EXHIBIT 4.1
EXECUTION COPY
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.,
Depositor
▇▇▇▇▇▇ LOAN SERVICING LP,
Servicer
and
JPMORGAN CHASE BANK,
Trustee
--------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2004
--------------------------------------
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-BC1
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................. 5
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES............................. 45
SECTION 2.01. Conveyance of Mortgage Loans............................................... 45
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans................................ 47
SECTION 2.03. Representations, Warranties and Covenants of the Depositor................. 48
SECTION 2.04. Representations and Warranties of the Servicer............................. 51
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which Are Not "Qualified
Mortgages"................................................................. 52
SECTION 2.06. Authentication and Delivery of Certificates................................ 53
SECTION 2.07. REMIC Elections............................................................ 53
SECTION 2.08. Covenants of the Servicer.................................................. 57
SECTION 2.09. [RESERVED]................................................................. 58
SECTION 2.10. [RESERVED]................................................................. 58
SECTION 2.11. Permitted Activities of the Trust.......................................... 58
SECTION 2.12. Qualification Special Purpose Entity....................................... 58
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS........................................... 58
SECTION 3.01. Servicer to Service Mortgage Loans......................................... 58
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of Servicer..... 59
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the Servicer......... 60
SECTION 3.04. Trustee to Act as Servicer................................................. 60
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account; Certificate
Account.................................................................... 61
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts........ 64
SECTION 3.07. Access to Certain Documentation and Information Regarding the Mortgage
Loans...................................................................... 64
SECTION 3.08. Permitted Withdrawals from the Collection Account and Certificate Account.. 65
SECTION 3.09. [RESERVED]................................................................. 67
SECTION 3.10. Maintenance of Hazard Insurance............................................ 67
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.................. 68
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds................................................................... 69
i
TABLE OF CONTENTS
(continued)
PAGE
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files............................ 71
SECTION 3.14. Documents Records and Funds in Possession of Servicer to be Held for the
Trustee.................................................................... 73
SECTION 3.15. Servicing Compensation..................................................... 73
SECTION 3.16. Access to Certain Documentation............................................ 73
SECTION 3.17. Annual Statement as to Compliance.......................................... 73
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement; Financial
Statements................................................................. 74
SECTION 3.19. Rights of the NIM Insurer.................................................. 74
SECTION 3.20. Periodic Filings........................................................... 74
SECTION 3.21. Annual Certificate by Trustee.............................................. 75
SECTION 3.22. Annual Certificate by Servicer............................................. 75
SECTION 3.23. Prepayment Penalty Reporting Requirements.................................. 76
SECTION 3.24. Statements to Trustee...................................................... 77
SECTION 3.25. Indemnification............................................................ 77
SECTION 3.26. Nonsolicitation............................................................ 77
SECTION 3.27. Existing Servicing Agreement............................................... 77
ARTICLE IV DISTRIBUTIONS............................................................................ 78
SECTION 4.01. Advances................................................................... 78
SECTION 4.02. Reduction of Servicing Compensation in Connection with Prepayment
Interest Shortfalls........................................................ 78
SECTION 4.03. Distributions on the REMIC Interests....................................... 79
SECTION 4.04. Distributions.............................................................. 79
SECTION 4.05. Monthly Statements to Certificateholders................................... 83
ARTICLE V THE CERTIFICATES......................................................................... 86
SECTION 5.01. The Certificates........................................................... 86
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange of
Certificates............................................................... 87
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.......................... 91
SECTION 5.04. Persons Deemed Owners...................................................... 91
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.................. 92
SECTION 5.06. Book-Entry Certificates.................................................... 92
SECTION 5.07. Notices to Depository...................................................... 93
ii
TABLE OF CONTENTS
(continued)
PAGE
SECTION 5.08. Definitive Certificates.................................................... 93
SECTION 5.09. Maintenance of Office or Agency............................................ 93
ARTICLE VI THE DEPOSITOR AND THE SERVICER........................................................... 94
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer................... 94
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer................... 94
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and Others.......... 94
SECTION 6.04. Limitation on Resignation of Servicer...................................... 95
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds............................. 95
ARTICLE VII DEFAULT; TERMINATION OF SERVICER......................................................... 95
SECTION 7.01. Events of Default.......................................................... 95
SECTION 7.02. Servicer Trigger Event..................................................... 97
SECTION 7.03. Trustee to Act; Appointment of Successor................................... 98
SECTION 7.04. Notification to Certificateholders......................................... 99
ARTICLE VIII CONCERNING THE TRUSTEE................................................................... 99
SECTION 8.01. Duties of Trustee.......................................................... 99
SECTION 8.02. Certain Matters Affecting the Trustee...................................... 100
SECTION 8.03. Trustee Not Liable for Mortgage Loans...................................... 102
SECTION 8.04. Trustee May Own Certificates............................................... 102
SECTION 8.05. Trustee's Fees............................................................. 102
SECTION 8.06. Indemnification of Trustee; Expenses....................................... 102
SECTION 8.07. Eligibility Requirements for Trustee....................................... 103
SECTION 8.08. Resignation and Removal of Trustee......................................... 103
SECTION 8.09. Successor Trustee.......................................................... 104
SECTION 8.10. Merger or Consolidation of Trustee......................................... 104
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.............................. 105
SECTION 8.12. Tax Matters................................................................ 106
ARTICLE IX TERMINATION.............................................................................. 108
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage Loans........... 108
SECTION 9.02. Final Distribution on the Certificates..................................... 109
SECTION 9.03. Additional Termination Requirements........................................ 110
ARTICLE X MISCELLANEOUS PROVISIONS................................................................. 111
iii
TABLE OF CONTENTS
(continued)
PAGE
SECTION 10.01. Amendment.................................................................. 111
SECTION 10.02. Counterparts............................................................... 113
SECTION 10.03. Governing Law.............................................................. 113
SECTION 10.04. Intention of Parties....................................................... 113
SECTION 10.05. Notices.................................................................... 113
SECTION 10.06. Severability of Provisions................................................. 114
SECTION 10.07. Assignment................................................................. 114
SECTION 10.08. Limitation on Rights of Certificateholders................................. 115
SECTION 10.09. Inspection and Audit Rights................................................ 115
SECTION 10.10. Certificates Nonassessable and Fully Paid.................................. 115
SECTION 10.11. Third Party Rights......................................................... 116
SECTION 10.12. Additional Rights of the NIM Insurer....................................... 116
SECTION 10.13. Credit Risk Manager........................................................ 116
SECTION 10.14. Assignment; Sales; Advance Facilities...................................... 117
iv
EXHIBIT A FORMS OF OFFERED CERTIFICATES
EXHIBIT B-1 MORTGAGE LOAN SCHEDULE - TOTAL POOL
EXHIBIT B-2 MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3 MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF INVESTMENT LETTER
EXHIBIT H FORM OF RULE 144A LETTER
EXHIBIT I REQUEST FOR RELEASE
EXHIBIT J FORM OF POWER OF ATTORNEY
EXHIBIT K FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M FORM OF TRANSFEREE LETTER
EXHIBIT N FORM OF AUCTION PROCEDURES
EXHIBIT O FORM OF CAP CONTRACT
POOLING AND SERVICING AGREEMENT, dated as of March 1, 2004, among
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor
(the "Depositor"), ▇▇▇▇▇▇ LOAN SERVICING LP, a Delaware limited partnership, as
servicer (the "Servicer") and JPMORGAN CHASE BANK, a New York banking
corporation, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of (i) four real estate mortgage investment conduits,
(ii) the right to receive (x) prepayment penalties on the Mortgage Loans, (y)
amounts paid by the Servicer or the Seller in respect of prepayment charges or
waivers thereof pursuant to this Agreement and (z) amounts received in respect
of any indemnification paid as a result of a prepayment charge being
unenforceable in breach of the representations and warranties set forth in the
Sale Agreement, (iii) the grantor trusts described in Section 2.07 hereof and
(iv) the Cap Contract and Cap Contract Account. REMIC 1 will consist of all of
the assets constituting the Trust Fund (other than the assets described in
clauses (ii), (iii) and (iv) above, the REMIC 1 Regular Interests, the REMIC 2
Regular Interests and the REMIC 3 Regular Interests) and will be evidenced by
the REMIC 1 Regular Interests (which will be uncertificated and will represent
the "regular interests" in REMIC 1) and the Class LT1-R Interest as the single
"residual interest" in REMIC 1. The Trustee will hold the REMIC 1 Regular
Interests. REMIC 2 will consist of the REMIC 1 Regular Interests and will be
evidenced by the REMIC 2 Regular Interests (which will represent the "regular
interests" in REMIC 2) and the Class LT2-R Interest as the single "residual
interest" in REMIC 2. REMIC 3 will consist of the REMIC 2 Regular Interests,
other than the REMIC 2 IO Interests, and will be evidenced by the REMIC 3
Regular Interests (which will represent the "regular interests" in REMIC 3) and
the Class LT3-R Interest as the single "residual interest" in REMIC 3. REMIC 4
will consist of the REMIC 3 Regular Interests and the REMIC 2 IO Interests and
will be evidenced by the REMIC 4 Regular Interests (which will represent the
"regular interests" in REMIC 4) and the Residual Interest as the single
"residual interest" in REMIC 4. The Class R Certificate will represent
beneficial ownership of the Class LT1-R Interest, Class LT2-R Interest, Class
LT3-R Interest and the Residual Interest. The "latest possible maturity date"
for federal income tax purposes of all interests created hereby will be the
Latest Possible Maturity Date.
REMIC 1
The following table specifies the class designation, interest rate, and
initial principal amount for each class of REMIC 1 Interests.
Designation Interest Rate Initial Principal Amount
----------- ------------- ------------------------
LT1-1 (1) $ 38,998,882.37
LT1-2 (1) $ 36,104,536.56
LT1-3 (1) $ 33,424,821.59
LT1-4 (1) $ 30,943,833.32
LT1-5 (1) $ 28,646,831.58
LT1-6 (1) $ 26,520,209.79
LT1-7 (1) $ 24,551,325.99
LT1-8 (1) $ 22,728,489.25
LT1-9 (1) $ 21,040,874.49
LT1-10 (1) $ 19,478,455.27
LT1-11 (1) $ 18,031,943.62
LT1-12 (1) $ 16,692,772.47
LT1-13 (1) $ 15,452,968.88
LT1-14 (1) $ 14,305,165.63
LT1-15 (1) $ 13,242,541.27
LT1-16 (1) $ 12,258,779.78
LT1-17 (1) $ 11,348,033.14
LT1-18 (1) $ 10,504,886.67
LT1-19 (1) $ 9,724,326.90
LT1-20 (1) $ 9,001,711.93
LT1-21 (1) $ 8,329,938.54
LT1-22 (1) $ 7,707,819.46
LT1-23 (1) $ 7,135,316.30
LT1-24 (1) $ 6,605,315.13
LT1-25 (1) $ 6,114,644.62
LT1-26 (1) $ 5,660,388.57
LT1-27 (1) $ 5,239,846.86
LT1-28 (1) $ 4,850,519.38
LT1-29 (1) $ 4,490,091.32
LT1-30 (1) $ 55,864,729.32
LT1-X (1) $ 8,837.25
LT1-R (2) (2)
---------------------
(1) For any Distribution Date, the interest rate for each REMIC 1 Regular
Interest shall be a per annum rate equal to Net Rate for such
Distribution Date.
(2) The Class LT1-R Interest shall represent the sole class of residual
interest in REMIC 1. The Class LT1-R Interest will not have a
principal amount or an interest rate. The Class LT1-R Interest shall
be represented by the Class R Certificate.
REMIC 2
The following table specifies the class designation, Adjustment Period,
interest rate, and initial principal amount or initial notional amount for each
class of REMIC 2 Interests.
Initial Principal
Amount or Initial
Notional Principal
Designation Interest Rate Adjustment Period Amount (5)
----------- ------------- ----------------- ------------------
LT2-1 (1) April 2004 $ 38,998,882.37
LT2-2 (1) May 2004 $ 36,104,536.56
LT2-3 (1) June 2004 $ 33,424,821.59
LT2-4 (1) July 2004 $ 30,943,833.32
LT2-5 (1) August 2004 $ 28,646,831.58
LT2-6 (1) September 2004 $ 26,520,209.79
LT2-7 (1) October 2004 $ 24,551,325.99
LT2-8 (1) November 2004 $ 22,728,489.25
LT2-9 (1) December 2004 $ 21,040,874.49
LT2-10 (1) January 2005 $ 19,478,455.27
LT2-11 (1) February 2005 $ 18,031,943.62
LT2-12 (1) March 2005 $ 16,692,772.47
LT2-13 (1) April 2005 $ 15,452,968.88
LT2-14 (1) May 2005 $ 14,305,165.63
LT2-15 (1) June 2005 $ 13,242,541.27
LT2-16 (1) July 2005 $ 12,258,779.78
LT2-17 (1) August 2005 $ 11,348,033.14
LT2-18 (1) September 2005 $ 10,504,886.67
LT2-19 (1) October 2005 $ 9,724,326.90
LT2-20 (1) November 2005 $ 9,001,711.93
LT2-21 (1) December 2005 $ 8,329,938.54
LT2-22 (1) January 2006 $ 7,707,819.46
LT2-23 (1) February 2006 $ 7,135,316.30
LT2-24 (1) March 2006 $ 6,605,315.13
LT2-25 (1) April 2006 $ 6,114,644.62
LT2-26 (1) May 2006 $ 5,660,388.57
LT2-27 (1) June 2006 $ 5,239,846.86
LT2-28 (1) July 2006 $ 4,850,519.38
LT2-29 (1) August 2006 $ 4,490,091.32
LT2-30 (1) September 2006 $ 55,864,729.32
LT2-X (2) N/A $ 8,837.25
LT2-1-IO (3) April 2004 $ 38,998,882.37
LT2-I-2-IO (3) May 2004 $ 36,104,536.56
LT2-I-3-IO (3) June 2004 $ 33,424,821.59
LT2-I-4-IO (3) July 2004 $ 30,943,833.32
LT2-I-5-IO (3) August 2004 $ 28,646,831.58
LT2-I-6-IO (3) September 2004 $ 26,520,209.79
LT2-I-7-IO (3) October 2004 $ 24,551,325.99
LT2-I-8-IO (3) November 2004 $ 22,728,489.25
LT2-I-9-IO (3) December 2004 $ 21,040,874.49
LT2-I-10-IO (3) January 2005 $ 19,478,455.27
LT2-I-11-IO (3) February 2005 $ 18,031,943.62
LT2-I-12-IO (3) March 2005 $ 16,692,772.47
LT2-I-13-IO (3) April 2005 $ 15,452,968.88
LT2-I-14-IO (3) May 2005 $ 14,305,165.63
LT2-I-15-IO (3) June 2005 $ 13,242,541.27
LT2-I-16-IO (3) July 2005 $ 12,258,779.78
LT2-I-17-IO (3) August 2005 $ 11,348,033.14
LT2-I-18-IO (3) September 2005 $ 10,504,886.67
LT2-I-19-IO (3) October 2005 $ 9,724,326.90
LT2-I-20-IO (3) November 2005 $ 9,001,711.93
LT2-I-21-IO (3) December 2005 $ 8,329,938.54
LT2-I-22-IO (3) January 2006 $ 7,707,819.46
LT2-I-23-IO (3) February 2006 $ 7,135,316.30
LT2-I-24-IO (3) March 2006 $ 6,605,315.13
LT2-I-25-IO (3) April 2006 $ 6,114,644.62
LT2-I-26-IO (3) May 2006 $ 5,660,388.57
LT2-I-27-IO (3) June 2006 $ 5,239,846.86
LT2-I-28-IO (3) July 2006 $ 4,850,519.38
LT2-I-29-IO (3) August 2006 $ 4,490,091.32
LT2-I-30-IO (3) September 2006 $ 55,864,729.32
LT2-R (4) N/A (4)
---------------------
(1) For any Distribution Date during or prior to the related Adjustment
Period, the interest rate for each REMIC 2 Interest that does not
contain "IO" in its designation (other than the LT2-X Interest) shall
be a per annum rate equal to the greater of (i) the Net Rate for such
Distribution
Date minus 2.00% and (ii) 0.00%. For any Distribution Date after the
related Adjustment Period, the interest rate for each such REMIC 2
Interest shall be the Net Rate.
(2) For any Distribution Date, the interest rate for the LT2-X Interest
shall be a per annum rate equal to the Net Rate for such Distribution
Date.
(3) For any Distribution Date during or prior to the related Adjustment
Period, the interest rate for each REMIC 2 Interest that contains an
"IO" in its designation shall be a per annum rate equal to 2.00%
subject to a cap equal to the Net Rate. For any Distribution Date
after the related Adjustment Period, the interest rate for each such
REMIC 2 Interest shall be 0.00%.
(4) The Class LT2-R Interest shall represent the sole class of residual
interest in REMIC 2. The Class LT2-R Interest will not have a
principal amount or an interest rate. The Class LT2-R Interest shall
be represented by the Class R Certificate.
(5) The REMIC 2 IO Interests are interest-only interests and are not
entitled to payments of principal.
REMIC 3
The following table specifies the class designation, interest rate, and
initial principal amount for each class of REMIC 3 Interests.
Corresponding
Designation Interest Rate Initial Principal Amount Certificate
----------- ------------- ------------------------ -------------
LT3-A1A (1) $ 107,564,000.00000000 Class A-1A
LT3-A1B (1) $ 5,661,000.00000000 Class A-1B
LT3-A2 (1) $ 103,337,500.00000000 Class A-2
LT3-M1 (1) $ 17,062,500.00000000 Class M-1
LT3-M2 (1) $ 13,781,500.00000000 Class M-2
LT3-M3 (1) $ 4,594,000.00000000 Class M-3
LT3-B1 (1) $ 7,219,000.00000000 Class B-1
LT3-B2 (1) $ 3,280,500.00000000 Class B-2
LT3-AR (1) $ 50.00000000 Class R
LT3-X (1) $ 262,478,787.25000000 N/A
LT3-R (2) (2) N/A
---------------------
(1) For any Distribution Date, the interest rate for the LT3-A1A Interest,
the LT3-A1B Interest, the LT3-A2 Interest, the LT3-A3 Interest, the
LT3-M1 Interest, the LT3-M2 Interest, the LT3-M3 Interest, the LT3-B1
Interest, the LT3-B2 Interest, the LT3-X Interest and the LT3-AR
Interest shall be a per annum rate equal to the weighted average
interest rate of the REMIC 2 Regular Interests (other than the REMIC 2
IO Interests) for such Distribution Date, weighted on the basis of
their respective principal balances.
(2) The Class LT3-R Interest shall represent the sole class of residual
interest in REMIC 3. The Class LT3-R Interest will not have a
principal amount or an interest rate. The Class LT3-R Interest shall
be represented by the Class R Certificate.
All computations with respect to any REMIC 3 Interest shall be taken
out to ten decimal places.
All covenants and agreements made by the Seller in the Sale Agreement
and by the Depositor and the Trustee herein with respect to the Mortgage Loans
and the other property constituting the Trust Fund
are for the benefit of the Holders from time to time of the Certificates and, to
the extent provided herein, the NIM Insurer.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing
practices, which will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgages Loans in the jurisdictions in which the
related Mortgaged Properties are located.
Accrual Period: With respect to each Class of Certificates (other than
the Class X Certificates) and any Distribution Date, the period commencing on
the immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
such Distribution Date. With respect to the Class X Certificates, the REMIC 1
Regular Interests, the REMIC 2 Regular Interests and the REMIC 3 Regular
Interests, the calendar month preceding the month in which such Distribution
Date occurs. All calculations of interest on each Class of Certificates (other
than the Class X Certificates) will be made on the basis of the actual number of
days elapsed in the related Accrual Period and a 360 day year. All calculations
of interest on the Class X Certificates, the REMIC 1 Regular Interests, the
REMIC 2 Regular Interests and the REMIC 3 Regular Interests will be made on the
basis of 30 days in the related Accrual Period and a 360 day year.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable.
Adjusted Net Rate: With respect to any Distribution Date, the per annum
rate equal to 12 times the amount determined by dividing (i) the excess of (a)
the total scheduled interest on the Mortgage Loans in the related Due Period
based on the Net Mortgage Rates in effect on the related Due Date over (b) the
Class X Current Interest by (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, as of the Cut-off Date).
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Adjustment Period: As set forth in the "REMIC 2" table in the
Preliminary Statement.
Advance: The aggregate of the advances required to be made by the
Servicer with respect to any Distribution Date pursuant to Section 4.01, the
amount of any such advances being equal to the sum of the aggregate of payments
of principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto;
provided, however, that with respect to any Mortgage Loan that is (x) a second
lien Mortgage
Loan or (y) has been converted to an REO Property, the obligation to make
advances shall only be to payments of interest.
Advance Facility: A financing or other facility as described in Section
10.14(a).
Advance Facility Notice: As defined in Section 10.14(b).
Advance Financing Person: As defined in Section 10.14(a).
Advance Reimbursement Amounts: As defined in Section 10.14(a).
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A-1A Certificate Principal Balance, the Class A-1B
Certificate Principal Balance, the Class A-2 Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance, the Class M-3 Certificate
Principal Balance, Class B-1 Certificate Principal Balance and the Class B-2
Certificate Principal Balance in each case as of such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Seller by an independent fee appraiser at the time of the
origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction where the related Mortgaged Property is located to reflect
of record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Auction Termination: The termination of the Trust Fund hereunder
pursuant to Section 9.01(a)(i) hereof.
Auction Termination Amount: The purchase price received by the Trustee
in connection with any purchase of all of the Mortgage Loans pursuant to Section
9.01(a) (i).
Auction Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is equal to or less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
Auction Termination Price: In the case of an Auction Termination, as of
the initial Distribution Date on or after the Auction Termination Date, an
amount equal to the sum of (A) the aggregate Stated Principal Balance of each
Mortgage Loan (other than any Mortgage Loan that has become an REO Property),
plus accrued interest thereon at the applicable Mortgage Rate through the Due
Date preceding distribution of the proceeds, the fair market value of any REO
Property, plus accrued interest thereon, (B) any unreimbursed out-of-pocket
costs and expenses owed to the Trustee (including any costs and expenses
incurred in connection with the Auction Termination) or the Servicer and any
unreimbursed Servicing Fees, Advances and Servicing Advances, (C) all interest
accrued on, as well as amounts necessary to retire the principal balance of, the
notes guaranteed by the NIM Insurer, (D) any and all amounts then owed to the
NIM Insurer and (E) any costs and damages incurred by the Trust Fund (or the
Trustee on behalf of the Trust Fund) in connection with any violation of any
anti-predatory or anti-abusive lending laws.
Available Funds Cap: with respect to a Distribution Date, the per annum
rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates in
effect on the related Due Date less the Current Interest on the Class X
Certificates, divided by (y) the aggregate Certificate Principal Balance (prior
to distributions on such Distribution Date) of the Class A-1A, Class ▇-▇▇, ▇▇▇▇▇
▇-▇, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class R
Certificates and (iii) a fraction, the numerator of which is 30, and the
denominator of which is the actual number of days in the related Accrual Period.
Balloon Loan: A Mortgage Loan having an original term to stated
maturity of approximately 15 years which provides for level monthly payments of
principal and interest based on a 30-year amortization schedule, with a balloon
payment of the remaining outstanding principal balance due on such Mortgage Loan
at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each of the Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class X, Class M-1, Class
M-2, Class M-3, Class B-1 and Class B-2 Certificates constitutes a Class of
Book-Entry Certificates.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a
day on which banking institutions in the State of Texas, State of Delaware, and
in the City of New York, New York are authorized or obligated by law or
executive order to be closed.
Cap Contract: The amended confirmation and agreement and any related
confirmation thereto, between the Trust Fund or Trustee and Credit Suisse First
Boston International (in the form of Exhibit O hereto).
Cap Contract Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.04(j) in the name of the Trustee
for the benefit of the Trust Fund and designated
"JPMorgan Chase Bank, as trustee, in trust for registered holders of Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2004-BC1." Funds in the Cap Contract Account shall be held
in trust for the Trust Fund for the uses and purposes set forth in this
Agreement.
Cap Contract Notional Balance: With respect to any Distribution Date,
the Cap Contract Notional Balance set forth below for such Distribution Date:
ONE-MONTH LIBOR CAP TABLE
1ML STRIKE 1ML STRIKE
BEGINNING NOTIONAL BALANCE LOWER COLLAR UPPER COLLAR
PERIOD ACCRUAL ENDING ACCRUAL ($) (%) (%)
------ -------- -------------- ---------------- ------------ ------------
1 03/30/04 04/25/04 525,000,000.00 5.261 9.000
2 04/25/04 05/25/04 519,880,888.93 4.656 9.000
3 05/25/04 06/25/04 513,650,295.94 4.612 9.000
4 06/25/04 07/25/04 506,316,435.80 4.881 9.000
5 07/25/04 08/25/04 497,896,813.35 4.810 9.000
6 08/25/04 09/25/04 488,414,316.55 4.895 9.000
7 09/25/04 10/25/04 477,901,407.90 5.146 9.000
8 10/25/04 11/25/04 466,628,617.08 5.043 9.000
9 11/25/04 12/25/04 454,670,788.34 5.287 9.000
10 12/25/04 01/25/05 442,379,832.73 5.169 9.000
11 01/25/05 02/25/05 430,414,317.18 5.228 9.000
12 02/25/05 03/25/05 418,780,150.64 5.875 9.000
13 03/25/05 04/25/05 407,467,913.36 5.334 9.000
14 04/25/05 05/25/05 396,468,521.22 5.571 9.000
15 05/25/05 06/25/05 385,773,150.16 5.430 9.000
16 06/25/05 07/25/05 375,373,228.62 5.665 9.000
17 07/25/05 08/25/05 365,260,434.67 5.518 9.000
18 08/25/05 09/25/05 355,426,695.19 5.559 9.000
19 09/25/05 10/25/05 345,857,913.26 5.792 9.000
20 10/25/05 11/25/05 334,490,616.51 5.631 9.000
21 11/25/05 12/25/05 319,387,858.25 6.465 9.000
22 12/25/05 01/25/06 304,992,883.50 7.276 9.000
23 01/25/06 02/25/06 291,374,680.15 7.306 9.000
24 02/25/06 03/25/06 278,459,274.23 8.119 9.000
25 03/25/06 04/25/06 267,401,280.36 7.320 9.000
26 04/25/06 05/25/06 259,278,618.29 7.593 9.000
27 05/25/06 06/25/06 251,475,416.03 7.580 9.000
28 06/25/06 07/25/06 243,926,590.98 8.238 9.000
29 07/25/06 08/25/06 236,625,501.66 7.986 9.000
30 08/25/06 09/25/06 229,556,464.61 7.998 9.000
31 09/25/06 10/25/06 222,711,589.22 8.750 9.000
32 10/25/06 11/25/06 216,083,443.74 8.449 9.000
33 11/25/06 12/25/06 209,664,849.90 8.970 9.000
Cap Contract Termination Date: The Distribution Date in December 2006.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A.
Certificate Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(f) in the name of the Trustee
for the benefit of the Certificateholders and designated "JPMorgan Chase Bank,
as trustee, in trust for registered holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2004-BC1." Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Group: Either of Certificate Group One or Certificate Group
Two.
Certificate Group One: The Class A-1A Certificates; the Class A-1B
Certificates and the Class R Certificates. For purposes of Section 2.07 hereof,
Certificate Group One shall be related to Group One.
Certificate Group Two: The Class A-2 Certificates. For purposes of
Section 2.07 hereof, Certificate Group Two shall be related to Group Two.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(h). On each Distribution Date, after distributions and allocations of
Realized Losses have been made, a portion of the Class C Interest Carry Forward
Amount will be added to the Class C Certificate Principal Balance so that the
Class C Certificate Principal Balance equals the Overcollateralization Amount.
No interest will accrue on such portion. Notwithstanding the foregoing, on any
Distribution Date relating to a Prepayment Period in which a Subsequent Recovery
has been received by the Servicer, the Certificate Principal Balance of any
Class of Certificates then outstanding for which any Realized Loss or any
Applied Realized Loss Amount has been applied will be increased, in order of
seniority, by an amount equal to the lesser of (i) the Unpaid Realized Loss
Amount for such Class of Certificates and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders, to the extent
allocable to principal, (reduced by the amount of the increase in the
Certificate Principal Balance of any more senior Class of Certificates pursuant
to this sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee and the NIM Insurer are entitled to rely conclusively on
a certification of the Depositor or any
Affiliate of the Depositor in determining which Certificates are registered in
the name of an Affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set forth
in Section 5.01 hereof.
Class A Certificates: Any of the Class A-1A, Class A-1B and Class A-2
Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the Certificate Principal Balance of the Class A and Class R
Certificates immediately prior to such Distribution Date over (B) the lesser of
(1) 62.90% of the Stated Principal Balances of the Mortgage Loans as of the end
of the immediately preceding Due Period, and (2) the excess of the Stated
Principal Balances of the Mortgage Loans as of the end of the immediately
preceding Due Period over the Minimum Required Overcollateralization Amount;
provided, however, that in no event will the Class A Principal Distribution
Amount with respect to any Distribution Date exceed the aggregate Certificate
Principal Balance of the Class A and Class R Certificates.
Class A-1A Certificate: Any Certificate designated as a "Class A-1A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-1A Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class A-1A
Certificates.
Class A-1A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1A Pass-Through Rate on
the Class A-1A Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class A-1A Current Interest or a Class A-1A Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class A-1A Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class A-1A Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class A-1A Current Interest with respect to
prior Distribution Dates (excluding any Class A-1A Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-1A Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class A-1A Pass-Through Rate for the related Accrual
Period.
Class A-1A Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class A-1A
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-1A Certificates would otherwise be entitled to receive
on such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-1A Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class A-1A
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class A-1A Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class A-1A Margin for such Distribution
Date.
Class A-1A Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.220% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.440% per annum.
Class A-1A Pass-Through Rate: For the first Distribution Date, 1.310%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class A-1A Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class A-1B Certificate: Any Certificate designated as a "Class A-1B
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-1B Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class A-1B
Certificates.
Class A-1B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1B Pass-Through Rate on
the Class A-1B Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class A-1B Current Interest or a Class A-1B Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class A-1B Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class ▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇: As of any Distribution Date,
the sum of (1) the excess of (A) the Class A-1B Current Interest with respect to
prior Distribution Dates (excluding any Class A-1B Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-1B Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class A-1B Pass-Through Rate for the related Accrual
Period.
Class A-1B Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class A-1B
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-1B Certificates would otherwise be entitled to receive
on such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-1B Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class A-1B
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class ▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class A-1B Margin for such Distribution
Date.
Class A-1B Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.420% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.840% per annum.
Class A-1B Pass-Through Rate: For the first Distribution Date, 1.510%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class A-1B Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class A-2
Certificates.
Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class A-2 Current Interest or a Class A-2 Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class A-2 Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class A-2 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates (excluding any Class A-1A Interest Carryover Amount)
over (B) the amount actually distributed to the Class A-2 Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class A-2 Pass-Through Rate for the related Accrual
Period.
Class A-2 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class A-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class A-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class A-2 Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class A-2
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class A-2 Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class A-2 Margin for such Distribution
Date.
Class A-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.230% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.460% per annum.
Class A-2 Pass-Through Rate: For the first Distribution Date, 1.320%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class A-2 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class B-1
Certificates.
Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class B-1 Current Interest or a Class B-1 Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class B-1 Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates (excluding any Class B-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class B-1 Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class B-1 Pass-Through Rate for the related Accrual
Period.
Class B-1 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class B-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class B-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class B-1 Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class B-1
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class B-1 Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class B-1 Margin for such Distribution
Date.
Class B-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.700% per annum and, as of any
Distribution Date after the Auction Termination Date, 2.550% per annum.
Class B-1 Pass-Through Rate: For the first Distribution Date, 2.790%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class B-1 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Certificate Principal
Balances of the Class A, Class R and Class M Certificates have been reduced to
zero and a Trigger Event exists, or as long as a Trigger Event does not exist,
the excess of (1) the sum of (A) the sum of the Certificate Principal Balances
of the Class A and Class R Certificates (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class M-3 Certificate Principal Balance (after
taking into account distributions of the Class M-3 Principal Distribution Amount
on such Distribution Date), and (E) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 95.40% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of the Class A Certificates, Class R
Certificates and Class M Certificates has been reduced to zero, the Class B-1
Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class B-1 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A,
Class R and Class M Certificates and (II) in no event will the Class B-1
Principal Distribution Amount with respect to any Distribution Date exceed the
Class B-1 Certificate Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Applied Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance.
Class B-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.
Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-2-Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class B-2
Certificates.
Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class B-2 Current Interest or a Class B-2 Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class B-2 Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates (excluding any Class B-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class B-2 Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class B-2 Pass-Through Rate for the related Accrual
Period.
Class B-2 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class B-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class B-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class B-2 Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class B-1
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class B-2 Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class B-2 Margin for such Distribution
Date.
Class B-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 2.750% per annum and, as of any
Distribution Date after the Auction Termination Date, 4.125% per annum.
Class B-2 Pass-Through Rate: For the first Distribution Date, 3.840%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class B-2 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Certificate Principal
Balances of the Class A, Class R, Class M and Class B-1 Certificates have been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the sum of the Certificate Principal
Balances of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class M-3 Certificate Principal Balance
(after taking into account distributions of the Class M-3 Principal Distribution
Amount on such Distribution Date), (E) the Class B-1 Certificate Principal
Balance (after taking into account distributions of the Class B-1 Principal
Distribution Amount on such Distribution Date) and (F) the Class B-2 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 97.90% of the Stated Principal Balances of the Mortgage Loans as
of the end of the immediately preceding Due Period and (B) the excess of the
Stated Principal Balances of the Mortgage Loans as of the end of the immediately
preceding Due Period over the Minimum Required Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of the
Class A Certificates, Class R Certificates, Class M Certificates and Class B-1
Certificates has been reduced to zero, the Class B-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R, Class M and
Class B-1 Certificates and (II) in no event will the Class B-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-2
Certificate Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Applied Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class C Certificate: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class C Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class C Certificates.
Class C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class C Certificates.
Class C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C Distributable Interest
Rate on a notional amount equal to the aggregate of
the principal balance of the Mortgage Loans outstanding as of the beginning of
such Accrual Period, plus the interest portion of any previous distributions on
such Class that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class C Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the REMIC 3 Regular Interests over (b)
two times the weighted average of the interest rates on the REMIC 3 Regular
Interests (treating for purposes of this clause (b) the interest rate on each of
the REMIC 3 Marker Interests as being subject to a cap equal to the interest
rate of the Corresponding Certificate and treating the interest rate on the
Class LT3-X Interest as being capped at zero). The averages described in the
preceding sentence shall be weighted on the basis of the respective principal
balances of the REMIC 3 Regular Interests immediately prior to any date of
determination.
Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates.
Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Applied Realized Loss Amount on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."
Class M Certificates: Any of the Class M-1, Class M-2 and Class M-3
Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-1
Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class M-1 Current Interest or a Class M-1 Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class M-1 Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class M-1 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates (excluding any Class M-1 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-1 Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class M-1 Pass-Through Rate for the related Accrual
Period.
Class M-1 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class M-1
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-1 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-1 Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class M-1
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class M-1 Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class M-1 Margin for such Distribution
Date.
Class M-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.510% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.765% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 1.600%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class M-1 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Certificate Principal
Balances of the Class A and Class R Certificates have been reduced to zero and a
Trigger Event exists, or as long as a Trigger Event does not exist, the excess
of (1) the sum of (A) the sum of the Certificate Principal Balances of the Class
A and Class R Certificates (after taking into account distributions of the Class
A Principal Distribution Amount on such Distribution Date) and (B) the Class M-1
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 75.90% of the Stated Principal Balances of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of the end of the
immediately preceding Due Period over the Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of the
Class A Certificates and Class R Certificates has been reduced to zero, the
Class M-1 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-1 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A Certificates and Class R Certificates and (II) in no event will the
Class M-1 Principal Distribution Amount with respect to any Distribution Date
exceed the Class M-1 Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Applied Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-2
Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class M-2 Current Interest or a Class M-2 Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class M-2 Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates (excluding any Class M-2 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-2 Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class M-2 Pass-Through Rate for the related Accrual
Period.
Class M-2 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class M-2
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-2 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-2 Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class M-2
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class M-2 Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class M-2 Margin for such Distribution
Date.
Class M-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.070% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.605% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 2.160%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class M-2 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Certificate Principal
Balances of the Class A, Class R and Class M-1 Certificates have been reduced to
zero and a Trigger Event exists, or as long as a Trigger Event does not exist,
the excess of (1) the sum of (A) the sum of the Certificate Principal Balances
of the Class A and Class R Certificates (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date) and
(C) the Class M-2 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 86.40% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances of the Mortgage Loans
as of the end of the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of Class A Certificates, Class R Certificates
and the Class M-1 Certificates has been reduced to zero, the Class M-2 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class M-2 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A, Class R
and Class M-1 Certificates and (II) in no event will the Class M-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-2
Certificate Principal Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Applied Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-3
Certificates.
Class M-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3 Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class M-3 Current Interest or a Class M-3 Interest
Carry Forward Amount that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class M-3 Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class M-3 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-3 Current Interest with respect to
prior Distribution Dates (excluding any Class M-3 Interest Carryover Amount)
over (B) the amount actually distributed to the Class M-3 Certificates with
respect to Current Interest or Interest Carry Forward Amounts on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by
applicable law) at the Class M-3 Pass-Through Rate for the related Accrual
Period.
Class M-3 Interest Carryover Amount: As of any Distribution Date, the
sum of (1) if on such Distribution Date the Pass-Through Rate for the Class M-3
Certificates is based upon the Available Funds Cap, the excess of (A) the amount
of interest the Class M-3 Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class M-3 Margin for such Distribution Date, up to the
Maximum Rate Cap, over (B) the amount of interest payable on the Class M-3
Certificates at the Available Funds Cap, up to but not exceeding the Maximum
Rate Cap for such Distribution Date and (2) the Class M-3 Interest Carryover
Amount for all previous Distribution Dates not previously paid pursuant to
Section 4.04(e)(vii), together with interest thereon at a rate equal to the sum
of One-Month LIBOR and the applicable Class M-3 Margin for such Distribution
Date.
Class M-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.300% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.950% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 2.39% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Certificate Principal
Balances of the Class A, Class R, Class M-1 and Class M-2 Certificates have been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the sum of the Certificate Principal
Balances of the Class A and Class R Certificates (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date) and (D) the Class M-3 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 89.90% of
the Stated Principal Balances of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balances for the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of the Class A Certificates, the
Class R Certificates, the Class M-1 Certificates and the Class M-2 Certificates
has been reduced to zero, the Class M-3 Principal Distribution Amount will equal
the lesser of (x) the outstanding Certificate Principal Balance of the Class M-3
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class R, Class M-1 and Class M-2 Certificates
and (II) in no event will the Class M-3 Principal Distribution Amount with
respect to any Distribution Date exceed the Class M-3 Certificate Principal
Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-3 Applied Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a Class P
Certificate on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class R Certificate: The Class R Certificate executed by the Trustee
and authenticated by the Trustee in substantially the form set forth in Exhibit
A.
Class R Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Class R Current Interest or a Class R Interest Carry
Forward Amount that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class R Certificate. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class R Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates (excluding any Class R Interest Carryover Amount) over (B)
the amount actually distributed to the Class R Certificate with respect to
Current Interest or Interest Carry Forward Amounts on such prior Distribution
Dates and (2) interest on such excess (to the extent permitted by applicable
law) at the Class R Pass-Through Rate for the related Accrual Period.
Class R Interest Carryover Amount: As of any Distribution Date, the sum
of (1) if on such Distribution Date the Pass-Through Rate for the Class R
Certificate is based upon the Available Funds Cap, the excess of (1) the amount
of interest the Class R Certificate would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of One-Month
LIBOR and the applicable Class R Margin for such Distribution Date, up to the
Maximum Rate Cap, over (2) the amount of interest payable on the Class R
Certificate at the Available Funds Cap, up to but not exceeding the Maximum Rate
Cap for such Distribution Date and (2) the Class R Interest Carryover Amount for
all previous Distribution Dates not previously paid pursuant to Section
4.04(e)(vii), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class R Margin for such Distribution Date.
Class R Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.220% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.440% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 1.310% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.
Class X Certificate: Any Certificate designated as a "Class X
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class X Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class X Pass-Through Rate on
the Class X Notional Amount as of such Distribution Date, plus the interest
portion of any previous distributions in respect of Class X Current Interest or
Class X Interest Carry Forward Amounts that is recovered as a voidable
preference by a trustee in bankruptcy, less any Non-Supported Interest Shortfall
allocated on such Distribution Date to the Class X Certificates.
Class X Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class X Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class X
Certificates with respect to Current Interest or Interest Carry Forward Amounts
on such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class X Pass-Through Rate for the related
Accrual Period.
Class X Notional Amount: With respect to any of the first thirty
Distribution Dates, will equal the lesser of (i) the amount specified on the
Class X Notional Balance Schedule below and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the preceding Distribution Date (or, in the
case of the first Distribution Date, as of the Cut-off Date). Beginning with the
Distribution Date in October 2006, and thereafter zero.
CLASS X NOTIONAL BALANCE SCHEDULE
PERIOD BALANCE SCHEDULE ($)
----------------------------------
1 525,000,000.00
2 486,001,117.63
3 449,896,581.07
4 416,471,759.48
5 385,527,926.16
6 356,881,094.58
7 330,360,884.79
8 305,809,558.80
9 283,081,069.55
10 262,040,195.06
11 242,561,739.79
12 224,529,796.17
13 207,837,023.70
14 192,384,054.82
15 178,078,889.19
16 164,836,347.92
17 152,577,568.14
18 141,229,535.00
19 130,724,648.33
20 121,000,321.43
21 111,998,609.50
22 103,668,670.96
23 95,960,851.50
24 88,825,535.20
25 82,220,220.07
26 76,105,575.45
27 70,445,186.88
28 65,205,340.02
29 60,354,820.64
30 55,864,729.32
31 0.00
Class X Pass-Through Rate: As of any Distribution Date, the lesser of
(1) 2.00% and (2) the weighted average Net Mortgage Rate on the Mortgage Loans
based on the Net Mortgage Rates in effect on the related Due Date. As of any
Distribution Date on or after October 25, 2006, 0.00%.
Clean Up Call: The termination of the Trust Fund hereunder pursuant to
Section 9.01(a)(ii).
Clean Up Call Date: The second Distribution Date immediately following
the Auction Termination Date.
Clean Up Call Price: An amount equal to the sum of (a) the aggregate
Stated Principal Balance of each Mortgage Loan (other than any Mortgage Loan
that is an REO Property), plus accrued interest
thereon at the applicable Mortgage Rate through the Due Date preceding
distribution of the proceeds, the fair market value of any REO Property, plus
accrued interest thereon, (b) any unreimbursed out-of-pocket expenses owed to
the Trustee (including the costs and expenses of conducting the auction
described in Section 9.01(a)) or the Servicer and any unreimbursed Servicing
Fees, Advances or Servicing Advances, (c) all interest accrued on, as well as
amounts necessary to retire the principal balance of the notes guaranteed by the
NIM Insurer, (d) any amounts owed to the NIM Insurer at the time the Clean Up
Call is exercised and (e) any costs and damages incurred by the Trust Fund (or
the Trustee on behalf of the Trust Fund) in connection with any violation by the
affected Mortgage Loan of any anti-predatory or anti-abusive lending laws.
Closing Date: March 30, 2004.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "▇▇▇▇▇▇ Loan
Servicing LP, in trust for registered holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2004-BC1". Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged Property and
(B) the sales price of the related Mortgaged Property at time of origination.
Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.
Corresponding Certificates: With respect to the Class LT3-A1A Interest,
the Class A-1A Certificates. With respect to the Class LT3-A1B Interest, the
Class A-1B Certificates. With respect to the Class LT3-A2 Interest, the Class
A-2 Certificates. With respect to the Class LT3-M1 Interest, the Class M-1
Certificates. With respect to the Class LT3-M2 Interest, the Class M-2
Certificates. With respect to the Class LT3-M3 Interest, the Class M-3
Certificates. With respect to the Class LT3-B1 Interest, the Class B-1
Certificates. With respect to the Class LT3-B2 Interest, the Class B-2
Certificates. With respect to the Class LT3-AR Interest, the Class R
Certificates.
Credit Risk Management Agreement: The Credit Risk Management Agreement
dated as of March 30, 2004 between the Depositor and the Credit Risk Manager.
Credit Risk Manager: The Murrayhill Company, a Colorado corporation, or
its successor in interest.
Credit Risk Manager Fee: The fee payable on each Distribution Date to
the Credit Risk Manager as compensation for all services rendered by it in
exercise and performance of any of the powers and duties of the Credit Risk
Manager under the Credit Risk Management Agreement, which amount shall
equal one-twelfth of the product of (1) the Credit Risk Manager Fee Rate and (2)
the Stated Principal Balance of the Mortgage Loans as of the first day of the
related Due Period.
Credit Risk Manager Fee Rate: 0.015% per annum.
Current Interest: Any of the Class A-1A Current Interest, the Class
A-1B Current Interest, the Class A-2 Current Interest, the Class R Current
Interest, the Class M-1 Current Interest, the Class M-2 Current Interest, the
Class M-3, Current Interest Class B-1 Current Interest, the Class B-2 Current
Interest, Class X Current Interest and the Class C Current Interest.
Cut-off Date: March 1, 2004.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates on and
after the Cut-off Date.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."
Depositor: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., a Delaware
corporation, or its successor in
Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry
Certificates, the agreement between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Transaction: A transaction in which the assets underlying
the Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial
mortgage obligations that are secured by single family residential, multi-family
residential, commercial real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, (2) any
organization (other than a cooperative described in Section 521 of the Code)
which is exempt from tax under Chapter 1 of Subtitle A of the Code unless such
organization is subject to the tax imposed by Section 511 of the Code and (3)
any organization described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in April 2004.
Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning
on the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs and ending on the first day of the month in which
such Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the NIM Insurer and each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account and a perfected first security interest
against any collateral (which shall be limited to Permitted Investments)
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such account is maintained,
or (v) maintained at an eligible institution whose commercial paper, short-term
debt or other short-term deposits are rated at least A-1+ by S&P and F-1+ by
Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein,
or (vii) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity, that is acceptable to the Rating Agencies, or (viii) otherwise
acceptable to each Rating Agency, as evidenced by a letter from each Rating
Agency to the Trustee and the NIM Insurer.
ERISA: The Employee Retirement Income Security Act of 1974, including
any successor or amendatory provisions.
ERISA Restricted Certificate: The Class C, Class P and Class R
Certificate and any other Certificate, unless such other Certificate shall have
received a rating from a Rating Agency at the time of a transfer of such other
Certificate that is in one of the three (or in the case of Designated
Transactions, four) highest generic rating categories.
Event of Default: As defined in Section 7.01 hereof.
Excess Interest: On any Distribution Date, for each Class of
Certificates (other than the Class X, Class C and Class P Certificates), the
excess of (i) the amount of interest each such Class of Certificates is entitled
to receive on such Distribution Date at its Pass-Through Rate over (ii) the
amount of interest each such Class of Certificates would have been entitled to
receive on such Distribution Date had the Pass-Through Rate for such Class been
the product of (I) the Adjusted Net Rate and (II) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days in the
related Accrual Period.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Existing Servicing Agreement: The Sub-Servicing Agreement between
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending, Inc., as Owner and ▇▇▇▇▇▇ Loan Servicing LP, as
Servicer, dated as of September 1, 2002, as at any time amended and in effect.
Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date reduced by the Principal Funds with respect to such Distribution Date and
(ii) $5,512,593 over (B) the Pool Stated Principal Balance of the Mortgage Loans
as of such Distribution Date and (2) on and after the Stepdown Date, (A) the sum
of (i) the Aggregate Certificate Principal Balance immediately preceding such
Distribution Date, reduced by the Principal Funds with respect to such
Distribution Date and (ii) the greater of (a) 2.10% of the Pool Stated Principal
Balances of the Mortgage Loans and (b) the Minimum Required
Overcollateralization Amount less (B) the Pool Stated Principal Balance of the
Mortgage Loans as of such Distribution Date; provided, however, that if on any
Distribution Date a Trigger Event is in effect, the Extra Principal Distribution
Amount will not be reduced to the applicable percentage of the then-current
Stated Principal Balance of the Mortgage Loans as of the Due Date immediately
prior to the Trigger Event until the next Distribution Date on which the Trigger
Event is not in effect. Notwithstanding the foregoing, the Extra Principal
Distribution amount will be zero for each Distribution Date up to and including
the Distribution Date in September 2004.
▇▇▇▇▇▇ ▇▇▇: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FIFO: As defined in Section 10.14(e).
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution
Date, in the event that the Pass-Through Rate for a class of Offered
Certificates (other than the Class X Certificates) is based upon the Available
Funds Cap or the Maximum Rate Cap, the excess of (1) the amount of interest that
such Class would have been entitled to receive on such Distribution Date had the
Pass-Through Rate for that Class not been calculated based on the Available
Funds Cap or the Maximum Rate Cap, up to but not exceeding greater of (x) the
Maximum Rate Cap or (y) the Upper Collar, over (2) the amount of interest such
class was entitled to receive on such Distribution Date based on the lesser of
(a) the Available Funds Cap or (b) the Maximum Rate Cap, together with (i) the
unpaid portion of any such excess from prior Distribution Dates (and interest
accrued thereon at the then applicable Pass-Through Rate, without giving effect
to the applicable Available Funds Cap) and (ii) any amount previously
distributed with respect to Floating Rate Certificate Carryover for such class
that is recovered as a voidable preference by a trustee in bankruptcy.
▇▇▇▇▇▇▇ Mac: A corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group One"
in the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan identified in the Group One
Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Principal Distribution Amount: As of any Distribution Date,
the amount equal to the lesser of (i) the aggregate Certificate Principal
Balance of the Class A-1A, Class A-1B and Class R Certificates and (ii) the
product of (x) the Group One Principal Distribution Percentage and (y) the Class
A Principal Distribution Amount; provided, however, that with respect to any
Distribution Date on which the Class A-1A and Class A-1B Certificates are
outstanding and the Certificate Principal Balance of the Class A-2 Certificates
has been reduced to zero, the Group One Principal Distribution Amount will equal
the Class A Principal Distribution Amount.
Group One Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group One, and the denominator of which is the amount of Principal Funds
received from all of the Mortgage Loans in the Mortgage Pool.
Group Two: The portion of the Mortgage Pool identified as "Group Two"
in the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan identified in the Group Two
Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Principal Distribution Amount: As of any Distribution Date,
the amount equal to the lesser of (i) the Certificate Principal Balance of the
Class A-2 Certificates and (ii) the product of (x) the Group Two Principal
Distribution Percentage and (y) the Class A Principal Distribution Amount;
provided, however, that with respect to any Distribution Date on which the Class
A-2 Certificates are outstanding and the Certificate Principal Balances of the
Class A-1A, Class A-1B and Class R Certificates have been reduced to zero, the
Group Two Principal Distribution Amount will equal the Class A Principal
Distribution Amount.
Group Two Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group Two, and the denominator of which is the amount of Principal Funds
received from all of the Mortgage Loans in the Mortgage Pool.
Indenture: An indenture relating to the issuance of notes guaranteed by
the NIM Insurer.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate
(other than the Class P Certificates), the Certificate Principal Balance of such
Certificate or any predecessor Certificate on the Closing Date as set forth in
Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing mortgage loans held for its own account, in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: Any of the Class A-1A Interest Carry
Forward Amount, the Class A-1B Interest Carry Forward Amount, the Class A-2
Interest Carry Forward Amount, the Class X Interest Carry Forward Amount, the
Class R Interest Carry Forward Amount, the Class M-1 Interest Carry Forward
Amount, the Class M-2 Interest Carry Forward Amount, the Class M-3 Interest
Carry Forward Amount, the Class B-1 Interest Carry Forward Amount or the Class
B-2 Interest Carry Forward Amount, as the case may be.
Interest Carryover Amount: Any of the Class A-1A Interest Carryover
Amount, the Class ▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Amount, the Class A-2 Interest
Carryover Amount, the Class R Interest Carryover Amount, the Class M-1 Interest
Carryover Amount, the Class M-2 Interest Carryover Amount, the Class M-3
Interest Carryover Amount, the Class B-1 Interest Carryover Amount or the Class
B-2 Interest Carryover Amount, as the case may be.
Interest Determination Date: With respect to the Certificates, for any
Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period.
Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee and the Credit Risk
Manager Fee, (2) all Advances relating to interest with respect to the Mortgage
Loans, (3) all Compensating Interest with respect to the Mortgage Loans, (4)
Liquidation Proceeds with respect to the Mortgage Loans (to the extent such
Liquidation Proceeds relate to interest) collected during the related Prepayment
Period, (5) proceeds of any purchase pursuant to Sections 2.02, 2.03 or 9.01 (to
the extent such proceeds relate to interest) and (6) prepayment penalties
received with respect to the Mortgage Loans during the related Prepayment
Period, less (A) all Non-Recoverable Advances relating to interest and (B) other
amounts reimbursable to the Servicer and the Trustee pursuant to this Agreement
and allocable to interest.
Latest Possible Maturity Date: The first Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
Lender: As defined in Section 10.14(a).
LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale, sale by the Servicer pursuant
to this Agreement or otherwise (including any Subsequent Recoveries related to
such Mortgage Loan after such Mortgage Loan becomes a Liquidated Loan) or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Advances, Servicing Fees,
Servicing Advances and any other expenses related to such Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (x) the Appraised Value of the related Mortgaged Property and (y) the sales
price of the related Mortgaged Property at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses
collectively.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note and with respect to each Fixed Rate Mortgage Loan, the rate of interest set
forth in the related Mortgage Note.
Maximum Rate Cap: With respect to a Distribution Date, the per annum
rate, adjusted to reflect the length of the related Accrual Period, equal to the
weighted average of the maximum lifetime Net Mortgage Rates on the Adjustable
Rate Mortgage Loans and the Net Mortgage Rates on the Fixed Rate Mortgage Loans.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage
electronically maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.
Minimum Required Overcollateralization Amount: The product of (x) 0.50%
and (y) the Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust
or other instrument creating a first lien or a first priority ownership interest
in an estate in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Either of Group One or Group Two.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to
time amended by the Seller to reflect the deletion of Deleted Mortgage Loans and
the addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibit B, setting forth the
following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the unpaid principal balance of the Mortgage Loans;
(iii) the Initial Mortgage Rate;
(iv) the maturity date and the months remaining before maturity
date;
(v) the original principal balance;
(vi) the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Loan-to-Value Ratio at origination with respect to a first
lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
respect to a second lien Mortgage Loan;
(ix) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(x) a code indicating the property type;
(xi) with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin;
(xiii) location of the related Mortgaged Property; and
(xiv) a code indicating whether a prepayment penalty is applicable
and, if so, the term of such prepayment penalty
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the sum of (1) the
Servicing Fee Rate and (2) the Credit Risk Manager Fee Rate.
Net Rate: With respect to any Distribution Date, the per annum rate
equal to 12 times the amount determined by dividing (i) the total scheduled
interest on the Mortgage Loans in the related Due Period based on the Net
Mortgage Rates in effect on the related Due Date by (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, as of the
Cut-off Date).
NIM Notes: The notes to be issued pursuant to the Indenture.
NIM Insurer: Any of the one or more insurers that is guaranteeing
certain payments under any NIM Notes.
NIM Insurer Default: A default by each of the NIM Insurers as such
default is defined in the Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class X,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class R Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of (a) the offered rates for one-month United States dollar deposits, as
such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date or (b) if such rate does not appear on Telerate Page
3750 as of 11:00 a.m. (London time), the offered rates of the Reference Banks
for one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest
Determination Date, One-Month LIBOR for the related Accrual Period will be
established by the Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall
be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole
multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Accrual Period shall
be the higher of (i) One-Month LIBOR as determined on
the previous Interest Determination Date and (ii) the
Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Servicer, reasonably acceptable to each addressee of
such opinion; provided, however, that with respect to Section 6.04 or 10.01, or
the interpretation or application of the REMIC Provisions, such counsel must (1)
in fact be independent of the Depositor and the Servicer, (2) not have any
direct financial interest in the Depositor or the Servicer or in any affiliate
of either, and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the
excess of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass Through Margin: For any Class of Offered Certificates, the Class
A-1A Margin, the Class A-1B Margin, the Class A-2 Margin, the Class M-1 Margin,
the Class M-2 Margin, the Class M-3 Margin, the Class B-1 Margin, the Class B-2
Margin and the Class R Margin.
Pass-Through Rate: With respect to the Class A-1A Certificates, the
Class A-1A Pass-Through Rate; with respect to the Class A-1B Certificates, the
Class A-1B Pass-Through Rate; with respect to the Class A-2 Certificates, the
Class A-2 Pass-Through Rate; with respect to the Class X Certificates, the Class
X Pass-Through Rate; with respect to the Class M-1 Certificates, the Class M-1
Pass-Through Rate; with respect to the Class M-2 Certificates, the Class M-2
Pass-Through Rate; with respect to the Class M-3 Certificates, the Class M-3
Pass-Through Rate; with respect to the Class B-1 Certificates, the Class B-1
Pass-Through Rate; with respect to the Class B-2 Certificates, the Class B-2
Pass-Through Rate; and, with respect to the Class R Certificate, the Class R
Pass-Through Rate.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided
beneficial ownership interest evidenced by such Class
which shall be equal to the Class Certificate
Principal Balance of such Class divided by the Class
Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced
thereby of the related Class shall equal the
percentage obtained by dividing the Denomination of
such Certificate by the aggregate of the
Denominations of all Certificates of such Class;
except that in the case of any Class P Certificates,
the Percentage Interest with respect to such
Certificate shown on the face of such Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the trust created
pursuant to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor
and other assets of the Trust Fund, including the Cap
Contract and any credit enhancement and passive
derivative financial instruments that pertain to
beneficial interests issued or sold to parties other
than the Depositor, its Affiliates, or its agents;
(ii) issuing Certificates and other interests in the
assets of the Trust Fund;
(iii) receiving collections on the Mortgage Loans and the
Cap Contract and making payments on such Certificates
and interests in accordance with the terms of this
Agreement; and
(iv) engaging in other activities that are necessary or
incidental to accomplish these limited purposes,
which activities cannot be contrary to the status of
the Trust Fund as a qualified special purpose entity
under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by
any state of the United States or the District of
Columbia receiving the highest long-term debt rating
of each Rating Agency rating the Certificates;
(iii) commercial or finance company paper, other than
commercial or finance company paper issued by the
Depositor, the Trustee or any of its Affiliates,
which is then
receiving the highest commercial or finance company
paper rating of each such Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances (other than banker's acceptances
issued by the Trustee or any of its Affiliates)
issued by any depository institution or trust company
incorporated under the laws of the United States or
of any state thereof and subject to supervision and
examination by federal and/or state banking
authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such
depository institution or trust company are then
rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency
for such securities;
(v) demand or time deposits or certificates of deposit
issued by any bank or trust company or savings
institution to the extent that such deposits are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation rated in
the two highest long-term or the highest short-term
ratings of each Rating Agency containing, at the time
of the issuance of such agreements, such terms and
conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the
Certificates by any such Rating Agency as evidenced
by a letter from each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either
case entered into with a depository institution or
trust company (acting as principal) described in
clause (v) above;
(viii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in
excess of 115% of the face amount thereof) bearing
interest or sold at a discount issued by any
corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United
States or any state thereof which, at the time of
such investment, have one of the two highest long
term ratings of each Rating Agency;
(ix) interests in any money market fund (including those
managed or advised by the Trustee or its affiliates)
which at the date of acquisition of the interests in
such fund and throughout the time such interests are
held in such fund has the highest applicable long
term rating by each such Rating Agency; and
(x) short term investment funds sponsored by any trust
company or national banking association incorporated
under the laws of the United States or any state
thereof, other than the Trustee or any of its
Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective
highest applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation,
any amounts collected by the Servicer but not yet deposited in the Collection
Account) may be invested in investments (other than money market funds) treated
as equity interests for Federal income tax purposes, unless the Servicer and/or
the Trustee, shall receive an Opinion of Counsel acceptable to the Servicer
and/or the Trustee, at the expense of the party requesting that such investment
be made, to the effect that such investment will not adversely affect the status
of the any REMIC provided for herein as a REMIC under the Code or result in
imposition of a tax on the Trust Fund or any REMIC provided for herein and (II)
any such investment must be a "permitted investment" within the meaning of
Section 860G(a)(5) of the Code. Permitted Investments that are subject to
prepayment or call may not be purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to a
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or resident of
the United States, a corporation or partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States or any State
thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor, the Trustee with a duly completed Internal
Revenue Service Form W-8ECI or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balance, as of such Distribution Date, of the
Mortgage Loans that were Outstanding Mortgage Loans as of such date.
Preference Claim: The meaning set out in Section 4.04(l) hereof.
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Certificates.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment or
a Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03 or
9.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date or in
the case of a partial Principal Prepayment on the amount of such prepayment
exceeds (ii) the amount of interest paid or collected in connection with such
Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period beginning
with the opening of business on the first day of the calendar month preceding
the month in which such Distribution Date occurs and ending on the close of
business on the last day of such month.
Principal Distribution Amount: With respect to each Distribution Date,
the sum of (1) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any
Distribution Date, the sum, without duplication, of (1) the scheduled principal
due during the related Due Period and received before the related Servicer
Remittance Date or advanced on or before the related Servicer Remittance Date,
(2) prepayments collected in the related Prepayment Period, (3) the Stated
Principal Balance of each Mortgage Loan that was purchased by the Depositor or
the Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on the Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Seller in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal) and (6) all other collections and
recoveries in respect of principal during the related Prepayment Period less (A)
all Non-Recoverable Advances relating to principal with respect to the Mortgage
Loans and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to principal. With respect to any
Mortgage Group and any Distribution Date, the sum, without duplication, of the
items described in clauses (1) through (6) of the preceding sentence with
respect to Mortgage Loans included in such Mortgage Group.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated March 25, 2004
relating to the public offering of the Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class
X, Class R, Class M-1, Class M-2, Class M-3, Class B-1 and Class B-2
Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller, pursuant to Section 2.02 or 2.03 hereof, or purchased
by the Servicer pursuant to Section 3.12(c) hereof, an amount equal to the sum
of (i) 100% of the unpaid principal balance of the Mortgage Loan as of the date
of such purchase together with any unreimbursed Servicing Advances, (ii) accrued
interest thereon at the applicable Mortgage Rate from (a) the date through which
interest was last paid by the Mortgagor to (b) the Due Date in the month in
which the Purchase Price is to be distributed to Certificateholders and (iii)
any costs and damages incurred by the Trust Fund (or the Trustee on behalf of
the Trust Fund) in connection with any violation by the affected Mortgage Loan
of any anti-predatory or anti-abusive lending laws. With respect to any REO
Property purchase by the Servicer pursuant to Section 3.12(c)
hereof, an amount equal to the fair market value of such REO Property, as
determined in good faith by the Servicer.
Rating Agency: Either of ▇▇▇▇▇'▇ or S&P . If any such organization or
its successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if
any, by which the Stated Principal Balance and accrued interest thereon at the
Net Mortgage Rate exceeds the amount actually recovered by the Servicer with
respect thereto (net of reimbursement of Advances and Servicing Advances) at the
time such Mortgage Loan became a Liquidated Loan or (2) with respect to a
Mortgage Loan which is not a Liquidated Loan, any amount of principal that the
Mortgagor is no longer legally required to pay (except for the extinguishment of
debt that results from the exercise of remedies due to default by the
Mortgagor).
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs.
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, Citibank,
N.A., and NatWest, N.A.; provided that if any of the foregoing banks are not
suitable to serve as a Reference Bank, then any leading banks selected by the
Trustee with the consent of the NIM Insurer which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, England and (ii) whose quotations
appear on the Reuters Screen LIBO Page on the relevant Interest Determination
Date.
Regular Certificate: Any one of the Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇,
Class X, Class M-1, Class M-2, Class M-3, Class B-1 and Class B-2 Certificates.
Relief Act: The Servicmembers Civil Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code. References herein to "the REMICs" or "a REMIC"
shall mean any of or, as the context requires, both of the Lower Tier REMIC and
the Upper Tier REMIC.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMIC 1: A real estate mortgage investment conduit, as described in the
Preliminary Statement and Section 2.07.
REMIC 1 Interests: Each interest in REMIC 1 as described in the
Preliminary Statement.
REMIC 1 Regular Interests: Each REMIC 1 Interest other than the Class
LT1-R Interest.
REMIC 2: A real estate mortgage investment conduit, as described in the
Preliminary Statement and Section 2.07.
REMIC 2 Interests: Each interest in REMIC 2 as described in the
Preliminary Statement.
REMIC 2 IO Interests: Each of the Class LT2-1-IO Interest, LT2-2-IO
Interest, LT2-3-IO Interest, LT2-4-IO Interest, LT2-5-IO Interest, LT2-6-IO
Interest, LT2-7-IO Interest, LT2-8-IO Interest, ▇▇▇-▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ Interest, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇
Interest, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ Interest, ▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ Interest, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ Interest, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇-▇▇
Interest, LT2-27-IO Interest, LT2-28-IO Interest, LT2-29-IO Interest and
LT2-30-IO Interest.
REMIC 2 Regular Interests: Each REMIC 2 Interest other than the Class
LT2-R Interest.
REMIC 3: A real estate mortgage investment conduit, as described in the
Preliminary Statement and Section 2.07.
REMIC 3 Interests: Each interest in REMIC 3 as described in the
Preliminary Statement.
REMIC 3 Marker Interests: Each of the Class LT3-A1A Interest, the Class
LT3-A1B Interest, the Class LT3-A2 Interest, the Class LT3-AR Interest, the
Class LT3-M1 Interest, the Class LT3-M2 Interest, the Class LT3-M3 Interest, the
Class LT3-B1 Interest and the Class LT3-B2 Interest.
REMIC 3 Regular Interests: Each REMIC 3 Interest other than the Class
LT3-R Interest.
REMIC 4: A real estate mortgage investment conduit, as described in the
Preliminary Statement and Section 2.07.
REMIC 4 Interests: Each of the REMIC 4 Regular Interests and the
Residual Interest.
REMIC 4 Regular Interests: Each of the Class X Certificates, the REMIC
4 A-1A Interest, the REMIC 4 A-1B Interest, the REMIC 4 A-2 Interest, the REMIC
4 M-1 Interest, the REMIC 4 M-2 Interest, the REMIC 4 M-3 Interest, the REMIC 4
B-1 Interest, the REMIC 4 B-2 Interest and the REMIC 4 C Interest.
REMIC 4 A-1A Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class A-1A Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 A-1A Interest will
be represented by the Class A-1A Certificates.
REMIC 4 A-1B Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class A-1B Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 A-1B Interest will
be represented by the Class A-1B Certificates.
REMIC 4 A-2 Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class A-2 Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 A-2 Interest will
be represented by the Class A-2 Certificates.
REMIC 4 B-1 Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class B-1 Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 B-1 Interest will
be represented by the Class B-1 Certificates.
REMIC 4 B-2 Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class B-2 Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 B-2 Interest will
be represented by the Class B-2 Certificates.
REMIC 4 C Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class C Certificates, except that such
interest shall (i) not be treated as having any obligations to make the payments
described in Section 2.07(d) hereof, (ii) be treated as entitled to payments
treated as distributed to the Class C Certificates pursuant to Section 2.07(d)
hereof and (iii) not be treated as entitled to payments treated as distributed
to the Class C Certificates pursuant to Section 4.04(j) hereof.
REMIC 4 M-1 Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class M-1 Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 M-1 Interest will
be represented by the Class M-1 Certificates.
REMIC 4 M-2 Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class M-2 Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 M-2 Interest will
be represented by the Class M-2 Certificates.
REMIC 4 M-3 Interest: An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class M-3 Certificates other than the
rights to payments in respect of Excess Interest. The REMIC 4 M-3 Interest will
be represented by the Class M-3 Certificates.
REO Property: A Mortgaged Property acquired by the Servicer, on behalf
of the Trustee for the benefit of the Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
Remittance Report: The meaning specified in Section 4.04(k) hereof.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted by
the Servicer to the Trustee, substantially in the form of Exhibit I hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Required Percentage: Means on any Distribution Date following a
Stepdown Date, the quotient of (1) the excess of (A) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date, over (B)
the Certificate Principal Balance of the most senior Class of Certificates
outstanding as of such Distribution Date, prior to giving effect to
distributions to be made on such Distribution Date and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.
Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
Residual Certificate: The Class R Certificate.
Residual Interest: An interest in the REMIC 4 that is entitled to all
distributions of principal and interest on the Class R Certificate other than
(i) distributions in respect of the Class LT1-R Interest, Class LT2-R Interest
and Class LT3-R Interest, and (ii) distributions on the Class R Certificate in
respect of Excess Interest.
Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.
S&P: Standard & Poor's, a Division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
or its successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated
as of March 31, 2004 between the Depositor and the Seller.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
Section 302 Requirements: Any rules or regulations promulgated pursuant
to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Seller: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Lending, Inc., a Delaware corporation,
or its successor in interest.
Servicer: ▇▇▇▇▇▇ Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.
Servicer Advance Date: As to any Distribution Date, the related
Servicer Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the
18th day (or if such day is not a Business Day, the next succeeding Business
Day) of the month in which the related Distribution Date occurs.
Servicer Trigger Event: As defined in Section 7.02 hereof.
Servicer's Assignee: As defined in Section 10.14(a).
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments, (2)
any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations, (3) the conservation,
management, sale and liquidation of any REO Property and (4) compliance with the
obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such lists may from time to time be amended.
Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to which the Servicer may pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank, N.A., as
the representative of certain lenders.
Servicing Transfer Costs: In the event that the Servicer does not
reimburse the Trustee under the this Agreement, all costs associated with the
transfer of servicing from the predecessor Servicer, including, without
limitation, any costs or expenses associated with the termination of the
predecessor Servicer, the appointment of a successor servicer, the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Trustee or any successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or successor servicer to service the Mortgage Loans property
and effectively.
SFAS 140: Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
SPV: As defined in Section 10.14(a).
Startup Date: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (A) the principal portion of the Scheduled Payments
(x) due with respect to such Mortgage Loan during each Due Period ending prior
to such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on the Servicer Advance Date prior to
such Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The later to occur of (1) the Distribution Date in April
2007 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance (reduced by the Principal Funds with respect to such
Distribution Date) is less than or equal to (B) 62.90% of the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.
Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------ ---------------------------------
April 2007 - March 2008 2.50% with respect to April 2007, plus an
additional 1/12th of 1.25% for each month
thereafter
April 2008 - March 2009 3.75% with respect to April 2008, plus an
additional 1/12th of 1.25% for each month
thereafter
April 2009 - March 2010 5.00% with respect to April 2009, plus an
additional 1/12th of 0.75% for each month
thereafter
April 2010 and thereafter 5.75%
Subordinated Certificates: The Class M-1, Class M-2, Class M-3, Class
B-1 and Class B-2 Certificates.
Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Loan with respect to which a Realized Loss has been
incurred after liquidation and disposition of such Mortgage Loan
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Tax Matters Person: The Person designated as "tax matters person" in
the manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Trigger Event: With respect to the Certificates after the Stepdown
Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
measured on a rolling three month basis (including, for the purposes of this
calculation, Mortgage Loans in foreclosure, REO Properties and Mortgage Loans
with respect to which the applicable Mortgagor is in bankruptcy) and (B) the
Stated Principal Balance of the Mortgage Loans as of the preceding Servicer
Advance Date, equals or exceeds the product of (i) 40.00% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.
Trust Fund: The corpus of the trust (the "Specialty Underwriting and
Residential Finance Trust, Series 2004-BC1") created hereunder consisting of (i)
the Mortgage Loans and all interest and principal received on or with respect
thereto on and after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof, exclusive of interest not required to be
deposited in the Collection Account; (ii) the Collection Account and the
Certificate Account and all amounts deposited therein pursuant to the applicable
provisions of this Agreement; (iii) property that secured a Mortgage Loan and
has been acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv)
the mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loans; (v) all proceeds of the conversion, voluntary or involuntary, of any of
the foregoing into cash or other liquid property; and (vi) the Cap Contract and
Cap Contract Account.
Trustee: JPMorgan Chase Bank, a New York banking corporation, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount,
Class B-1 Unpaid Realized Loss Amount, Class B-2 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
Upper Collar: With respect to each Distribution Date with respect to
which payments are received on the Cap Contract, a rate equal to the lesser of
One-Month LIBOR and 9.00% per annum.
USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of
Certificates shall be allocated 95% to the Offered Certificates, 5% to the Class
C and Class P Certificates, with the allocation among the Offered Certificates
to be in proportion to the Class Certificate Principal Balance of each Class
relative to the Class Certificate Principal Balance of all other Classes. Voting
Rights will be allocated among the Certificates of each such Class in accordance
with their respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(A) The Original Mortgage Note, together with all riders thereto,
endorsed, "Pay to the order of JPMorgan Chase Bank, as trustee - SURF 2004-BC1,
without recourse" together with all riders thereto. The Mortgage Note shall
include all intervening endorsements showing a complete chain of the title from
the originator to the Seller.
(B) Except as provided below and for each Mortgage Loan that is
not a MERS Loan, the original recorded Mortgage together with all riders
thereto, with evidence of recording thereon, or, if the original Mortgage has
not yet been returned from the recording office, a copy of the original Mortgage
together with all riders thereto certified by the Seller to be true copy of the
original of the Mortgage that has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged Property
is located and in the case of each MERS Loan, the original Mortgage together
with all riders thereto, noting the presence of the MIN of the Loan and either
language indicating that the Mortgage Loan is a MOM Loan or if the Mortgage Loan
was not a MOM Loan at origination, the original Mortgage and the assignment
thereof to MERS, with evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which such Mortgage has
been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of each Mortgage, to "JPMorgan Chase Bank, as trustee -
SURF-BC1."
(D) The original policy of title insurance (or a preliminary title
report, commitment or binder if the original title insurance policy has not been
received from the title insurance company).
(E) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment has not
yet been returned from the recording office, a copy of such assignment certified
to be a true copy of the original of the assignment which has been sent for
recording in the appropriate jurisdiction in which the Mortgaged Property is
located.
(F) Originals of all assumption and modification agreements, if
any.
If in connection with any Mortgage Loan, the Depositor cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with
evidence of recording thereon, if applicable, concurrently with the execution
and delivery of this Agreement solely because of a delay caused by the public
recording office where such Mortgage, Assignments of Mortgage or assumption,
consolidation or modification, as the case may be, has been delivered for
recordation, the Depositor shall deliver or cause to be delivered to the Trustee
written notice stating that such Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered to the appropriate public
recording office for recordation. Thereafter, the Depositor shall deliver or
cause to be delivered to the Trustee such Mortgage, Assignments of Mortgage or
assumption, consolidation or modification, as the case may be, with evidence of
recording indicated thereon, if applicable, upon receipt thereof from the public
recording office. To the extent any required endorsement is not contained on a
Mortgage Note or an Assignment of Mortgage, the Depositor shall make or cause
such endorsement to be made.
With respect to any Mortgage Loan, none of the Depositor, the Servicer
or the Trustee shall be obligated to cause to be recorded the Assignment of
Mortgage referred to in this Section 2.01. In the event that any Assignment of
Mortgage is not recorded or is improperly recorded, the Servicer shall have no
liability for its failure to receive or act on notices related to such
Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor nor
the Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and
interests under the Sale Agreement, including the Depositor's right, title and
interest in the representations and warranties contained in the Sale Agreement
and the benefit of the repurchase obligations and the obligation of the Seller
contained in the Sale Agreement to take, at the request of the Depositor or the
Trustee, all action on its part which is reasonably necessary to ensure the
enforceability of a Mortgage Loan. The Trustee hereby accepts such assignment,
and shall be entitled to exercise all rights of the Depositor under the Sale
Agreement as if, for such purpose, it were the Depositor. The foregoing sale,
transfer, assignment, set-over, deposit and conveyance does not and is not
intended to result in creation or assumption by the Trustee of any obligation of
the Depositor, the Seller, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the Cap Contract (a form of which
is attached hereto as Exhibit O), Transfer Agreement and the Sale Agreement.
The Trustee agrees, for the benefit of Certificateholders and the NIM
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIM Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B that have been conveyed to it. If the
Trustee finds any document or documents constituting a part of a Mortgage File
to be missing or defective (that is, mutilated, damaged, defaced or unexecuted)
in any material respect, the Trustee shall promptly (and in any event within no
more than five Business Days) after such finding so notify the Servicer, the
Seller, the Depositor and the NIM Insurer. In addition, the Trustee shall also
notify the Servicer, the Seller, the Depositor and the NIM Insurer, if the
original Mortgage with evidence of recording thereon with respect to a Mortgage
Loan is not received within 70 days of the Closing Date; if it has not been
received because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation, the Depositor shall deliver or
cause to be delivered to the Trustee written notice stating that such Mortgage
has been delivered to the appropriate public recording officer for recordation
and thereafter the Depositor shall deliver or cause to be delivered such
Mortgage with evidence of recording thereon upon receipt thereof from the public
recording office. The Trustee shall request that the Seller correct or cure such
omission, defect or other irregularity, or substitute a Mortgage Loan pursuant
to the provisions of Section 2.03(c), within 90 days from the date the Seller
was notified of such omission or defect and, if the Seller does not correct or
cure such omission or defect within such period, that the Seller purchase such
Mortgage Loan from the Trust Fund within 90 days from the date the Trustee
notified the Seller of such omission, defect or other irregularity at the
Purchase Price of such Mortgage Loan. The Purchase Price for any Mortgage Loan
purchased pursuant to this Section 2.02 shall be paid to the Servicer and
deposited by the Servicer in the Collection Account promptly upon receipt, and,
upon receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee, upon receipt of a Request for Release, shall
promptly release to the Seller the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment, without
recourse, representation or warranty, as shall be necessary to vest in the
Seller or its designee, as the case may be, any Mortgage Loan released pursuant
hereto, and the Trustee shall have no further responsibility with regard to such
Mortgage Loan. It is understood and agreed that the obligation of the Seller to
purchase, cure or substitute any Mortgage Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIM Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor,
the Trustee or the NIM Insurer pursuant to the Sale Agreement. The Trustee shall
be under no duty or obligation to inspect, review and examine such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, recordable or appropriate to the represented purpose, or that they
have actually been recorded, or that they are other than what they purport to be
on their face. The Trustee shall keep confidential the name of each Mortgagor
and the Trustee shall not solicit any such Mortgagor for the purpose of
refinancing the related Mortgage Loan. It is understood and agreed that all
rights and benefits relating to the solicitation of any Mortgagors and the
attendant rights, title and interest in and to the list of Mortgagors and data
relating to their Mortgages shall be retained by the Servicer.
Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor, the Servicer and the NIM Insurer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Servicer,
the Trustee and the NIM Insurer as follows, as of the date hereof
(i) The Depositor is duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has full power and authority (corporate and other)
necessary to own or hold its properties and to conduct its business as
now conducted by it and to enter into and perform its obligations under
this Agreement and the Sale Agreement.
(ii) The Depositor has the full corporate power and
authority to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement and the
Sale Agreement and has duly authorized, by all necessary corporate
action on its part, the execution, delivery and performance of this
Agreement and the Sale Agreement; and this Agreement and the Sale
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Depositor, enforceable against the Depositor
in accordance with its terms, subject, as to enforceability, to (i)
bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and (ii) general principles
of equity, regardless of whether enforcement is sought in a proceeding
in equity or at law.
(iii) The execution and delivery of this Agreement and the
Sale Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Depositor and will not (A) result in a
material breach of any term or provision of the charter or by-laws of
the Depositor or (B) materially conflict with, result in a violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which the Depositor is a
party or by which it may be bound or (C) constitute a material
violation of any statute, order or regulation applicable to the
Depositor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Depositor; and the
Depositor is not in breach or violation of any material indenture or
other
material agreement or instrument, or in violation of any statute, order
or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation
may materially impair the Depositor's ability to perform or meet any of
its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement and the Sale Agreement or the ability
of the Depositor to perform its obligations under this Agreement and
the Sale Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement and the Sale Agreement or the
consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, the Depositor
has obtained the same. The Depositor hereby represents and warrants to
the Trustee with respect to each Mortgage Loan as of the Closing Date,
and following the transfer of the Mortgage Loans to it by the Seller,
the Depositor had good title to the Mortgage Loans and the Mortgage
Notes were subject to no offsets, claims, liens, mortgage, pledge,
charge, security interest, defenses or counterclaims.
(b) To the extent that any fact, condition or event with respect
to a Mortgage Loan constitutes a breach of a representation or warranty of the
Seller under the Sale Agreement, the only right or remedy of the Trustee, the
NIM Insurer or of any Certificateholder shall be the Trustee's right to enforce
the obligations of the Seller under any applicable representation or warranty
made by it. The Trustee acknowledges that the Depositor shall have no obligation
or liability with respect to any breach of any representation or warranty with
respect to the Mortgage Loans (except as set forth in Section 2.03(a)(v)) under
any circumstances.
(c) Upon discovery by any of the Depositor, the Servicer, the NIM
Insurer, or the Trustee of a breach of any of representations and warranties set
forth in the Sale Agreement that adversely and materially affects the value of
the related Mortgage Loan, prepayment charges or the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties. Within 90 days of the discovery of a breach of any
representation or warranty given to the Trustee by the Depositor, the Seller and
assigned to the Trustee, the Depositor, or the Seller shall either (a) cure such
breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Replacement Mortgage Loan for the affected Mortgage Loan. In the event of
discovery of a breach of any representation and warranty of the Seller or the
Depositor, the Trustee shall enforce its rights under the Sale Agreement or
thereunder for the benefit of Certificateholders and the NIM Insurer. If a
breach of the representations and warranties set forth in the Sale Agreement
hereof exists solely due to the unenforceability of a prepayment charge, the
Trustee shall notify the NIM Insurer thereof and not seek to enforce the
repurchase remedy provided for herein unless directed in writing to do so by the
NIM Insurer. In the event of a breach of the representations and warranties with
respect to the Mortgage Loans set forth in a Sale Agreement, the Trustee shall
at the request of the NIM Insurer enforce the right of the Trust Fund and the
NIM Insurer to be indemnified for such breach of representation and warranty. In
the event that such breach relates solely to the unenforceability of a
prepayment charge, amounts received in respect of such indemnity up to the
amount of such prepayment charge shall be distributed pursuant to Section
4.04(b)(i)(B). As provided in the Sale Agreement, if the Seller substitutes for
a Mortgage Loan for which there is a breach of any representations and
warranties which adversely and materially affects the value of such Mortgage
Loan and such substitute mortgage loan is not a Replacement Mortgage Loan,
under the terms of the Sale Agreement, the Seller will, in exchange for such
substitute Mortgage Loan, (i) provide the applicable Purchase Price for the
affected Mortgage Loan or (ii) within two years of the Closing Date, substitute
such affected Mortgage Loan with a Replacement Mortgage Loan. Any such
substitution shall not be effected prior to the additional delivery to the
Trustee of a Request for Release substantially in the form of Exhibit I and
shall not be effected unless it is within two years of the Startup Date. As
provided in the Sale Agreement, the Seller indemnifies and holds the Trust Fund,
the Trustee, the Depositor, the NIM Insurer, the Servicer and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Depositor,
the NIM Insurer, the Servicer and any Certificateholder may sustain in
connection with any actions of the Seller relating to a repurchase of a Mortgage
Loan other than in compliance with the terms of this Section 2.03 and the Sale
Agreement, to the extent that any such action causes (i) any federal or state
tax to be imposed on the Trust Fund or any REMIC provided for herein, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860(d)(1) of the Code, or (ii) any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Certificate is outstanding.
With respect to any Mortgage Loan repurchased by the Depositor pursuant
to this Agreement or by the Seller pursuant to the Sale Agreement, the principal
portion of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Certificate Account pursuant to Section 3.05. The
Trustee, upon receipt of the full amount of the Purchase Price for a Deleted
Mortgage Loan, or upon receipt of the Mortgage File for a Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan, shall release or cause to be
released and reassign to the Depositor or the Seller, as applicable, the related
Mortgage File for the Deleted Mortgage Loan and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or its
designee or assignee title to any Deleted Mortgage Loan released pursuant
hereto, free and clear of all security interests, liens and other encumbrances
created by this Agreement, which instruments shall be prepared by the Trustee,
and the Trustee shall not have any further responsibility with respect to the
Mortgage File relating to such Deleted Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the Seller, as applicable, must deliver to
the Trustee the Mortgage File for the Replacement Mortgage Loan containing the
documents set forth in Section 2.01 along with a written certification
certifying as to the delivery of such Mortgage File and containing the granting
language set forth in the first sentence of Section 2.01; and (ii) the Depositor
will be deemed to have made, with respect to such Replacement Mortgage Loan,
each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage Loan and certify to the NIM Insurer and the
Depositor that all documents required by Section 2.01 have been executed and
received.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Seller to the
Servicer for deposit into the Collection
Account on the Determination Date for the Distribution Date relating to the
Prepayment Period during which the related Mortgage Loan became required to be
purchased or replaced hereunder.
The Seller shall give or cause to be given written notice to the
Certificateholders and the NIM Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIM Insurer and the Trustee. Upon
such substitution by the Seller, such Replacement Mortgage Loan or Replacement
Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject
in all respects to the terms of this Agreement and the Sale Agreement, including
all applicable representations and warranties thereof included in the Sale
Agreement as of the date of substitution.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the NIM Insurer an Opinion of Counsel addressed to the Trustee
and the NIM Insurer to the effect that such substitution will not (a) cause any
federal tax to be imposed on the Trust Fund or any REMIC provided for herein,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code or (b) adversely affect
the status of any REMIC provided for herein as a REMIC. If any such Opinion of
Counsel can not be delivered, then such substitution may only be effected at
such time as the required Opinion of Counsel can be given.
(d) It is understood and agreed that the representations,
warranties and indemnification (i) set forth in this Section 2.03 and (ii) of
the Seller and the Depositor set forth in the Sale Agreement and assigned to the
Trustee by the Depositor hereunder shall each survive delivery of the Mortgage
Files and the Assignment of Mortgage of each Mortgage Loan to the Trustee and
shall continue throughout the term of this Agreement.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof
(i) The Servicer is a duly formed limited partnership and
is validly existing and in good standing under the laws of the state of
its formation and is duly authorized and qualified to transact any and
all business contemplated by this Agreement to be conducted by the
Servicer in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Servicer has the power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and
has duly authorized by all necessary corporate action on the part of
the Servicer the execution, delivery and performance of this Agreement;
and this Agreement, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal, valid
and binding obligation of the Servicer, enforceable against the
Servicer in accordance with its terms, except that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Servicer and will not (A)
result in a material breach of any term or provision of the charter or
by-laws of the Servicer or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument
to which the Servicer is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation
applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Servicer's
ability to perform or meet any of its obligations under this Agreement.
(iv) The Servicer is an approved servicer of mortgage
loans for ▇▇▇▇▇▇ ▇▇▇ and is an approved seller of seasoned mortgage
loans and servicer of all types of mortgage loans for ▇▇▇▇▇▇▇ Mac.
(v) No litigation is pending or, to the best of the
Servicer's knowledge, threatened, against the Servicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Servicer to
service the Mortgage Loans or to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of, or compliance by the
Servicer with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully
furnish (for the period it serviced the Mortgage Loans), in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company on a monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which Are
Not "Qualified Mortgages".
Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (1) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions,
as it would a Mortgage Loan repurchased for breach of a representation or
warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform its duties set forth in this Agreement in accordance with the provisions
hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to
make an appropriate election to treat each of REMIC 1, REMIC 2, REMIC 3 and
REMIC 4 as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of REMIC 1, REMIC 2,
REMIC 3 and REMIC 4 be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Date" for purposes of the REMIC Provisions shall be
the Closing Date. Each REMIC's fiscal year shall be the calendar year.
REMIC 1 shall consist of all of the assets of the Trust Fund (other
than (i) any proceeds of prepayment penalties, (ii) amounts paid by the Servicer
or the Seller in respect of prepayment charges or waivers thereof pursuant to
this Agreement, (iii) amounts received in respect of any indemnification paid as
a result of a prepayment charge being unenforceable in breach of the
representations and warranties set forth in the Sale Agreement, (iv) the
interests issued by the REMICs provided for herein, (v) the grantor trusts
described in this Section 2.07 and (vi) the Cap Contract and Cap Contract
Account. REMIC 1 shall issue (i) the REMIC 1 Regular Interests, each of which
shall be designated as regular interests of REMIC 1, and (ii) the Class LT1-R
Interest that shall be designated as the sole class of residual interest in
REMIC 1. Each of the REMIC 1 Regular Interests shall have the characteristics
set forth in the Preliminary Statement and in this Section 2.07.
On each Distribution Date, the REMIC 1 Regular Interests shall receive
distributions of interest and principal equal in the aggregate to amounts
distributable pursuant to Sections 4.04(b), 4.04(d), 4.04(e) and 4.04(f) (other
than to the Class P Certificates) from amounts on deposit in the Certificate
Account. Such amounts with respect to interest shall accrue at the rate
specified in the Preliminary Statement with respect to each REMIC 1 Regular
Interest. Any shortfalls of interest on the Mortgage Loans will be allocated,
first, to the Class LT1-X Interest then to the remaining REMIC 1 Regular
Interests in numerical order. Amounts in reduction of principal balance of the
REMIC 1 Regular Interests shall be allocated first, to the Class LT1-X Interest
and then to the remaining REMIC 1 Regular Interests in numerical order. Realized
Losses in respect of principal shall be allocated in the same manner as amounts
in reduction of principal balance. Such amounts with respect to principal and
any Realized Losses with respect to principal shall reduce the principal
balances of the REMIC 1 Regular Interests so that in the aggregate, such
balances correspond to the Stated Principal Balance of the Mortgage Loans as of
such Distribution Date (or, in the case of the first Distribution Date, as of
the Cut-off Date). Amounts in the Certificate Account deemed distributed in
respect of the REMIC 1 Regular Interests shall be treated as
held by REMIC 2 for distribution in accordance with the second succeeding
paragraph. Any amounts remaining in REMIC 1 on a Distribution Date after
distributions on the REMIC 1 Regular Interests shall be distributed to the Class
R Certificates in respect of the Class LT1-R Interest.
The assets of REMIC 2 shall be the REMIC 1 Regular Interests. REMIC 2
shall issue (i) the REMIC 2 Regular Interests, each of which shall be designated
as regular interests of REMIC 2, and (ii) the Class LT2-R Interest that shall be
designated as the sole class of residual interest in REMIC 2. Each of the REMIC
2 Regular Interests shall have the characteristics set forth in the Preliminary
Statement and in this Section 2.07.
On each Distribution Date, the REMIC 2 Regular Interests shall receive
distributions of interest and principal equal in the aggregate to amounts
distributable pursuant to Sections 4.04(b), 4.04(d), 4.04(e) and 4.04(f) (other
than to the Class P Certificates) from amounts on deposit in the Certificate
Account. Such amounts with respect to interest shall accrue at the rate
specified in the Preliminary Statement with respect to each REMIC 2 Regular
Interest. Amounts in reduction of principal balance of the REMIC 2 Regular
Interests shall be allocated first, to the Class LT2-X Interest and then to the
remaining REMIC 2 Regular Interests (other than the REMIC 2 IO Interests) in
numerical order, so that the principal balance of each REMIC 2 Regular Interest
(other than the REMIC 2 IO Interests) is equal to the principal balance of the
REMIC 1 Regular Interest that has the same numerical designation. Realized
Losses in respect of principal shall be allocated in the same manner as amounts
in reduction of principal balance. Such amounts with respect to principal and
any Realized Losses with respect to principal shall reduce the principal
balances of the REMIC 2 Regular Interests so that in the aggregate, such
balances correspond to the Stated Principal Balance of the Mortgage Loans as of
such Distribution Date (or, in the case of the first Distribution Date, as of
the Cut-off Date). Amounts in the Certificate Account deemed distributed in
respect of the REMIC 2 Regular Interests shall be treated as held by REMIC 3 (in
the case of amounts deemed distributed in respect of REMIC 2 Regular Interests
other than the REMIC 2 IO Interests) for distribution in accordance with the
second succeeding paragraph. Amounts in the Certificate Account deemed
distributed in respect of the REMIC 2 IO Interests shall be treated as held and
by REMIC 4 for distribution in accordance with Section 4.04 hereof. Any amounts
remaining in REMIC 2 on a Distribution Date after distributions on the REMIC 2
Regular Interests shall be distributed to the Class R Certificates in respect of
the Class LT-R Interest.
The assets of REMIC 3 shall be the REMIC 2 Regular Interests (other
than the REMIC 2 IO Interests). REMIC 3 shall issue (i) the REMIC 3 Regular
Interests, each of which shall be designated as regular interests of REMIC 3,
and (ii) the Class LT3-R Interest that shall be designated as the sole class of
residual interest in REMIC 3. Each of the REMIC 3 Regular Interests shall have
the characteristics set forth in the Preliminary Statement and in this Section
2.07.
On each Distribution Date, REMIC 3 shall be deemed to have received the
amounts deemed distributed in respect of the REMIC 2 Regular Interests other
than the REMIC 2 IO Interests. Amounts with respect to interest shall accrue on
the REMIC 3 Regular Interests at the rates specified in the Preliminary
Statement. Payments and Realized Losses shall be allocated among the REMIC 3
Regular Interests so that (i) each of the REMIC 3 Marker Interests shall have a
principal balance equal to 50% of the principal balance of the related REMIC 4
Interest (with the REMIC 4 A-1A Interest being related to the Class LT3-A1A
Interest, the REMIC 4 A-1B Interest being related to the Class LT3-A1B Interest,
the REMIC 4 A-2 Interest being related to the Class LT3-A2 Interest, the REMIC 4
M-1 Interest being related to the Class LT3-M1 Interest, the REMIC 4 M-2
Interest being related to the Class LT3-M2 Interest, the REMIC 4 M-3 Interest
being related to the Class LT3-M3 Interest, the REMIC 4 B-1 Interest being
related to the Class LT3-B1 Interest, the REMIC 4 B-2 Interest being related to
the Class LT3-B2 Interest and the Residual Interest being related to the Class
LT3-AR Interest) and (ii) the Class LT3-X Interest has a principal balance equal
to the excess of (x) the principal balance of the Mortgage Loans
over (y) the aggregate principal balance of the REMIC 3 Marker Interests (if
necessary to reflect an increase in overcollateralization, accrued and unpaid
interest on the Class LT3-X Interest may be added to its principal amount to
achieve this result). Notwithstanding the preceding sentence, however, Realized
Losses not allocated to any Class of Certificates will not be allocated to any
REMIC 3 Regular Interests. All computations with respect to the REMIC 3 Regular
Interests shall be taken out to ten decimal places. Any funds remaining in REMIC
3 on a Distribution Date after distributions to the REMIC 3 Regular Interests
shall be distributed to the Class R Certificates in respect of the Class LT3-R
Interest.
The assets of REMIC 4 shall be the REMIC 3 Regular Interests and the
REMIC 2 IO Interests. REMIC 4 shall issue (i) the REMIC 4 Regular Interests,
each of which shall be designated as regular interests of REMIC 4, and (ii) the
Class LT4-R Interest that shall be designated as the sole class of residual
interest in REMIC 4. Each of the REMIC 4 Regular Interests shall have the
characteristics set forth in the definitions thereof and in this Section 2.07.
On each Distribution Date, REMIC 4 shall be deemed to have received the
amounts deemed distributed in respect of the REMIC 3 Regular Interests and the
REMIC 2 IO Interests. Principal, interest, shortfalls and Realized Losses shall
be deemed paid to and allocated among the REMIC 4 Interests in the same manner
as such items (other than payments in respect of Excess Interest, which shall be
deemed paid in respect of the REMIC 4 C Interest if made pursuant to Section
4.04(e)(vii) and other than payments pursuant to Section 4.04(g) hereof) are
paid or allocated in respect of the related Certificates (with the Class A-1A
Certificates being related to the REMIC 4 A-1A Interest, the Class A-1B
Certificates being related to the REMIC 4 A-1B Interest, the Class A-2
Certificates being related to the REMIC 4 A-2 Interest, the Class M-1
Certificates being related to the REMIC 4 M-1 Interest, the Class M-2
Certificates being related to the REMIC 4 M-2 Interest, the Class M-3
Certificates being related to the REMIC 4 M-3 Interest, the Class B-1
Certificates being related to the REMIC 4 B-1 Interest, the Class B-2
Certificates being related to the REMIC 4 B-2 Interest, the Class C Certificates
being related to the REMIC 4 C Interest and the Class R Certificates being
related to the Residual Interest). On each Distribution Date, principal shall be
paid to, Realized Losses shall be allocated to and accrued but unpaid interest
shall be added to the principal amount of the REMIC 4 C Interest so that such
principal amount shall equal the excess, if any, of (i) the Stated Principal
Balance of the Mortgage Loans on such Distribution Date over (ii) the aggregate
Certificate Principal Balance of each Class of Certificates on such Distribution
Date after all principal payments have been made and Realized Losses have been
allocated to such Certificates (other than the Class C Certificates). Funds
remaining in REMIC 4 on a Distribution Date after all distributions have been
made to the REMIC 4 Regular Interests shall be distributed to the Class R
Certificates in respect of the Residual Interest.
The beneficial ownership of the Class LTR-1 Interest, Class LTR-2
Interest, Class LTR-3 Interest, and the Residual Interest shall be represented
by the Class R Certificate.
All calculations with respect to REMIC 1 Interests, REMIC 2 Interests,
REMIC 3 Interests, and REMIC 4 Interests shall be taken out to ten decimal
places.
(c) The "tax matters person" with respect to each REMIC for
purposes of the REMIC Provisions shall be the beneficial owner of the Class R
Certificate; provided, however, that the Holder of a Class R Certificate, by its
acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters person" with respect to each such REMIC
for purposes of the REMIC Provisions. If there is more than one beneficial owner
of the Class R Certificate, the "tax matters person" shall be the Person with
the greatest percentage interest in the Class R Certificate and, if there is
more than one such Person, shall be determined under Treasury regulation Section
1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.
(d) It is intended that the rights of the Class A-1A Certificates,
Class A-1B Certificates, Class A-2 Certificates, Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class B-1
Certificates and Class B-2 Certificates to receive payments of Excess Interest
shall be treated as a right in interest rate cap contracts written by the Class
C Certificateholders in favor of the holders of the Class A-1A Certificates,
Class A-1B Certificates, Class A-2 Certificates, Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class B-1
Certificates and Class B-2 Certificates, and such shall be accounted for as
property held separate and apart from the regular interests in REMIC 4 held by
the holders of the Class A-1A Certificates, Class A-1B Certificates, Class A-2
Certificates, M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates
Class B-1 Certificates and Class B-2 Certificates and the residual interest in
REMIC 4 held by the holder of the Class R Certificate. This provision is
intended to satisfy the requirements of Treasury Regulations Section 1.860G-2(i)
for the treatment of property rights coupled with REMIC interests to be
separately respected and shall be interpreted consistently with such regulation.
On each Distribution Date, to the extent that any of the Class A-1A
Certificates, Class A-1B Certificates, Class A-2 Certificates, Class R
Certificate, M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates,
Class B-1 Certificates or Class B-2 Certificates receive payments in respect of
Excess Interest, such amounts will be treated as distributed by REMIC 4 to the
Class C Certificates pro rata in payment of the amounts specified in Section
4.04(f) and then paid to the relevant Class of Certificates pursuant to the
related interest cap agreement.
(e) The parties intend that the portion of the Trust Fund
consisting of the REMIC 4 C Interest, the Cap Contract Account, the Cap Contract
and the obligation of the holders of the Class C Certificates to pay amounts in
respect of Excess Interest to the holders of the Class A-1A Certificates, Class
A-1B certificates, Class A-2 Certificates, Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class B-1
Certificates and Class B-2 Certificates shall be treated as a "grantor trust"
under the Code, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Trustee shall (i) furnish
or cause to be furnished to the holders of the Class C Certificates information
regarding their allocable share, if any, of the income with respect to such
grantor trust, (ii) file or cause to be filed with the Internal Revenue Service
Form 1041 (together with any necessary attachments) and such other forms as may
be applicable and (iii) comply with such information reporting obligations with
respect to payments from such grantor trust to the holders of Class A-1A
Certificates, Class A-1B Certificates, Class A-2 Certificates, Class R
Certificate, Class M-1 Certificates, Class M-2 Certificates, Class M-3
Certificates, Class B-1 Certificates, Class B-2 Certificates and Class C
Certificates as may be applicable under the Code.
(f) The parties intend that the portion of the Trust Fund
consisting of the right to receive proceeds from prepayment penalties collected
on the Mortgage Loans, amounts paid by the Servicer or Seller in respect of
prepayment charges pursuant to this Agreement and amounts received with respect
to any amounts in respect of any indemnification paid as a result of a
prepayment charge being unenforceable in breach of the representations and
warranties set forth in the Sale Agreement shall be treated as a "grantor trust"
under the Code, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Trustee shall (i) furnish
or cause to be furnished to the holders of the Class P Certificates information
regarding their allocable share of the income with respect to such grantor trust
and (ii) file or cause to be filed with the Internal Revenue Service Form 1041
(together with any necessary attachments) and such other forms as may be
applicable.
(g) The parties intend that the portion of the Trust Fund
consisting of the Class R Certificate and the right of the Class C Certificates
to receive the amounts described in the last paragraph of Section 9.01 hereof
shall be treated as a "grantor trust" under the Code and the provisions hereof
shall be interpreted consistent with this intention. In furtherance of this
intention, the Trustee shall (i) furnish or cause to be furnished to the holders
of the Class R Certificate and the Class C Certificates information
regarding their allocable share of the income with respect to such grantor
trust, (ii) file or cause to be filed with the Internal Revenue Service Form
1041 (together with any necessary attachments) and such other forms as may be
applicable and (iii) comply with such information reporting obligations with
respect to payments from such grantor trust as may be applicable under the Code.
In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the NIM Insurer, the
Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of the Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of the Class R Certificate
on which the Servicer has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of the Class R Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing, however,
in no event shall the Servicer have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than arising out of a negligent performance by the Servicer of its duties
and obligations set forth herein, and (3) for any special or consequential
damages to Certificateholders (in addition to payment of principal and interest
on the Certificates).
In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the NIM Insurer and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Trustee shall not be liable for any such Losses
attributable to the action or inaction of the Servicer, the Depositor or the
Holder of the Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of the Class R Certificate
on which the Trustee has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of the Class R Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing, however,
in no event shall the Trustee have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than arising out of a negligent performance by the Trustee of its duties
and obligations set forth herein, and (3) for any special or consequential
damages to Certificateholders (in addition to payment of principal and interest
on the Certificates).
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements of
the insurer under each Required Insurance Policy;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the Trustee
or the NIM Insurer, any affiliate of the Depositor, the Trustee or the NIM
Insurer and prepared by the Servicer pursuant to this Agreement will be
inaccurate in any material respect, provided, however, that the Servicer shall
not be responsible for inaccurate information provided to it by third parties.
SECTION 2.09. [RESERVED].
SECTION 2.10. [RESERVED].
SECTION 2.11. Permitted Activities of the Trust. The Trust is created
for the object and purpose of engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee is hereby authorized and directed to
execute and deliver on behalf of the Trust the Cap Contract, and to execute and
deliver on behalf of the Trust, and to perform the duties and obligations of the
Trustee under an insurance and indemnity agreement with a NIM Insurer and any
other agreement or instrument related thereto, in each case in such form as the
Depositor shall direct or shall approve, the execution and delivery of any such
agreement by the Depositor to be conclusive evidence of its approval thereof.
SECTION 2.12. Qualification Special Purpose Entity. For purposes of
SFAS 140, the parties hereto intend that the Trust Fund shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 of SFAS 140.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. The Servicer shall represent and protect the interest of the Trust Fund in
the same manner as it currently protects its own interest in mortgage loans in
its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. The Servicer shall not make
or permit any modification, waiver or amendment of any term of any Mortgage Loan
which would cause any of the REMICs provided for herein to fail to qualify as a
REMIC or result in the imposition of any tax under Section 860G(a) or 860G(d) of
the Code. Without limiting the generality of the foregoing, the Servicer, in its
own name or in the name of the Depositor and the Trustee, is hereby authorized
and empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall prepare and deliver to the Depositor
and/or the Trustee such documents requiring execution and delivery by any or all
of them as are necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans. If
reasonably required by the Servicer, the Trustee shall furnish the Servicer with
a power of attorney in the form attached hereto as Exhibit J and execute such
other documents delivered to it by the Servicer that are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement. Upon receipt of such documents, the Depositor
and/or the Trustee shall execute such documents and deliver them to the
Servicer. The Trustee shall have no liability with respect to any misuse of such
power of attorney and shall be indemnified by the Servicer for any costs,
liabilities or expenses incurred by the Trustee in connection therewith.
In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. To the extent that a Mortgage does not provide for
escrow payments, (i) the Servicer shall determine whether any such payments are
made by the Mortgagor in a manner and at a time that is necessary to avoid the
loss of the Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax lien and (ii) the Servicer shall ensure that all insurance required to
be maintained on the Mortgaged Property pursuant to this Agreement is
maintained. If any such payment has not been made and the Servicer receives
notice of a tax lien with respect to the Mortgage Loan being imposed, the
Servicer will, to the extent required to avoid loss of the Mortgaged Property,
advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property. All costs incurred by the Servicer, if any, in effecting the
timely payments of taxes and assessments on the Mortgaged Properties and related
insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balance under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
The Servicer shall deliver a list of Servicing Officers to the Trustee
by the Closing Date.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage
Loan by a subservicer, which may be an affiliate (each, a "subservicer")
pursuant to a subservicing agreement (each, a "Subservicing Agreement");
provided, however, that (i) such subservicing arrangement and the terms of the
related subservicing agreement must provide for the servicing of such Mortgage
Loans in a manner consistent with the servicing arrangements contemplated
hereunder, (ii) that such agreement would not result in a withdrawal or
downgrading by any Rating Agency of the ratings of any Certificates or any of
the NIM Notes evidenced by a letter to that effect delivered by each Rating
Agency to the Depositor and the NIM Insurer and (iii) the NIM Insurer shall have
consented to such subservicing agreement. Notwithstanding the provisions of any
subservicing agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a subservicer or reference
to actions taken through a subservicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Mortgage Loans in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such subservicing agreements or arrangements or by virtue
of indemnification from the subservicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the Mortgage Loans. Every subservicing agreement entered into by
the Servicer shall contain a provision giving any successor servicer the option
to terminate such agreement
with the consent of the NIM Insurer in the event a successor servicer is
appointed. All actions of the each subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Servicer with the
same force and effect as if performed directly by the Servicer. The Servicer
shall deliver to the NIM Insurer and the Trustee copies of all subservicing
agreements.
(b) For purposes of this Agreement, the Servicer shall be deemed
to have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor Servicer
hereunder, (ii) obligated to make Advances or Servicing Advances if it is
prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02 or 2.03 hereof, (iv) responsible for any expenses of the Servicer
pursuant to Section 2.03 or (v) deemed to have made any representations and
warranties hereunder, including pursuant to Section 2.04 or the first paragraph
of Section 6.02 hereof; provided, however that the Trustee (subject to clause
(ii) above) or its designee, in its capacity as the successor servicer, shall
immediately assume the terminated or resigning Servicer's obligation to make
Advances and Servicing Advances. No such termination shall affect any obligation
of the Servicer to pay amounts owed under this Agreement and to perform its
duties under this Agreement until its successor assumes all of its rights and
obligations hereunder. If the Servicer shall for any reason no longer be the
Servicer (including by reason of any Event of Default), the Trustee (or any
other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to assume such obligations of the Servicer
thereunder; and the Servicer shall not thereby be relieved of any liability or
obligations under the subservicing agreement arising prior to the date of such
succession. To the extent any costs or expenses, including without limitation
Servicing Transfer Costs incurred by the Trustee in connection with this Section
3.04 are not paid by the Servicer pursuant to this Agreement within 30 days of
the date of the Trustee's invoice therefor, such amounts shall be payable out of
the Certificate Account; provided that the terminated Servicer shall reimburse
the Trust Fund for any such expense incurred by the Trust Fund upon receipt of a
reasonably detailed invoice evidencing such expenses. If the Trustee is
unwilling or unable to act as servicer, or if the NIM Insurer so directs the
Trustee, the Trustee shall seek to appoint a successor servicer that is eligible
in accordance with the criteria specified this Agreement and reasonably
acceptable to the NIM Insurer.
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement and the Mortgage
Loans then being serviced and otherwise use its best efforts to effect the
orderly and efficient transfer of the subservicing agreement to the assuming
party.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within 10 Business Days or delivery to the Trustee by the
Servicing Rights Pledgee of a letter signed by the Servicer whereby the Servicer
shall resign as Servicer under this Agreement, the Servicing Rights Pledgee or
its designee shall be appointed as successor servicer (provided that at the time
of such appointment the Servicing Rights Pledgee or such designee meets the
requirements of a successor servicer set forth above) and the Servicing Rights
Pledgee agrees to be subject to the terms of this Agreement.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing and subject to Section
3.01 hereof, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below; provided, further, that the NIM
Insurer's prior written consent shall be required for any modification, waiver
or amendment since the Cutoff Date if the aggregate number of outstanding
Mortgage Loans which have been modified, waived or amended exceeds 5% of the
number of Mortgage Loans as of the Cut-Off Date. In the event of any such
arrangement pursuant to clause (ii) above, subject to Section 4.01, the Servicer
shall make any Advances on the related Mortgage Loan during the scheduled period
in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
(any and all such waivers, modifications, variances, forgiveness of principal or
interest, postponements, or indulgences collectively referred to herein as
"forbearance"), provided, however, that in no event shall the Servicer grant any
such forbearance (other than as permitted by the second sentence of this
Section) with respect to any one Mortgage Loan more than once in any 12 month
period or more than three times over the life of such Mortgage Loan, and
provided, further, that in determining which course of action permitted by this
sentence it shall pursue, the Servicer shall adhere to the standards of Section
3.01. The Servicer's analysis supporting any forbearance and the conclusion that
any forbearance meets the standards of Section 3.01 shall be reflected in
writing in the Mortgage File.
(b) The Servicer will not waive any prepayment penalty or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the prepayment of the
Mortgage Loan is made in connection with the voluntary sale of the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment as
described in Section 3.01 hereof, (x) such waiver relates to a default or a
reasonably foreseeable default, (y) such waiver would maximize recovery of total
proceeds taking into account the value of such prepayment penalty and related
Mortgage Loan and (z) doing so is standard and customary in servicing similar
Mortgage Loans (including any waiver of a prepayment penalty in connection with
a refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default), or (v) if sufficient information is not made available to
enable it to collect the prepayment penalty. Except as provided in the preceding
sentence, in no event will the Servicer waive a prepayment penalty in connection
with a refinancing of a Mortgage Loan that is not related to a default or a
reasonably foreseeable default. If the Servicer waives or does not collect all
or a portion of a prepayment penalty relating to a Principal Prepayment in full
or in part due to any action or omission of the Servicer, other than as provided
above, the Servicer shall deposit the amount of such prepayment penalty (or such
portion thereof as had been waived for deposit) into the Collection Account for
distribution in accordance with the terms of this Agreement.
(c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf
of the Trustee for the benefit of the Certificateholders, the Collection
Account. The Servicer shall deposit into the Collection Account daily, within
two Business Days of receipt thereof, in immediately available funds, the
following payments and collections received or made by it on and after the
Cut-Off Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans, other than principal due
on the Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage
Loans net of the related Servicing Fee permitted under Section 3.15,
other than interest due on the Mortgage Loans on or prior to the
Cut-off Date;
(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Servicer's normal
servicing procedures;
(iv) all Compensating Interest;
(v) any amount required to be deposited by the Servicer
pursuant to Section 3.05(g) in connection with any losses on Permitted
Investments;
(vi) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 hereof;
(vii) the Purchase Price and any Substitution Adjustment
Amount;
(viii) all Advances made by the Servicer pursuant to Section
4.01;
(ix) all prepayment penalties; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property) and other similar ancillary fees (other than
prepayment penalties) if collected, need not be remitted by the Servicer. In the
event that the Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time withdraw or direct the Trustee, or such other institution maintaining
the Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
The Servicer shall give notice to the NIM Insurer and the Trustee of
the location of the Collection Account maintained by it when established and
prior to any change thereof. The Servicer shall have at least 30 days' notice of
the appointment of a NIM Insurer prior to being required to deliver notices to
such NIM Insurer. Not later than twenty days after each Distribution Date, the
Servicer shall forward to the NIM Insurer and, upon request, to the Trustee and
the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.
(e) [RESERVED].
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from
the Collection Account and required to be deposited in the Certificate
Account;
(ii) any amount required to be deposited by the Trustee
pursuant to Section 3.05(g) in connection with any losses on Permitted
Investments; and
(iii) the Auction Termination Amount or Clean Up Call Price
payable pursuant to Section 9.01.
Any amounts received by the Trustee prior to 3:00 p.m. New York City
time (or such earlier deadline for investment in the Permitted Investments
designated by the Trustee) which are required to be deposited in the Certificate
Account by the Servicer shall be invested in Permitted Investments on the
Business Day on which they were received. The foregoing requirements for
remittance by the Servicer and deposit by the Servicer into the Certificate
Account shall be exclusive. In the event that the Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
All funds deposited in the Certificate Account shall be held by the Trustee in
trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the
Trustee incur liability for withdrawals
from the Certificate Account at the direction of the Servicer. The Trustee shall
give notice to the NIM Insurer and the Servicer of the location of the
Certificate Account maintained by it when established and prior to any change
thereof.
(g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or a fund for which such
institution serves as custodian or is otherwise immediately available, then such
Permitted Investment shall mature not later than such Distribution Date) and, in
each case, shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Servicer or the Trustee,
as applicable, for the benefit of the Certificateholders. All income and gain
net of any losses realized from amounts on deposit in the Collection Account
shall be for the benefit of the Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. The amount of any losses incurred in
the Collection Account in respect of any such investments shall be deposited by
the Servicer in the Collection Account out of the Servicer's own funds
immediately as realized. All income and gain net of any losses realized from
amounts on deposit in the Certificate Account shall be for the benefit of the
Trustee and shall be remitted to or withdrawn by it monthly as provided herein.
The amount of any losses incurred in the Certificate Account in respect of any
such investments shall be deposited by the Trustee, in the Certificate Account
out of the Trustee's own funds immediately as realized.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided,
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously
paid to or withheld by the Servicer), as servicing compensation in
accordance with Section 3.15, that portion of any payment of interest
that equals the Servicing Fee for the period with respect to which such
interest payment was made, and, as additional servicing compensation,
those other amounts set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances made by it
with respect to the Mortgage Loans, such right of reimbursement
pursuant to this subclause (ii) being limited to amounts received on
particular Mortgage Loan(s) (including, for this purpose, Condemnation
Proceeds, Insurance Proceeds or Liquidation Proceeds) that represent
late recoveries of payments of principal and/or interest on such
particular Mortgage Loan(s) in respect of which any such Advance was
made;
(iii) to reimburse the Servicer for any Non-Recoverable
Advance previously made and, to the extent that such Non-Recoverable
Servicing Advances would constitute "unanticipated expenses" within the
meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by
one of the REMICs provided for herein, any Non-Recoverable Servicing
Advance;
(iv) to pay to the Servicer earnings on or investment
income with respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(vi) pay the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, the Servicer's
right to reimbursement of Servicing Advances pursuant to this subclause
(vi) with respect to any Mortgage Loan being limited to amounts
received on particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds and purchase and repurchase proceeds) that
represent late recoveries of the payments for which such advances were
made pursuant to Section 3.01 or Section 3.06;
(vii) to pay to the Depositor or the Servicer, as
applicable, with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to Section 2.02, 2.03
or 3.12, all amounts received thereon and not taken into account in
determining the related Stated Principal Balance of such repurchased
Mortgage Loan;
(viii) to reimburse the Servicer or the Depositor for
expenses incurred by any of them in connection with the Mortgage Loans
or Certificates and reimbursable pursuant to Section 3.25 or Section
6.03 hereof;
(ix) to reimburse the Trustee for enforcement expenses
reasonably incurred in respect of a breach of defect giving rise to the
purchase obligation in Section 2.03 that were incurred in
the Purchase Price of the Mortgage Loans including any expenses arising
out of the enforcement of the purchase obligation; provided that any
such expenses will be reimbursable under this subclause (ix) only to
the that such expenses would constitute "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1 (b)(3)(ii) if paid
by one of the REMICs provided for herein;
(x) to withdraw pursuant to Section 3.05 any amount
deposited in the Collection Account and not required to be deposited
therein;
(xi) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof; and
(xii) to reimburse itself for Advances or Servicing
Advances from amounts in the Collection Account held for future
distributions that were not included in Available Funds for the
preceding Distribution Date. An amount equal to the amount withdrawn
from the Collection Account pursuant to this subclause (xii) shall be
deposited in the Collection Account by the Servicer on the next
succeeding Distribution Date that funds are to be distributed to
Certificateholders.
In addition, no later than 3:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided, however
if the Trustee does not receive such Interest Funds and Principal Funds by 4:00
p.m. Eastern Time, such Interest Funds and Principal Funds shall be deposited in
the Certificate Account on the next Business Day.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.
The Servicer shall provide written notification to the Trustee and the
NIM Insurer on or prior to the next succeeding Servicer Remittance Date upon
making any withdrawals from the Collection Account pursuant to subclauses (iii)
and (viii) above.
In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any P&I Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at the "prime rate" (as specified in the New York edition of the Wall Street
Journal) until such failure is remedied.
(b) The Trustee shall withdraw funds from the Certificate Account
for distribution to the Certificateholders in the manner specified in this
Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to this Agreement). In addition,
the Trustee may from time to time make withdrawals from the Certificate Account
for the following purposes:
(i) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein;
(ii) to pay the Trustee any indemnification amounts owed
it and to clear and terminate the Certificate Account upon termination
of the Agreement pursuant to Section 9.01
hereof (including paying all amounts necessary to the Trustee or the
Servicer in connection with any such termination);
(iii) to reimburse the Trustee for expenses incurred by the
Trustee and reimbursable pursuant to Section 8.06 hereof;
(iv) to pay to the Trustee earnings on or investment
income with respect to funds in or credited to the Certificate Account;
and
(v) to pay to the Credit Risk Manager, the Credit Risk
Manager Fee.
SECTION 3.09. [RESERVED].
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each Mortgage Loan,
hazard insurance with extended coverage in an amount that is at least equal to
the lesser of (i) the replacement value of the improvements that are part of
such Mortgaged Property and (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan and (b) an amount such that the proceeds of such
policy shall be sufficient to prevent the related Mortgagor and/or mortgagee
from becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. The Servicer shall also cause flood insurance to be maintained on
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent required under the standards described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Servicer under any
such policies (other than the amounts to be applied to the restoration or repair
of the related Mortgaged Property or property thus acquired or amounts released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Servicer out of late payments by the related Mortgagor or
out of Liquidation Proceeds to the extent and as otherwise permitted by Section
3.08 hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser of
(i) the original principal balance of the related Mortgage Loan, (ii) the
replacement value of the improvements that are part of such Mortgaged Property,
or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket
policy because of such deductible clause. In connection with its activities as
servicer of the Mortgage Loans, the Servicer agrees to present, on behalf of
itself, the Depositor and the Trustee for the benefit of the Certificateholders,
claims under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, but only to the extent that such enforcement will not adversely affect
or jeopardize coverage under any Required Insurance Policy; provided, however,
that the Servicer shall not exercise any such right if the due-on-sale clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law. An opinion of counsel, which shall be reimbursable as a Servicing Advance,
delivered to the Trustee and the Depositor to the foregoing shall conclusively
establish the reasonableness of such belief to the extent permitted under
applicable law. Notwithstanding the foregoing, the Servicer is not required to
exercise such rights with respect to a Mortgage Loan if the Person to whom the
related Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies the terms and conditions contained in the Mortgage Note and Mortgage
related thereto and the consent of the mortgagee under such Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that the Servicer is prohibited by law
from enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.11(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
3.11(a) by reason of any transfer or assumption that the Servicer reasonably
believes it is restricted by law from preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.11(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with
the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the Periodic Rate
Cap, the Adjustment Date, any prepayment penalty and any other term affecting
the amount or timing of payment on the Mortgage Loan) may be changed. The
Servicer shall notify the Trustee and the NIM Insurer that any such substitution
or assumption agreement has been completed by forwarding to the Trustee (with a
copy to the NIM Insurer) the original of such substitution or assumption
agreement, which
in the case of the original shall be added to the related Mortgage File and
shall, for all purposes, be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. Any
fee collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds.
(a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Collection Account pursuant to Section 3.08
hereof). The Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Servicer has knowledge that a Mortgaged Property that the Servicer is
contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous
waste risks known to the Servicer, the Servicer will, prior to acquiring the
Mortgaged Property, consider such risks and only take action in accordance with
Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee or its nominee. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer or an affiliate may receive usual and customary real estate referral
fees for real estate brokers in connection with the listing and disposition of
REO Property. The Servicer shall prepare a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Servicer to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Collection
Account no later than the close of business on each Determination Date. The
Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, request more than 60 days prior
to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period unless the Trustee and the NIM Insurer shall have been supplied with an
Opinion of Counsel addressed to the Trustee and the NIM Insurer (such Opinion of
Counsel not to be an expense of the Trustee or the NIM Insurer) to the effect
that the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund or any of the REMICs provided for herein as
defined in section 860F of the Code or cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust Fund
in such a manner or pursuant to any terms that would (i) cause such Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or (ii) subject the Trust Fund or any REMIC
provided for herein to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged Property under section 860G(c) of
the Code or otherwise, unless the Servicer or the Depositor has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of any
such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to any prepayment penalties and then to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.
(c) The Servicer, in its sole discretion, shall have the right to
elect (by written notice sent to the Trustee) to purchase for its own account
from the Trust Fund any Mortgage Loan that is 91 days or more Delinquent or REO
Property for which the Servicer has accepted a deed-in-lieu of foreclosure at a
price equal to the Purchase Price. The Purchase Price for any Mortgage Loan or
REO Property purchased hereunder shall be delivered to the Trustee for deposit
in the Collection Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Depositor in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, representation or warranty, as
shall be necessary to vest in the Servicer any Mortgage Loan or REO Property
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The Servicer shall thereupon own such Mortgage Loan or REO
Property, and all security and documents, free of any further obligation to the
Trustee or the Certificateholders with respect thereto. The Servicer shall not
use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders.
In the event that the Servicer is acting as the servicer and the
Servicer (or an affiliate of the Servicer) is the owner of more than 50% of the
Class of Certificates which is then currently in a first loss position and such
party is deemed to be the "Primary Beneficiary" as defined in FIN 40, the
provisions of the preceding paragraph shall not apply and the Servicer (or an
affiliate of the Servicer), in its sole discretion, shall have the right to
elect to purchase for its own account from the Trust Fund any Mortgage Loan that
is 120 days or more Delinquent or REO Property for which the Servicer has
accepted a deed-in-lieu of foreclosure, during the period commencing on the
first day of the calendar quarter succeeding the calendar quarter in which the
Initial Delinquency Date (as defined below) occurred with respect to such
Mortgage Loan and ending on the last Business Day of such calendar quarter. If
the Servicer (or an affiliate of the Servicer) does not exercise its purchase
right with respect to a Mortgage Loan during the period specified in the
preceding sentence, such Mortgage Loan shall thereafter again become eligible
for purchase pursuant to the preceding sentence only after the Mortgage Loan
ceases to be 120 days or more Delinquent and thereafter becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage Loan shall mean
the date on which the Mortgage Loan first became 120 days Delinquent. Prior to
repurchase pursuant to this Section 3.12, the Servicer shall be required to
continue to make monthly advances pursuant to Section 4.01. The Servicer shall
not use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders. The Servicer
purchase any Mortgage Loan or REO Property pursuant to this paragraph at a price
equal to the Purchase Price. The Purchase Price for any Mortgage Loan or REO
Property purchased hereunder shall be delivered to the Trustee for deposit in
the Collection Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Depositor in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, representation or warranty, as
shall be necessary to vest in the Servicer any Mortgage Loan or REO Property
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. The provisions in this paragraph shall only apply if
▇▇▇▇▇▇ Loan Servicing LP is the servicer.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of such request, the Trustee or its designee shall
promptly release the related Mortgage File to the Servicer, and the Trustee or
its designee shall at the Servicer's written direction
execute and deliver to the Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage in each case provided by the Servicer, together with
the Mortgage Note with written evidence of cancellation thereon. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account, the Certificate
Account or the related subservicing account. From time to time and as shall be
appropriate for the servicing or foreclosure of any Mortgage Loan, including for
such purpose, collection under any policy of flood insurance, any fidelity bond
or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making of
any corrections to the Mortgage Note or the Mortgage or any of the other
documents included in the Mortgage File, the Trustee or its designee shall, upon
delivery to the Trustee or its designee of a Request for Release in the form of
Exhibit I signed by a Servicing Officer, release the Mortgage File to the
Servicer. Subject to the further limitations set forth below, the Servicer shall
cause the Mortgage File or documents so released to be returned to the Trustee
or its designee when the need therefor by the Servicer no longer exists, unless
the Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account, in which case the Trustee or its designee shall deliver the
Request for Release to the Servicer.
Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Servicer and the Trustee or its designee shall mutually agree. The Trustee
or its designee shall promptly release the related Mortgage File(s) within five
(5) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents in a timely manner, the Trustee or its
designee, shall be liable for such penalties or damages directly caused by it
and shall have no liability for penalties or damages attributable to the
Servicer's actions or inactions.
If the Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property as authorized by this Agreement, the
Servicer shall deliver or cause to be delivered to the Trustee or its designee,
for signature, as appropriate, any court pleadings, requests for trustee's sale
or other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to enforce any other remedies or
rights provided by the Mortgage Note or the Mortgage or otherwise available at
law or in equity. Notwithstanding the foregoing, the Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been
released by the Trustee or its designee to be returned to the Trustee promptly
after possession thereof shall have been released by the Trustee or its designee
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account, and
the Servicer shall have delivered to the Trustee or its designee a Request for
Release in the form of Exhibit I or (ii) the Mortgage File or document shall
have been delivered to an attorney or to a public trustee or other public
official as required by law for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property and the
Servicer shall have delivered to the Trustee or its designee an Officer's
Certificate of a Servicing Officer certifying as to the name and address of the
Person to which the Mortgage File or the documents therein were delivered and
the purpose or purposes of such delivery.
SECTION 3.14. Documents Records and Funds in Possession of Servicer to be
Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control of,
the Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Collection Account, shall be held by the
Servicer for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable provisions of this
Agreement. The Servicer also agrees that it shall not create, incur or subject
any Mortgage File or any funds that are deposited in the Collection Account or
Certificate Account or in any Escrow Account, or any funds that otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, customary real estate referral fees, assumption fees (i.e. fees
related to the assumption of a Mortgage Loan upon the purchase of the related
Mortgaged Property) and similar fees payable by the Mortgagor, and all income
and gain net of any losses realized from Permitted Investments in the Collection
Account shall be retained by the Servicer to the extent not required to be
deposited in the Collection Account pursuant to Sections 3.05, or 3.12(a)
hereof. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of any
premiums for hazard insurance, as required by Section 3.10 hereof and
maintenance of the other forms of insurance coverage required by Section 3.10
hereof) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.08 and 3.12 hereof.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.17. Annual Statement as to Compliance.
Pursuant to this Agreement, the Servicer shall deliver to the Depositor,
the Trustee and the NIM insurer on or before February 28 beginning in 2005 or
such other date that the Depositor gives the
Servicer at least 30 days prior notice of in order to remain in compliance with
the Section 302 Requirements, an Officer's Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding calendar year and of performance under this Agreement has been
made under such officer's supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof. The Trustee shall
forward a copy of each such statement received by it to each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon written request at the Certificateholder's expense,
provided such statement has been delivered by the Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
On or before March 15 of each year, beginning in 2005 or such other date in
order to remain in compliance with the Section 302 Requirements, the Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any Affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a USAP Report to the Trustee, the NIM Insurer and the
Depositor. Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee. In addition, at the
NIM Insurer's written request, the Servicer shall deliver copies of evidence of
the Servicer's fidelity bond or errors and omissions insurance coverage to the
NIM Insurer.
SECTION 3.19. Rights of the NIM Insurer. Each of the rights of the NIM
Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIM Insurer is owed amounts
in respect of its guarantee of payment on such notes.
SECTION 3.20. Periodic Filings.
(a) Promptly upon receipt of any report of the independent public
accountants required pursuant to Section 3.18, the Trustee shall review such
report. As part of the Form 10-K required to be filed pursuant to the terms of
this Agreement, the Trustee shall include such accountants report as well as the
Officer's Certificate delivered by the Servicer pursuant to Section 3.17
relating to the Servicer's performance of its obligations under this Agreement
and any significant deficiencies relating to the Servicer's compliance set forth
in the report of the Servicer's certified independent accountants described
above.
(b) The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust Fund, and file with the
Securities and Exchange Commission, (i) within 15 days after each Distribution
Date in each month, each Monthly Statement on Form 8-K under the Exchange Act
executed by the Trustee, (ii) on or before March 31 of each year beginning in
2004 or such other date in order to remain in compliance with the Section 302
Requirements, a Form 10-K under the Exchange Act executed by the Depositor,
including any certification (the "Certification") required by the Section 302
Requirements, and (iii) any and all reports, statements and information
respecting the Trust Fund and/or the Certificates required to be filed on behalf
of the Trust Fund under the Exchange Act executed by the Trustee. The
Certification shall be executed by a senior officer of the Depositor. Upon such
filing with the Securities and Exchange Commission, the Trustee shall promptly
deliver to the Depositor a copy of any such executed report, statement or
information. Prior to making any such filings and certifications, the Trustee
shall comply with the provisions set forth in this Section. If permitted by
applicable law and unless the Depositor otherwise directs, the Trustee shall
file a Form 15 under the
Exchange Act on or before January 30, 2004 or as soon as it is able to do so
pursuant to applicable law. The Depositor hereby grants to the Trustee a limited
power of attorney to execute (other than the Form 10-Ks and the Certification)
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports, and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this section.
(c) [RESERVED].
(d) The obligations set forth in paragraphs (a) through (c) of this Section
shall only apply with respect to periods for which the Trustee is obligated to
file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section. In the event
a Form 15 is properly filed pursuant to paragraph (b) of this Section, there
shall be no further obligations under paragraphs (a) through (c) of this Section
commencing with the fiscal year in which the Form 15 is filed (other than the
obligations in paragraphs (a) and (b) of this Section to be performed in such
fiscal year that relate back to the prior fiscal year).
SECTION 3.21. Annual Certificate by Trustee.
(a) Within 15 days prior to the date on which a Form 10-K is to be filed
with a Certification by the Depositor, an officer of the Trustee shall execute
and deliver an Officer's Certificate, signed by a Responsible Officer of the
Trustee or any officer to whom that officer reports, to the Depositor for the
benefit of such Depositor and its officers, directors and affiliates, certifying
as to the matters described in the Officer's Certificate attached hereto as
Exhibit K.
(b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.
SECTION 3.22. Annual Certificate by Servicer.
(a) By February 28 beginning in 2005 or such other date specified in a
written notice within 15 days prior to the date on which a Form 8-K is required
to be filed with a Certification by the Depositor, the Servicer shall execute
and deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee, the NIM Insurer and
Depositor for the benefit of the Trustee and Depositor and their respective
officers, directors and affiliates, certifying as to the following matters:
(i) The Servicer has reviewed the information required to be delivered
to the Trustee pursuant to the Pooling and Servicing Agreement (the
"Servicing Information").
(ii) Based on the Servicer's knowledge, the information in the Annual
Statement of Compliance, and all servicing reports, officer's certificates
and other information relating to the servicing of the Mortgage Loans
submitted to the Trustee by the Servicer taken as a whole, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make any such reports, certificates or other information, in
light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by the Annual Statement
of Compliance;
(iii) Based on the Servicer's knowledge, the Servicing Information
required to be provided to the Trustee by the Servicer under this Agreement
has been provided to the Trustee; and
(iv) Based upon the review required under this Agreement, and except as
disclosed in the Annual Statement of Compliance, the Annual Independent
Certified Public Accountant's Servicing Report and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans submitted to the Trustee by the Servicer, the Servicer
has, as of the last day of the period covered by the Annual Statement of
Compliance fulfilled its obligations under this Agreement.
(b) The Servicer shall indemnify and hold harmless the Depositor and their
respective officers, directors, agents and affiliates from and against (i) any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.22, (ii) any allegation that
the Officer's Certificate required under this Section contains a misstatement of
a material fact or omits or omitted to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading or (iii) the negligence, bad faith or willful
misconduct of the Servicer in connection therewith. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the
Depositor, then the Servicer agrees that it shall contribute to the amount paid
or payable by the Trustee and the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Depositor on the one hand and the Servicer on
the other in connection with a breach of the Servicer's obligations under this
Section 3.22, any alleged material misstatement or omission in the Officer's
Certificate required under this Section or the Servicer's negligence, bad faith
or willful misconduct in connection therewith.
SECTION 3.23. Prepayment Penalty Reporting Requirements.
(a) Promptly after each Distribution Date, the Servicer shall provide to
the Depositor and the NIM Insurer the following information with regard to each
Mortgage Loan that has prepaid during the related Prepayment Period:
(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) prepayment penalty amount due;
(vi) prepayment penalty amount collected; and
(vii) reason why full prepayment penalty amount was not collected, if
applicable.
SECTION 3.24. Statements to Trustee. Not later than the tenth calendar day
of each month, the Servicer shall furnish to the Trustee and the NIM Insurer an
electronic file providing loan level accounting data for the period ending on
the last Business Day of the preceding month in the format mutually agreed upon
between the Servicer and the Trustee, including but not limited to information
described in Section 4.05(a).
SECTION 3.25. Indemnification.
The Servicer shall indemnify the Seller, the Trust Fund, Trustee, the
Depositor and the NIM Insurer and hold each of them harmless against any and all
claims, losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgements, and any other costs, fees and expenses
that any of such parties may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement. The Servicer immediately shall notify the Seller,
the Trustee, the Depositor and the NIM Insurer or any other relevant party if a
claim is made by a third party with respect to this Agreement or the Mortgage
Loans, assume (with the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed) the defense of any such
claim and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgement or decree which may be entered
against it or any of such parties in respect of such claim. The Servicer shall
follow any written instructions received from the Trustee and the NIM Insurer in
connection with such claim. The Servicer shall provide the Trustee, the
Depositor and the NIM Insurer with a written report of all expenses and advances
incurred by the Servicer pursuant to this Section 3.25, and the Servicer from
the assets of the Trust Fund in the Collection Account promptly shall reimburse
itself for all amounts advanced by it pursuant to the preceding sentence except
when the claim in any way relates to the failure of the Servicer to service and
administer the Mortgage Loans in material compliance with the terms of this
Agreement or the gross negligence, bad faith or willful misconduct of the
Servicer. The provisions of this paragraph shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
SECTION 3.26. Nonsolicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.
SECTION 3.27. Existing Servicing Agreement.
The Servicer acknowledges the transfer on the Closing Date of the servicing
of the Mortgage Loans from the Existing Servicing Agreement to this Agreement
pursuant to Section 10.01 of the Existing Servicing Agreement.
ARTICLE II
DISTRIBUTIONS
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 1:00
p.m. New York City time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, the NIM Insurer, each
Rating Agency and the Trustee an Officer's Certificate setting forth the basis
for such determination. The Servicer may, in its sole discretion, make an
Advance with respect to the principal portion of the final Scheduled Payment on
a Balloon Loan, but the Servicer is under no obligation to do so; provided,
however, that nothing in this sentence shall affect the Servicer's obligation
under this Section 4.01 to Advance the interest portion of the final Scheduled
Payment with respect to a Balloon Loan as if such Balloon Loan were a fully
amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled
Payment on a Balloon Loan when due, the Servicer shall Advance (unless it
determines in its good faith judgment that such amounts would constitute a Non
Recoverable Advance) a full month of interest (net of the Servicing Fee) on the
Stated Principal Balance thereof each month until its Stated Principal Balance
is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until such Mortgage
Loan is paid in full or the related Mortgaged Property or related REO Property
has been liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for
such Distribution Date, deposit into the Collection Account, as a reduction of
the Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest Shortfall; provided that the amount so deposited with
respect to any Distribution
Date shall be limited to the product of (x) one-twelfth of 0.30% and (y) the
aggregate Stated Principal Balance of the Mortgage Loans. In case of such
deposit, the Servicer shall not be entitled to any recovery or reimbursement
from the Depositor, the Trustee, the Trust Fund or the Certificateholders. With
respect to any Distribution Date, to the extent that the Prepayment Interest
Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest
Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current
Interest with respect to each Class of Certificates, pro rata based upon the
amount of interest each such Class would otherwise be entitled to receive on
such Distribution Date. Notwithstanding the foregoing, there shall be no
reduction of the Servicing Fee in connection with Prepayment Interest Shortfalls
related to the Relief Act and the Servicer shall not be obligated to pay
Compensating Interest with respect to Prepayment Interest Shortfalls related to
the Relief Act.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in REMIC 1, REMIC 2 and REMIC 3 in an amount sufficient to make
the distributions on the respective Certificates on such Distribution Date in
accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) [RESERVED].
(b) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:
(i) to the Class P Certificates, an amount equal to any prepayment
penalties collected on the Mortgage Loans and (A) any amounts paid by the
Seller or the Servicer in respect of prepayment charges pursuant to this
Agreement or (B) any amounts received in respect of any indemnification
paid as a result of a prepayment charge being unenforceable in breach of
the representations and warranties set forth in the Sale Agreement received
during the related Prepayment Period;
(ii) to each Class of the Class R, Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇
and Class X Certificates, the Current Interest and any Interest Carry
Forward Amount with respect to each such Class; provided, however, if such
amount is not sufficient to make a full distribution of the Current
Interest and any Interest Carry Forward Amount to all of the Class R, Class
A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇ and Class X Certificates, such amount will be
distributed pro rata among each Class of the Class R, Class A-1A, Class
▇-▇▇, ▇▇▇▇▇ ▇-▇ and Class X Certificates based on the ratio of (x) the
Current Interest and Interest Carry Forward Amount for such Class to (y)
the total amount of Current Interest and any Interest Carry Forward Amount
for the Class R, Class A-1A, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇ and Class X
Certificates;
(iii) to the Class M-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such class;
(iv) to the Class M-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such class;
(v) to the Class M-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such class;
(vi) to the Class B-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such class;
(vii) to the Class B-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such class;
(viii) [RESERVED]; and
(ix) any remainder pursuant to Section 4.04(e) hereof.
(c) All amounts representing prepayment charges in respect of the Mortgage
Loans, and amounts paid by the Servicer in respect of prepayment charges
pursuant to this Agreement will be distributed by the Trustee to the Holders of
the Class P Certificates pursuant to Section 4.04(b).
(d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:
(i) (1) to the Class A-1A, Class A-1B and Class R Certificates, (a) on
or prior to the Distribution Date in March 2007 or if a Trigger Event has
occurred and is continuing the Group One Principal Distribution Amount will
be distributed sequentially to the Class R, Class A-1A and Class A-1B
Certificates until their respective Certificate Principal Balances have
been reduced to zero and (b) after the Distribution Date in March 2007, the
Group One Principal Distribution Amount will be distributed pro rata, based
upon their respective outstanding Certificate Principal Balances, to the
Class A-1A and Class A-1B Certificates; and with respect to the Class A-2
Certificates, the Group Two Principal Distribution Amount will be
distributed to the Class A-2 Certificates until their Certificate Principal
Balance has been reduced to zero;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(iv) to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount;
(v) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;
(vi) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount; and
(vii) any remainder pursuant to Section 4.04(e) hereof.
(e) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(ix) and 4.04(d)(vii) hereof and, to the
extent required to make the distributions set forth below in clauses (i) through
(vii) of this Section 4.04(e), and each such distribution shall be made only
after all distributions pursuant to Sections 4.04(b) and (d) above shall have
been made until such remainders shall have been fully distributed for such
Distribution Date:
(i) for distribution as part of the Principal Distribution Amount, the
Extra Principal Distribution Amount;
(ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized Loss
Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Unpaid Realized Loss
Amount;
(iv) to the Class M-3 Certificates, the Class M-3 Unpaid Realized Loss
Amount;
(v) to the Class B-1 Certificates, the Class B-1 Unpaid Realized Loss
Amount;
(vi) to the Class B-2 Certificates, the Class B-2 Unpaid Realized Loss
Amount;
(vii) to the Offered Certificates, on a pro rata basis, the Floating
Rate Certificate Carryover for each such class; and
(viii) the remainder pursuant to Section 4.04(f) hereof.
(f) on each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(e)(viii) as follows:
(i) to the Class C Certificates in the following order of priority,
(I) the Class C Current Interest, (II) the Class C Interest Carry Forward
Amount, (III) as principal on the Class C Certificate until the Certificate
Principal Balance of the Class C Certificates has been reduced to zero and
(IV) the Class C Unpaid Realized Loss Amount; and
(ii) the remainder pursuant to Section 4.04(g) hereof.
(g) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(f)(ii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.06 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.
(h) On each Distribution Date, after giving effect to distributions on such
Distribution Date, the Trustee shall allocate the Applied Realized Loss Amount
for the Certificates to reduce the Certificate Principal Balances of the Class C
and Subordinated Certificates in the following order of priority:
(i) to the Class C Certificates until the Class C Certificate
Principal Balance is reduced to zero;
(ii) to the Class B-2 Certificates until the Class B-2 Certificate
Principal Balance is reduced to zero;
(iii) to the Class B-1 Certificates until the Class B-1 Certificate
Principal Balance is reduced to zero;
(iv) to the Class M-3 Certificates until the Class M-3 Certificate
Principal Balance is reduced to zero
(v) to the Class M-2 Certificates until the Class M-2 Certificate
Principal Balance is reduced to zero; and
(vi) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(i) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
(j) The Trustee is hereby directed by the Depositor to execute the Cap
Contract on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents of such Cap
Contract, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contract at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contract, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contract. Any payments
received under the terms of the Cap Contract will be available to pay the
holders of the Offered Certificates up to the amount of any Floating Rate
Certificate Carryovers remaining after all other distributions required under
this Section 4.04 are made on such Distribution Date, other than Floating Rate
Certificate Carryovers attributable to the fact that Applied Realized Loss
Amounts are not allocated to the Class A and Class R Certificates. Any amounts
received under the terms of the Cap Contract on a Distribution Date that are not
used to pay such Floating Rate Certificate Carryovers will be distributed to the
holders of the Class C Certificates. Payments in respect of such Floating Rate
Certificate Carryovers shall be paid to the Offered Certificates, pro rata based
upon such Floating Rate Certificate Carryovers for each class of Offered
Certificates.
(i) The Trustee shall establish and maintain, for the benefit of the
Trust Fund and the Certificateholders, the Cap Contract Account. On or
prior to the Cap Contract Termination Date, amounts, if any, received by
the Trustee for the benefit of the Trust Fund in respect of the Cap
Contract shall be deposited by the Trustee into the Cap Contract Account
and will be used to pay Floating Rate Certificate Carryovers on the Offered
Certificates. With respect to any Distribution Date on or prior to the Cap
Contract Termination Date, the amount, if any, payable by the Cap Contract
Counterparty under the Cap Contract will equal the product of (i) the
excess of (x) One-Month LIBOR (as determined by the Cap Contract
Counterparty and subject to a cap equal to the rate with respect to such
Distribution Date as shown under the heading "1ML Upper Collar" in the Cap
Table), over (y) the rate with respect to such Distribution Date as shown
under the heading "1ML Lower Collar" in the Cap Table, (ii) an amount equal
to the Cap Contract Notional Balances and (iii) the number of days in such
Accrual Period, divided by 360. If a payment is made to the Trust Fund
under the Cap Contract and the Trustee is required to distribute excess
amounts to the holders of the Class C Certificates as described above, the
Trustee shall send a notice on the Business Day prior to the related
Distribution Date stating the amount received on the Cap Contract, the
amounts paid with respect to Floating Rate Certificate Carryovers and the
amount due to the holders of the Class C Certificates. Such notice shall be
sent by the Trustee via facsimile to the holders of the Class C
Certificates.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
(iii) The Cap Contract is scheduled to remain in effect until the Cap
Contract Termination Date and will be subject to early termination only in
limited circumstances. Such circumstances include certain insolvency or
bankruptcy events in relation to the Cap Contract Counterparty (after a
grace period of three Local Business Days, as defined in the Cap Contract,
after notice of such failure is received by the Cap Contract Counterparty)
to make a payment due under the Cap Contract, the failure by the Cap
Contract Counterparty (after a cure period of 20 days after notice of such
failure is received) to perform any other agreement made by it under the
Cap Contract, the termination of the Trust Fund and the Cap Contract
becoming illegal or subject to certain kinds of taxation.
(k) In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee and the NIM Insurer in
the form of a computer readable magnetic tape (or by such other means as the
Servicer, the Trustee and the NIM Insurer may agree from time to time)
containing such data and information such as to permit the Trustee to prepare
the Monthly Statement to Certificateholders and make the required distributions
for the related Distribution Date.
(l) The Trustee shall promptly notify the NIM Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class C Certificates or the
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates and the Trustee hereby agree
that the NIM Insurer may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim, including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Claim and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the NIM Insurer shall be subrogated to the rights
of the Trustee and each Holder of the Class C Certificates and the Class P
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIM Insurer will not have any rights with respect to
any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIM Notes has been required
to relinquish a distribution made on the Class C Certificates, the Class P
Certificates or the NIM Notes, as applicable, and the NIM Insurer made a payment
in respect of such relinquished amount.
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based on information provided by
the Servicer, the Trustee shall prepare and make available on its website
located at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇ to each Holder of a Class of Certificates of the
Trust Fund, the Servicer, the NIM Insurer, the Rating Agencies and the Depositor
a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each Class
allocable to principal, separately identifying (A) the aggregate amount of
any Principal Prepayments included therein, (B) the aggregate of all
scheduled payments of principal included therein, (C) the Extra Principal
Distribution Amount, if any, and (D) the aggregate amount of prepayment
penalties, if any;
(ii) the amount of such distribution to Holders of each Class allocable
to interest, together with any Non-Supported Interest Shortfalls allocated
to each Class;
(iii) any Interest Carry Forward Amount for each Class of the Offered
Certificates;
(iv) the Class Certificate Principal Balance of each Class after giving
effect (i) to all distributions allocable to principal on such Distribution
Date and (ii) the allocation of any Applied Realized Loss Amounts for such
Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution Date;
(vi) the related amount of the Servicing Fee paid to or retained by the
Servicer and the amount of investment income earned on funds on deposit in
the Certificate Account for the related Due Period;
(vii) the Pass-Through Rate for each Class of Certificates for such
Distribution Date;
(viii) the amount of Advances included in the distribution on such
Distribution Date;
(ix) the cumulative amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts to date, in the aggregate and with respect to the
Group One Mortgage Loans and Group Two Mortgage Loans;
(x) the amount of (A) Realized Losses and (B) Applied Realized Loss
Amounts with respect to such Distribution Date, in the aggregate and with
respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(xi) the number and aggregate principal amounts of Mortgage Loans (A)
Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60 days,
(2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure and
Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in
each case as of the close of business on the last day of the calendar month
preceding such Distribution Date, in the aggregate and with respect to the
Group One Mortgage Loans and Group Two Mortgage Loans;
(xii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan as of the close of business on the last day
of the calendar month preceding such Distribution Date and the date of
acquisition thereof, in the aggregate and with respect to the Group One
Mortgage Loans and Group Two Mortgage Loans;
(xiii) the total number and principal balance of any REO Properties as
of the close of business on the last day of the calendar month preceding
such Distribution Date, in the aggregate and with respect to the Group One
Mortgage Loans and Group Two Mortgage Loans;
(xiv) the aggregate Stated Principal Balance of all Liquidated Loans as
of the preceding Distribution Date, in the aggregate and with respect to
the Group One Mortgage Loans and Group Two Mortgage Loans;
(xv) whether a Stepdown Trigger Event has occurred;
(xvi) with respect to each Class of Certificates, any Interest Carry
Forward Amount with respect to such Distribution Date for each such Class,
any Interest Carry Forward Amount paid for each such Class and any
remaining Interest Carry Forward Amount for each such Class;
(xvii) with respect to each Class Certificates any Interest Carryover
Amount with respect to such Distribution Date for each such Class, any
Interest Carryover Amount paid for each such Class and any remaining
Interest Carryover Amount for each such Class;
(xviii) the number and Stated Principal Balance (as of the preceding
Distribution Date) of any Mortgage Loans which were purchased or
repurchased during the preceding Due Period and since the Cut-off Date;
(xix) the number of Mortgage Loans for which prepayment penalties were
received during the related Prepayment Period and, for each such Mortgage
Loan, the amount of prepayment penalties received during the related
Prepayment Period and in the aggregate of such amounts for all such
Mortgage Loans since the Cut-off Date;
(xx) the related amount of the Credit Risk Manager Fee paid to the
Credit Risk Manager;
(xxi) the amount and purpose of any withdrawal from the Collection
Account pursuant to Section 3.08(a)(iv);
(xxii) the amount of any payments to each Class of Certificates that
are treated as payments received in respect of a REMIC Regular Interest and
the amount of any payments to each Class of Certificates that are not
treated as payments received in respect of a REMIC Regular Interest; and
(xxiii) as of each Distribution Date, the amount, if any, to be
deposited in the Cap Contract Account pursuant to the Cap Contract as
described in Section 4.04(j) and the amount thereof to be paid to the
Offered Certificates as described in Section 4.04(j) hereof.
(b) The Servicer shall deliver to the NIM Insurer a copy of any report
delivered by the Servicer to the Trustee.
(c) Within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished to the NIM Insurer and each Person who
at any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i) and (a)(ii) of this
Section 4.05 aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and the NIM Insurer the Form
1066 and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of Class R Certificate with respect
to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions used
in determining the projected principal and interest cash flows described
above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the REMICs with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the REMICs;
and
(vii) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.12.
ARTICLE III
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ ----------------- -----------------
A-1A $25,000.00 $1.00 $215,128,000.00
A-1B $25,000.00 $1.00 $ 11,322,000.00
A-2 $25,000.00 $1.00 $206,675,000.00
X $50,000.00 $1.00 (1)
M-1 $25,000.00 $1.00 $ 34,125,000.00
M-2 $25,000.00 $1.00 $ 27,563,000.00
M-3 $25,000.00 $1.00 $ 9,188,000.00
B-1 $25,000.00 $1.00 $ 14,438,000.00
B-2 $25,000.00 $1.00 $ 6,561,000.00
C (2) (2) $ 8,737.25
R $ 100.00 N/A $ 100.00
P (3) (3) (3)
--------------------
(1) The Class X Certificates are interest-only certificates; they will not
be entitled to payments of principal; and they will accrue interest on
the Class X Notional Amount.
(2) The Class C Certificates shall not have a minimum dollar denominations
as the Certificate Principal Balance thereof shall vary over time as
described herein.
(3) The Class P Certificates shall not have minimum dollar denominations or
Certificate Principal Balance and shall be issued in a minimum
percentage interest of 25%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of Transfers and exchanges of Certificates
as herein provided. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute and the
Trustee shall authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of Transfer or exchange shall be
accompanied by a written instrument of Transfer in form satisfactory to a
Trustee duly executed by the holder thereof or his attorney duly authorized in
writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
(b) No Transfer of a Class C or Class P Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co. or, in connection with the transfer of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued, whether or not such notes are guaranteed by the NIM Insurer)
each certify to each Trustee in writing the facts surrounding the Transfer in
substantially the forms set forth in Exhibit F (the "Transferor Certificate")
and (i) deliver a letter in substantially the form of either Exhibit G (the
"Investment Letter") or Exhibit H (the "Rule 144A Letter") or (ii) there shall
be delivered to each Trustee an Opinion of Counsel addressed to the Trustee that
such Transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be an expense of the Depositor or the
Trustee. The Depositor shall provide to any Holder of a Class C or Class P
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for Transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Trustee shall cooperate with the Depositor
in providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information in the possession of the
Trustee regarding the Certificates, the Mortgage Loans and other matters
regarding the Trust Fund as the Depositor shall reasonably request to meet its
obligation under the preceding sentence. Each Holder of a Class C or Class P
Certificate desiring to effect such Transfer shall, and does hereby agree to,
indemnify the Depositor and the Trustee against any liability that may result if
the Transfer is not so exempt or is not made in accordance with such federal and
state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee and the NIM Insurer, to the effect that either (A) such transferee is
not an employee benefit plan subject to Title I of ERISA or a plan subject to
Section 4975 of the Code or a plan subject to any applicable Federal, state or
local law materially similar to the foregoing provisions of ERISA and the Code
("Similar Law"), or a Person acting on behalf of any such plan or using the
assets of any such plan or (B) in the case of any such ERISA Restricted
Certificate, other than a Class R Certificate, such transferee is an insurance
company and the source of funds for the purchase of such Certificate is an
"insurance company general account" within the meaning of Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925
(July 12, 1995), and the acquisition and holding of such Certificate are covered
under Sections I and III of PTCE 95-60, or (ii) in the case of any such ERISA
Restricted Certificate, other than a Class R Certificate, presented for
registration in the name of an employee benefit plan subject to ERISA, a plan
subject to Section 4975 of the Code, or a plan subject to Similar Law (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee and the NIM Insurer to the effect that the
purchase and holding of such ERISA Restricted Certificate will not result in a
prohibited transaction under ERISA or the Code or Similar Law and will not
subject the NIM Insurer or the Trustee to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the NIM Insurer or the Trustee. For purposes of clause (i) of the
preceding sentence, such representation shall be deemed to have been made to the
Trustee by the transferee's acceptance of an ERISA Restricted Certificate (or
the acceptance by a Certificate Owner of the beneficial interest in any Class of
ERISA Restricted Certificates) unless the Trustee shall have received from the
transferee an alternative representation acceptable in form and substance to the
Trustee. Notwithstanding anything else to the contrary herein, any purported
transfer of an ERISA Restricted Certificate to or on behalf of an employee
benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of the
Code, or a plan subject to Similar Law without the delivery to the Trustee and
the NIM Insurer of a representation or an Opinion of Counsel satisfactory to the
Trustee and the NIM Insurer as described above shall be void and of no effect.
The Trustee shall be under no liability to any Person for any registration of
transfer of any ERISA Restricted Certificate that is in fact not permitted by
this Section 5.02(b) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact an employee benefit plan subject to Title I of
ERISA, 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 at the time it became a Holder
or, at such subsequent time as it became such a plan or Person acting on behalf
of such a plan, all payments made on such ERISA Restricted Certificate at and
after either such time. Any such payments so recovered by the Trustee shall be
paid and delivered by the Trustee to the last preceding Holder of such
Certificate that is not such a plan or Person acting on behalf of a plan.
No Transfer of a Class C Certificate may be made to a person that is either
(i) not a "United States person" (as defined for purposes of Section 7701 of the
Code) or (ii) a Disqualified Organization or a Person acquiring such Certificate
on behalf (as a broker, agent, nominee or otherwise) of a Disqualified
Organization. The Trustee shall not register any Transfer of a Class C
Certificate unless the Trustee shall have been furnished with a Transferee
Letter or a letter from the initial Holder of the Class C Certificates in the
form attached as Exhibit M. Any Transfer of a Class C Certificate in violation
of the provisions of this Section 5.02(b) shall be absolutely null and void and
the purported Transferee shall acquire absolutely no rights in such Class C
Certificate.
(c) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be purchased,
transferred or sold, directly or indirectly, except in accordance with the
provisions hereof. No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class R Certificate unless, in
addition to the
certificates required to be delivered to the Trustee under subparagraph (b)
above, the Trustee shall have been furnished with an affidavit (a "Transfer
Affidavit") of the initial owner or the proposed transferee in the form
attached hereto as Exhibit E-1 and an affidavit of the proposed transferor
in the form attached hereto as Exhibit E-2. In the absence of a contrary
instruction from the transferor of a Class R Certificate, declaration (11)
in Appendix A of the Transfer Affidavit may be left blank. If the
transferor requests by written notice to the Trustee prior to the date of
the proposed transfer that one of the two other forms of declaration (11)
in Appendix A of the Transfer Affidavit be used, then the requirements of
this Section 5.02(c)(ii) shall not have been satisfied unless the Transfer
Affidavit includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee. Further, no transfer, sale or other disposition of any
Ownership Interest in a Class R Certificate may be made to a person who is
not a U.S. Person (within the meaning of section 7701 of the Code) unless
such person furnishes the transferor and the Trustee with a duly completed
and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other
disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section 5.02(c)
shall be absolutely null and void and shall vest no rights in the purported
Transferee. If any purported transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section 5.02(c), then
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of Transfer of such
Class R Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class R Certificate that is in fact
not permitted by Section 5.02(b) and this Section 5.02(c) or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement
so long as the Transfer was registered after receipt of the related
Transfer Affidavit. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
such Class R Certificate at and after either such time. Any such payments
so recovered by the Trustee shall be paid and delivered by the Trustee to
the last preceding Permitted Transferee of such Certificate.
(v) At the option of the Holder of the Class R Certificate, the Class
LT1-R Interest, the Class LT2-R Interest, the Class LT3-R Interest and the
Residual Interest may be severed and represented by separate certificates;
provided, however, that such separate certification may not occur until the
NIM Insurer and the Trustee receive an Opinion of Counsel addressed to the
Trustee to the effect that separate certification in the form and manner
proposed would not result in the imposition of federal tax upon the Trust
Fund or any of the REMICs provided for herein or cause any of the REMICs
provided for herein to fail to qualify as a REMIC; and provided further,
that the provisions of Sections 5.02(b) and (c) will apply to each such
separate certificate as if the separate certificate were a Class R
Certificate. If, as evidenced by an Opinion of Counsel, it is necessary to
preserve the REMIC status of any of the REMICs provided for herein, the
Class
LT1-R Interest , the Class LT2-R Interest, the Class LT3-R Interest and the
Residual Interest shall be severed and represented by separate
Certificates.
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee and the NIM Insurer of an Opinion of Counsel
addressed to the Trustee, which Opinion of Counsel shall not be an expense of
the Trustee or the Depositor, to the effect that the elimination of such
restrictions will not cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust Fund, any REMIC provided for herein, a
Certificateholder or another Person. Each Person holding or acquiring any
Ownership Interest in a Class R Certificate hereby consents to any amendment of
this Agreement that, based on an Opinion of Counsel addressed to and furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class R Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Class R Certificate that is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The transferor of the Class R Certificate shall notify the Trustee in
writing upon the transfer of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Trust Fund, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIM Insurer such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The NIM Insurer, the Trustee and any agent of the NIM Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the NIM
Insurer nor the Trustee, nor any agent of the NIM Insurer or the Trustee shall
be affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Trustee, (b) state that such Certificateholders desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates, and (c) provide a copy of the communication that such
Certificateholders propose to transmit or if the NIM Insurer or the Depositor
shall request such information in writing from the Trustee, then the Trustee
shall, within ten Business Days after the receipt of such request, provide the
NIM Insurer, the Depositor or such Certificateholders at such recipients'
expense the most recent list of the Certificateholders of the Trust Fund held by
the Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Trustee and the NIM Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by
the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Book-Entry Certificates and the NIM Insurer,
through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of such Class
requesting the same. The Depositor shall provide the Trustee with an adequate
inventory of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon surrender to the Trustee of any such Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
Institutional Trust Services/Transfer Department as offices for such purposes.
The Trustee will give prompt written notice to the Certificateholders of any
change in such location of any such office or agency.
ARTICLE IV
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or Servicer, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense 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. None of the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that any of the
Depositor or the Servicer may, in its discretion undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Servicer and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIM Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIM Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Sections 7.01, 7.02 and 7.03 as obligations that survive the resignation or
termination of the Servicer.
The Trustee and the Depositor hereby specifically (i) consent to the pledge
and assignment by the Servicer of all the Servicer's right, title and interest
in, to and under this Agreement to the Servicing Rights Pledgee, for the benefit
of certain lenders, and (ii) provided that no Event of Default exists, agree
that upon delivery to the Trustee by the Servicing Rights Pledgee of a letter
signed by the Servicer whereby the Servicer shall resign as Servicer under this
Agreement, the Trustee shall appoint the Servicing Rights Pledgee or its
designee as successor servicer but only if such successor servicer meets the
requirements of a successor servicer under this Agreement and agrees to be
subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor servicer.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac for Persons
performing servicing for mortgage loans purchased by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
The Servicer shall provide the Trustee and the NIM Insurer, upon request, with
copies of such policies and fidelity bond or a certification from the insurance
provider evidencing such policies and fidelity bond. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
best efforts to obtain a comparable replacement policy or bond from an insurer
or issuer meeting the requirements set forth above as of the date of such
replacement. Any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee and the NIM
Insurer.
ARTICLE V
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to make any Advance to deposit in the
Collection Account or the Certificate Account or remit to the Trustee any
payment (excluding a payment required to be made under Section 4.01 hereof)
required to be made under the terms of this Agreement, which failure shall
continue unremedied for three Business Days and, with respect to
a payment required to be made under Section 4.01 hereof, for one Business Day,
after the date on which written notice of such failure shall have been given to
the Servicer by the Trustee or the Depositor, or to the Trustee and the Servicer
by the NIM Insurer or the Holders of Certificates evidencing not less than 50%
of the Voting Rights evidenced by the Certificates; or
(ii) any failure by the Servicer to observe or perform in any material
respect any other of the covenants or agreements on the part of the Servicer
contained in this Agreement or any representation or warranty shall prove to be
untrue, which failure or breach shall continue unremedied for a period of 60
days after the date on which written notice of such failure shall have been
given to the Servicer by the Trustee or the Depositor, or to the Trustee by the
NIM Insurer or the Holders of Certificates evidencing not less than 50% of the
Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 consecutive days;
or
(iv) consent by the Servicer to the appointment of a receiver or liquidator
in any insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Servicer or all or substantially all
of the property of the Servicer; or
(v) admission by a Servicer in writing of its inability to pay its debts
generally as they become due, file a petition to take advantage of, or commence
a voluntary case under, any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIM Insurer, except after a NIM Insurer
Default), or at the direction of the NIM Insurer or the Holders of Certificates
evidencing not less than 50% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIM Insurer, except after a NIM Insurer
Default), shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, subject to and in accordance with Section 6.04 hereof, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee as successor servicer. To the extent the Event of Default resulted from
the failure of the Servicer to make a required Advance, the Trustee, in its
capacity as successor servicer, shall thereupon make any Advance described in
Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any obligation of the Servicer to pay amounts owed pursuant to
Article VIII. The Servicer agrees to cooperate with the Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee of all cash amounts which shall
at the time be credited to the Collection Account, or thereafter be received
with respect to the Mortgage Loans. The
Servicer and the Trustee shall promptly notify the Rating Agencies of the
occurrence of an Event of Default or an event that, with notice, passage of
time, other action or any combination of the foregoing would be an Event of
Default, such notice to be provided in any event within two Business Days of
such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.
SECTION 7.02. Servicer Trigger Event
A "Servicer Trigger Event," shall be deemed to have occurred on any
Distribution Date where the aggregate amount of cumulative Realized Losses
incurred since the Cut-off Date through the last day of the related Accrual
Period divided by the Pool Balance as of the Cut-off Date exceeds the applicable
percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
April 2007 through March 2008 4.25%
April 2008 through March 2009 5.60%
April 2009 through March 2010 7.50%
April 2010 and thereafter 8.00%
Upon discovery by the Trustee that a Servicer Trigger Event has occurred,
the Trustee shall promptly (and in any event within 5 Business Days of
discovery) give written notice thereof to the Certificateholders. If a Servicer
Trigger Event shall occur, then the Holders of Certificates evidencing not less
than 51% of the Voting Rights evidenced by the Certificates (with the written
consent of the NIM Insurer, except after a NIM Insurer Default), may, by notice
in writing to the Servicer (with a copy to each Rating Agency), terminate all of
the rights and obligations of the Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer hereunder, subject to
and in accordance with Section 6.04 hereof, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee as successor
servicer. The Trustee is hereby authorized and empowered as successor servicer
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 Trustee as successor servicer in effecting
the termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee as successor servicer
of all cash amounts which shall at the time be credited to the Collection
Account, or thereafter be received with respect to the Mortgage Loans. The
Servicer and the Trustee shall promptly notify the Rating Agencies of the
occurrence of a Servicer Trigger Event, such notice to be provided in any event
within two Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or 7.02 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof and
applicable law including the obligation to make advances pursuant to Section
4.01. As compensation therefor, subject to the last paragraph of Section 7.01 or
7.02, as applicable, the Trustee shall be entitled to all compensation and
reimbursement for costs and expenses that the Servicer would have been entitled
to hereunder if the Servicer had continued to act hereunder. Notwithstanding the
foregoing, if the Trustee has become the successor to the Servicer in accordance
with Section 7.01 or 7.02 hereof, the Trustee may, if it shall be unwilling to
so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 hereof or if it is otherwise unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution the appointment of which successor shall be
approved by the NIM Insurer and which does not adversely affect the then current
rating of the Certificates by each Rating Agency as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Any successor servicer shall be
an institution that is acceptable to the NIM Insurer and is a ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac approved seller/servicer in good standing, that has a net worth of
at least $15,000,000, and that is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer (other than liabilities of the Servicer under Section 6.03 hereof
incurred prior to termination of the Servicer under Section 7.01 or 7.02), with
like effect as if originally named as a party to this Agreement; and provided
further that each Rating Agency acknowledges that its rating of the Certificates
in effect immediately prior to such assignment and delegation will not be
qualified or reduced as a result of such assignment and delegation. No
appointment of a successor to the Servicer hereunder shall be effective until
the Trustee and the NIM Insurer shall have consented thereto, prior written
consent of the NIM Insurer is obtained and written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder.
The Trustee shall not resign as servicer until a successor servicer has been
appointed and has accepted such appointment. Pending appointment of a successor
to the Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to Section 3.04 hereof, act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.04. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders, the
NIM Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIM Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIM
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIM Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIM Insurer and the
Certificateholders.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform on their
face, to the requirements of this Agreement. If any such instrument is found not
to conform, on its face, to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such Agreement of such
non-conformance, and if the instrument is not corrected to the Trustee's
satisfaction, the Trustee will provide notice thereof to the NIM Insurer and the
Certificateholders and take such further action as directed by the NIM Insurer
and the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable, individually
or as Trustee, except for the performance of such duties and obligations as
are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement that it reasonably believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder;
(ii) the Trustee shall not be liable, individually or as Trustee, for
an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was negligent or
acted in bad faith or with willful misfeasance;
(iii) the Trustee shall not be liable, individually or as Trustee, with
respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the NIM Insurer or the Holders of
each Class of Certificates evidencing not less than 50% of the Voting
Rights of such Class relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Agreement; and
(iv) except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under
any Permitted Investment, the Trustee may and, subject to Section 8.01 and
Section 8.02, upon the request of the NIM Insurer or the Holders of the
Certificates representing more than 50% of the Voting Rights allocated to
any Class of Certificates, shall take such action as may be appropriate to
enforce such payment or performance, including the institution and
prosecution of appropriate proceedings.
The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or other document (i) which is delivered to the Trustee,
(ii) of which a Responsible Officer has actual knowledge and (iii) which
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document related to is a Mortgaged
Property.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice and any advice
or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(iii) the Trustee shall not be liable, individually or as Trustee, for
any action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and after
the curing of all Events of Default that may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing so to do by the NIM Insurer or the
Holders of each Class of Certificates evidencing not less than 50% of the
Voting Rights of such Class;
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is not
assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee, for
any loss on any investment of funds pursuant to this Agreement (other than
as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an Event of
Default until a Responsible Officer of the Trustee shall have received
written notice thereof,
(ix) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the NIM Insurer or the Certificateholders, pursuant
to the provisions of this Agreement, unless the NIM Insurer or such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; and
(x) if requested by the Servicer, the Trustee may appoint the Servicer
as the trustee's attorney-in-fact in order to carry out and perform certain
activities that are necessary or appropriate for the servicing and
administration of the Mortgage Loans pursuant to this Agreement. Such
appointment shall be evidenced by a power of attorney in such form as may
be agreed to by the Trustee and the Servicer. The Trustee shall have no
liability for any action or inaction of the Servicer in connection with
such power of attorney and the Trustee shall be indemnified by the Servicer
for all liabilities, costs and expenses incurred by the Trustee in
connection with the Servicer's use or misuse of such powers of attorney.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIM Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or Certificate
Account by the Depositor or the Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not the
Trustee.
SECTION 8.05. Trustee's Fees.
The Trustee shall be entitled to earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 8.06. Indemnification of Trustee; Expenses.
(a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor and the Holders written notice thereof promptly after the Trustee
shall have knowledge thereof; provided that failure to so notify shall not
relieve the Trust Fund of the obligation to indemnify the Trustee; however,
any reasonable delay by the Trustee to provide written notice to the
Depositor and the Holders promptly after the Trustee shall have obtained
knowledge of a claim shall not relieve the Trust Fund of the obligation to
indemnify the Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense;
(iii) notwithstanding anything to the contrary in this Section 8.06,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld; and
(iv) any such loss, liability or expense to be indemnified by the Trust
Fund must constitute an "unanticipated expense" of the Trust Fund within
the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).
The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
(b) The Trustee shall be entitled to all reasonable expenses, disbursements
and advancements incurred or made by the Trustee in accordance with this
Agreement (including fees and expenses of its counsel and all persons not
regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).
(c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs and any
auction expenses incurred by the Trustee in connection with Section 9.01(a)(i),
in the aggregate in any calendar year; provided, however, that such cap shall
apply only if NIM Notes have been issued and are outstanding and shall cease to
apply after the date on which any NIM Notes are paid in full and all amounts
which the NIM Insurer is entitled to be paid or reimbursed shall have been paid
or reimbursed. Any amounts not in excess of this cap may be withdrawn by the
Trustee from the Certificate Account at any time.
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction) and reasonably acceptable to the NIM Insurer. If such corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 8.07 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and the NIM Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by (1) giving written notice of resignation to the Depositor and the NIM
Insurer and by mailing notice of resignation by first class mail, postage
prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.09, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee
acceptable to the NIM Insurer in accordance with Section 8.09 and meeting the
qualifications set forth in Section 8.07. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIM Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIM
Insurer may remove the Trustee and the Depositor with the consent of the NIM
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIM Insurer, or the NIM Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIM Insurer), one complete
set of which instruments shall be delivered by the successor Trustee to the
Servicer, one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
the NIM Insurer and each Rating Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIM Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.
No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper
or further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding (except for the execution of an assumption agreement
where such succession is not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee and the NIM Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. Any
such co-trustee or separate trustee shall be subject to the written approval of
the Servicer and the NIM Insurer. The Trustee shall not be liable for the
actions of any co-trustee appointed at the request of the Trustee provided that
such co-trustee has been appointed with due care. If the Servicer and the NIM
Insurer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.07 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Servicer, shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Trustee with the consent of the NIM Insurer may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer, the NIM Insurer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.12. Tax Matters.
It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. It is also intended
that each of the grantor trusts provided for in Section 2.07 hereof shall
constitute, and that the affairs of Trust Fund shall be conducted so as to allow
each such grantor trust to qualify as, a grantor trust under the provisions of
Subpart E, Part I of Subchapter J of the Code. In furtherance of such intention,
the Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of each of the REMICs provided for
herein and that in such capacity it shall: (a) prepare and file, or cause to be
prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066 or any successor form adopted by the
Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with respect to each of
the REMICs and grantor trusts provided for herein, containing such information
and at the times and in the manner as may be required by the Code or state or
local tax laws, regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for each of the REMICs provided for
herein; (c) make or cause to be made elections, on behalf of each of the REMICs
provided for herein to be treated as a REMIC on the federal tax return of such
REMICs for their first taxable years (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions or other applicable tax
law, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) provide information necessary for
the computation of tax imposed on the transfer of a Class R Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
Pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
and grantor trusts provided for herein at all times that any Certificates are
outstanding so as to maintain the status of each of the REMICs provided for
herein as a REMIC under the REMIC Provisions and the status of each of the
grantor trusts provided for herein as a grantor trust under Subpart E, Part I of
Subchapter J of the Code; (g) not knowingly or intentionally
take any action or omit to take any action that would cause the termination of
the REMIC status of any of the REMICs provided for herein or result in the
imposition of tax upon any such REMIC; (h) not knowingly or intentionally take
any action or omit to take any action that would cause the termination of the
grantor trust status under Subpart E, Part I of Subchapter J of the Code of any
of the grantor trusts provided for herein or result in the imposition of tax
upon any such grantor trust; (i) pay, from the sources specified in the last
paragraph of this Section 8.12, the amount of any federal, state and local
taxes, including prohibited transaction taxes as described below, imposed on
each of the REMICs provided for herein prior to the termination of the Trust
Fund when and as the same shall be due and payable (but such obligation shall
not prevent the Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (j) sign or cause to be signed federal, state or local income
tax or information returns; (k) maintain records relating to each of the REMICs
provided for herein, including but not limited to the income, expenses, assets
and liabilities of each of the REMICs provided for herein, and the fair market
value and adjusted basis of the Trust Fund property determined at such intervals
as may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information; and (l) as and when necessary and
appropriate, represent each of the REMICs and grantor trusts provided for herein
in any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative adjustment
as to any taxable year of any of the REMICs provided for herein, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of any of
the REMICs provided for herein as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of any of such REMICs as defined in
Section 860G(c) of the Code, on any contribution to the Trust Fund after the
Startup Day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax shall be paid by
(i) the Trustee, if any such other tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement or as a result of the
location of the Trustee, (ii) any party hereto (other than the Trustee) to the
extent any such other tax arises out of or results from a breach by such other
party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class C
Certificates (pro rata), second, to the Class B-2 Certificates (pro rata),
third, to the Class B-1 Certificates (pro rata), fourth to the Class M-3
Certificates (pro rata), fifth, to the Class M-2 Certificates (pro rata), sixth,
to the Class M-1 Certificates (pro rata), and seventh, to the Class A
Certificates (pro rata). Notwithstanding anything to the contrary contained
herein, to the extent that such tax is payable by the Class R Certificate, the
Trustee is hereby authorized pursuant to such instruction to retain on any
Distribution Date, from the Holders of the Class R Certificate (and, if
necessary, from the Holders of all other Certificates in the priority specified
in the preceding sentence), funds otherwise distributable to such Holders in an
amount sufficient to pay such tax. The Trustee agrees to promptly notify in
writing the party liable for any such tax of the amount thereof and the due date
for the payment thereof.
(a) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein.
ARTICLE VII
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earliest of (i) the successful completion of the
auction referred to in Section 9.01(b), (ii) the exercise by the NIM Insurer (or
the Servicer) of the Clean Up Call on any Distribution Date on or after the
Clean Up Call Date and (iii) the later of (x) the maturity or other liquidation
(or any Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (y) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement, as applicable. In no event shall the trusts created hereby
continue beyond the earlier of (i) the expiration of 21 years from the death of
the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador
of the United States to the Court of St. James's, living on the date hereof and
(ii) the Latest Possible Maturity Date.
(b) (i) Any termination pursuant to Section 9.01(a)(i) shall be effected by
the auction by the Trustee of all of the Mortgage Loans and REO Properties via a
solicitation of bids in accordance with the auction procedures set forth in
Exhibit N. The Trustee shall accept the highest such bid, provided that such bid
equals or exceeds the amount described in the definition of "Auction Termination
Price." Any sale pursuant to such auction process must occur no earlier than the
second day of the calendar month that includes the Distribution Date on which
the proceeds of such sale will be distributed to the Certificateholders.
(ii) If no sale under Section 9.01(a)(i) occurs, the NIM Insurer (or
the Servicer as provided in clause (e) below) may, at its option, terminate the
Trust Fund on any Distribution Date by purchasing all of the Mortgage Loans and
REO Properties at the price equal to the Clean Up Call Price.
Notwithstanding anything to the contrary herein, the Auction Termination Amount
received by the Trustee or the Clean Up Call Price paid by the NIM Insurer or
the Servicer shall be deposited by the Trustee directly into the Certificate
Account promptly upon receipt of such amount by the Trustee. Any Clean Up Call
Price to be paid by the NIM Insurer or the Servicer shall be paid by the NIM
Insurer or the Servicer to the Trustee for deposit into the Certificate Account.
(c) If the Trustee receives a bid meeting the conditions specified in
Section 9.01(b)(i) or there is a Clean Up Call pursuant to Section 9.01(b)(ii),
then the Trustee's written acceptance of such bid shall constitute a plan of
complete liquidation within the meaning of Section 860F of the Code, and the
Trustee shall release to the winning bidder of the auction or the purchaser
pursuant to the Clean Up Call, upon the Trustee's receipt of the Auction
Termination Price or the Clean Up Call Price and the distribution by the Trustee
of such amounts in accordance with Section 4.04 hereof, the Mortgage Files
pertaining to the Mortgage Loans being purchased and take such other actions as
the winning bidder or such purchaser may reasonably request to effect the
transfer of the Mortgage Loans to the winning bidder or such purchaser.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Certificate Account all amounts then on
deposit in the Collection Account (less amounts permitted to be withdrawn by the
Servicer pursuant to Section 3.08), which deposit shall be deemed to have
occurred immediately preceding such purchase.
Any purchase shall be accomplished by deposit into the Certificate Account
of the amount paid by the winning bidder if an Auction Termination has occurred
or the amount described in the definition of "Clean Up Call Price" and only
following the delivery of an Opinion of Counsel in form and substance acceptable
to the Trustee that such termination is a "Qualified Liquidation" under Section
860F of the Code.
(d) The right of the Depositor to direct the Trustee to effect an Auction
Termination or of the NIM Insurer or the Servicer to effect a Clean Up Call
pursuant to clause (a)(i) or (a)(ii) above shall be conditioned upon the
aggregate Stated Principal Balance of the Mortgage Loans, at the time of any
such repurchase, aggregating ten percent (10%) or less of the Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date.
(e) In the event that the Trustee is unable to complete a sale at the
Auction Termination and the NIM Insurer does not exercise a Clean Up Call, the
Servicer may terminate the Trust Fund by purchasing all the Mortgage Loans, and
REO Properties at a price equal to the Clean Up Call Price on any Distribution
Date on or after the Clean Up Call Date, by exercising a Clean Up Call.
(f) The Class R Certificateholder hereby assigns to the Class C
Certificateholders that portion of any amount received by the Class R
Certificate upon an Auction Termination or Clean Up Call of the Trust Fund that
is attributable to clause (C) of the definition of Auction Termination Price or
clause (c) of the definition of Clean Up Call Price and required to cover what
would otherwise be a shortfall in the amounts described in clause (C) of the
definition of Auction Termination Price or clause (c) of the definition of Clean
Up Call Price.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIM Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee specified in such notice. If the Trustee is able to terminate the Trust
Fund pursuant to Section 9.01(a)(i), or if the NIM Insurer or the Servicer
conducts a Clean Up Call and terminates the Trust Fund pursuant to Section
9.01(a)(ii) or 9.01(e), at least 10 days prior to the date notice is to be
mailed to the affected Certificateholders, the Trustee shall notify the
Depositor and the Servicer of the date such electing party intends to terminate
the Trust Fund and of the applicable repurchase price of the Mortgage Loans and
REO Properties.
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 10th day and no
later than the 15th day of the month immediately preceding the month of such
final distribution. Any such notice shall specify (a) the Distribution Date upon
which final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the location of
the office or agency at which such presentation and surrender must be made, and
(c) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such notice
to the NIM Insurer and each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIM
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Trustee is able to effect an Auction Termination or
the NIM Insurer or the Servicer conducts a Clean Up Call as provided in Section
9.01, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee has been supplied with an Opinion of
Counsel addressed to the Trustee, at the expense of the Trust Fund or the NIM
Insurer, as applicable, to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 9.03 will not (i) result in the
imposition of taxes on "prohibited transactions" of any of the REMICs provided
for herein as defined in section 860F of the Code, or (ii) cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, which shall in turn specify the first day of
such period in a statement attached to the final tax returns of each of the
REMICs provided for herein pursuant to Treasury Regulation Section
1.860F-1. The Depositor shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder,
as evidenced by an Opinion of Counsel obtained at the expense of the Trust
Fund or the NIM Insurer, as applicable;
(ii) During such 90-day liquidation period, and at or prior to the time
of making the final payment on the Certificates, the Depositor as agent of
the Trustee shall sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholders all cash on hand
(other than cash retained to meet outstanding claims known to the Trustee),
and the Trust Fund shall terminate at that time, whereupon the Trustee
shall have no further duties or obligations with respect to sums
distributed or credited to the Class R Certificateholders.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and sign a
plan of complete liquidation prepared and delivered to it by the Depositor upon
the written request of the Depositor, and the receipt of Opinion of Counsel
referred to in Section 9.03(a)(i) and to take such other action in connection
therewith as may be reasonably requested by the Depositor.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIM Insurer and without the
consent of any of the Certificateholders to,
(i) To cure any ambiguity or correct any mistake,
(ii) To correct, modify or supplement any provision therein which may
be inconsistent with any other provision herein,
(iii) To add any other provisions with respect to matters or questions
arising under this Agreement, or
(iv) To modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement, provided, however, that, in the
case of clauses (iii) and (iv), such amendment will not, as evidenced by an
Opinion of Counsel addressed to the Trustee to such effect, adversely
effect in any material respect the interests of any Holder; provided,
further, however, that such amendment will be deemed to not adversely
affect in any material respect the interest of any Holder if the Person
requesting such amendment obtains a letter from each Rating Agency stating
that such amendment will not result in a reduction or withdrawal of its
rating of any Class of the Certificates, it being understood and agreed
that any such letter in and of itself will not represent a determination as
to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee and the NIM Insurer have been provided
an Opinion of Counsel addressed to the Trustee, which opinion shall be an
expense of the party requesting such amendment but in any case shall not be an
expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, with the consent of the
NIM Insurer, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the consent
of the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing 66 2/3% or more of the Voting Rights of such Class or (iii)
reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee, to the effect that such amendment is permitted
hereunder and will not cause the imposition of any tax on the Trust Fund, any of
the REMICs provided for herein or the Certificateholders or cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding. A copy of such Opinion of Counsel shall be
provided to the NIM Insurer.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIM Insurer and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIM Insurer with respect to each of the following of
which a Responsible Officer of the Trustee has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Trustee or the Servicer
and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03 and 3.12;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account or the
Certificate Account.
The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following:
(i) Each report to Certificateholders described in Section 4.05;
(ii) Each annual statement as to compliance described in Section 3.17;
and
(iii) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, JPMorgan Chase Bank, 4 New York Plaza,
6th Floor, New York, New York 10004, Attention: Institutional Trust
Services/Structured Finance Services, SURF Series 2004-BC1; (c) in the case of
the Rating Agencies, (i) Standard and Poor's, a division of the McGraw Hill
Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (ii) ▇▇▇▇▇'▇
Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (d) in the
case of NIM Insurer, an address to be specified; (e) in the case of the Credit
Risk Manager, The Murrayhill Company, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; (f) in the case of the Servicer,
▇▇▇▇▇▇ Loan Servicing LP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.; and in the case of any of the foregoing persons,
such other addresses as may hereafter be furnished by any such persons to the
other parties to this Agreement. Notices to Certificateholders shall be deemed
given when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIM
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIM Insurer or to enforce any right under this Agreement,
except in the manner herein provided and for the common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the NIM Insurer, the Depositor or the Trustee during the
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the NIM Insurer, Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the NIM
Insurer, Depositor or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall be
borne by the Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
SECTION 10.11. Third Party Rights.
The NIM Insurer shall be deemed a third-party beneficiary of this Agreement
to the same extent as if it were a party hereto, and shall have the right to
enforce the provisions of this Agreement.
SECTION 10.12. Additional Rights of the NIM Insurer.
(a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIM Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIM Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIM Insurer to be an
addressee of any report furnished pursuant to this Agreement.
(b) Wherever in this Agreement there shall be a requirement that there be
no downgrade, reduction, withdrawal or qualification of or other effect on the
rating of any Class of Certificates by any Rating Agency as of any date, there
also shall be deemed to be a requirement that there be no such effect on any
class of notes issued pursuant to the Indenture and guaranteed by the NIM
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIM Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIM Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIM Insurer, which approval shall not be unreasonably withheld or delayed.
SECTION 10.13. Credit Risk Manager.
(a) For and on behalf of the Depositor, the Credit Risk Manager will
provide reports and recommendations concerning certain delinquent and defaulted
Mortgage Loans, and as to the collection of any prepayment charges with respect
to the Mortgage Loans. Upon request, the Depositor shall forward copies of such
reports to the Trustee and the NIM Insurer. Such reports and recommendations
will be based upon information provided to the Credit Risk Manager pursuant to
the Credit Risk Management Agreement, and the Credit Risk Manager shall look
solely to the Depositor for all information and data (including loss and
delinquency information and data) relating to the servicing of the Mortgage
Loans. Upon any termination of the Credit Risk Manager or the appointment of a
successor Credit Risk Manager, the Depositor shall give written notice thereof
to the Servicer, the Trustee, and each Rating Agency. Notwithstanding the
foregoing, the termination of the Credit Risk Manager pursuant to this Section
shall not become effective until the appointment of a successor Credit Risk
Manager.
(b) Neither the Credit Risk Manager, nor any of its directors, officers,
employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by the Depositor under the Credit Risk
Management Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Credit Risk Manager or any such person against
liability that would otherwise be imposed by reason of willful malfeasance or
bad faith in
its performance of its duties. The Credit Risk Manager and any director,
officer, employee, or agent of the Credit Risk Manager 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, and may rely in good faith upon
the accuracy of information furnished by the Depositor pursuant to the Credit
Risk Management Agreement in the performance of its duties thereunder and
hereunder.
(c) The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust, in the exercise of its or their sole discretion. The Certificateholders
shall provide written notice of the Credit Risk Manager's removal to the
Trustee. Upon receipt of such notice, the Trustee shall provide written notice
to the Credit Risk Manager of its removal, which shall be effective upon receipt
of such notice by the Credit Risk Manager.
(d) The Servicer agrees to provide the Depositor with all information in
relation to the Mortgage Loans that is reasonably requested by the Depositor,
which information shall include, but not be limited to, monthly data on each
Mortgage Loan in the Trust, information on delinquent and defaulted Mortgage
Loans, information on prepayment charges with respect to the Mortgage Loans, and
copies of realized loss certificates or any such itemization regarding each
Liquidated Loan for the applicable Due Period.
(e) The Servicer shall permit the Credit Risk Manager to conduct an
on-site review and evaluation of the Servicer's operations, as they relate to
the Mortgage Loans, no more than annually, unless circumstances warrant special
review. Circumstances warranting special review shall include, but not be
limited to, a request by the Depositor that a review be conducted. The review
and evaluation will be conducted upon at least thirty (30) days prior written
notice, except in the case of special review, to the Servicer by the Credit Risk
Manager, and shall be conducted at the Credit Risk Manager's expense.
SECTION 10.14. Assignment; Sales; Advance Facilities.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 10.05 hereof a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 10.14(c)
hereof, have the right to make withdrawals from the Collection Account pursuant
to Section 3.08(a) hereof to reimburse previously unreimbursed Advances and/or
Servicing Advances ("Advance Reimbursement Amounts"). Advance Reimbursement
Amounts (i) shall consist solely of amounts in respect of Advances and/or
Servicing Advances for which the Servicer would be permitted to reimburse itself
in accordance with Section 3.08 hereof, assuming the Servicer had made the
related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 10.14(e) below.
(c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of Advances and/or Servicing Advances in
accordance with Section 4.01 hereof, which entitlement may be terminated by the
Advance Financing Person pursuant to a written notice to the Trustee in the
manner set forth in Section 10.05 hereof. Upon receipt of such written notice,
the Servicer shall no longer be entitled to receive reimbursement for any
Advance Reimbursement Amounts and the Servicer's Assignee shall immediately have
the right to receive from the Collection Account all Advance Reimbursement
Amounts. Notwithstanding the foregoing, and for the avoidance of doubt, (i) the
Servicer and/or the Servicer's Assignee shall only be entitled to reimbursement
of Advance Reimbursement Amounts hereunder from withdrawals from the Collection
Account pursuant to Section 4.01 of this Agreement and shall not otherwise be
entitled to make withdrawals or receive amounts that shall be deposited in the
Distribution Account pursuant to Section 4.01 hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 4.01
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
10.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor servicer, as the case may be, or
failure by the successor servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this Agreement. The Servicer shall maintain and provide to any successor
servicer and, upon request, the Trustee a detailed accounting on a loan-by-loan
basis as to amounts advanced by, pledged or assigned to, and reimbursed to any
Advance Financing Person. The successor servicer shall be entitled to rely on
any such information provided by the predecessor Servicer, and the successor
servicer shall not be liable for any errors in such information.
(d) [RESERVED]
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor servicer and its Advance Financing Person, if any,
on the other hand, Advance
Reimbursement Amounts on a loan-by-loan basis with respect to each Mortgage Loan
as to which an Advance and/or Servicing Advance shall have been made and be
outstanding shall be allocated on a "first-in, first out" basis. In the event
the Servicer's Assignee shall have received some or all of an Advance
Reimbursement Amount related to Advances and/or Servicing Advances that were
made by a Person other than such predecessor Servicer or its related Advance
Financing Person in error, then such Servicer's Assignee shall be required to
remit any portion of such Advance Reimbursement Amount to each Person entitled
to such portion of such Advance Reimbursement Amount. Without limiting the
generality of the foregoing, the Servicer shall remain entitled to be reimbursed
by the Advance Financing Person for all Advances and/or Servicing Advances
funded by the Servicer to the extent the related Advance Reimbursement Amounts
have not been assigned or pledged to such Advance Financing Person or Servicer's
Assignee.
(f) For purposes of any Officer's Certificate of the Servicer made
pursuant to Section 4.01, any Non-Recoverable Advance or Non-Recoverable
Servicing Advance referred to therein may have been made by such Servicer or any
predecessor Servicer. In making its determination that any Advance or Servicing
Advance theretofore made has become a Non-Recoverable Advance or Non-Recoverable
Servicing Advance, the Servicer shall apply the same criteria in making such
determination regardless of whether such Advance or Servicing Advance shall have
been made by the Servicer or any predecessor Servicer.
(g) Any amendment to this Section 10.14 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.14, including amendments to
add provisions relating to a successor servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 10.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC., as Depositor
By: _________________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ LOAN SERVICING LP,
as Servicer
By: _________________________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
JPMORGAN CHASE BANK
not in its individual capacity, but
solely as Trustee
By: _________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Solely for purposes of Section 10.13,
accepted and agreed to by:
THE MURRAYHILL COMPANY
By: _________________
Name:
Title:
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE - TOTAL MORTGAGE POOL
[INTENTIONALLY OMITTED]
B-1
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-2
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-3
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
FORM OF TRUSTEE CERTIFICATION
[DATE]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial Center, 10th Floor
New York, New York 10080
▇▇▇▇▇▇ Loan Servicing LP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement dated as of March 1, 2004 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, ▇▇▇▇▇▇ Loan Servicing LP, as
servicer and JPMorgan Chase Bank, as trustee, relating to Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2004-BC1
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan as to which documentary evidence
of recording was not received on the Closing Date, it has received evidence of
such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(A) through (E), inclusive, of Section 2.01 in the Agreement and documents
listed in clause (F) to the extent the Trustee has received written notice of
the existence of such documents from the Depositor or the Seller. The Trustee
makes no representations or warranties as to the validity, legality,
recordability,
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sufficiency, recordability, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
JPMORGAN CHASE BANK, as Trustee
By: __________________________________________________
Name: ________________________________________________
Title: _______________________________________________
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EXHIBIT E
FORM OF TRANSFEREE'S LETTER
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-BC1
[DATE]
JPMorgan Chase Bank
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Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Ladies and Gentlemen:
We propose to purchase the Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-BC1, Class R
Certificate, described in the Prospectus Supplement, dated March 25, 2004, and
Prospectus, dated February 25, 2004.
1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)
___ The Class R Certificate will be registered in our name.
___ The Class R Certificate will be held in the name of our nominee
____________, which is not a disqualified organization.
_______________________
(1) Check appropriate box and if necessary fill in the name of the
Transferee's nominee.
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4. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
a plan within the meaning of Section 4975 of the Code or a plan subject to
federal, state or local law materially similar to the foregoing provisions of
ERISA and the Code (each, a "Plan"), and are not directly or indirectly
purchasing the Class R Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of or with the assets of a Plan or directly or
indirectly purchasing the Class R Certificate with the assets of any insurance
company separate account or general account containing any "plan assets" or of
any Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and have furnished the transferor, the Trustee and the Trustee
with a duly completed and effective Internal Revenue Service Form W-8ECI or
successor form at the time and in the manner required by the Code; for this
purpose the term "U.S. person" means a citizen or resident of the United States,
a corporation, or partnership (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise) created or organized in or under
the laws of the United States, any State thereof or the District of Columbia,
including an entity treated as a corporation or partnership for federal income
tax purposes, an estate whose income is subject to United States federal income
tax regardless of the source of its income, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more such U.S. persons have the authority to control all
substantial decisions of the trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons. We agree that any breach by us
of this certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to
transfer any interest in the Class R Certificate, we will transfer such interest
in the Class R Certificate only (a) to a transferee that (i) is not a
disqualified organization and is not purchasing such interest in the Class R
Certificate on behalf of a disqualified organization, (ii) is a U.S. person or
will hold the Class R Certificate in connection with the conduct of a trade or
business within the United States and will furnish us, the Trustee and the
Trustee with a duly completed and effective Internal Revenue Service Form W-8ECI
or successor form at the time and in the manner required by the Code and (iii)
has delivered to the Trustee and the Trustee a letter in the form of this letter
(including the affidavit appended hereto) and, we will provide the Trustee and
the Trustee a written statement substantially in the form of Exhibit E-2 to the
Agreement.
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7. We hereby designate ___________________ as our fiduciary to act as the
tax matters person for each of the REMICs provided for in the Agreement.
Very truly yours,
[PURCHASER]
By:_______________________
Name:
Title:
Accepted as of _________ __, 200_.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
By:__________________
Name:
Title:
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APPENDIX A
Affidavit pursuant to (i) Section 860E(e)
(4) of the Internal Revenue Code of
1986, as amended, and (ii) certain
provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of______________________________ (the
"Transferee"),
(2) the Transferee's Employer Identification number is __________________,
(3) the Transferee is not a "disqualified organization" (as defined
below), has no plan or intention of becoming a disqualified
organization, and is not acquiring any of its interest in the
Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1, Class R Certificate on
behalf of a disqualified organization or any other entity,
(4) unless ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.("MLMI") has consented to
the transfer to the Transferee by executing the form of Consent
affixed as Appendix B to the Transferee's Letter to which this
Certificate is affixed as Appendix A, the Transferee is a "U.S.
person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the assessment
or collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the
Class R Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by MLMI (upon advice of
counsel) to constitute a reasonable arrangement to ensure that the
Class R Certificate will not be owned directly or indirectly by a
disqualified organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
transfer is not a direct or indirect transfer of the Class R
Certificate to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee, and
as to each of the residual interests represented by the Class R
Certificate, the present value of the anticipated tax liabilities
associated with holding such residual interest does not exceed the sum
of:
(A) the present value of any consideration given to the Transferee to
acquire such residual interest;
(B) the present value of the expected future distributions on such
residual interest; and
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(C) the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax
at a rate equal to the highest rate of tax specified in Section I l(b)(1)
of the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code
may be used in lieu of the highest rate specified in Section 11(b)(1) of
the Code if the Transferee has been subject to the alternative minimum tax
under Section 55 of the Code in the preceding two years and will compute
its taxable income in the current taxable year using the alternative
minimum tax rate, and (ii) present values are computed using a discount
rate equal to the Federal short-term rate prescribed by Section 1274(d) of
the Code for the month of the transfer and the compounding period used by
the Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year
of transfer, the Transferee's gross assets for financial reporting
purposes exceed $100 million and its net assets for financial
reporting purposes exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
any subsequent transfer of the Class R Certificate will be to another
eligible corporation in a transaction that satisfies Treasury
regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E1(c)(5) and such transfer will not be a
direct or indirect transfer to a foreign permanent establishment
(within the meaning of an applicable income tax treaty) of a domestic
corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.
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For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
______________________________________
By:___________________________________
___________________________________
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
_______________________________
_______________________________, Secretary
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Personally appeared before me the above-named ____________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
____________ of the Investor, and acknowledged to me that he executed the same
as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ____ day of _______, 200_.
_______________________________________
Notary Public
County of __________________________
State of ___________________________
My commission expires the __________________day of_______
By:_________________
Name:___________
Title:__________
Dated: _________________________
E-1-7
EXHIBIT E-2
FORM OF TRANSFEROR'S AFFIDAVIT
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-BC1
[DATE]
JPMorgan Chase Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1
____________________________(the "Transferor") has reviewed the
attached affidavit of _____________________________ (the "Transferee"), and has
no actual knowledge that such affidavit is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to the Class R Certificate referred to in the attached affidavit. In
addition, the Transferor has conducted a reasonable investigation at the time of
the transfer and found that the Transferee had historically paid its debts as
they came due and found no significant evidence to indicate that the Transferee
will not continue to pay its debts as they become due.
Very truly yours,
________________________
Name:
Title:
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EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS P AND CLASS C CERTIFICATES
JPMorgan Chase Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1
Ladies and Gentlemen:
In connection with our disposition of the Class [C or P] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act and
(c) if we are disposing of a Class C Certificate, we have no knowledge the
Transferee is not a Permitted Transferee. All capitalized terms used herein but
not defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of March 1, 2004, among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage,
Inc., as depositor, ▇▇▇▇▇▇ Loan Servicing LP, as servicer and JPMorgan Chase
Bank, as trustee.
Very truly yours,
____________________________________
Name of Transferor
By:_________________________________
Name:
Title
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
JPMorgan Chase Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
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Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1 [CLASS C OR P]
Ladies and Gentlemen:
___________(the "Purchaser") intends to purchase from __________ (the
"Transferor") $ ________ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2004-BC1,
[CLASS C OR P] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of March 1, 2004 (the "Pooling and Servicing Agreement"),
among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the "Depositor"),
▇▇▇▇▇▇ Loan Servicing LP, as servicer (the "Servicer") and JPMorgan Chase Bank,
as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED
CERTIFICATE IN THE NAME OF , AS NOMINEE FOR .] All terms used and not otherwise
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (1) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR
INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH
TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING TRANSFER OF THIS
CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE
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SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A) AN
INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM
THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (I) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT EITHER (A) SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE OR ANY APPLICABLE
FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") (EACH, A "PLAN") MATERIALLY SIMILAR
TO THE FOREGOING PROVISIONS OF ERISA AND THE CODE, AND IS NOT DIRECTLY OR
INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT MANAGER OF, AS
NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN THE CASE OF AN
INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS CONTAINING ANY "PLAN
ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR REGULATIONS SET FORTH IN 29 CFR
SECTION 2510.3-101 TO EFFECT SUCH ACQUISITION OR (B) SUCH TRANSFEREE IS AN
INSURANCE COMPANY AND THE SOURCE OF FUNDS FOR THE PURCHASE OF SUCH CERTIFICATE
IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF SECTION V(E) OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925
(JULY 12, 1995), AND THE ACQUISITION AND HOLDING OF SUCH CERTIFICATE ARE COVERED
UNDER SECTIONS I AND III OF PTCE 95-60, OR (II) AN OPINION OF COUNSEL TO THE
EFFECT THAT THE PURCHASE AND HOLDING OF THE CERTIFICATE WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER ERISA, THE CODE OR SIMILAR LAW AND WILL NOT SUBJECT
THE NIM INSURER OR THE TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY
UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL
SHALL NOT BE AN EXPENSE OF THE NIM INSURER OR THE TRUSTEE.
3. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule 501
(a) promulgated pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that
_____________________
**/ Not required of a broker/dealer purchaser.
G-2
would constitute a distribution of any Certificate under the Securities Act or
the Investment Company Act of 1940, as amended (the "1940 Act"), that would
render the disposition of any Certificate a violation of Section 5 of the
Securities Act or any state securities law, or that would require registration
or qualification pursuant thereto. Neither the Purchaser nor anyone acting on
its behalf has offered the Certificates for sale or made any general
solicitation by means of general advertising or in any other manner with respect
to the Certificates. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
6. The Purchaser either (A) (i) is not an employee benefit plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a plan within the meaning of Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") or a plan subject to federal state or
local law materially similar to the foregoing provisions of ERISA and the Code
("Similar Law") (each, a "Plan"), and is not directly or indirectly purchasing
any Certificate on behalf of, as investment manager of, as named fiduciary of,
as trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account
containing any "plan assets" or of any Plan or (ii) is an insurance company and
the source of funds for the purchase of such Certificate is an "insurance
company general account" within the meaning of Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12,
1995), and the acquisition and holding of such Certificate are covered under
Sections I and III of PTCE 95-60, or (B) herewith delivers to the Trustee an
Opinion of Counsel satisfactory to the Trustee, and upon which the Trustee shall
be entitled to rely, to the effect that the purchase and holding of the
Certificate by the Purchaser will not result in a prohibited transaction under
ERISA, the Code or Similar Law and will not subject the NIM Insurer or the
Trustee to any obligation in addition to those expressly undertaken in the
Pooling and Servicing Agreement, which Opinion of Counsel shall not be an
expense of the NIM Insurer or the Trustee.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit [H] to the Pooling and Servicing Agreement.
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8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[PURCHASER]
By:__________________________
Name:
Title:
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1 [CLASS C OR P]
Ladies and Gentlemen:
______________(the "Purchaser") intends to purchase from ______________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2004-BC1,
[CLASS C OR P] (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of March 1, 2004 (the "Pooling and Servicing Agreement'),
among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor (the "Depositor"),
▇▇▇▇▇▇ Loan Servicing LP, as servicer (the "Servicer"), and JPMorgan Chase Bank,
as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED
CERTIFICATE IN THE NAME OF_________ AS NOMINEE FOR ________.] All terms used and
not otherwise defined herein shall have the meanings set forth in the Pooling
and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act'), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) we either (i) (A) are not
an employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or a
plan subject to federal, state or local law materially similar to the foregoing
provisions of ERISA and the Code ("Similar Law") (each, a "Plan"), nor are we
directly or indirectly purchasing any Certificate on behalf of, as investment
manager of, as named fiduciary of, as trustee of or with assets of a Plan or
directly or indirectly purchasing any certificates with the assets of any
insurance company separate account containing any "plan assets" or of any Plan
or (B) are an insurance company and the source of funds for the purchase of such
Transferred Certificates is an "insurance company general account" within the
meaning of Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and the acquisition and holding
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of such Certificates are covered under Sections I and III of PTCE 95-60, or (ii)
herewith have delivered to the Trustee an Opinion of Counsel satisfactory to the
Trustee, and upon which the Trustee shall be entitled to rely, to the effect
that the purchase and holding of the Transferred Certificates by the Purchaser
will not result in a prohibited transaction under ERISA, the Code or Similar Law
and will not subject the NIM Insurer or the Trustee to any obligation in
addition to those expressly undertaken in the Pooling and Servicing Agreement,
which Opinion of Counsel shall not be an expense of the NIM Insurer or the
Trustee, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed one of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale of the Transferred Certificates to us is being made in
reliance on Rule 144A. We are acquiring the Transferred Certificates for our own
account or for resale pursuant to Rule 144A and further understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:__________________________
Name:
Title:
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ANNEX 1
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:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________*/ in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by
Federal, State or territorial banking commission or similar
official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
_____________________
* 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.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over such institution or is a foreign
savings and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of
1934, as amended.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by
the insurance commissioner or a similar official
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or agency of the State, territory or the District of
Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of
1974, as amended.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301 (c) or (d) of the Small
Business Investment Act of 1958, as amended.
____ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
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6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By:___________________________________
Name:
Title:
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▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (1) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $_________________ securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $_______ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or
because one investment adviser is a majority owned subsidiary of the
other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
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6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:_____________________________________
Name:
Title:
IF AN ADVISER:
________________________________________
Print Name of Buyer
Date:___________________________________
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EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: JPMorgan Chase Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Re: Pooling and Servicing Agreement dated as of March 1, 2004 among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., as depositor, ▇▇▇▇▇▇ Loan Servicing LP, as
servicer and JPMorgan Chase Bank, as trustee, relating to Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2004-BC1
In connection with the administration of the Mortgage Loans held by you, as
Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______1. Mortgage Paid in Full
_______2. Foreclosure
_______3. Substitution
_______4. Other Liquidation (Repurchases, etc.)
_______5. Nonliquidation
_______6. Other Reason:_________________
Address to which the Trustee should deliver the Mortgage File:
By:__________________________________
(authorized signer)
Address:_____________________________
Date:________________________________
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If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Trustee
JPMorgan Chase Bank
Please acknowledge the execution of the above request by your signature and date
below:
______________________________ ____________________________________
Signature Date
Documents returned to Trustee:
______________________________ ____________________________________
Trustee Date
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EXHIBIT J
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
▇▇▇▇▇▇ LOAN SERVICING LP
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: _________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JPMorgan Chase Bank, having its
principal place of business at Four ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, as Trustee (the "Trustee") pursuant to that Pooling and Servicing
Agreement among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc. (the "Depositor"), ▇▇▇▇▇▇
Loan Servicing LP (the "Servicer"), and the Trustee, dated as of March 1, 2004
(the "Pooling and Servicing Agreement"), hereby constitutes and appoints the
Servicer, by and through the Servicer's officers, the Trustee's true and lawful
Attorney-in-Fact, in the Trustee's name, place and stead and for the Trustee's
benefit, in connection with all mortgage loans serviced by the Servicer pursuant
to the Pooling and Servicing Agreement for the purpose of performing all acts
and executing all documents in the name of the Trustee as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of trust (the
"Mortgages" and the "Deeds of Trust", respectively) and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Trustee
for various certificateholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which the
Servicer is acting as servicer, all subject to the terms of the Pooling and
Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and said modification or re-recording, in either instance, does
not adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company of a government agency or unit with
powers of eminent domain; this section shall include, without limitation,
the execution of partial satisfactions/releases, partial reconveyances or
the execution or requests to trustees to accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
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5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any
such foreclosure, including, without limitation, any and all of the
following acts:
(a) the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
(b) the preparation and issuance of statements of breach or
non-performance;
(c) the preparation and filing of notices of default and/or notices
of sale;
(d) the cancellation/rescission of notices of default and/or notices
of sale;
(e) the taking of a deed in lieu of foreclosure; and
(f) the preparation and execution of such other documents and
performance of such other actions as may be necessary under the terms
of the Mortgage, Deed of Trust or state law to expeditiously complete
said transactions in paragraphs 8(a) through 8(e), above.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
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IN WITNESS WHEREOF, JPMorgan Chase Bank as Trustee pursuant to that Pooling
and Servicing Agreement among the Depositor, the Servicer, and the Trustee,
dated as of March 1, 2004 (Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2004-BC1), has caused its
corporate seal to be hereto affixed and these presents to be signed and
acknowledged in its name and behalf by_____ its duly elected and authorized
____________ this day of ____, 200__.
JPMORGAN CHASE BANK,
as Trustee for Specialty Underwriting and
Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series
By ______________________________________
Name:
Title:
STATE OF____________
COUNTY OF_________
On ____, 200__, before me, the undersigned, a Notary Public in and for said
state, personally appeared , _______________ of JPMorgan Chase Bank as Trustee
for Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1, personally known to me to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed that same in his/her authorized capacity, and that by
his/her signature on the instrument the entity upon behalf of which the person
acted and executed the instrument.
WITNESS my hand and official seal.
(SEAL)
_________________________________________
Notary Public
My Commission Expires ________________________
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EXHIBIT K
OFFICER'S CERTIFICATE OF TRUSTEE
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Agreement") dated as of March 1,
2004 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as depositor, ▇▇▇▇▇▇
Loan Servicing LP, as servicer and JPMorgan Chase Bank, as trustee,
relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2004-BC1
The Trustee hereby certifies to the Depositor, and its officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1. The Trustee has reviewed the Monthly Statements delivered pursuant to
the Agreement since the last Officer's Certificate executed pursuant to
Section 4.02 of the Agreement [or in the case of the first
certification, since the Cut-off Date] (the "Trustee Information");
2. Based on the Trustee's knowledge, the information in the Monthly
Statement, taken as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact required by the
Agreement to be included therein and necessary to make the statements
made, in light of the circumstances under which such statements were
made, not misleading as of the date hereof; and
3. Based on the Trustee's knowledge, the Monthly Statements required to be
prepared by the Trustee under the Agreement has been prepared and
provided in accordance with the Agreement.
Date:
JPMorgan Chase Bank, as Trustee
By:____________________________________
Name:__________________________________
Title:_________________________________
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EXHIBIT L
OFFICER'S CERTIFICATE OF SERVICER
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services-Transfer Department - SURF 2004-BC1
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1
Reference is made to the Pooling and Servicing Agreement, dated as of March 1,
2004 (the "Agreement"), by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, ▇▇▇▇▇▇ Loan Servicing LP, as servicer (the "Servicer") and JPMorgan
Chase Bank, as trustee. The Servicer hereby certifies to the Trustee and the
Depositor, and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:
1. The Servicer has reviewed the information required to be delivered to
the Trustee pursuant to the Agreement (the "Servicing Information").
2. Based on the Servicer's knowledge, the information in the Annual
Statement of Compliance, and all servicing reports, officer's
certificates and other information relating to the servicing of the
Mortgage Loans submitted to the Trustee by the Servicer taken as a
whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by the Annual
Statement of Compliance;
3. Based on the Servicer's knowledge, the Servicing Information required
to be provided to the Trustee by the Servicer under this Agreement has
been provided to the Trustee; and
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4. Based upon the review required under this Agreement, and except as
disclosed in the Annual Statement of Compliance, the Annual Independent
Certified Public Accountant's Servicing Report and all servicing
reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Trustee by the
Servicer, the Servicer has, as of the last day of the period covered by
the Annual Statement of Compliance fulfilled its obligations under this
Agreement.
Date:
▇▇▇▇▇▇ Loan Servicing LP, as Servicer
By: ___________________________________
Name: _________________________________
Title: ________________________________
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EXHIBIT M
TRANSFEREE'S LETTER
JPMorgan Chase Bank
4 New York ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services/Structured Finance Services
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-BC1: Class C Certificates
The undersigned represents to the Trustee that (i) it is a United
States person (as such term is defined for purposes of Section 7701 of the
Code), (ii) it is not a Disqualified Organization, (iii) it is not acquiring an
interest in a Class C Certificate on behalf of a Person that is (x) not a United
States person (as defined for purposes of Section 7701 of the Code) or (y) a
Disqualified Organization, (iv) it will not Transfer an interest in a Class C
Certificate to any Person unless such Person provides it and the Trustee with a
Transferee Letter in the form of this letter. and (v) it is not, for United
States federal income tax purposes, an entity whose separate existence from its
owners is disregarded, or, if it is so treated, each of the representations made
in clauses (i) through (iv) would be true if made with respect to each person
that is treated as the owner of the undersigned for United States federal income
tax purposes.
By: ___________________________________
Name: _________________________________
Title: ________________________________
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AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with Pooling and Servicing Agreement (the "Agreement") among ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc., JPMorgan Chase Bank, as trustee and ▇▇▇▇▇▇ Loan
Servicing, LP, dated March 1, 2004. Capitalized terms used herein that are not
otherwise defined shall have the meanings described thereto in the Agreement.
1. Upon notice to the Servicer by the Trustee of the initiation of the
auction, the Servicer will initiate the general auction procedures
consisting of the following: (i) prepare a general solicitation package
along with a confidentiality agreement; (ii) derive a list of a minimum
of three (3) bidders, each of whom shall be a nationally recognized
participant in mortgage finance, (iii) initiate contact with all
bidders, (iv) send a confidentiality agreement to all bidders, and (v)
upon receipt of a signed confidentiality agreement, send bid
solicitation package to all bidders.
2. The general solicitation package will include (i) the Agreement; (ii) a
copy of all monthly trustee reports or electronic access thereto; (iii)
a form of a Mortgage Loan Purchase Agreement acceptable to the Trustee
and Servicer (the Mortgage Loans and other property included in the
Trust Fund will be offered and sold on an "as is, where is basis,
without any representation or warranty, expressed or implied, of any
kind and without recourse to, or guaranty by, the Trustee); (iv) a
description of the minimum price as set forth in the Agreement; (v) a
formal bidsheet as determined by the Servicer and accepted by the
Trustee; (vi) a detailed timetable (which shall include, but not be
limited to, the provisions and dates preliminary bids, due diligence
and final bids); and (vii) a data tape of the Mortgage Loans as of the
related Remittance Period reflecting substantially the same data
attributes used in the Prospectus Supplement dated March 25, 2004.
3. A detailed timetable will be determined approximately ten (10) days
prior to each auction sale and shall be determined by the Servicer with
the consent of the Trustee, which consent shall not be unreasonably
withheld, within reasonable market conditions at the time of the
auction sale.
4. All bids will be submitted directly to the Trustee. Upon acceptance of
a bid which meets or exceeds the conditions set forth in Section 9.01,
the Trustee will distribute the proceeds from the auction to the
holders of the Certificates on the next succeeding Distribution Date as
set forth in the Agreement. In the event the Trustee receives two (2)
or more bids from bidders above the Auction Termination Price and at
equal bids (a "Tie Event"), the Trustee shall notify such bidders to
resubmit a bid to break the Tie Event.
5. Upon determination that the minimum price was not met, the Trustee
shall cancel such auction sale and notify the Servicer, Depositor and
NIM Insurer immediately.
6. The Trustee, the Servicer and the Depositor may mutually agree to
revise or supplement these provisions as necessary, provided that the
purchase price is at all times required to be at least the Auction
Termination Price.
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FORM OF CAP CONTRACT
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