Balance, the Person specified in Section 9.01 of the
Agreement will have the option to repurchase, in whole, from the Trust Fund all
remaining Mortgage Loans and all property acquired in respect of the Mortgage
Loans at a purchase price determined as provided in the Agreement. The
obligations and responsibilities created by the Agreement will terminate as
provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
D-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trust Administrator to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: ___________________________ .
Dated:
Signature by or on behalf of assignor
D-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
for the account of_____________________________________________________________,
account number ______________, or, if mailed by check, to______________________.
Applicable statements should be mailed to______________________________________
This information is provided by______________________________,
the assignee named above, or___________________________________________________,
as its agent.
D-9
EXHIBIT E
FORM OF INITIAL CERTIFICATION OF TRUST ADMINISTRATOR
[date]
[Trustee]
[Depositor]
[Servicer]
_____________________
_____________________
Re: Pooling and Servicing Agreement, dated as of May 1, 2005, among
Fremont Mortgage Securities Corporation, as Depositor, Fremont
Investment & Loan, as Originator and Servicer, ▇▇▇▇▇ Fargo
Bank, N.A., as Master Servicer and Trust Administrator, and
HSBC Bank USA, National Association, as Trustee, Fremont Home
Loan Trust, 2005-B
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trust Administrator, for each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan listed in the attached schedule of exceptions),
certifies that it has received:
(i) the original Mortgage Note, endorsed as provided in the
following form: "Pay to the order of ________, without recourse"; and
(ii) a duly executed Assignment of Mortgage (which may be included
in a blanket assignment or assignments).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trust Administrator makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability, recordability or genuineness of any of the documents contained
in each Mortgage File of any of the Mortgage Loans identified on the Mortgage
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan or the perfection or priority of any
Mortgage.
E-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator
By:____________________________________
Name:__________________________________
Title:
E-2
EXHIBIT F
FORM OF DOCUMENT CERTIFICATION
AND EXCEPTION REPORT OF TRUST ADMINISTRATOR
[date]
[Trustee]
[Depositor]
[Servicer]
[Originator]
_____________________
_____________________
Re: Pooling and Servicing Agreement, dated as of May 1, 2005, among
Fremont Mortgage Securities Corporation, as Depositor, Fremont
Investment & Loan, as Originator and Servicer, ▇▇▇▇▇ Fargo
Bank, N.A., as Master Servicer and Trust Administrator, and
HSBC Bank USA, National Association, as Trustee, Fremont Home
Loan Trust, 2005-B
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trust Administrator, hereby certifies that as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attached Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in
Section 2.01 of the Pooling and Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator
to the last endorsee.
(ii) The original recorded Mortgage.
(iii) A duly executed Assignment of Mortgage in the form provided in
Section 2.01 of the Pooling and Servicing Agreement; or, if the Originator
has certified or the Trustee otherwise knows that the related Mortgage has
not been returned from the applicable recording office, a copy of the
Assignment of Mortgage (excluding information to be provided by the
recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from
the originator to the last endorsee.
F-1
(v) The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy
thereof certified by the title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (1), (2) and (13) of
the Mortgage Loan Schedule and the Data Tape Information accurately reflects
information set forth in the Custodial File.
The Trust Administrator has made no independent examination of any
documents contained in each Mortgage File beyond the review of the Custodial
File specifically required in the Pooling and Servicing Agreement. The Trust
Administrator makes no representations as to: (i) the validity, legality,
sufficiency, enforceability, recordability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan or the
perfection or priority of any Mortgage. Notwithstanding anything herein to the
contrary, the Trust Administrator has made no determination and makes no
representations 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 sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which the assignment relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
▇▇▇▇▇ FARGO BANK, N.A.,
as Trust Administrator
By:____________________________________
Name:__________________________________
Title:
F-2
EXHIBIT G
RESIDUAL TRANSFER AFFIDAVIT AND AGREEMENT
Fremont Home Loan Trust 2005-[ ]
Mortgage-Backed Certificates
STATE OF )
:ss.:
COUNTY OF )
________________, being duly sworn, deposes, represents and warrants as follows:
1. I am a _________________ of [ ] (the "Owner") a [corporation] duly
organized and existing under the laws of [ ], the record owner of Fremont Home
Loan Trust 2005-[ ], Mortgage-Backed Certificates, Series [ ], Class R (the
"Class R Certificates"), on behalf of whom I make this affidavit and agreement.
Capitalized terms used but not defined herein have the respective meanings
assigned thereto in the Pooling and Servicing Agreement pursuant to which the
Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
______________ and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.
3. The Owner is aware (i) of the tax that would be imposed on transfers
of the Class R Certificates to disqualified organizations under the Internal
Revenue Code of 1986 that applies to all transfers of the Class R Certificates
after May 31, 1988; (ii) that such tax would be on the transferor or, if such
transfer is through an agent (which person includes a broker, nominee or
middleman) for a non-Permitted Transferee, on the agent; (iii) that the person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is a
Permitted Transferee and, at the time of transfer, such person does not have
actual knowledge that the affidavit is false; and (iv) that each of the Class R
Certificates may be a "noneconomic residual interest" within the meaning of
proposed Treasury regulations promulgated under the Code and that the transferor
of a "noneconomic residual interest" will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer is to impede the assessment or collection of tax.
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In accordance with Revenue Procedure 2001-12, I.R.B. 2001-2 (December 8,
2000), the Transferee represents and warrants that one of the following applies:
(i) the consideration paid to the Transferee for accepting the Class
R Certificates is greater than the present value of the anticipated
net federal income taxes and tax benefits ("Tax Liability Present
Value") associated with owning such Certificates, with such present
value computed using a discount rate equal to the "applicable
federal rate" prescribed by Section 1274 of the Internal Revenue
Code as of the date hereof (with all applicable computations done in
accordance with Rev. Proc. 2001-12) or, to the extent it is not, if
the Transferee has asserted that it regularly borrows, in the
ordinary course of its trade or business, substantial funds from
unrelated third parties at a lower interest rate than such
applicable federal rate and the consideration paid to the Transferee
is greater than the Tax Liability Present Value using such lower
interest rate as the discount rate, the transactions with the
unrelated third party lenders, the interest rate or rates, the date
or dates of such transactions, and the maturity dates or, in the
case of adjustable rate debt instruments, the relevant adjustment
dates or periods, with respect to such borrowings, are accurately
stated in Exhibit A to this letter; or
(ii) the Transferee (A) is an "eligible corporation" as defined in
Section 860L(a)(2) of the Internal Revenue Code, as to which the
income of Class Certificates will only be subject to taxation in the
United States, (B) has, and has had in each of its two preceding
fiscal years, gross assets for financial reporting purposes
(excluding any obligation of a person related to the transferee
within the meaning of Section 860L of the Internal Revenue Code) in
excess of $100 million and net assets of $10 million, and (C) hereby
agrees only to transfer the Certificate to another corporation
meeting the criteria set forth in this letter.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the transfer
of any Class R Certificate unless the transferee, or the transferee's agent,
delivers to the Trustee, among other things, an affidavit in substantially the
same form as this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is _____________________.
8. The Owner has reviewed the restrictions set forth on the face of the
Class R Certificates and the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section
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5.02(d) which authorize the Trustee to deliver payments to a person other than
the Owner and negotiate a mandatory sale by the Trustee in the event that the
Owner holds such Certificate in violation of Section 5.02(d); and that the Owner
expressly agrees to be bound by and to comply with such restrictions and
provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds the Class R
Certificates, have sufficient assets to pay any taxes owed by the holder of such
Class R Certificates, and hereby represents to and for the benefit of the person
from whom it acquired the Class R Certificates that the Owner intends to pay
taxes associated with holding such Class R Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.
12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the intent
to transfer the Class R Certificates to any person or entity that will not have
sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of the
Class R Certificates, obtain from its transferee the representations required by
Section 5.02(d) of the Pooling and Servicing Agreement under which the Class R
Certificate were issued and will not consummate any such transfer if it knows,
or knows facts that should lead it to believe, that any such representations are
false.
15. The Owner will, in connection with any transfer that it makes of the
Class R Certificates, deliver to the Trustee an affidavit, which represents and
warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that the
proposed transferee: (i) has insufficient assets to pay any taxes owed by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted Transferee."
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included in
gross income for the United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
17. The Owner of the Class R Certificate hereby agrees that in the event
that the Trust Fund created by the Pooling and Servicing Agreement is terminated
pursuant to Section 9.01 thereof, the undersigned shall assign and transfer to
the Servicer any amounts in excess of par received in connection with such
termination. Accordingly, in the event of such termination, the Trustee is
hereby authorized to withhold any such amounts in excess of par and to pay such
amounts directly to the Servicer. This agreement shall bind and be enforceable
against any
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successor, transferee or assigned of the undersigned in the Class R Certificate.
In connection with any transfer of the Class R Certificate, the Owner shall
obtain an agreement substantially similar to this clause from any subsequent
owner.
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IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its
_________________, effective on the __day of _________, _____.
[ ]
By:____________________________
Name:
Title:
Personally appeared before me the above-named _________________, known or proved
to me to be the same person who executed the foregoing instrument and to be a
_________________ of the Owner, and acknowledged to me that [he/she] executed
the same as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of _________________, ____.
_____________________________
Notary Public
County of_____________________
State of_______________________
My Commission expires:
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EXHIBIT H
FORM OF TRANSFEROR CERTIFICATE
__________, 20__
Fremont Mortgage Securities Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Fargo Bank, N.A.,
as Trust Administrator,
HSBC Bank USA, National Association,
as Trustee
Re: Fremont Home Loan Trust 2005-B, Mortgage-Backed Certificates, Class [ ]
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) to the extent we are disposing of a Residual Certificate, (A) we have no
knowledge the Transferee is not a Permitted Transferee and (B) after conducting
a reasonable investigation of the financial condition of the Transferee, we have
no knowledge and no reason to believe that the Transferee will not pay all taxes
with respect to the Residual Certificates as they become due and (C) we have no
reason to believe that the statements made in the Transferee's Residual Transfer
Affidavit are false.
Very truly yours,
_________________________________________
Print Name of Transferor
By:______________________________________
Authorized Officer
H-1
EXHIBIT I
FORM OF RULE 144A LETTER
____________, 20__
Fremont Mortgage Securities Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Fargo Bank, N.A.,
as Trust Administrator
HSBC Bank USA, National Association,
as Trustee
Re: Fremont Home Loan Trust 2005-B, Mortgage-Backed Certificates, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either we are not an employee benefit plan that
is subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a plan or arrangement that is subject to Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or a plan subject to
any Federal, state or local law materially similar to the foregoing provisions
of ERISA or the Code, nor are we acting on behalf of any such plan or
arrangement nor using the assets of any such plan or arrangement to effect such
acquisition, or, with respect to an ERISA Restricted Certificate (other than the
Class C Certificate, the Class P Certificate and the Residual Certificates), the
purchaser is an insurance company that is purchasing this certificate 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, (e) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Certificates,
any interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar
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security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, and (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.
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ANNEX 1 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties listed
in the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:
(i) As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer
of the Buyer.
(ii) In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because (i) the
Buyer owned and/or invested on a discretionary basis $ (1)
in securities (except for the excluded securities referred to below)
as of the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A and (ii) the Buyer
satisfies the criteria in the category marked below.
____ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
----------
(1) Buyer must own and/or invest on a discretionary basis at
least $100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000 in
securities.
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____ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
____ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
____ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940.
(iii) The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if
the Buyer is a dealer, (iii) securities issued or guaranteed by the
U.S. or any instrumentality thereof, (iv) bank deposit notes and
certificates of deposit, (v) loan participations, (vi) repurchase
agreement, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
(iv) For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer
used the cost of such securities to the Buyer and did not include
any of the securities referred to in the preceding paragraph, except
(i) where the Buyer reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been
published. If clause (ii) in the preceding sentence applies, the
securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in
accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer's
direction. However, such securities were not included if the Buyer
is a majority-owned, consolidated
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subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as
amended.
(v) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer may be in
reliance on Rule 144A.
(vi) Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such
notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of
such purchase. In addition, if the Buyer is a bank or savings and
loan is provided above, the Buyer agrees that it will furnish to
such parties updated annual financial statements promptly after they
become available.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
Date:
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ANNEX 2 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties listed
in the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:
(i) As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the
Buyer is a "qualified institutional buyer" as that term is defined
in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A"), because Buyer is part of a Family of Investment Companies
(as defined below), is such an officer of the Adviser.
(ii) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment
Company Act of 1940, as amended and (ii) as marked below, the Buyer
alone, or the Buyer's Family of Investment Companies, owned at least
$100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal
year. For purposes of determining the amount of securities owned by
the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's
Family of Investment Companies reports its securities holdings in
its financial statements on the basis of their market value, and
(ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
(iii) The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that
have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the
same parent or because one investment adviser is a majority owned
subsidiary of the other).
(iv) The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment
I-6
Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates
of deposit, (iv) loan participations, (v) repurchase agreement, (vi)
securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps.
(v) The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will
be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.
(vi) Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information
and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
IF AN ADVISER:
______________________________________
Print Name of Buyer
Date:
I-7
EXHIBIT J
FORM OF REQUEST FOR RELEASE
(for Trust Administrator)
To: ▇▇▇▇▇ Fargo Bank, N.A.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement among Fremont Mortgage Securities
Corporation, as Depositor, Fremont Investment & Loan, as Originator
and Servicer, ▇▇▇▇▇ Fargo Bank, N.A., as Master Servicer and Trust
Administrator, and HSBC Bank USA, National Association, as Trustee,
Fremont Home Loan Trust, 2005-B
In connection with the administration of the Mortgage Loans held by
you as the Trust Administrator on behalf of the Certificateholders pursuant to
the above-captioned Pooling Agreement, we request the release, and acknowledge
receipt, of the Custodial File for the Mortgage Loan described below, for the
reason indicated.
Mortgage Loan Number:
Mortgagor's Name, Address & Zip Code:
Reason for Requesting Documents (check one)
____ 1. Mortgage Paid in Full.
____ 2. Foreclosure
____ 3. Substitution
____ 4. Other Liquidation (Repurchases, etc.)
____ 5. Nonliquidation Reason:
Address to which Trust Administrator should
Deliver the Custodial File: ______________________________________
______________________________________
By:____________________________________
(authorized signer)
J-1
Issuer:
Address:_______________________________
Date:
Trust Administrator
▇▇▇▇▇ Fargo Bank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
_______________________________________ _______________________________________
Signature Date
Documents returned to Trust Administrator:
_______________________________________ _______________________________________
Trust Administrator Date
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EXHIBIT K
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Servicer or delivered to and
retained by the Trust Administrator, as applicable:
i. The original Mortgage Note bearing all intervening endorsements,
showing a complete chain of endorsement from the originator to the
last endorsee endorsed "Pay to the order of _________________,
without recourse" and signed (which may be by facsimile signature)
in the name of the last endorsee by an authorized officer. To the
extent that there is no room on the face of the Mortgage Notes for
endorsements, the endorsement may be contained on an allonge, if
state law so allows and the Trustee is so advised by the Originator
that state law so allows.
ii. The original of any guaranty executed in connection with the
Mortgage Note.
iii. The original Mortgage with evidence of recording thereon or a
certified true copy of such Mortgage submitted for recording. If in
connection with any Mortgage Loan, the Originator cannot deliver or
cause to be delivered the original Mortgage with evidence of
recording thereon on or prior to the Closing Date because of a delay
caused by the public recording office where such Mortgage has been
delivered for recordation or because such Mortgage has been lost or
because such public recording office retains the original recorded
Mortgage, the Originator (to the extent that it has not previously
delivered the same to the Purchaser or the Trust Administrator)
shall deliver or cause to be delivered to the Trustee, (1) a
photocopy of such Mortgage, certified by the Originator (or
certified by the title company, escrow agent, or closing attorney)
to be a true and complete copy of such Mortgage dispatched to the
appropriate public recording office for recordation; and (2) upon
receipt thereof by the Originator, the original recorded Mortgage,
or, in the case of a Mortgage 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, a
copy of such Mortgage certified by such public recording office to
be a true and complete copy of the original recorded Mortgage;
iv. The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon or a
certified true copy of such agreement submitted for recording.
v. Except with respect to each MERS Designated Mortgage Loan, the
original Assignment of Mortgage for each Mortgage Loan endorsed in
blank and in recordable form.
K-1
vi. The originals of all intervening Assignments of Mortgage (if any)
evidencing a complete chain of assignment from the applicable
originator (or MERS with respect to each MERS Designated Mortgage
Loan) to the last endorsee with evidence of recording thereon, or if
any such intervening assignment has not been returned from the
applicable recording office or has been lost or if such public
recording office retains the original recorded Assignments of
Mortgage, the Originator (to the extent that it has not previously
delivered the same to the Purchaser or the Trust Administrator)
shall deliver or cause to be delivered to the Trust Administrator,
(1) a photocopy of such intervening assignment, certified by the
Originator (or certified by the title company, escrow agent, or
closing attorney) to be a complete copy of such intervening
Assignment of Mortgage dispatched to the appropriate public
recording office for recordation upon receipt thereof by the
Originator, and (2) the original recorded intervening assignment or
in the case where an intervening assignment is lost after
recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true
and complete copy of the original recorded intervening assignment;
vii. The original mortgagee title insurance policy or attorney's opinion
of title and abstract of title or, in the event such original title
policy is unavailable, a certified true copy of the related policy
binder or commitment for title certified to be true and complete by
the title insurance company.
viii. The original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage (if
provided).
ix. Residential loan application.
x. Mortgage Loan closing statement.
xi. Verification of employment and income, if applicable.
xii. Verification of acceptable evidence of source and amount of down
payment.
xiii. Credit report on Mortgagor.
xiv. Residential appraisal report.
xv. Photograph of the Mortgaged Property.
xvi. Survey of the Mortgaged Property.
xvii. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
xviii. All required disclosure statements.
K-2
xix. If required in an appraisal, termite report, structural engineer's
report, water potability and septic certification.
xx. Sales contract, if applicable.
xxi. Original powers of attorney, if applicable, with evidence of
recording thereon, if required.
Evidence of payment of taxes and insurance, insurance claim files,
correspondence, current and historical computerized data files (which include
records of tax receipts and payment history from the date of origination), and
all other processing, underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.
K-3
EXHIBIT L
POWER OF ATTORNEY
Record and Return to:
Fremont Investment & Loan
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LIMITED POWER OF ATTORNEY
This Limited Power of Attorney is made as of _____________ by HSBC
Bank USA, National Association, having an office at ____________________________
(the "Trustee") as Trustee for the Fremont Home Loan Trust 2005-B (the "Trust"),
in favor of Fremont Investment & Loan, a California state chartered industrial
bank, having an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Servicer").
WHEREAS, the Trustee and Servicer have executed and delivered a
certain Pooling and Servicing Agreement dated as of May 1, 2005 (the "Pooling
and Servicing Agreement"), pursuant to which the Trustee and Servicer agreed to
certain terms governing the servicing of single family mortgage loans ("Mortgage
Loans") by Servicer on behalf of the Trustee; and
WHEREAS, the Trustee and Servicer desire that the Trustee execute
and deliver this Limited Power of Attorney in order to facilitate the servicing
of the Mortgage Loans by Servicer; and
NOW THEREFORE, the Trustee does hereby appoint, subject to and in
accordance with the Pooling and Servicing Agreement, Servicer, as its
attorney-in-fact, in its name, place and stead:
1. To execute all documents necessary to satisfy or discharge "security
instruments" and "notes" upon receipt of all principal, interest and other
payments called for in the related lien documents;
2. To take such actions as are necessary and appropriate to pursue, prosecute
and defend foreclosures (or other comparable conversions to Trusteeship),
ejectments, evictions, bankruptcies, suits and other related matters with
respect to "Mortgaged Properties" (as defined in the Pooling and Servicing
Agreement), in accordance with the Pooling and Servicing Agreement;
3. To execute all deeds, deeds to secure debt, assignments, transfers, tax
declarations, certificates, pledges and any other documents or instruments
whatsoever which are necessary, appropriate, or required in order to
transfer and assign Mortgaged Properties
L-1
acquired by the Trustee on behalf of the Trust either by foreclosure or by
deed in lieu of foreclosure and any such deed to be without recourse;
4. To endorse checks, notes, drafts and other evidences of payment made
payable to the Trustee on behalf of the Trust, representing payments on
accounts in the name of the Trustee on behalf of the Trust.
5. To execute subordination agreements affecting the lien priority of the
Security Instruments.
6. To take such further actions as are deemed necessary or desirable to
service, administer, and enforce the terms of said Mortgage Loans in
accordance with the Pooling and Servicing Agreement; and
Until a properly executed revocation of this Limited Power of
Attorney is duly executed and delivered, all parties dealing with said
attorney-in-fact (individually or collectively) in connection with the above
described matters may fully rely upon the power and authority of said
attorney-in-fact to act for and on behalf of the undersigned, and in its name,
place and stead, and may accept and rely on all documents and agreements entered
into by said attorney-in-fact pursuant to the powers listed herein.
As between the Trustee and Servicer, this Limited Power of Attorney
shall be effective as ______________ and shall remain in full force and effect
thereafter until a written notice of revocation hereof shall have been executed
by the Trustee. The expiration or revocation of the period of agency hereunder
shall in no wise affect the validity of any actions of said Attorney-In-Fact
during said period. This Limited Power of Attorney is not intended to modify or
expand the rights and obligations of Servicer as set forth in the Pooling and
Servicing Agreement.
Nothing in this Limited Power of Attorney shall be construed to
prevent the Trustee from acting on its behalf as the Trustee of the Mortgage
Loans.
IN WITNESS WHEREOF, the Trustee has caused this Limited Power of
Attorney to be signed and executed as its seal hereto affixed in its name by its
proper officer thereunto duly authorized on the ______ day of _________________,
2005.
[___________________________________]
By:____________________________________
Name:
Title:
L-2
_________________________________________
Witness
_________________________________________
Witness
State of [________________________]:
County of [_______________________]:
On this, the _____ day of _____________, 2005, before me, a Notary
Public in and for said County and State, personally appeared,
______________________, personally known to me (or proved on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal
_________________________
Notary Signature
My Commission Expires on ________________.
L-3
EXHIBIT M
FORM OF TRUST ADMINISTRATOR CERTIFICATION
Re: Fremont Home Loan Trust 2005-B (the "Trust") Mortgage-Backed
Certificates, Series 2005-B, issued pursuant to the Pooling and
Servicing Agreement, dated as of May 1, 2005 (the "Pooling and
Servicing Agreement"), among Fremont Mortgage Securities
Corporation, as depositor (the "Depositor"), Fremont Investment &
Loan, as originator and servicer ("Fremont"), ▇▇▇▇▇ Fargo Bank,
N.A., as master servicer and trust administrator (the "Master
Servicer" and "Trust Administrator" in such capacities,
respectively), and HSBC Bank USA, National Association, as trustee
(the "Trustee")
I, [identify the certifying individual], a [title] of ▇▇▇▇▇ Fargo Bank,
N.A., as Trust Administrator of the Trust, hereby certify to Fremont Mortgage
Securities Corporation (the "Depositor"), and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1 I have reviewed the annual report on Form 10-K for the fiscal year [
], and all reports on Form 8-K containing distribution reports filed in respect
of periods included in the year covered by that annual report, relating to the
above-referenced trust;
2 Based on my knowledge, the information in these distribution reports
prepared by the Trust Administrator, taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the period covered by
that annual report; and
3 Based on my knowledge, the distribution information required to be
provided by the Trust Administrator under the Pooling and Servicing Agreement is
included in these reports.
Date: _________________
▇▇▇▇▇ Fargo Bank, N.A., as Trust Administrator
By:_______________________________
[Signature]
[Title]
M-1
EXHIBIT N
[Reserved]
N-1
EXHIBIT O
PURCHASE AGREEMENT
[On File With The Depositor]
O-1
EXHIBIT P
APPENDIX E OF THE STANDARD & POOR'S GLOSSARY FOR
FILE FORMAT FOR LEVELS(R) VERSION 5.6b REVISED
REVISED July 7, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇ - STANDARD & POOR'S ANTI-PREDATORY LENDING CATEGORIZATION
Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Category under
--------------
Name of Anti-Predatory Lending Applicable Anti-
------------------------------ ----------------
State/Jurisdiction Law/Effective Date Predatory Lending Law
------------------ ------------------ ---------------------
Arkansas Arkansas Home Loan Protection Act, High Cost Home Loan
Ark. Code ▇▇▇. Sections ▇▇-▇▇-▇▇▇ et seq.
Effective July 16, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ Ordinance No. 72-2003 (PSH), Mun. Covered Loan
Code Sections 757.01 et seq.
Effective June 2, 2003
Colorado Consumer Equity Protection, Colo. Covered Loan
Stat. ▇▇▇. Sections 5-3.5-101 et seq.
Effective for covered loans offered or entered
into on or after January 1, 2003. Other
provisions of the Act took effect
on June 7, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Abusive Home Loan High Cost Home Loan
Lending Practices Act, Conn. Gen. Stat.
Sections 36a-746 et seq.
Effective October 1, 2001
P-1
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Category under
--------------
Name of Anti-Predatory Lending Applicable Anti-
------------------------------ ----------------
State/Jurisdiction Law/Effective Date Predatory Lending Law
------------------ ------------------ ---------------------
District of Columbia Home Loan Protection Act, D.C. Code Covered Loan
Sections 26-1151.01 et seq.
Effective for loans closed on or after
January 28, 2003
Florida Fair Lending Act, Fla. Stat. ▇▇▇. High Cost Home Loan
Sections 494.0078 et seq.
Effective October 2, 2002
Georgia (Oct. 1, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇. Code High Cost Home Loan
- Mar. 6, 2003) ▇▇▇. Sections 7-6A-1 et seq.
Effective October 1, 2002 - March 6, 2003
Georgia as amended Georgia Fair Lending Act, Ga. High Cost Home Loan
(Mar. 7, 2003 - Code ▇▇▇. Sections 7-6A-1 et seq.
current)
Effective for loans closed on or after
▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇ Section 32 Home Ownership and Equity Protection High Cost Loan
Act of 1994, 15 U.S.C. Section 1639,
12 C.F.R. Sections 226.32 and 226.34
Effective October 1, 1995, amendments
October 1, 2002
Illinois High Risk Home Loan Act, Ill. Comp. High Risk Home Loan
Stat. tit. 815, Sections 137/5 et seq.
Effective January 1, 2004 (prior to this
date, regulations under Residential
Mortgage License Act effective from
May 14, 2001)
Kansas Consumer Credit Code, Kan. Stat. ▇▇▇. High Loan to Value
Sections 16a-1-101 et seq. Consumer Loan (id. Section
16a-3-207) and;
Sections 16a-1-301 and 16a-3-207
became effective April 14, 1999; High APR Consumer
Section 16a-3-308a became Loan (id.Section
effective July 1, 1999 16a-3-308a)
Kentucky 2003 KY H.B. 287 - High Cost Home High Cost Home Loan
Loan Act, Ky. Rev. Stat. Sections
360.100 et seq.
P-2
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Category under
--------------
Name of Anti-Predatory Lending Applicable Anti-
------------------------------ ----------------
State/Jurisdiction Law/Effective Date Predatory Lending Law
------------------ ------------------ ---------------------
Effective June 24, 2003
Maine Truth in Lending, Me. Rev. Stat. tit. 9-A, High Rate High Fee
Sections 8-101 et seq. Mortgage
Effective September 29, 1995 and as
amended from time to time
Massachusetts Part 40 and Part 32, 209 C.M.R. High Cost Home Loan
Sections 32.00 et seq. and 209 C.M.R.
Sections 40.01 et seq.
Effective March 22, 2001 and amended
from time to time
Nevada Assembly ▇▇▇▇ No. 284, Nev. Rev. Stat. Home Loan
Sections 598D.010 et seq.
Effective October 1, 2003
New Jersey New Jersey Home Ownership Security High Cost Home Loan
Act of 2002, N.J. Rev. Stat.
Sections 46:10B-22 et seq.
Effective for loans closed on or after
November 27, 2003
New Mexico Home Loan Protection Act, N.M. Rev. Stat. High Cost Home Loan
Sections 58-21A-1 et seq.
Effective as of January 1, 2004; Revised
as of February 26, 2004
New York N.Y. Banking Law Article 6-l High Cost Home Loan
Effective for applications made on or
after April 1, 2003
North Carolina Restrictions and Limitations on High High Cost Home Loan
Cost Home Loans, N.C. Gen. Stat.
Sections 24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
Ohio H.B. 386 (codified in various sections of Covered Loan
the Ohio Code), Ohio Rev. Code ▇▇▇.
Sections 1349.25 et seq.
P-3
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Category under
--------------
Name of Anti-Predatory Lending Applicable Anti-
------------------------------ ----------------
State/Jurisdiction Law/Effective Date Predatory Lending Law
------------------ ------------------ ---------------------
Effective May 24, 2002
Oklahoma Consumer Credit Code (codified in Subsection 10 Mortgage
various sections of Title 14A)
Effective July 1, 2000; amended
effective January 1, 2004
South Carolina South Carolina High Cost and High Cost Home Loan
Consumer Home Loans Act, S.C. Code ▇▇▇.
Sections 37-23-10 et seq.
Effective for loans taken on or
after January 1, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Residential Mortgage West Virginia Mortgage
Lender, Broker and Servicer Act, W. Va. Loan Act Loan
Code ▇▇▇.Sections 31-17-1 et seq.
Effective June 5, 2002
STANDARD & POOR'S COVERED LOAN CATEGORIZATION
Category under
--------------
Name of Anti-Predatory Lending Applicable Anti-
------------------------------ ----------------
State/Jurisdiction Law/Effective Date Predatory Lending Law
------------------ ------------------ ---------------------
Georgia (Oct. 1, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇. Code Covered Loan
- Mar. 6, 2003) ▇▇▇.Sections 7-6A-1 et seq.
Effective October 1, 2002 - March 6, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Home Ownership Security Covered Home Loan
Act of 2002, N.J. Rev. Stat.
Sections 46:10B-22 et seq.
Effective November 27, 2003 - July 5, 2004
P-4
STANDARD & POOR'S HOME LOAN CATEGORIZATION
Category under
--------------
Name of Anti-Predatory Lending Applicable Anti-
------------------------------ ----------------
State/Jurisdiction Law/Effective Date Predatory Lending Law
------------------ ------------------ ---------------------
Georgia (Oct. 1, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇. Code Home Loan
- Mar. 6, 2003) ▇▇▇.Sections 7-6A-1 et seq.
Effective October 1, 2002 - March 6, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Home Ownership Security Home Loan
Act of 2002, N.J. Rev. Stat.
Sections 46:10B-22 et seq.
Effective for loans closed on or after
November 27, 2003
New Mexico Home Loan Protection Act, N.M. Rev. Home Loan
Stat.Sections 58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
North Carolina Restrictions and Limitations on High Consumer Home Loan
Cost Home Loans, N.C. Gen. Stat.
Sections 24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end
lines of credit)
South Carolina South Carolina High Cost and Consumer Consumer Home Loan
Home Loans Act, S.C. Code ▇▇▇.
Sections 37-23-10 et seq.
Effective for loans taken on or
after January 1, 2004
P-5
EXHIBIT Q
FORM OF CALCULATION OF REALIZED LOSS
[Begins on the following page.]
Q-1
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
Form 332
Calculation of Realized Loss
Purpose
To provide the Servicer with a form for the calculation of any Realized Loss (or
gain) as a result of a Mortgage Loan having been foreclosed and liquidated.
Distribution
The Servicer will prepare the form in duplicate and send the original together
with evidence of conveyance of title and appropriate supporting documentation to
the Master Servicer with the Monthly Accounting Reports which supports the
Mortgage Loan's removal from the Mortgage Loan Activity Report. The Servicer
will retain the duplicate for its own records.
Due Date
With respect to any Liquidated Mortgage Loan, the form will be submitted to the
Master Servicer no later than the date on which statements are due to the Master
Servicer under Section 4.03 of this Agreement (the "Statement Date") in the
month following receipt of final liquidation proceeds and supporting
documentation relating to such liquidated Mortgage Loan; provided, that if such
Statement Date is not at least 30 days after receipt of final liquidation
proceeds and supporting documentation relating to such liquidated Mortgage Loan,
then the form will be submitted on the first Statement Date occurring after the
30th day following receipt of final liquidation proceeds and supporting
documentation.
Preparation Instructions
The numbers on the form correspond with the numbers listed below.
1. The actual Unpaid Principal Balance of the Mortgage Loan.
2. The Total Interest Due less the aggregate amount of servicing fee that
would have been earned if all delinquent payments had been made as agreed.
3-7. Complete as necessary. All line entries must be supported by copies of
appropriate statements, vouchers, receipts, canceled checks, etc., to
document the expense. Entries not properly documented will not be
reimbursed to the Servicer.
8. Accrued Servicing Fees based upon the Scheduled Principal Balance of the
Mortgage Loan as calculated on a monthly basis.
10. The total of lines 1 through 9.
Credits
11-17.Complete as necessary. All line entries must be supported by copies of
the appropriate claims forms, statements, payment checks, etc. to document
the credit. If the Mortgage Loan is subject to a Bankruptcy Deficiency,
the difference between the Unpaid Principal Balance of the Note prior to
the Bankruptcy Deficiency and the Unpaid Principal Balance as reduced by
the Bankruptcy Deficiency should be input on line 16.
18. The total of lines 11 through 17.
Total Realized Loss (or Amount of Any Gain)
19. The total derived from subtracting line 18 from 10. If the amount
represents a realized gain, show the amount in parentheses ( ).
Q-2
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
CALCULATION OF REALIZED LOSS
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A. Trust:
___________________________
Prepared by: __________________ Date: _______________
Phone: ______________________
Servicer Loan No. Servicer Name Servicer Address
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
Loan No._____________________________
Borrower's Name:________________________________________________________
Property
Address:________________________________________________________________
LIQUIDATION AND ACQUISITION EXPENSES:
Actual Unpaid Principal Balance of Mortgage Loan $________________(1)
Interest accrued at Net Rate ________________(2)
Attorney's Fees ________________(3)
Taxes ________________(4)
Property Maintenance ________________(5)
MI/Hazard Insurance Premiums ________________(6)
Hazard Loss Expenses ________________(7)
Accrued Servicing Fees ________________(8)
Other (itemize) ________________(9)
_________________________________________ $___________________
_________________________________________ ___________________
_________________________________________ ___________________
TOTAL EXPENSES $________________(10)
CREDITS:
Escrow Balance $________________(11)
HIP Refund ________________(12)
Rental Receipts ________________(13)
Hazard Loss Proceeds ________________(14)
Primary Mortgage Insurance Proceeds ________________(15)
Proceeds from Sale of Acquired Property ________________(16)
Other (itemize) ________________(17)
_________________________________________ ___________________
_________________________________________ ___________________
TOTAL CREDITS $________________(18)
TOTAL REALIZED LOSS (OR AMOUNT OF GAIN) $________________(19)
Q-3