Exhibit 99.4
------------
==============================================================================
CWHEQ, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
PARK GRANADA LLC,
Seller
PARK MONACO INC.,
Seller
PARK SIENNA LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
and
THE BANK OF NEW YORK,
Trustee
-------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2007
-------------------------------
HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 2007-S1
Table of Contents
Page
----
ARTICLE I. DEFINITIONS 5
Section 1.01 Defined Terms.................................................................5
Section 1.02 Certain Interpretive Provisions..............................................44
ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES 44
Section 2.01 Conveyance of Mortgage Loans.................................................44
Section 2.02 Acceptance by Trustee of the Mortgage Loans..................................51
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and
the Sellers..................................................................57
Section 2.04 Representations and Warranties of the Depositor..............................74
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and
Repurchases..................................................................76
Section 2.06 Authentication and Delivery of Certificates..................................76
Section 2.07 Covenants of the Master Servicer.............................................77
Section 2.08 Sponsor Loss Coverage Obligation.............................................77
ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS 77
Section 3.01 Master Servicer to Service Mortgage Loans....................................77
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer..............79
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM
Insurer, the Certificate Insurer and the Trustee in Respect of the
Master Servicer..............................................................80
Section 3.04 Trustee to Act as Master Servicer............................................81
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution
Account; Pre-Funding Account; Seller Shortfall Interest Requirement;
Premium Account..............................................................81
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts..........86
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage
Loans........................................................................86
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution
Account, Carryover Reserve Fund and the Principal Reserve Fund...............87
Section 3.09 [Reserved]...................................................................90
Section 3.10 Maintenance of Hazard Insurance..............................................90
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements....................91
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds and Realized Losses; Repurchase of Certain Mortgage Loans;
Auction of Charged-off Mortgage Loans........................................92
Section 3.13 Trustee to Cooperate; Release of Mortgage Files..............................96
i
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be
Held for the Trustee.........................................................97
Section 3.15 Servicing Compensation.......................................................97
Section 3.16 Access to Certain Documentation..............................................98
Section 3.17 Annual Statement as to Compliance............................................98
Section 3.18 The Corridor Contract........................................................99
Section 3.19 [Reserved]...................................................................99
Section 3.20 Prepayment Charges..........................................................100
ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER 101
Section 4.01 Advances; Remittance Reports................................................101
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment
Interest Shortfalls.........................................................102
Section 4.03 [Reserved]..................................................................102
Section 4.04 Distributions...............................................................103
Section 4.05 Monthly Statements to Certificateholders....................................108
Section 4.06 Certificate Insurance Policy; Rights of the Certificate Insurer.............109
Section 4.07 Termination of the Credit Insurance Policy..................................112
Section 4.08 Carryover Reserve Fund......................................................113
ARTICLE V. THE CERTIFICATES 115
Section 5.01 The Certificates............................................................115
Section 5.02 Certificate Register; Registration of Transfer and Exchange of
Certificates................................................................116
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates...........................120
Section 5.04 Persons Deemed Owners.......................................................120
Section 5.05 Access to List of Certificateholders' Names and Addresses...................120
Section 5.06 Book-Entry Certificates.....................................................121
Section 5.07 Notices to Depository.......................................................122
Section 5.08 Definitive Certificates.....................................................122
Section 5.09 Maintenance of Office or Agency.............................................122
ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS 123
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the
Sellers.....................................................................123
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the
Sellers.....................................................................123
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master
Servicer, the NIM Insurer and Others........................................123
Section 6.04 Limitation on Resignation of Master Servicer................................124
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds..............................125
ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER 125
Section 7.01 Events of Default...........................................................125
ii
Section 7.02 Trustee to Act; Appointment of Successor....................................127
Section 7.03 Notification to Certificateholders..........................................129
ARTICLE VIII. CONCERNING THE TRUSTEE 129
Section 8.01 Duties of Trustee...........................................................129
Section 8.02 Certain Matters Affecting the Trustee.......................................131
Section 8.03 Trustee Not Liable for Mortgage Loans.......................................132
Section 8.04 Trustee May Own Certificates................................................132
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses..........................132
Section 8.06 Eligibility Requirements for Trustee........................................133
Section 8.07 Resignation and Removal of Trustee..........................................133
Section 8.08 Successor Trustee...........................................................134
Section 8.09 Merger or Consolidation of Trustee..........................................135
Section 8.10 Appointment of Co-Trustee or Separate Trustee...............................135
Section 8.11 Tax Matters.................................................................137
Section 8.12 Access to Records of the Trustee............................................139
Section 8.13 Suits for Enforcement.......................................................139
Section 8.14 Monitoring of Significance Percentage.......................................140
ARTICLE IX. TERMINATION 140
Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans............140
Section 9.02 Final Distribution on the Certificates......................................141
Section 9.03 Additional Termination Requirements.........................................143
Section 9.04 Auction of the Mortgage Loans and REO Properties............................144
ARTICLE X. MISCELLANEOUS PROVISIONS 147
Section 10.01 Amendment...................................................................147
Section 10.02 Recordation of Agreement; Counterparts......................................148
Section 10.03 Governing Law...............................................................149
Section 10.04 Intention of Parties........................................................149
Section 10.05 Notices.....................................................................151
Section 10.06 Severability of Provisions..................................................152
Section 10.07 Assignment..................................................................152
Section 10.08 Limitation on Rights of Certificateholders..................................152
Section 10.09 Inspection and Audit Rights.................................................153
Section 10.10 Certificates Nonassessable and Fully Paid...................................153
Section 10.11 Rights of NIM Insurer.......................................................154
ARTICLE XI. EXCHANGE ACT REPORTING 156
Section 11.01 Filing Obligations..........................................................156
Section 11.02 Form 10-D Filings...........................................................156
Section 11.03 Form 8-K Filings............................................................157
Section 11.04 Form 10-K Filings...........................................................157
Section 11.05 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification................................................158
iii
Section 11.06 Form 15 Filing..............................................................159
Section 11.07 Report on Assessment of Compliance and Attestation..........................159
Section 11.08 Use of Subservicers and Subcontractors......................................160
Section 11.09 Amendments..................................................................161
Section 11.10 Reconciliation of Accounts..................................................162
Exhibits
EXHIBIT A Forms of Certificates
EXHIBIT A-1-A Form of Class A-1-A Certificate
EXHIBIT A-1-B Form of Class A-1-B Certificate
EXHIBIT A-2 Form of Class A-2 Certificate
EXHIBIT A-3 Form of Class A-3 Certificate
EXHIBIT A-4 Form of Class A-4 Certificate
EXHIBIT A-5 Form of Class A-5 Certificate
EXHIBIT A-6 Form of Class A-6 Certificate
EXHIBIT B Form of Class P Certificate
EXHIBIT C Form of Class C Certificate
EXHIBIT D-1 Form of Class A-R Certificate
EXHIBIT D-2 Form of Class E-P Certificate
EXHIBIT E Form of Tax Matters Person Certificate
EXHIBIT F Mortgage Loan Schedule
EXHIBIT F-1 List of Mortgage Loans
EXHIBIT F-2 Mortgage Loans for which All or a Portion
of a Related Mortgage File is not Delivered
to the Trustee on or prior to the Closing
Date
EXHIBIT G Forms of Certification of Trustee
EXHIBIT G-1 Form of Initial Certification of Trustee (Initial Mortgage
Loans)
EXHIBIT G-2 Form of Interim Certification of Trustee
EXHIBIT G-3 Form of Delay Delivery Certification
EXHIBIT G-4 Form of Initial Certification of Trustee (Subsequent Mortgage
Loans)
EXHIBIT H Form of Final Certification of Trustee
EXHIBIT I Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1 Form of Transferor Certificate for Class A-R Certificates
EXHIBIT J-2 Form of Transferor Certificate for Private Certificates
EXHIBIT K Form of Investment Letter (Non-Rule 144A)
EXHIBIT L Form of Rule 144A Letter
EXHIBIT M Form of Request for Document Release
EXHIBIT N Form of Request for File Release
EXHIBIT O Copy of Depository Agreement
EXHIBIT P Form of Subsequent Transfer Agreement
EXHIBIT Q [Reserved]
EXHIBIT R [Reserved]
EXHIBIT S-1 [Reserved]
EXHIBIT S-2 [Reserved]
iv
EXHIBIT T Officer's Certificate with respect to Prepayments
EXHIBIT U [Reserved]
EXHIBIT V-1 [Reserved]
EXHIBIT V-2 [Reserved]
EXHIBIT V-3 [Reserved]
EXHIBIT W Form of Monthly Statement
EXHIBIT X-1 Form of Performance Certification (Subservicer)
EXHIBIT X-2 Form of Performance Certification (Trustee)
EXHIBIT Y Form of Servicing Criteria to be Addressed in Assessment of
Compliance Statement
EXHIBIT Z List of Item 1119 Parties
EXHIBIT AA Form of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (Replacement Master
Servicer)
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary
SCHEDULE II Collateral Schedule
v
POOLING AND SERVICING AGREEMENT, dated as of February 1, 2007,
by and among CWHEQ, INC., a Delaware corporation, as depositor (the
"Depositor"), COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller
("CHL" or a "Seller"), PARK GRANADA LLC, a Delaware corporation, as a seller
("Park Granada" or a "Seller"), PARK MONACO INC., a Delaware corporation, as a
seller ("Park Monaco" or a "Seller"), PARK SIENNA LLC, a Delaware limited
liability company, as a seller ("Park Sienna" or a "Seller", and together with
CHL, Park Granada and Park Monaco, the "Sellers"), COUNTRYWIDE HOME LOANS
SERVICING LP, a Texas limited partnership, as master servicer (the "Master
Servicer"), and THE BANK OF NEW YORK, a New York banking corporation, as
trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. As provided herein, the Trustee
will elect that the Trust Fund (excluding the Carryover Reserve Fund, the
assets held in the Pre-Funding Account and the Capitalized Interest Account
and the Trust Fund's rights with respect to payments received under the
Corridor Contract) be treated for federal income tax purposes as two real
estate mortgage investment conduits (each a "REMIC" or, in the alternative,
the "Subsidiary REMIC" and the "Master REMIC"). The Subsidiary REMIC will hold
as assets all property of the Trust, other than the Carryover Reserve Fund,
the Pre-Funding Account, the Capitalized Interest Account and the Trust Fund's
rights with respect to payments received under the Corridor Contract, and will
be evidenced by (i) the Subsidiary REMIC Regular Interests, which will be
uncertificated and will represent the "REMIC regular interests" in the
Subsidiary REMIC, and (ii) the Class S-A-R Interest, which will represent the
"REMIC residual interest" in the Subsidiary REMIC. The Master REMIC will hold
as assets the Subsidiary REMIC Regular Interests and will be evidenced by the
Certificates, each of which (other than the Class A-R Certificate) will
represent ownership of one or more REMIC regular interests in the Master
REMIC. The Class A-R Certificate will represent ownership of the sole Class of
the REMIC residual interest in each REMIC created hereunder. The latest
possible maturity date, for federal income tax purposes, of all REMIC regular
interests created herein shall be the Latest Possible Maturity Date.
The Subsidiary REMIC
The Subsidiary REMIC Regular Interests will have the principal
balances, pass-through rates and corresponding Classes of Certificates as set
forth in the following table:
------------------------------------------------------------------------------------------------
Subsidiary REMIC Regular Initial Principal Pass-Through Corresponding
Interests Balance Rate Class of Certificates
------------------------------------------------------------------------------------------------
SR-A-1-A................... (1) (2) A-1-A
------------------------------------------------------------------------------------------------
SR-A-1-B................... (1) (2) A-1-B
------------------------------------------------------------------------------------------------
SR-A-2..................... (1) (2) A-2
------------------------------------------------------------------------------------------------
SR-A-3..................... (1) (2) A-3
------------------------------------------------------------------------------------------------
SR-A-4..................... (1) (2) A-4
------------------------------------------------------------------------------------------------
SR-A-5..................... (1) (2) A-5
------------------------------------------------------------------------------------------------
SR-A-6..................... (1) (2) A-6
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
SR-Accrual................. (3) (2) N/A
------------------------------------------------------------------------------------------------
SR-$100.................... $100.00 (4) N/A
------------------------------------------------------------------------------------------------
SR-P....................... $100.00 (4) P
------------------------------------------------------------------------------------------------
SR-A-R..................... (5) (5) N/A
------------------------------------------------------------------------------------------------
(1) The Class SR-A-1-A Interest, Class SR-A-1-B Interest, Class SR-A-2
Interest, Class SR-A-3 Interest, Class SR-A-4 Interest, Class SR-A-5
Interest and Class SR-A-6 (the "Accretion Directed Classes") will each
have a principal balance that is equal to 50% of its Corresponding
Class of Certificates and on each Distribution Date, interest,
principal payments and Realized Losses shall be allocated so as to
cause each of the Accretion Directed Classes to continue to equal 50%
of its Corresponding Class of Certificates.
(2) The interest rate with respect to any Distribution Date (and the
related Interest Accrual Period) for this Subsidiary REMIC Interest is
a per annum rate equal to the weighted average Adjusted Net Mortgage
Rate of the Mortgage Loans.
(3) The SR-Accrual Interest shall have an initial principal balance equal
to the sum of (a) 50% of the Cut-off Date Principal Balance of the
Mortgage Loans and (b) 50% of the Overcollateralized Amount. On each
Distribution Date, interest, principal and Realized Losses shall be
allocated so as to cause the SR-Accrual Interest to equal the excess
of the Stated Principal Balance of the Mortgage Loans as of the end of
the related Due Period (appropriately adjusted for prepayments) over
the aggregate Certificate Principal Balance of the Accretion Directed
Classes (after taking into account distributions for such Distribution
Date).
(4) The SR-$100 Interest and the Class SR-P Interest do not pay any
interest. All Prepayment Charges are allocated to the Class SR-P
Interest.
(5) The Class SR-A-R Interest is the sole class of residual interest in
the Subsidiary REMIC. It has no principal balance and pays no
principal or interest.
On each Distribution Date, the Interest Funds, the Principal Distribution
Amount and the Prepayment Charges payable with respect to the Mortgage Loans
will be payable with respect to the Subsidiary REMIC Regular Interests in the
following manner:
(1) Interest. Interest is to be distributed with respect to each
Subsidiary REMIC Interest at the rate or according to the formulas
described above.
(2) Prepayment Charges. All Prepayment Charges are allocated to the
Class SR-P Interest.
(3) Principal. Principal shall be allocated among the Subsidiary REMIC
Interests according to the formulas described above.
The Master REMIC
The following table specifies the class designation, pass through
rate, and principal amount for each class of Master REMIC Interest:
2
------------------------------------------------------------------------------------------------
Class Original Certificate Pass-Through
Principal Balance Rate
------------------------------------------------------------------------------------------------
A-1-A......................... $ 531,454,000 (1)
------------------------------------------------------------------------------------------------
A-1-B......................... $ 165,000,000 (2)
------------------------------------------------------------------------------------------------
A-2........................... $ 175,901,000 (2)
------------------------------------------------------------------------------------------------
A-3........................... $ 310,125,000 (2)
------------------------------------------------------------------------------------------------
A-4........................... $ 119,172,000 (2)
------------------------------------------------------------------------------------------------
A-5........................... $ 138,348,000 (2)
------------------------------------------------------------------------------------------------
A-6........................... $ 160,000,000 (2)
------------------------------------------------------------------------------------------------
C............................. (3) (4)
------------------------------------------------------------------------------------------------
A-R........................... $ 100 (5)
------------------------------------------------------------------------------------------------
P............................. $ 100 (6)
------------------------------------------------------------------------------------------------
(1) The Pass-Through Rate for the Class A-1-A Certificates for the
Accrual Period for any Distribution Date will be equal to the lesser of (a)
One-Month LIBOR plus the applicable Pass-Through Margin, and (b) the Net Rate
Cap.
(2) The Pass-Through Rates for the Class A-1-B, Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates for the Accrual Period for any
Distribution Date will be equal to the lesser of (a) the per annum fixed rate
for the Class set forth in the table below and (b) the Net Rate Cap.
Class of Certificates Pass-Through Rate
--------------------- -----------------
--------------------------
Class A-1-B................................. 5.888%
Class A-2................................... 5.609%
Class A-3................................... 5.810%
Class A-4................................... 5.874%
Class A-5................................... 6.018%
Class A-6................................... 5.693%
(3) For federal income tax purposes, the Class C Certificates shall
have a Certificate Principal Balance equal to the Overcollateralized Amount.
(4) For each Accrual Period the Class C Certificates are entitled to
an amount (the "Class C Distributable Amount") equal to the sum of a specified
portion of the interest on the Subsidiary REMIC Regular Interests (other than
the SR-P Interest) equal to the excess of the Net Rate Cap over the product of
two and the weighted average of the rates on the Accretion Directed Classes
(capped at the rates on their Corresponding Class of Certificates) and the
SR-Accrual Interest (subject to a cap of 0.00%). The Pass-Through Rate of the
Class C Certificates shall be a rate sufficient to entitle it to an amount
equal to all interest accrued on the Mortgage Loans less the interest accrued
on the other interests issued by the Master REMIC. The Class C Distributable
Amount for any Distribution Date is payable from current interest on the
Mortgage Loans to the extent not used to increase overcollateralization and
any related amount of overcollateralization released for that Distribution
Date.
(5) The Class A-R Certificates represent the sole class of residual
interest in each REMIC created hereunder. The Class A-R Certificates are not
entitled to distributions of
3
interest. On the first Distribution Date, the Class A-R Certificates are
entitled to receive $100.00 from the Principal Reserve Fund.
(6) For any Distribution Date, the Class P Certificates are entitled
to all Prepayment Charges collected during the related Prepayment Period and
the Master Servicer Prepayment Charge Amount. On the Class P Principal
Distribution Date, the Class P Certificates are entitled to receive $100.00
from the Principal Reserve Fund.
The foregoing REMIC structure is intended to cause all of the cash
from the Mortgage Loans to flow through to the Master REMIC as cash flow on a
REMIC regular interest, without creating any shortfall--actual or potential
(other than for credit losses) to any REMIC regular interest.
For any purpose for which the interest rate in respect of any
Subsidiary REMIC regular interest created hereunder is calculated, the
interest rate on the Mortgage Loans shall be appropriately adjusted to account
for the difference between the monthly day count convention of the Mortgage
Loans and the monthly day count convention of the regular interests issued by
each of the REMICs. For purposes of calculating the interest rates for each of
the interests issued by REMIC, such rates shall be adjusted to equal a monthly
day count convention based on a 30 day month for each Interest Period and a
360-day year so that the Mortgage Loans and all regular interests will be
using the same monthly day count convention.
4
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Acceptable Bid Amount: Either (i) a bid equal to or greater
than the Minimum Auction Amount or (ii) the highest bid submitted by a
Qualified Bidder in an auction if the Directing Certificateholder agrees to
pay the related Auction Supplement Amount.
Account: Any Escrow Account, the Certificate Account, the
Distribution Account, the Pre-Funding Account, the Capitalized Interest
Account or any other account related to the Trust Fund or the Mortgage Loans.
Accrual Period: With respect to any Distribution Date and each
Class of Adjustable Rate Certificates, 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 any Distribution Date and
each Class of Fixed Rate Certificates and the Class C Certificates, the
calendar month preceding the month in which such Distribution Date occurs. All
calculations of interest on the Adjustable Rate Certificates will be made on
the basis of the actual number of days elapsed in the related Accrual Period
and on a 360-day year. All calculations of interest on each Class of Fixed
Rate Certificates and the Class C Certificates will be made on the basis of a
360-day year consisting of twelve 30-day months.
Adjustable Rate Certificates: The Class A-1-A Certificates.
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the
Mortgage Rate less the related Expense Fee Rate.
Advance: The aggregate of the advances required to be made by
the Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such advances being equal to the aggregate of payments
of principal of, and interest on the Stated Principal Balance of, the Mortgage
Loans (net of the Servicing Fees) that were due on the related Due Date and
not received by the Master Servicer as of the close of business on the related
Determination Date including an amount equivalent to interest on the Stated
Principal Balance of each Mortgage Loan as to which the related Mortgaged
Property is an REO Property or as to which the related Mortgaged Property has
been liquidated but such Mortgage Loan has not yet become a Liquidated
Mortgage Loan; provided, however, that the net monthly rental income (if any)
from such REO Property deposited in the Certificate Account for such
Distribution Date pursuant to Section 3.12 may be used to offset such Advance
for the related REO Property;
5
provided, further, that for the avoidance of doubt, no Advances shall be
required to be made in respect of any Liquidated Mortgage Loan and no Advances
shall be made in respect of a Charged-off Mortgage Loan after the related
Charge-off Date.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution
Date, the aggregate amount held in the Certificate Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage
Loans due after the related Due Date, (ii) Principal Prepayments received in
respect of such Mortgage Loans after the last day of the related Prepayment
Period and (iii) Liquidation Proceeds and Subsequent Recoveries received in
respect of such Mortgage Loans after the last day of the related Due Period.
Applied Realized Loss Amount: With respect to any Distribution
Date, the amount, if any, by which, the aggregate Certificate Principal
Balance of the Certificates (after all distributions of principal on such
Distribution Date) exceeds the sum of (x) the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date and (y) the amount on
deposit in the Pre-Funding Account.
Appraised Value: The appraised value of the Mortgaged Property
based upon the appraisal made for the originator of the related Mortgage Loan
by an independent fee appraiser at the time of the origination of the related
Mortgage Loan, or the sales price of the Mortgaged Property at the time of
such origination, whichever is less, or with respect to any Mortgage Loan
originated in connection with a refinancing, the appraised value of the
Mortgaged Property based upon the appraisal made at the time of such
refinancing.
Auction Supplement Amount: As defined in Section 9.04(c).
Auction Period: With respect to a Charged-off Mortgage Loan,
the period commencing on the related Charge-off Date and ending one year after
such date.
Bankruptcy Code: Title 11 of the United States Code.
Bid Determination Date: As defined in Section 9.04(b).
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 Class of Interest-Bearing Certificates constitutes a Class of
Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which either the Certificate Insurer or banking institutions in
the State of New York or California or the city in which the Corporate Trust
Office of the Trustee is located are authorized or obligated by law or
executive order to be closed.
6
Capitalized Interest Account: The separate Eligible Account
designated as such and created and maintained by the Trustee pursuant to
Section 3.05(e). The Capitalized Interest Account shall be treated as an
"outside reserve fund" under applicable Treasury regulations and shall not be
part of any REMIC. Except as provided in Section 3.05(e), any investment
earnings on the amounts on deposit in the Capitalized Interest Account shall
be treated as owned by the Depositor and shall be taxable to the Depositor.
Capitalized Interest Deposit: $43,286.27.
Capitalized Interest Requirement: With respect to each Funding
Period Distribution Date, 1/12 of the product of (1) the sum of (a) the
Trustee Fee Rate, (b) the Certificate Insurance Policy Premium Rate and (c)
the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans
(excluding any Subsequent Mortgage Loans conveyed to the Trust Fund during the
calendar month preceding such Distribution Date) as of the first day of the
related Due Period (after giving effect to Principal Prepayments received
during the Prepayment Period, if any, that ends during such Due Period) and
(2) the amount on deposit in the Pre-Funding Account as of the last day of the
calendar month preceding such Funding Period Distribution Date (or, if the
Funding Period ended during such calendar month, as of the last day of the
Funding Period).
Carryover Reserve Fund: The separate Eligible Account created
and initially maintained by the Trustee pursuant to Section 4.08 in the name
of the Trustee for the benefit of the Certificateholders and designated "The
Bank of New York in trust for registered Holders of CWHEQ, Inc., Home Equity
Loan Asset Backed Certificates, Series 2007-S1". Funds in the Carryover
Reserve Fund shall be held in trust for the Certificateholders for the uses
and purposes set forth in this Agreement.
Certificate: Any one of the certificates of any Class executed
and authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1-A through A-6, Exhibit B, Exhibit C and Exhibit D.
Certificate Account: The separate Eligible Account created and
initially maintained by the Master Servicer pursuant to Section 3.05(b) with a
depository institution in the name of the Master Servicer for the benefit of
the Trustee on behalf of the Certificateholders and the Certificate Insurer
and designated "Countrywide Home Loans Servicing LP in trust for registered
Holders of CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series
2007-S1". Funds in the Certificate Account shall be held in trust for the
Certificateholders and the Certificate Insurer for the uses and purposes set
forth in this Agreement.
Certificate Insurance Policy: The irrevocable Financial
Guaranty Insurance Policy, No. 492490, including any endorsements thereto,
issued by MBIA with respect to the Class A Certificates.
Certificate Insurance Policy Premium Rate: 0.130% per annum.
Certificate Insurance Premium: For any Distribution Date, an
amount equal to the product of (x) the Certificate Insurance Policy Premium
Rate and (y) the aggregate Certificate Principal Balance of the Class A
Certificates immediately prior to such Distribution Date. The
7
Certificate Insurance Premium shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Certificate Insurance Reimbursement Amount: As to any
Distribution Date, (i) all Insured Payments paid by the Certificate Insurer
for which the Certificate Insurer has not been reimbursed prior to such
Distribution Date pursuant to Section 4.04 hereof, plus (ii) interest accrued
on such Insured Payments not previously repaid, calculated at the Late Payment
Rate from the date the Insured Payments were made, plus (iii) any other
amounts then due and owing to the Certificate Insurer pursuant to the
Insurance and Indemnity Agreement plus interest accrued on such amount not
previously paid calculated at the Late Payment Rate.
Certificate Insurer: MBIA in its capacity as insurer under the
Certificate Insurance Policy, and any permitted successor or assign.
Certificate Insurer Contact Person: The officer designated by
the Master Servicer to provide information to the Certificate Insurer pursuant
to Section 4.06(i).
Certificate Insurer Default: As defined in Section 4.06(l).
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 (other
than the Class C and Class E-P Certificates) and as of any Distribution Date,
the Initial Certificate Principal Balance of such Certificate (A) less the sum
of (i) 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, (ii) with respect to the Class A Certificates only,
payments under the Certificate Insurance Policy relating to principal (except
that any payment under the Certificate Insurance Policy with respect to an
Applied Realized Loss Amount allocated to the Class A Certificates shall not
result in a further reduction of the Certificate Principal Balance of the
Class A Certificates) and (iii) any Applied Realized Loss Amounts allocated to
such Certificate on previous Distribution Dates pursuant to Section 4.04(h),
and (B) increased by any Subsequent Recoveries allocated to such Certificate
pursuant to Section 4.04(i) on such Distribution Date subject to the proviso
set forth in Section 4.04(i). References herein to the Certificate Principal
Balance of a Class of Certificates shall mean the Certificate Principal
Balances of all Certificates in such Class. The Class C and Class E-P
Certificates do not have a Certificate Principal Balance. With respect to any
Certificate (other than the Class C and Class E-P Certificates) of a Class and
any Distribution Date, the portion of the Certificate Principal Balance of
such Class represented by such Certificate equal to the product of the
Percentage Interest evidenced by such Certificate and the Certificate
Principal Balance of such Class. Exclusively for the purpose of determining
any subrogation rights of the Certificate Insurer arising under Section 4.06
hereof, the "Certificate Principal Balance" of the Class A Certificates shall
not be reduced by the amount of any payments made by the Certificate Insurer
in respect of principal on such Certificates under the Certificate Insurance
Policy, except to the extent such payment shall have been reimbursed to the
Certificate Insurer pursuant to the provisions of this Agreement.
Certificate Register: The register maintained pursuant to
Section 5.02 hereof.
8
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 Book-Entry
Certificates), 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 Voting Interest evidenced thereby shall not be taken into
account in determining whether the requisite amount of Voting Interests
necessary to effect such consent has been obtained; provided that if any such
Person (including the Depositor) owns 100% of the Voting Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof (other than the second
sentence of Section 10.01 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 is entitled to rely conclusively on a certification of
the Depositor or any affiliate of the Depositor in determining which
Certificates are registered in the name of an affiliate of the Depositor.
Certification Party: As defined in Section 11.05.
Certifying Person: As defined in Section 11.05.
Charge-off Date: With respect to a Charged-off Mortgage Loan,
the close of business on the last day of the calendar month in which such
Charged-off Mortgage Loan became a Charged-off Mortgage Loan.
Charged-off Loan Proceeds: With respect to a Charged-off
Mortgage Loan, any Insurance Proceeds and all other net proceeds received with
respect to such Charged-off Mortgage Loan after the related Charge-off Date in
connection with the partial or complete liquidation of such Charged-off
Mortgage Loan, whether through trustee's sale, foreclosure sale, auction or
otherwise, or in connection with any condemnation or partial release of the
related Mortgaged Property, together with the net proceeds received after the
related Charge-off Date with respect to any Mortgaged Property acquired by the
Master Servicer by foreclosure or deed in lieu of foreclosure in connection
with such Charged-off Mortgage Loan, less the sum of related unreimbursed
Servicing Advances and the related Charged-off Mortgage Loan Servicing Fee, if
any.
Charged-off Mortgage Loan: A Mortgage Loan that is 180 days
delinquent; provided, however, that a Covered Loan shall not be a Charged-off
Mortgage Loan unless (i) the Credit Insurer has rejected the claim under the
Credit Insurance Policy and (ii) no Loss Coverage Payment is payable with
respect to such Mortgage Loan as a result of the Sponsor Loss Coverage Amount
being reduced to zero or otherwise.
Charged-off Mortgage Loan Servicing Fee: The fee payable to the
Master Servicer in connection with any Charged-off Mortgage Loan, which shall
be an amount equal to 10% of the gross proceeds from the Charged-off Mortgage
Loan, regardless of whether those proceeds arise as a result of a sale, an
auction, foreclosure or otherwise.
CHL: Countrywide Home Loans, Inc., a New York corporation, and
its successors and assigns.
9
CHL Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which CHL is the applicable Seller.
Class: All Certificates bearing the same Class designation as
set forth in Section 5.01 hereof.
Class A Certificates: Collectively, the Class A-1-A, Class
A-1-B, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates.
Class A Available Funds: With respect to any Distribution Date,
funds allocated from amounts available pursuant to this Agreement to make
distributions on the Class A Certificates on such Distribution Date, including
without limitation amounts on deposit in the Distribution Account and the
Premium Account.
Class A Insurance Payments Account: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 4.06(c) in
the name of the Trustee for the benefit of the Class A Certificateholders and
designated "The Bank of New York in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2007-S1, Class A
Certificates." Funds in the Class A Insurance Payments Account shall be held
in trust for the Class A Certificateholders for the uses and purposes set
forth in this Agreement.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to that Distribution
Date, over (y) the aggregate Stated Principal Balance of the Mortgage Loans
for that Distribution Date minus the Overcollateralization Target Amount for
such Distribution Date.
Class A-1-A Certificate: Any Certificate designated as a "Class
A-1-A Certificate" on the face thereof, in the form of Exhibit A-1-A hereto,
representing the right to distributions as set forth herein.
Class A-1-B Certificate: Any Certificate designated as a "Class
A-1-B Certificate" on the face thereof, in the form of Exhibit A-1-B hereto,
representing the right to distributions as set forth herein.
Class A-2 Certificate: Any Certificate designated as a "Class
A-2 Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class A-3 Certificate: Any Certificate designated as a "Class
A-3 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class A-4 Certificate: Any Certificate designated as a "Class
A-4 Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to distributions as set forth herein.
10
Class A-5 Certificate: Any Certificate designated as a "Class
A-5 Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class A-6 Certificate: Any Certificate designated as a "Class
A-6 Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to distributions as set forth herein.
Class A-6 Portion: With respect to any Distribution Date, a
percentage, expressed as a fraction, the numerator of which is the Certificate
Principal Balance of the Class A-6 Certificates immediately prior to such
Distribution Date and the denominator of which is the aggregate Certificate
Principal Balance of all Classes of the Class A Certificates immediately prior
to such Distribution Date.
Class A-R Certificate: Any Certificate designated as a "Class
A-R Certificate" on the face thereof, in the form of Exhibit D-1 hereto or, in
the case of the Tax Matters Person Certificate, Exhibit E hereto, in either
case representing the right to distributions as set forth herein.
Class C Certificate: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit C hereto,
representing the right to distributions as set forth herein.
Class C Distributable Amount: As defined in the Preliminary
Statement.
Class E-P Certificate: Any Certificate designated as a "Class
E-P Certificate" on the face thereof, in the form of Exhibit D-2 hereto,
representing the right to distributions as set forth herein.
Class P Certificate: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit B hereto,
representing the right to distributions as set forth herein.
Class P Principal Distribution Date: The first Distribution
Date that occurs after the end of the latest Prepayment Charge Period for all
Mortgage Loans that have a Prepayment Charge Period.
Closing Date: February 28, 2007.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
Collateral Schedule: Schedule II hereto.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) original principal
balance of the related Mortgage Loan and (y) the outstanding principal balance
of any senior mortgage loans at the date of origination of
11
the related Mortgage Loan and the denominator of which is the Appraised Value
of the related Mortgaged Property.
Commission: The U.S. Securities and Exchange Commission.
Compensating Interest: With respect to the Mortgage Loans and
any Distribution Date, an amount equal to the lesser of (x) one-half of the
Servicing Fee for the related Due Period and (y) the aggregate Prepayment
Interest Shortfall for such Distribution Date.
Confirmation: The confirmation, reference number 1291160, with
a trade date of February 22, 2007 evidencing a transaction between the
Corridor Contract Counterparty and CHL relating to the Corridor Contract.
Corporate Trust Office: The designated office of the Trustee in
the State of New York where at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Attention: Corporate Trust MBS Administration),
telephone: (▇▇▇) ▇▇▇-▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Corridor Contract: With respect to the Class A-1-A
Certificates, the transaction evidenced by the Confirmation (as assigned to
the Corridor Contract Administrator pursuant to the Corridor Contract
Assignment Agreement).
Corridor Contract Administration Agreement: The corridor
contract administration agreement dated as of the Closing Date among CHL, the
Trustee and the Corridor Contract Administrator.
Corridor Contract Administrator: The Bank of New York, in its
capacity as corridor contract administrator under the Corridor Contract
Administration Agreement.
Corridor Contract Assignment Agreement: The Assignment
Agreement dated as of the Closing Date among CHL, the Corridor Contract
Administrator and the Corridor Contract Counterparty.
Corridor Contract Counterparty: Swiss Re Financial Products
Corporation.
Corridor Contract Termination Date: The Distribution Date in
January 2009.
Covered Certificates: The Class A-1-A Certificates.
Covered Loan: A Mortgage Loan covered by the Credit Insurance
Policy as of the Cut-off Date.
Credit Bureau Risk Score: A statistical credit score obtained
by CHL in connection with the origination of a Mortgage Loan.
Credit Insurance Policy: The Credit Insurance Policy issued by
the Credit Insurer with respect to certain Mortgage Loans identified in the
Mortgage Loan Schedule.
12
Credit Insurance Premium: For any Distribution Date, the
aggregate fee payable to the Credit Insurer equal to the product of (x) the
Credit Insurance Premium Rate and (y) the unpaid principal balance of each
Covered Loan as of the first day of the related calendar month, computed on
the basis of a 360-day year consisting of twelve 30-day months.
Credit Insurance Premium Rate: The rate at which the Credit
Insurance Premium accrues on each Mortgage Loan, as set forth on the Mortgage
Loan Schedule.
Credit Insurer: Old Republic Insurance Company, or any
replacement Credit Insurer, as applicable.
Cumulative Loss Trigger Event: With respect to any Distribution
Date on or after the Stepdown Date, (x) the aggregate amount of Realized
Losses (calculated without taking into account payments made under the Credit
Insurance Policy or any Loss Coverage Payments) on the Mortgage Loans from the
Cut-off Date for each such Mortgage Loan to (and including) the last day of
the related Due Period (reduced by the aggregate amount of any Subsequent
Recoveries and Charged-off Loan Proceeds received through the last day of that
Due Period) exceeds (y) the applicable percentage, for such Distribution Date,
of the sum of the Initial Cut-off Date Pool Principal Balance and the
Pre-Funded Amount, as set forth below:
Distribution Date Percentage
----------------- ----------
September 2009 --February 2010.... 2.175% with respect to September
2009, plus an additional 1/6th of
0.725% for each month thereafter
through February 2010
March 2010 -- February 2011....... 2.900% with respect to March 2010,
plus an additional 1/12th of 1.200%
for each month thereafter through
February 2011
March 2011 -- February 2012....... 4.100% with respect to March 2011,
plus an additional 1/12th of 1.150%
for each month thereafter through
February 2012
March 2012 -- February 2013....... 5.250% with respect to March 2012,
plus an additional 1/12th of 0.550%
for each month thereafter until
February 2013
March 2013 and thereafter......... 5.800%
Current Interest: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, interest accrued at
the applicable Pass-Through Rate for the applicable Accrual Period on the
Certificate Principal Balance or Notional Amount of such Class immediately
prior to such Distribution Date.
13
Cut-off Date: With respect to any Mortgage Loan, the Initial
Cut-off Date or the related Subsequent Cut-off Date, as the case may be.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on 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
on or prior to the Cut-off Date, but without giving effect to any installments
of principal received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficiency Amount: As defined in the Certificate Insurance
Policy.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under such Mortgage Loan,
or any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Delay Delivery Mortgage Loans: (i) The Initial Mortgage Loans
identified on the schedule of Mortgage Loans hereto set forth on Exhibit F-2
hereof for which all or a portion of a related Mortgage File is not delivered
to the Trustee on or prior to the Closing Date, and (ii) the Subsequent
Mortgage Loans identified on the schedule of Subsequent Mortgage Loans set
forth in Annex A to each related Subsequent Transfer Agreement for which all
or a portion of the related Mortgage File is not delivered to the Trustee on
or prior to the related Subsequent Transfer Date. The Depositor shall deliver
(or cause delivery of) the Mortgage Files to the Trustee: (A) with respect to
at least 50% of the Initial Mortgage Loans, not later than the Closing Date
and with respect to at least 10% of the Subsequent Mortgage Loans conveyed on
a Subsequent Transfer Date, not later than such Subsequent Transfer Date, (B)
with respect to at least an additional 40% of the Initial Mortgage Loans, not
later than 20 days after the Closing Date, and not later than 20 days after
the relevant Subsequent Transfer Date with respect to the remaining Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date, and (C) with respect
to the remaining Initial Mortgage Loans, not later than thirty days after the
Closing Date. To the extent that Countrywide Home Loans, Inc. shall be in
possession of any Mortgage Files with respect to any Delay Delivery Mortgage
Loan, until delivery of such Mortgage File to the Trustee as provided in
Section 2.01, Countrywide Home Loans, Inc. shall hold such files as agent and
in trust for the Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage Loan.
14
Delinquency Trigger Event: With respect to any Distribution
Date on or after the Stepdown Date, the Rolling Sixty-Day Delinquency Rate for
that Distribution Date for the outstanding Mortgage Loans exceeds 4.50%.
Denomination: With respect to each Certificate, the amount set
forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or, if not the foregoing, the Percentage Interest appearing on
the face thereof, as applicable.
Depositor: CWHEQ, Inc., a Delaware corporation, or its
successor in interest.
Depository: The initial Depository shall be The Depository
Trust Company, the nominee of which is Cede & Co., 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(a)(5) of the
Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Book-Entry
Certificates, the agreement among the Depositor and the initial Depository,
dated as of the Closing Date, substantially in the form of Exhibit O.
Depository Participant: A broker, dealer, bank or other
financial institution or other person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Distribution Date, the
22nd day of the month of such Distribution Date or, if such 22nd day is not a
Business Day, the immediately preceding Business Day; provided that the
Determination Date in each month will be at least two Business Days before the
Distribution Date.
Directing Certificateholder: As defined in Section 9.04(a).
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(c) in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
and designated "The Bank of New York, in trust for registered Holders of
CWHEQ, Inc., Home Equity Loan Asset Backed Certificates, Series 2007-S1".
Funds in the Distribution Account shall be held in trust for the
Certificateholders and the Certificate Insurer for the uses and purposes set
forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
1:00 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each month, or if such day
is not a Business Day, on the first Business Day thereafter, commencing in
March 2007.
Due Date: With respect to any Mortgage Loan and Due Period, the
due date for Scheduled Payments of interest and/or principal on that Mortgage
Loan occurring in such Due Period as provided in the related Mortgage Note.
15
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.
▇▇▇▇▇: The Commission's Electronic Data Gathering, Analysis,
and Retrieval system.
Eligible Account: Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, if ▇▇▇▇▇'▇ is not a Rating Agency) are rated by each Rating
Agency in one of its two highest long-term and its highest short-term rating
categories respectively, at the time any amounts are held on deposit therein,
or (ii) an account or accounts in a depository institution or trust company in
which such accounts are insured by the FDIC (to the limits established by the
FDIC) and the uninsured deposits in which accounts are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee, the
Certificate Insurer and to each Rating Agency, the Certificateholders have a
claim with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in
which such account is maintained, or (iii) a trust account or accounts
maintained with the corporate trust department of a federal or state chartered
depository institution or trust company having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity or (iv) any other account
acceptable to the Rating Agencies without reduction or withdrawal of their
then-current ratings of the Certificates (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates) as evidenced by a
letter from each Rating Agency to the Trustee and the Certificate Insurer.
Eligible Accounts may bear interest, and may include, if otherwise qualified
under this definition, accounts maintained with the Trustee.
Eligible Repurchase Month: As defined in Section 3.12(d)
hereof.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment underwriting or private placement that meets the applicable
requirements of the Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates,
Class P Certificates, Class E-P Certificates, Class C Certificates and
Certificates of any Class that does not have or no longer has a rating of at
least AA- or its equivalent from at least one Rating Agency.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Excess Cashflow: With respect to any Distribution Date the sum
of (i) the amount remaining after the distribution of interest to
Certificateholders and payments to the
16
Certificate Insurer for such Distribution Date, pursuant to Section
4.04(a)(v), (ii) the amount remaining after the distribution of principal to
Certificateholders and payments to the Certificate Insurer for such
Distribution Date, pursuant to Section 4.04(b)(iv) and (iii) the
Overcollateralization Reduction Amount for such Distribution Date.
Excess Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of the Overcollateralized Amount for
such Distribution Date over the Overcollateralization Target Amount for such
Distribution Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan,
other than a Charged-off Mortgage Loan, the amount, if any, by which the sum
of any Liquidation Proceeds and Subsequent Recoveries are in excess of the sum
of (i) the unpaid principal balance of such Liquidated Mortgage Loan as of the
date of liquidation of such Liquidated Mortgage Loan plus (ii) 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 Master Servicer) up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
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,
and the rules and regulations promulgated thereunder.
Exchange Act Reports: Any reports on Form 10-D, Form 8-K and
Form 10-K required to be filed by the Depositor with respect to the Trust Fund
under the Exchange Act.
Expense Fee Rate: With respect to any Mortgage Loan, the sum of
(i) the Servicing Fee Rate, (ii) the Trustee Fee Rate and (iii) with respect
to any Covered Loan, the Credit Insurance Premium Rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date, the lesser of (1) the Overcollateralization Deficiency
Amount for such Distribution Date and (2) the Excess Cashflow available for
payment thereof for such Distribution Date.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act, or any successor
thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Final Scheduled Distribution Date: With respect to the Class A
Certificates and the Certificate Insurance Policy, the Distribution Date
occurring in the month following the month of the scheduled maturity date of
the Mortgage Loan having the latest scheduled maturity date including any
Subsequent Mortgage Loan, if any.
Fixed Rate Certificates: The Class A-1-B, Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates.
17
Form 10-D Disclosure Item: With respect to any Person, any
material litigation or governmental proceedings pending against such Person,
or against any of the Trust Fund, the Depositor, the Trustee, any co-trustee,
the Master Servicer or any Subservicer, if such Person has actual knowledge
thereof.
Form 10-K Disclosure Item: With respect to any Person, (a) Form
10-D Disclosure Item, and (b) any affiliations or relationships between such
Person and any Item 1119 Party.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under
Title III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Funding Period: The period from the Closing Date to and
including the earlier to occur of (x) the date the amount in the Pre-Funding
Account is less than $40,000 and (y) March 30, 2007.
Funding Period Distribution Date: Each Distribution Date during
the Funding Period and, if the Funding Period ends after the Distribution Date
in a month, the immediately succeeding Distribution Date.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Initial Mortgage
Loans due after the Initial Cut-off Date and received by the Master Servicer
before the Closing Date and not applied in computing the Cut-off Date
Principal Balance thereof and (ii) interest on the Initial Mortgage Loans due
after the Initial Cut-off Date and received by the Master Servicer before the
Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate (other than the Class C and Class E-P Certificates) the
Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date.
Initial Cut-off Date: In the case of any Initial Mortgage Loan,
the later of (x) February 1, 2007 and (y) the date of origination of such
Mortgage Loan.
Initial Cut-off Date Pool Principal Balance: The aggregate
Cut-off Date Principal Balance of the Initial Mortgage Loans.
Initial Mortgage Loan: A Mortgage Loan conveyed to the Trustee
on the Closing Date pursuant to this Agreement as identified on the Mortgage
Loan Schedule delivered to the Trustee on the Closing Date.
Insolvency Proceeding: As defined in Section 4.06(h).
Insurance and Indemnity Agreement: The Insurance Agreement,
dated as of the Closing Date, by and among the Certificate Insurer, as
insurer, the Depositor, as depositor, CHL, as sponsor and a seller, the Master
Servicer, as master servicer, and the Trustee, as trustee.
18
Insurance Policy: With respect to any Mortgage Loan included in
the Trust Fund, any insurance policy, including the Credit Insurance Policy
but excluding the Certificate 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 Policy.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans (other than by the Certificate Insurer under the Certificate Insurance
Policy) 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 Master 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 Master 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 and received either prior to or in
connection with such Mortgage Loan becoming a Liquidated Mortgage Loan.
Insured Expenses: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
Insured Payments: As defined in the Certificate Insurance
Policy.
Interest-Bearing Certificates: The Class A Certificates.
Interest Carry Forward Amount: With respect to each Class of
Interest-Bearing Certificates and each Distribution Date, the excess of (i)
the Current Interest for such Class with respect to prior Distribution Dates
over (ii) the amount actually distributed to such Class with respect to
interest on such prior Distribution Dates.
Interest Determination Date: With respect to the Adjustable
Rate Certificates, the second LIBOR Business Day preceding the commencement of
each Accrual Period.
Interest Funds: With respect to any Distribution Date, (x) an
amount equal to the sum of (i) the Interest Remittance Amount for such
Distribution Date, (ii) the Capitalized Intereset Requirement, if any, for
such Distribution Date and (iii) solely for the purpose of calculating the
Deficiency Amount, the amount on deposit in the Premium Account after taking
into account any deposits to the Premium Account on such Distribution Date,
less (y) the sum of (i) the Trustee Fee for such Distribution Date and (ii)
the Credit Insurance Premium for such Distribution Date.
Interest Remittance Amount: With respect to any Distribution
Date, (x) the sum, without duplication, of (i) all scheduled interest
collected during the related Due Period with respect to the Mortgage Loans
less the Servicing Fee, (ii) all interest on Principal Prepayments received
during the related Prepayment Period with respect to the Mortgage Loans, other
than Prepayment Interest Excess, (iii) all Advances relating to interest with
respect to the Mortgage Loans, (iv) all Compensating Interest with respect to
the Mortgage Loans, (v) Liquidation Proceeds with respect to the Mortgage
Loans collected during the related Due Period (to the extent such Liquidation
Proceeds relate to interest), (vi) any payments received under the Credit
Insurance Policy attributable to interest for the related Due Period, (vii)
any Loss Coverage Payment attributable to interest for the related Due Period
and (viii) the Seller Interest Shortfall
19
Payment, if any, less (y) all reimbursements to the Master Servicer during the
related Due Period for Advances of interest previously made.
Investment Letter: As defined in Section 5.02(b).
Item 1119 Party: The Depositor, any Seller, the Master
Servicer, the Trustee, any Subservicer, any originator identified in the
Prospectus Supplement, the Certificate Insurer, the Credit Insurer and the
Corridor Contract Counterparty, and any other material transaction party, as
identified in Exhibit Z hereto, as updated pursuant to Section 11.04.
Late Payment Rate: With respect to any Distribution Date, the
lesser of (i) the greater of (a) the rate of interest, as it is publicly
announced by Citibank, N.A. at its principal office in New York, New York as
its prime rate (any change in the prime rate of interest to be effective on
the date the change is announced by Citibank, N.A.) plus 2% and (b) the then
applicable highest rate of interest on any of the Class A Certificates and
(ii) the maximum rate permissible under applicable usury or similar laws
limiting interest rates. The Late Payment Rate shall be computed on the basis
of the actual number of days elapsed over a year of 360 days.
Latest Possible Maturity Date: The Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan
having the latest scheduled maturity date as of the Cut-off Date.
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.
Limited Exchange Act Reporting Obligations: The obligations of
the Master Servicer under Section 3.17(b), Section 6.02 and Section 6.04 with
respect to notice and information to be provided to the Depositor and Article
XI (except Section 11.07(a)(1) and (2)).
Liquidated Mortgage 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 Master Servicer has
certified 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 or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property received in connection with or prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan (other than the amount of such net proceeds
representing any profit realized by the Master Servicer in connection with the
disposition of any such properties and other than amounts paid under the
Certificate Insurance Policy), less the sum of related unreimbursed Advances,
Servicing Fees and Servicing Advances. For the avoidance of doubt, Liquidation
Proceeds shall not include Charged-off Loan Proceeds.
20
Loan Number and Borrower Identification Mortgage Loan Schedule:
With respect to any Subsequent Transfer Date, the Loan Number and Borrower
Identification Mortgage Loan Schedule delivered in connection with such
Subsequent Transfer Date pursuant to Section 2.01(f). Each Loan Number and
Borrower Identification Mortgage Loan Schedule shall contain the information
specified in the definition of "Mortgage Loan Schedule" with respect to the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, and each
Loan Number and Borrower Identification Mortgage Loan Schedule shall be deemed
to be included in the Mortgage Loan Schedule.
Loss Coverage Payment: With respect to any Distribution Date on
or prior to the Distribution Date on which the Sponsor Loss Coverage Amount is
reduced to zero, the amount of Realized Losses on the Covered Loans with
respect to which a claim for payment was denied by the Credit Insurer due to
an exclusion in the Credit Insurance Policy but for which there are no
breaches of the representations and warranties set forth in Section 2.03 with
respect to such Covered Loans. Notwithstanding the preceding sentence, with
respect to the Distribution Date on which the amount described in the
preceding sentence exceeds the Sponsor Loss Coverage Amount, the Loss Coverage
Payment for such Distribution Date shall be the Sponsor Loss Coverage Amount.
Majority Holder: The Holders of Certificates evidencing at
least 51% of the Voting Rights allocated to such Class of Certificates.
Master Servicer: Countrywide Home Loans Servicing LP, a Texas
limited partnership, and its successors and assigns, in its capacity as master
servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
Master Servicer Prepayment Charge Payment Amount: The amounts
(i) payable by the Master Servicer in respect of any Prepayment Charges waived
other than in accordance with the standard set forth in the first sentence of
Section 3.20(a), or (ii) collected from the Master Servicer in respect of a
remedy for the breach of the representation made by CHL set forth in Section
3.20(c).
MBIA: MBIA Insurance Corporation, organized and created under
the laws of the State of New York, or any successor thereto.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on
the MERS(R) System.
MERS(R) System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Mortgage
Loan.
21
Minimum Auction Amount: With respect to any auction of the
Mortgage Loans and any REO Properties pursuant to Section 9.04, the sum of (i)
the Termination Price that would be payable by the NIM Insurer if the Optional
Termination were exercised in the following calendar month pursuant to Section
9.01 and (ii) all reasonable fees and expenses incurred by the Trustee in
connection with any auction conducted pursuant to Section 9.04. For the
avoidance of doubt, the Minimum Auction Amount shall result in a final
distribution on the Class A Certificates and to the Certificate Insurer that
is sufficient (x) to pay such Class A Certificates in full (without the need
of any payment by the Certificate Insurer of any Insured Payment) and (y) to
pay any amounts due and payable to the Certificate Insurer pursuant to the
terms hereof and pursuant to the Insurance and Indemnity Agreement.
Modified Mortgage Loan: As defined in Section 3.12(a).
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.
Monthly Statement: The statement delivered to the
Certificateholders pursuant to Section 4.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
Mortgage: The mortgage, deed of trust or other instrument
creating a second lien on or second priority ownership interest in an estate
in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the deletion of
Liquidated Mortgage Loans and Deleted Mortgage Loans and the addition of (x)
Replacement Mortgage Loans pursuant to the provisions of this Agreement and
(y) Subsequent Mortgage Loans pursuant to the provisions of this Agreement and
any Subsequent Transfer Agreement) transferred to the Trustee as part of the
Trust Fund and from time to time subject to this Agreement, attached hereto as
Exhibit F-1, setting forth in the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) [Reserved];
(iii) the Appraised Value;
(iv) the Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
22
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off
Date;
(x) the Combined Loan-to-Value Ratio at origination;
(xi) a code indicating whether the residential dwelling
at the time of origination was represented to be
owner-occupied;
(xii) a code indicating whether the residential
dwelling is either (a) a detached single-family dwelling, (b) a
two-family residential property, (c) a three-family residential
property, (d) a four-family residential property, (e) planned
unit development, (f) a low-rise condominium unit, (g) a
high-rise condominium unit or (h) manufactured housing;
(xiii) the purpose of the Mortgage Loan;
(xiv) a code indicating if such Mortgage Loan is a
Covered Loan and the related Credit Insurance Premium Rate; and
(xv) a code indicating whether the Mortgage Loan is a
CHL Mortgage Loan, a Park Granada Mortgage Loan, a Park Monaco
Mortgage Loan or a Park Sienna Mortgage Loan.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans. The Mortgage Loan Schedule shall be
deemed to include each Loan Number and Borrower Identification Mortgage Loan
Schedule delivered pursuant to Section 2.01(f) and all the related Subsequent
Mortgage Loans and Subsequent Mortgage Loan information included therein.
Mortgage Loans: Such of the mortgage loans transferred and
assigned to the Trustee pursuant to the provisions hereof and any Subsequent
Transfer Agreement as from time to time are held as 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, including a breach of the representation contained in Section
2.02 hereof, shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified
in the Mortgage Loan Schedule.
23
Mortgage Rate: The annual rate of interest borne by a Mortgage
Note as set forth in the Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligors on a Mortgage Note.
NAS Factor: For any Distribution Date set forth below, the
percentage set forth in the following table:
Distribution Date Percentage
------------------------------------------------ ----------
March 2007 -- February 2010 0%
March 2010 -- February 2012 45%
March 2012 -- February 2013 80%
March 2013 -- February 2014 100%
March 2014 and thereafter 300%
NAS Principal Distribution Amount: For any Distribution Date,
an amount equal to the product of (i) the Class A-6 Portion for such
Distribution Date, (ii) any amounts distributed to the Class A Certificates
pursuant to Section 4.04(b)(ii) for such Distribution Date and (iii) the NAS
Factor for such Distribution Date.
Net Mortgage Rate: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.
Net Rate Cap: For each Distribution Date, (1) the weighted
average Adjusted Net Mortgage Rate of the Mortgage Loans as of the first day
of the related Due Period (after giving effect to Principal Prepayments
received during the Prepayment Period that ends during such Due Period), less
(2) the Certificate Insurance Policy Premium Rate, multiplied by a fraction,
the numerator of which is (a) the aggregate Certificate Principal Balance of
the Class A Certificates and the denominator of which is (b) the aggregate
Stated Principal Balance of the Mortgage Loans as of the first day of the
related Due Period (after giving effect to Principal Prepayments received
during the Prepayment Period that ends during such Due Period) plus any
amounts on deposit in the Pre-Funding Account as of the first day of that Due
Period. The Net Rate Cap shall be adjusted in the case of the Class A-1-A
Certificates only, to an effective rate reflecting the calculation of interest
on the basis of the actual number of days elapsed during the related Accrual
Period and a 360 day year.
Net Rate Carryover: With respect to any Class of Class A
Certificates and any Distribution Date, the sum of (A) the excess of (i) the
amount of interest that such Class would otherwise have accrued for such
Distribution Date had the Pass-Through Rate for such Class and the related
Accrual Period not been determined based on the Net Rate Cap, over (ii) the
amount of interest accrued on such Class at the applicable Net Rate Cap for
such Distribution Date and (B) the Net Rate Carryover for such Class for all
previous Distribution Dates not previously paid pursuant to Section 4.04,
together with interest thereon at the then-applicable Pass-Through Rate for
such Class, without giving effect to the applicable Net Rate Cap.
24
NIM Insurer: Any insurer guarantying at the request of CHL
certain payments under notes backed or secured by the Class C and/or Class P
Certificates.
Nonrecoverable Advance: Any portion of an Advance previously
made or proposed to be made by the Master Servicer that, in the good faith
judgment of the Master Servicer, will not or, in the case of a current
delinquency, would not, be ultimately recoverable by the Master Servicer from
the related Mortgagor, related Liquidation Proceeds or otherwise. Any
unreimbursed, outstanding Advances made prior to the related Charge-off Date
in connection with a Charged-off Mortgage Loan shall be considered
Nonrecoverable Advances as of the related Charge-off Date.
Non-United States Person: A Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
(treated as a corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more United States persons have authority to control
all substantial decisions of the trustor.
Notional Amount: Not applicable.
OC Floor: An amount equal to 0.50% of the sum of the Initial
Cut-off Date Pool Principal Balance and the Pre-Funded Amount.
Officer's Certificate: A certificate (i) in the case of the
Depositor, signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or
one of the Assistant Treasurers or Assistant Secretaries of the Depositor,
(ii) in the case of the Master Servicer, signed by the President, an Executive
Vice President, a Vice President, an Assistant Vice President, the Treasurer,
or one of the Assistant Treasurers or Assistant Secretaries of Countrywide GP,
Inc., its general partner, (iii) if provided for in this Agreement, signed by
a Servicing Officer, as the case may be, and delivered to the Depositor and
the Trustee, as the case may be, as required by this Agreement, or (iv) in the
case of any other Person, signed by an authorized officer of such Person.
One-Month LIBOR: With respect to any Accrual Period for the
Adjustable Rate Certificates, the rate determined by the Trustee on the
related Interest Determination Date on the basis of the rate for U.S. dollar
deposits for one month as quoted on the Bloomberg Terminal on such Interest
Determination Date. If such rate is not quoted on the Bloomberg Terminal (or
if such service is no longer offered, such other service for displaying
One-Month LIBOR or comparable rates as may be reasonably selected by the
Trustee), One-Month LIBOR for the applicable Accrual Period for the Adjustable
Rate Certificates will be the Reference Bank Rate. If no such quotations can
be obtained by the Trustee and no Reference Bank Rate is available, One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual Period for
the Adjustable Rate Certificates.
25
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, reasonably acceptable to
each addressee of such opinion; provided that with respect to Section 6.04 or
10.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Depositor and the Master
Servicer, (ii) not have any direct financial interest in the Depositor or the
Master Servicer or in any affiliate of either and (iii) not be connected with
the Depositor or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
Optional Termination: The termination of the Trust Fund
provided hereunder pursuant to the purchase of the Mortgage Loans pursuant to
clause (a) of the first sentence of Section 9.01 hereof.
Optional Termination Date: The first Distribution Date on which
the aggregate Stated Principal Balance of the Mortgage Loans is less than or
equal to 10% of the sum of the Initial Cut-off Date Pool Principal Balance and
the Pre-Funded Amount.
Original Value: The value of the property underlying a Mortgage
Loan based, in the case of the purchase of the underlying Mortgaged Property,
on the lower of an appraisal satisfactory to the Master Servicer or the sales
price of such property or, in the case of a refinancing, on an appraisal
satisfactory to the Master Servicer.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of
which other Certificates have been executed and delivered by
the Trustee pursuant to this Agreement.
To effectuate the Certificate Insurer's rights of subrogation
under Section 4.06 hereof, all Class A Certificates that have been paid with
funds provided under the Certificate Insurance Policy shall be Outstanding
until the Certificate Insurer has been paid all amounts due to it pursuant to
this Agreement and the Insurance and Indemnity 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 Mortgage Loan, prior to the end of the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization
Target Amount exceeds the Overcollateralized Amount on such Distribution Date
(after giving effect to the distribution of
26
the Principal Distribution Amount (other than the portion thereof consisting
of the Extra Principal Distribution Amount) on such Distribution Date).
Overcollateralization Reduction Amount: With respect to any
Distribution Date, an amount equal to the lesser of (i) the Excess
Overcollateralization Amount for such Distribution Date and (ii) the Principal
Remittance Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any
Distribution Date: (a) prior to the Stepdown Date, an amount equal to 1.85% of
the sum of the Initial Cut-off Date Pool Principal Balance and the Pre-Funded
Amount and (b) on or after the Stepdown Date, the greater of (i) an amount
equal to 3.70% of the aggregate Stated Principal Balance of the Mortgage Loans
for that Distribution Date and (ii) the OC Floor; provided, however, that if a
Trigger Event is in effect on any Distribution Date, the Overcollateralization
Target Amount will be the Overcollateralization Target Amount as in effect for
the prior Distribution Date.
Overcollateralized Amount: With respect to any Distribution
Date, the amount, if any, by which (x) the sum of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and any
amount on deposit in the Pre-Funding Account exceeds (y) the aggregate
Certificate Principal Balance of the Class A Certificates as of such
Distribution Date (after giving effect to the distribution of the Principal
Remittance Amount on such Distribution Date and, in the case of the
Distribution Date immediately following the end of the Funding Period, any
amounts to be released from the Pre-Funding Account).
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.
Park Granada: Park Granada LLC, a Delaware limited liability
company, and its successors and assigns.
Park Granada Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which Park Granada is the applicable
Seller.
Park Monaco: Park Monaco Inc., a Delaware corporation, and its
successors and assigns.
Park Monaco Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which Park Monaco is the applicable
Seller.
Park Sienna: Park Sienna LLC, a Delaware limited liability
company, and its successors and assigns.
Park Sienna Mortgage Loans: The Mortgage Loans identified as
such on the Mortgage Loan Schedule for which Park Sienna is the applicable
Seller.
Pass-Through Margin: With respect to any Distribution Date and
the Class A-1-A Certificates, 0.110% per annum.
27
Pass-Through Rate: With respect to any Accrual Period and each
Class of Interest-Bearing Certificates, the per annum rate set forth or
calculated in the manner described in the Preliminary Statement.
Percentage Interest: With respect to any Interest-Bearing
Certificate, a fraction, expressed as a percentage, the numerator of which is
the Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate Certificate Principal Balance of the
related Class. With respect to the Class C, Class E-P, Class P and Class A-R
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Performance Certification: As defined in Section 11.05.
Permitted Investments: At any time, any one or more of the
following obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith
and credit of the United States;
(ii) general obligations of or obligations guaranteed by
any state of the United States or the District of Columbia
receiving the highest long-term debt rating of each Rating
Agency, or such lower rating as each Rating Agency has
confirmed in writing is sufficient for the ratings originally
assigned to the Certificates by such Rating Agency (without
regard to the Certificate Insurance Policy, in the case of the
Class A Certificates);
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper
rating of each Rating Agency, or such lower rating as each
Rating Agency has confirmed in writing is sufficient for the
ratings originally assigned to the Certificates by such Rating
Agency (without regard to the Certificate Insurance Policy, in
the case of the Class A Certificates);
(iv) certificates of deposit, demand or time deposits,
or bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States
or of any state thereof and subject to supervision and
examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust
company (or in the case of the principal depository institution
in a holding company system, the commercial paper or long-term
unsecured debt obligations of such holding company, but only if
▇▇▇▇▇'▇ is not a Rating Agency) are then rated one of the two
highest long-term and the highest short-term ratings of each
such Rating Agency for such securities, or such lower ratings
as each Rating Agency has confirmed in writing is sufficient
for the ratings originally assigned to the Certificates by such
Rating Agency (without regard to the Certificate Insurance
Policy, in the case of the Class A Certificates);
28
(v) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered
into with a depository institution or trust company (acting as
principal) described in clause (iv) above;
(vi) 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 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 (except (x) if the Rating Agency is
Moody's, such rating shall be the highest commercial paper
rating of S&P for any such securities) and (y), or such lower
rating as each Rating Agency has confirmed in writing is
sufficient for the ratings originally assigned to the
Certificates by such Rating Agency (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates);
(vii) interests in any money market fund 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 Rating Agency
or such lower rating as each Rating Agency has confirmed in
writing is sufficient for the ratings originally assigned to
the Certificates by such Rating Agency (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates);
(viii) 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 which
on the date of acquisition has been rated by each Rating Agency
in their respective highest applicable rating category or such
lower rating as each Rating Agency has confirmed in writing is
sufficient for the ratings originally assigned to the
Certificates by such Rating Agency (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates); and
(ix) such other relatively risk free investments having
a specified stated maturity and bearing interest or sold at a
discount acceptable to each Rating Agency as will not result in
the downgrading or withdrawal of the rating then assigned to
the Certificates by any Rating Agency (without regard to the
Certificate Insurance Policy, in the case of the Class A
Certificates), as evidenced by a signed writing delivered by
each Rating Agency, and reasonably acceptable to the NIM
Insurer and the Certificate Insurer, as evidenced by a signed
writing delivered by the NIM Insurer and the Certificate
Insurer;
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 (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
29
of money market funds pursuant to clause (vii) above); provided further that
no amount beneficially owned by any REMIC (including, without limitation, any
amounts collected by the Master Servicer but not yet deposited in the
Certificate Account) may be invested in investments (other than money market
funds) treated as equity interests for Federal income tax purposes, unless the
Master Servicer shall receive an Opinion of Counsel, at the expense of Master
Servicer, to the effect that such investment will not adversely affect the
status of any such REMIC as a REMIC under the Code or result in imposition of
a tax on any such REMIC. 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 any Class A-R Certificate,
(iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) an "electing large partnership" as defined in
section 775 of the Code, (vi) a Person that is not a citizen or resident of
the United States, a corporation, partnership, or other entity (treated as a
corporation or a partnership for federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the
United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States Persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder to fail to
qualify as a REMIC at any time that any Certificates are Outstanding. The
terms "United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
Person: Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Plan: An "employee benefit plan" as defined in section 3(3) of
ERISA that is subject to Title I of ERISA, a "plan" as defined in section 4975
of the Code that is subject to section 4975 of the Code, or any Person
investing on behalf of or with plan assets (as defined in 29 CFR ss.2510.3-101
or otherwise under ERISA) of such an employee benefit plan or plan.
30
Pool Stated Principal Balance: The aggregate of the Stated
Principal Balances of the Mortgage Loans which were Outstanding Mortgage
Loans.
Pre-Funded Amount: The amount deposited in the Pre-Funding
Account on the Closing Date, which shall equal $3,135,428.00.
Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and the Certificate Insurer and
designated "The Bank of New York, in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2007-S1." Funds in
the Pre-Funding Account shall be held in trust for the Certificateholders and
the Certificate Insurer for the uses and purposes set forth in this Agreement
and shall not be a part of any REMIC created hereunder, provided, however that
any investment income earned from Permitted Investments made with funds in the
Pre-Funding Account will be for the account of CHL.
Preference Amount: As defined in the Certificate Insurance
Policy.
Preference Claim: As defined in Section 4.06(h).
Premium Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and the Certificate Insurer and
designated "The Bank of New York, in trust for registered holders of CWHEQ,
Inc., Home Equity Loan Asset Backed Certificates, Series 2007-S1." Funds in
the Premium Account shall be held in trust for the Certificateholders and the
Certificate Insurer for the uses and purposes set forth in this Agreement.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the
charges or premiums, if any, due in connection with a full or partial
prepayment of such Mortgage Loan within the related Prepayment Charge Period
in accordance with the terms thereof (other than any Master Servicer
Prepayment Charge Payment Amount).
Prepayment Charge Period: With respect to any Mortgage Loan,
the period of time during which a Prepayment Charge may be imposed.
Prepayment Charge Schedule: As of the Initial Cut-off Date with
respect to each Initial Mortgage Loan and as of the Subsequent Cut-off Date
with respect to each Subsequent Mortgage Loan, a list attached hereto as
Schedule I (including the Prepayment Charge Summary attached thereto), setting
forth the following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
31
(iii) the state of origination of the related Mortgage
Loan;
(iv) the date on which the first monthly payment was
due on the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan
as of the Cut-off Date.
As of the Closing Date, the Prepayment Charge Schedule shall
contain the necessary information for each Initial Mortgage Loan. The
Prepayment Charge Schedule shall be amended by the Master Servicer upon the
sale of any Subsequent Mortgage Loans to the Trust Fund. In addition, the
Prepayment Charge Schedule shall be amended from time to time by the Master
Servicer in accordance with the provisions of this Agreement and a copy of
each related amendment shall be furnished by the Master Servicer to the Class
P and Class C Certificateholders and the NIM Insurer.
Prepayment Interest Excess: With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal Prepayment
during the period from the related Due Date to the end of the related
Prepayment Period, any payment of interest received in connection therewith
(net of any applicable Servicing Fee) representing interest accrued for any
portion of such month of receipt.
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 during the period from the
beginning of the related Prepayment Period to the Due Date in such Prepayment
Period (other than a Principal Prepayment in full resulting from the purchase
of a Mortgage Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or 9.01 hereof)
and for each Mortgage Loan that became a Liquidated Mortgage Loan during the
related Due Period, 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 immediately prior to such prepayment (or liquidation) or in the
case of a partial Principal Prepayment on the amount of such prepayment (or
Liquidation Proceeds) exceeds (ii) the amount of interest paid or collected in
connection with such Principal Prepayment or such Liquidation Proceeds.
Prepayment Period: As to any Distribution Date and related Due
Date, the period beginning with the opening of business on the sixteenth day
of the calendar month preceding the month in which such Distribution Date
occurs (or, with respect to the first Distribution Date, the period beginning
with the opening of business on February 2, 2007) and ending on the close of
business on the fifteenth day of the month in which such Distribution Date
occurs.
Prime Rate: The prime commercial lending rate of The Bank of
New York, as publicly announced to be in effect from time to time. The Prime
Rate shall be adjusted automatically, without notice, on the effective date of
any change in such prime commercial lending rate. The Prime Rate is not
necessarily The Bank of New York's lowest rate of interest.
32
Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Principal Remittance Amount for such
Distribution Date, (ii) the Extra Principal Distribution Amount for such
Distribution Date, and (iii) with respect to the Distribution Date immediately
following the end of the Funding Period, the amount, if any, remaining in the
Pre-Funding Account at the end of the Funding Period (net of any investment
income therefrom), minus (iv) the Overcollateralization Reduction Amount for
such Distribution Date.
Principal Prepayment: Any Mortgagor payment or other recovery
of (or proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 2.04, 2.07, 3.12 and 9.01
hereof) that is received in advance of its scheduled Due Date to the extent it
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 Master
Servicer in accordance with the terms of the related Mortgage Note.
Principal Remittance Amount: With respect to any Distribution
Date, (a) the sum, without duplication, of: (i) the scheduled principal
collected with respect to the Mortgage Loans during the related Due Period or
advanced with respect to such Distribution Date, (ii) Principal Prepayments
collected in the related Prepayment Period with respect to the Mortgage Loans,
(iii) the Stated Principal Balance of each Mortgage Loan that was repurchased
by a Seller or purchased by the Master Servicer with respect to such
Distribution Date, (iv) the amount, if any, by which the aggregate unpaid
principal balance of any Replacement Mortgage Loans delivered by the Sellers
in connection with a substitution of a Mortgage Loan is less than the
aggregate unpaid principal balance of any Deleted Mortgage Loans, (v) any
payments received under the Credit Insurance Policy attributable to principal
for the related Due Period, (vi) any Loss Coverage Payment attributable to
principal for the related Due Period, and (vii) all Liquidation Proceeds (to
the extent such Liquidation Proceeds related to principal) and Subsequent
Recoveries collected during the related Due Period; less (b) all Advances
relating to principal and certain expenses reimbursable pursuant to Section
6.03 and reimbursed during the related Due Period.
Principal Reserve Fund: The separate Eligible Account created
and initially maintained by the Trustee pursuant to Section 3.08 in the name
of the Trustee for the benefit of the Certificateholders and designated "The
Bank of New York in trust for registered Holders of CWHEQ, Inc., Home Equity
Loan Asset Backed Certificates, Series 2007-S1". Funds in the Principal
Reserve Fund shall be held in trust for the Certificateholders for the uses
and purposes set forth in this Agreement.
Private Certificates: The Class C, Class E-P and Class P
Certificates.
Prospectus: The prospectus dated November 15, 2006, relating to
asset backed securities to be sold by the Depositor.
Prospectus Supplement: The prospectus supplement dated February
27, 2007, relating to the public offering of the certain Classes of
Certificates offered thereby.
PTCE 95-60: As defined in Section 5.02(b).
33
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required
to be (1) repurchased by a Seller or purchased by the Master Servicer, as
applicable, pursuant to Section 2.02, 2.03, 2.07 or 3.12 hereof or (2)
repurchased by the Depositor pursuant to Section 2.04 hereof, or (y) that the
Master Servicer has a right to purchase pursuant to Section 3.12 hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance (or, if
such purchase or repurchase, as the case may be, is effected by the Master
Servicer, the Stated Principal Balance (without giving effect to the second
sentence of the definition of Stated Principal Balance)) of the Mortgage Loan
as of the date of such purchase, (ii) accrued interest thereon at the
applicable Mortgage Rate (or, if such purchase or repurchase, as the case may
be, is effected by the Master Servicer, at the Net Mortgage Rate) from (a) the
date through which interest was last paid by the Mortgagor (or, if such
purchase or repurchase, as the case may be, is effected by the Master
Servicer, the date through which interest was last advanced by and not
reimbursed to the Master Servicer) to (b) the Due Date in the month in which
the Purchase Price is to be distributed to Certificateholders and (iii) any
costs, expenses and damages incurred by the Trust Fund resulting from any
violation of any predatory or abusive lending law in connection with such
Mortgage Loan.
Qualified Bidder: With respect to any auction pursuant to
Section 9.04, any institution that is a regular purchaser and/or seller in the
secondary market of residential mortgage loans as determined by the Trustee
(or any advisor on its behalf), in its sole discretion, and any holder of an
interest in the Class C Certificates; provided, however, that neither CHL nor
any of its affiliates shall constitute a Qualified Bidder.
Rating Agency: Each of Moody's and 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 identified as a "Rating Agency" in the Underwriter's
Exemption, designated by the Depositor with the prior written consent of the
Certificate Insurer, 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 each Liquidated Mortgage Loan,
an amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of such Liquidated Mortgage Loan as of the date of such
liquidation, minus (ii) the Liquidation Proceeds, if any, received in
connection with such liquidation during the month in which such liquidation
occurs, to the extent applied as recoveries of principal of the Liquidated
Mortgage Loan. With respect to each Mortgage Loan that has become the subject
of a Deficient Valuation, (i) if the value of the related Mortgaged Property
was reduced below the principal balance of the related Mortgage Note, the
amount by which the value of the Mortgaged Property was reduced below the
principal balance of the related Mortgage Note and (ii) if the principal
amount due under the related Mortgage Note has been reduced, the difference
between the principal balance of the Mortgage Loan outstanding immediately
prior to such Deficient Valuation and the principal balance of the Mortgage
Loan as reduced by the Deficient Valuation. With respect to each Charged-off
Mortgage Loan, the Stated Principal Balance of thereof at the time it became a
Charged-off Mortgage Loan.
34
Record Date: With respect to any Distribution Date and the
Adjustable-Rate Certificates, the Business Day immediately preceding such
Distribution Date, or if such Certificates are no longer Book-Entry
Certificates, the last Business Day of the month preceding the month of such
Distribution Date. With respect to the Fixed-Rate Certificates and the Class
A-R, Class C, Class E-P and Class P Certificates, the last Business Day of the
month preceding the month of a Distribution Date.
Reference Bank Rate: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple
of 0.03125%) of the offered rates for United States dollar deposits for one
month that are quoted by the Reference Banks as of 11:00 a.m., New York City
time, on the related Interest Determination Date to prime banks in the London
interbank market for a period of one month in amounts approximately equal to
the outstanding aggregate Certificate Principal Balance of the Adjustable-Rate
Certificates on such Interest Determination Date, provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates
appear, the Reference Bank Rate will be the arithmetic mean (rounded upwards,
if necessary, to the nearest whole multiple of 0.03125%) of the rates quoted
by one or more major banks in New York City, selected by the Trustee, as of
11:00 a.m., New York City time, on such date for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately
equal to the aggregate Certificate Principal Balance of the Adjustable-Rate
Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Deutsche Bank 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 which are
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control
with the Depositor, CHL or the Master Servicer and (iii) which have been
designated as such by the Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any Certificate other than the Class A-R
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time and publicly available.
Relief Act: The Servicemembers Civil Relief Act.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
35
Remittance Report: A report prepared by the Master Servicer and
delivered to the Trustee and the NIM Insurer in accordance with Section 4.01.
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with
a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in a Request for File Release, (i) have a Stated
Principal Balance, after deduction of the principal portion of the Scheduled
Payment due in the month of substitution, not in excess of, and not less than
90% of the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have
the same or higher credit quality characteristics than that of the Deleted
Mortgage Loan; (iii) be accruing interest at a rate not more than 1% per annum
higher or lower than that of the Deleted Mortgage Loan; (iv) have a Combined
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have
a remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan; (vi) not permit conversion of the
Mortgage Rate from a fixed rate to a variable rate; (vii) provide for a
Prepayment Charge on terms substantially similar to those of the Prepayment
Charge, if any, of the Deleted Mortgage Loan; (viii) have the same occupancy
type and lien priority as the Deleted Mortgage Loan; and (ix) comply with each
representation and warranty set forth in Section 2.03 as of the date of
substitution; provided, however, that notwithstanding the foregoing, to the
extent that compliance with clause (ix) of this definition would cause a
proposed Replacement Mortgage Loan to fail to comply with one or more of
clauses (i), (iii), (vii) and/or (viii) of this definition, then such proposed
Replacement Mortgage Loan must comply with clause (ix) and need not comply
with one or more of clauses (i), (iii), (vii) and/or (viii), to the extent,
and only to the extent, necessary to assure that the Replacement Mortgage Loan
otherwise complies with clause (ix).
Reportable Event: Any event required to be reported on Form
8-K, and in any event, the following:
(a) entry into a definitive agreement related to the Trust
Fund, the Certificates or the Mortgage Loans, or an amendment to a Transaction
Document, even if the Depositor is not a party to such agreement (e.g., a
servicing agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
(b) termination of a Transaction Document (other than by
expiration of the agreement on its stated termination date or as a result of
all parties completing their obligations under such agreement), even if the
Depositor is not a party to such agreement (e.g., a servicing agreement with a
servicer contemplated by Item 1108(a)(3) of Regulation AB);
(c) with respect to the Master Servicer only, if the Master
Servicer becomes aware of any bankruptcy or receivership with respect to CHL,
the Depositor, the Master Servicer, any Subservicer, the Trustee, the Corridor
Contract Counterparty, any enhancement or support provider contemplated by
Items 1114(b) or 1115 of Regulation AB, or any other material party
contemplated by Item 1101(d)(1) of Regulation AB;
36
(d) with respect to the Trustee, the Master Servicer and the
Depositor only, the occurrence of an early amortization, performance trigger
or other event, including an Event of Default under this Agreement;
(e) any amendment to this Agreement;
(f) the resignation, removal, replacement, substitution of the
Master Servicer, any Subservicer, the Trustee or any co-trustee;
(g) with respect to the Master Servicer only, if the Master
Servicer becomes aware that (i) any material enhancement or support specified
in Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB
that was previously applicable regarding one or more classes of the
Certificates has terminated other than by expiration of the contract on its
stated termination date or as a result of all parties completing their
obligations under such agreement; (ii) any material enhancement specified in
Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB has
been added with respect to one or more classes of the Certificates; or (iii)
any existing material enhancement or support specified in Item 1114(a)(1)
through (3) of Regulation AB or Item 1115 of Regulation AB with respect to one
or more classes of the Certificates has been materially amended or modified;
and
(h) with respect to the Trustee, the Master Servicer and the
Depositor only, a required distribution to Holders of the Certificates is not
made as of the required Distribution Date under this Agreement.
Reporting Subcontractor: With respect to the Master Servicer or
the Trustee, any Subcontractor determined by such Person pursuant to Section
11.08(b) to be "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB. References to a Reporting Subcontractor shall
refer only to the Subcontractor of such Person and shall not refer to
Subcontractors generally.
Representing Party: As defined in Section 2.03(f).
Request for Document Release: A Request for Document Release
submitted by the Master Servicer to the Trustee, substantially in the form of
Exhibit M.
Request for File Release: A Request for File Release submitted
by the Master Servicer to the Trustee, substantially in the form of Exhibit N.
Required Carryover Reserve Fund Deposit: With respect to any
Distribution Date, an amount equal to the excess of (i) $1,000 over (ii) the
amount of funds on deposit in the Carryover Reserve Fund.
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, including with respect to the Covered Loans, the Credit
Insurance Policy.
Responsible Officer: When used with respect to the Trustee, any
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any
37
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Rolling Sixty-Day Delinquency Rate: With respect to any
Distribution Date on or after the Stepdown Date, the average of the Sixty-Day
Delinquency Rates for that Distribution Date and the two immediately preceding
Distribution Dates.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Letter: As defined in Section 5.02(b).
S&P: Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and its successors.
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification: As defined in Section 11.05.
Scheduled Payment: With respect to any Mortgage Loan, the
scheduled monthly payment of principal and/or interest due on any Due Date on
such Mortgage Loan which is payable by the related Mortgagor from time to time
under the related Mortgage Note, determined: (a) after giving effect to (i)
any Deficient Valuation and/or Debt Service Reduction with respect to such
Mortgage Loan and (ii) any reduction in the amount of interest collectible
from the related Mortgagor pursuant to the Relief Act or any similar state or
local law; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.05(a); and (c) on the assumption
that all other amounts, if any, due under such Mortgage Loan are paid when
due.
Securities Act: The Securities Act of 1933, as amended.
Seller Interest Shortfall Payment: With respect to any Initial
Mortgage Loan that does not have a Scheduled Payment of interest due on or
before the Due Date in the month of the first Distribution Date or any
Subsequent Mortgage Loan that does not have a Scheduled Payment of interest
due date on or before the Due Date in the month immediately following the
related Subsequent Transfer Date, an amount equal to one month's interest at
the related Net Mortgage Rate on the Cut-off Date Principal Balance of that
Mortgage Loan.
Sellers: CHL, in its capacity as seller of the CHL Mortgage
Loans to the Depositor, Park Granada, in its capacity as seller of the Park
Granada Mortgage Loans to the Depositor, Park Monaco, in its capacity as
seller of the Park Monaco Mortgage Loans to the Depositor and Park Sienna, in
its capacity as seller of the Park Sienna Mortgage Loans to the Depositor.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations hereunder, including, but not limited
to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property, (iv)
auction costs and
38
expenses in connection with Charged-off Mortgage Loans and (v) compliance with
the obligations under Section 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB.
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 for 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 for the period covered
by such payment of interest. The Servicing Fee will not accrue on any
Charged-off Mortgage Loan after the related Charge-off Date.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50%
per annum.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant
to this Agreement, as such list may from time to time be amended.
Sixty-Day Delinquency Rate: With respect to any Distribution
Date on or after the Stepdown Date, a fraction, expressed as a percentage, the
numerator of which is the aggregate Stated Principal Balance for such
Distribution Date of all Mortgage Loans 60 or more days delinquent as of the
close of business on the last day of the calendar month preceding such
Distribution Date (including Mortgage Loans in foreclosure, bankruptcy and REO
Properties) and the denominator of which is the aggregate Stated Principal
Balance for such Distribution Date of all Mortgage Loans.
Sponsor Loss Coverage Amount: With respect to any Distribution
Date, the amount by which 1.00% of the sum of the aggregate Cut-off Date
Principal Balance of the Initial Mortgage Loans and the Pre-Funded Amount
exceeds the aggregate amount of Loss Coverage Payments, if any, made prior to
such Distribution Date.
Sponsor Loss Coverage Obligation: The obligation of CHL
described in Section 2.08 with respect to Loss Coverage Payments.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property (i) as of the Cut-off Date, the unpaid principal balance
of the Mortgage Loan as of such date (before any adjustment to the
amortization schedule for any moratorium or similar waiver or grace period),
after giving effect to any partial prepayments or Liquidation Proceeds
received prior to such date and to the payment of principal due on or prior to
such date and irrespective of any delinquency in payment by the related
Mortgagor, and (ii) as of any other Distribution Date, the Stated Principal
Balance of the Mortgage Loan as of its Cut-off Date, 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 Master Servicer as of the close of business
on the Determination Date related to such Distribution Date or with respect to
which Advances were made as of the Master Servicer
39
Advance Date related to such Distribution Date, (b) all Principal Prepayments
with respect to such Mortgage Loan received by the Master Servicer during each
Prepayment Period ending prior to such Distribution Date, (c) all Liquidation
Proceeds collected with respect to such Mortgage Loan during each Due Period
ending prior to such Distribution Date, to the extent applied by the Master
Servicer as recoveries of principal in accordance with Section 3.12 and (d)
any Realized Loss previously incurred in connection with a Deficient
Valuation. The Stated Principal Balance of any Mortgage Loan that becomes a
Liquidated Mortgage Loan will be zero on each date following the Due Period in
which such Mortgage Loan becomes a Liquidated Mortgage Loan, and the Stated
Principal Balance of a Charged-off Mortgage Loan will be zero on the date
following the date on which it became a Charged-off Mortgage Loan. References
herein to the Stated Principal Balance of the Mortgage Loans at any time shall
mean the aggregate Stated Principal Balance of all Mortgage Loans in the Trust
Fund as of such time.
Stepdown Date: The later to occur of (i) the Distribution Date
in September 2009 and (ii) the first Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans for that Distribution Date is
less than or equal to 50.00% of the sum of the Initial Cut-off Date Pool
Principal Balance and the Pre-Funded Amount.
Subcontractor: Any vendor, subcontractor or other Person that
is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Mortgage Loans under the
direction or authority of the Master Servicer or a Subservicer or the Trustee,
as the case may be.
Subsequent Certificate Account Deposit: With respect to any
Subsequent Transfer Date, an amount equal to the aggregate of all amounts in
respect of (i) principal of the related Subsequent Mortgage Loans due after
the related Subsequent Cut-off Date and received by the Master Servicer on or
before such Subsequent Transfer Date and not applied in computing the Cut-off
Date Principal Balance thereof and (ii) interest on the such Subsequent
Mortgage Loans due after such Subsequent Cut-off Date and received by the
Master Servicer on or before the Subsequent Transfer Date.
Subsequent Cut-off Date: In the case of any Subsequent Mortgage
Loan, the later of (x) the first day of the month of the related Subsequent
Transfer Date and (y) the date of origination of such Subsequent Mortgage
Loan.
Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the
Trustee on a Subsequent Transfer Date, and listed on the related Loan Number
and Borrower Identification Mortgage Loan Schedule delivered pursuant to
Section 2.01(f). When used with respect to a single Subsequent Transfer Date,
"Subsequent Mortgage Loan" shall mean a Subsequent Mortgage Loan conveyed to
the Trustee on such Subsequent Transfer Date.
Subsequent Recoveries: As to any Distribution Date, with
respect to a Liquidated Mortgage Loan that resulted in a Realized Loss in a
prior calendar month, unexpected amounts received by the Master Servicer (net
of any related expenses permitted to be reimbursed pursuant to Section 3.08
and 3.12) specifically related to such Liquidated Mortgage Loan after the
40
classification of such Mortgage Loan as a Liquidated Mortgage Loan. Subsequent
Recoveries shall not include Charged-off Loan Proceeds.
Subsequent Transfer Agreement: A Subsequent Transfer Agreement
substantially in the form of Exhibit P hereto, executed and delivered by the
Sellers, the Depositor and the Trustee as provided in Section 2.01(d).
Subsequent Transfer Date: For any Subsequent Transfer
Agreement, the "Subsequent Transfer Date" identified in such Subsequent
Transfer Agreement; provided, however, the Subsequent Transfer Date for any
Subsequent Transfer Agreement must be a Business Day and may not be a date
earlier than the date on which the Subsequent Transfer Agreement is executed
and delivered by the parties thereto pursuant to Section 2.01(d).
Subsequent Transfer Date Purchase Amount: With respect to any
Subsequent Transfer Date, the "Subsequent Transfer Date Purchase Amount"
identified in the related Subsequent Transfer Agreement which shall be an
estimate of the aggregate Stated Principal Balances of the Subsequent Mortgage
Loans identified in such Subsequent Transfer Agreement.
Subsequent Transfer Date Transfer Amount: With respect to any
Subsequent Transfer Date, an amount equal to the lesser of (i) the aggregate
Stated Principal Balances as of the related Subsequent Cut-off Dates of the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, as listed
on the related Loan Number and Borrower Identification Mortgage Loan Schedule
delivered pursuant to Section 2.01(f) and (ii) the amount on deposit in the
Pre-Funding Account.
Subservicer: As defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such
term pursuant to Section 2.03(f).
Substitution Amount: With respect to any Mortgage Loan
substituted pursuant to Section 2.03(f), the excess of (x) the principal
balance of the Mortgage Loan that is substituted for, over (y) the principal
balance of the related substitute Mortgage Loan, each balance being determined
as of the date of substitution.
Successful Auction: An auction held pursuant to Section 9.04 at
which at least three Qualified Bidders submitted bids and at least one of
those bids was an Acceptable Bid Amount.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
Treasury regulation ss. 301.6231(a)(7)-1. Initially, this person shall be the
Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with
a Denomination of $0.05 and in the form of Exhibit E hereto.
41
Terminator: As defined in Section 9.01.
Termination Price: As defined in Section 9.01.
Transaction Documents: This Agreement, the Corridor Contract,
the Corridor Contract Administration Agreement, the Credit Insurance Policy,
the Certificate Insurance Policy, the Insurance and Indemnity Agreement and
any other document or agreement entered into in connection with the Trust
Fund, the Certificates or the Mortgage Loans.
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: With respect to any Distribution Date on or
after the Stepdown Date, either a Delinquency Trigger Event or a Cumulative
Loss Trigger Event is in effect with respect to that Distribution Date.
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal received
on or with respect thereto after the 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 Certificate Account pursuant to Section
3.05(b)(2); (ii) the Certificate Account, the Distribution Account, the
Principal Reserve Fund, the Carryover Reserve Fund, the Pre-Funding Account,
the Capitalized Interest Account, the Premium Account and all amounts
deposited therein pursuant to the applicable provisions of this Agreement;
(iii) the rights to receive certain proceeds of the Corridor Contract as
provided in the Corridor Contract Administration Agreement; (iv) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (v) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loan; (vi) rights under the Credit
Insurance Policy; (vii) the rights of the Trustee for the benefit of the Class
A Certificateholders under the Certificate Insurance Policy; and (viii) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property.
Trustee: The Bank of New York, a New York banking corporation,
not in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders and the Certificate Insurer 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.
Trustee Advance Notice: As defined in Section 4.01(d).
Trustee Advance Rate: With respect to any Advance made by the
Trustee pursuant to Section 4.01(d), a per annum rate of interest determined
as of the date of such Advance equal to the Prime Rate in effect on such date
plus 5.00%.
42
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the sum of (i) the Pool
Stated Principal Balance and (ii) any amounts remaining in the Pre-Funding
Account (excluding any investment earnings thereon) with respect to such
Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, the per
annum rate agreed upon in writing on or prior to the Closing Date by the
Trustee and the Depositor, which is 0.009% per annum.
Underwriter's Exemption: Prohibited Transaction Exemption
2002-41, 67 Fed. Reg. 54487 (2002), as amended (or any successor thereto), or
any substantially similar administrative exemption granted by the U.S.
Department of Labor.
Underwriters: Countrywide Securities Corporation and Greenwich
Capital Markets, Inc.
Unpaid Realized Loss Amount: For any Class of Certificates and
any Distribution Date, (x) the portion of the aggregate Applied Realized Loss
Amount allocated to that Class and remaining unpaid (in the case of any Class
of Class A Certificates, without regard to any payment made by the Certificate
Insurer in respect of that Class under the Certificate Insurance Policy) minus
(y) the sum of (1) the Charged-off Loan Proceeds distributed to such Class of
Certificates on any prior Distribution Date pursuant to Section 4.04(c) and
(2) either (a) any increase in the Certificate Principal Balance of that Class
due to the allocation of Subsequent Recoveries to the Certificate Principal
Balance of that Class pursuant to Section 4.04(i) or (b) in the case of any
Class of Class A Certificates, the amount of any Subsequent Recovery paid to
the Certificate Insurer in respect of that Class.
Voting Rights: The voting rights of all the Certificates that
are allocated to any Certificates for purposes of the voting provisions
hereunder. Voting Rights allocated to each Class of Certificates shall be
allocated 96% to the Certificates other than the Class A-R, Class C, Class E-P
and Class P Certificates (with the allocation among the Certificates to be in
proportion to the Certificate Principal Balance of each Class relative to the
Certificate Principal Balance of all other such Classes), and 1% to each of
the Class A-R, Class C, Class E-P and Class P Certificates. Voting Rights will
be allocated among the Certificates of each such Class in accordance with
their respective Percentage Interests. Notwithstanding any of the foregoing,
on any date on which any Class A Certificates are outstanding or any amounts
are owed the Certificate Insurer under this Agreement, unless a Certificate
Insurer Default shall have occurred and be continuing, the Certificate Insurer
will be entitled to exercise the Voting Rights of the Class A
Certificateholders, without the consent of the Class A Certificateholders, and
the Class A Certificateholders may exercise such rights only with the prior
written consent of the Certificate Insurer.
Winning Bidder: With respect to a Successful Auction, the
Qualified Bidder that bids the highest price.
43
Section 1.02 Certain Interpretive Provisions.
All terms defined in this Agreement shall have the defined
meanings when used in any certificate, agreement or other document delivered
pursuant hereto unless otherwise defined therein. For purposes of this
Agreement and all such certificates and other documents, unless the context
otherwise requires: (a) accounting terms not otherwise defined in this
Agreement, and accounting terms partly defined in this Agreement to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles; (b) the words "hereof," "herein" and
"hereunder" and words of similar import refer to this Agreement (or the
certificate, agreement or other document in which they are used) as a whole
and not to any particular provision of this Agreement (or such certificate,
agreement or document); (c) references to any Section, Schedule or Exhibit are
references to Sections, Schedules and Exhibits in or to this Agreement, and
references to any paragraph, subsection, clause or other subdivision within
any Section or definition refer to such paragraph, subsection, clause or other
subdivision of such Section or definition; (d) the term "including" means
"including without limitation"; (e) references to any law or regulation refer
to that law or regulation as amended from time to time and include any
successor law or regulation; (f) references to any agreement refer to that
agreement as amended from time to time; (g) references to any Person include
that Person's permitted successors and assigns; and (h) a Mortgage Loan is "30
days delinquent" if a Scheduled Payment has not been received by the close of
business on the Due Date on which the next Scheduled Payment is due. Similarly
for "60 days delinquent," "90 days delinquent" and so on.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.
(a) Each Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of such Seller in and to the applicable Initial Mortgage Loans,
including all interest and principal received and receivable by such Seller on
or with respect to applicable Initial Mortgage Loans after the Initial Cut-off
Date (to the extent not applied in computing the Cut-off Date Principal
Balance thereof) or deposited into the Certificate Account by the Master
Servicer on behalf of such Seller as part of the Initial Certificate Account
Deposit as provided in this Agreement, other than principal due on the
applicable Initial Mortgage Loans on or prior to the Initial Cut-off Date and
interest accruing prior to the Initial Cut-off Date. The Master Servicer
confirms that, on behalf of the Sellers, concurrently with the transfer and
assignment, it has deposited into the Certificate Account the Initial
Certificate Account Deposit.
Immediately upon the conveyance of the Initial Mortgage Loans
referred to in the preceding paragraph, the Depositor (i) sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders and the Certificate Insurer, without recourse, all right
title and interest in the Initial Mortgage Loans, (ii) causes the Certificate
Insurer to deliver the Certificate Insurance Policy to the Trustee and (iii)
causes the Credit Insurer to deliver the Credit Insurance Policy to the
Trustee.
▇▇
▇▇▇ further agrees (x) to cause The Bank of New York to enter
into the Corridor Contract Administration Agreement as Corridor Contract
Administrator and (y) to assign all of its right, title and interest in and to
the interest rate corridor transaction evidenced by each Confirmation, and to
cause all of its obligations in respect of such transaction to be assumed by,
the Corridor Contract Administrator, on the terms and conditions set forth in
the Corridor Contract Assignment Agreement.
(b) Subject to the execution and delivery of the related
Subsequent Transfer Agreement as provided by Section 2.01(d) and the terms and
conditions of this Agreement, each Seller sells, transfers, assigns, sets over
and otherwise conveys to the Depositor, without recourse, on each Subsequent
Transfer Date, all the right, title and interest of such Seller in and to the
related Subsequent Mortgage Loans, including all interest and principal
received and receivable by such Seller on or with respect to such Subsequent
Mortgage Loans after the related Subsequent Cut-off Date (to the extent not
applied in computing the Cut-off Date Principal Balance thereof) or deposited
into the Certificate Account by the Master Servicer on behalf of such Seller
as part of any related Subsequent Certificate Account Deposit as provided in
this Agreement, other than principal due on such Subsequent Mortgage Loans on
or prior to the related Subsequent Cut-off Date and interest accruing prior to
the related Subsequent Cut-off Date.
Immediately upon the conveyance of the Subsequent Mortgage
Loans referred to in the preceding paragraph, the Depositor sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders and the Certificate Insurer, without recourse, all right
title and interest in the Subsequent Mortgage Loans.
(c) Each Seller has entered into this Agreement in
consideration for the purchase of the Mortgage Loans by the Depositor and has
agreed to take the actions specified herein. The Depositor, concurrently with
the execution and delivery of this Agreement, hereby sells, transfers, assigns
and otherwise conveys to the Trustee for the use and benefit of the
Certificateholders and the Certificate Insurer, without recourse, all right
title and interest in the portion of the Trust Fund not otherwise conveyed to
the Trustee pursuant to Section 2.01(a) or (b).
(d) On any Business Day during the Funding Period designated by
CHL to the Trustee, the Sellers, the Depositor and the Trustee shall complete,
execute and deliver a Subsequent Transfer Agreement. After the execution and
delivery of such Subsequent Transfer Agreement, on the Subsequent Transfer
Date, the Trustee shall set aside in the Pre-Funding Account an amount equal
to the related Subsequent Transfer Date Purchase Amount.
(e) The transfer of Subsequent Mortgage Loans on the Subsequent
Transfer Date is subject to the satisfaction of each of the following
conditions:
(1) the Trustee, the Underwriters and the Certificate
Insurer will be provided Opinions of Counsel addressed to the Rating
Agencies and the Certificate Insurer as with respect to the sale of the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date
(such opinions being substantially similar to the opinions delivered on
the Closing Date to the Rating Agencies and the Certificate Insurer with
45
respect to the sale of the Initial Mortgage Loans on the Closing Date),
to be delivered as provided in Section 2.01(f);
(2) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent Mortgage Loans does
not result in a reduction or withdrawal of any ratings assigned to the
Certificates by the Rating Agencies (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates);
(3) the Depositor shall deliver to the Trustee an Officer's
Certificate confirming the satisfaction of each of the conditions set
forth in this Section 2.01(e) required to be satisfied by such
Subsequent Transfer Date;
(4) each Subsequent Mortgage Loan conveyed on such
Subsequent Transfer Date satisfies the representations and warranties
applicable to it under this Agreement, provided, however, that with
respect to a breach of a representation and warranty with respect to a
Subsequent Mortgage Loan set forth in this clause (4), the obligation
under Section 2.03(f) of this Agreement of the applicable Seller, to
cure, repurchase or replace such Subsequent Mortgage Loan shall
constitute the sole remedy against such Seller respecting such breach
available to Certificateholders, the Depositor, the Certificate Insurer
or the Trustee;
(5) the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date were selected in a manner reasonably believed
not to be adverse to the interests of the Certificateholders or the
Certificate Insurer;
(6) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date was 30 or more days delinquent as of the related Cut-off
Date;
(7) following the conveyance of the Subsequent Mortgage
Loans on such Subsequent Transfer Date, the characteristics of the
Mortgage Loans will not vary by more than the amount specified below
from the characteristics listed below; provided that for the purpose of
making such calculations, the characteristics for any Initial Mortgage
Loan made will be taken as of the Initial Cut-off Date and the
characteristics for any Subsequent Mortgage Loans will be taken as of
the Subsequent Cut-off Date;
Permitted
Characteristic Value Variance or Range
----------------------- ------------------- --------------------
Average Stated Principal Balance.................... $52,069 +/-5.00%
Weighted Average Mortgage Rate...................... 8.653% +/-0.10%
Weighted Average Original Combined
Loan-to-Value Ratio................................ 89.91% +/-3.00%
Weighted Average Remaining Term to Maturity......... 216 months +/-3 months
Weighted Average FICO Score......................... 710 points +/-5 points
46
(8) none of the Sellers or the Depositor is insolvent and
neither of the Sellers nor the Depositor will be rendered insolvent by
the conveyance of Subsequent Mortgage Loans on such Subsequent Transfer
Date; and
(9) the Trustee, the Underwriters and the Certificate
Insurer will be provided with an Opinion of Counsel, which Opinion of
Counsel shall not be at the expense of either the Trustee or the Trust
Fund, addressed to the Trustee and the Certificate Insurer, to the
effect that such purchase of Subsequent Mortgage Loans will not (i)
result in the imposition of the tax on "prohibited transactions" on the
Trust Fund or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause
any REMIC formed hereunder to fail to qualify as a REMIC, such opinion
to be delivered as provided in Section 2.01(f).
The Trustee shall not be required to investigate or otherwise
verify compliance with these conditions, except for its own receipt of
documents specified above, and shall be entitled to rely on the required
Officer's Certificate.
(f) Within six Business Days after each Subsequent Transfer
Date, upon (1) delivery to the Trustee and the Certificate Insurer by the
Depositor of the Opinions of Counsel referred to in Section 2.01(e)(1) and
(e)(9), (2) delivery to the Trustee by CHL (on behalf of each Seller) of a
Loan Number and Borrower Identification Mortgage Loan Schedule reflecting the
Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, (3)
deposit in the Certificate Account by the Master Servicer on behalf of the
Sellers of the applicable Subsequent Certificate Account Deposit, and (4)
delivery to the Trustee by the Depositor of an Officer's Certificate
confirming the satisfaction of each of the conditions precedent set forth in
this Section 2.01(f), the Trustee shall pay the applicable Seller the
Subsequent Transfer Date Transfer Amount from such funds that were set aside
in the Pre-Funding Account pursuant to Section 2.01(d). The positive
difference, if any, between the Subsequent Transfer Date Transfer Amount and
the Subsequent Transfer Date Purchase Amount shall be re-invested by the
Trustee in the Pre-Funding Account.
The Trustee shall not be required to investigate or otherwise
verify compliance with the conditions set forth in the preceding paragraph,
except for its own receipt of documents specified above, and shall be entitled
to rely on the required Officer's Certificate.
Within thirty days after each Subsequent Transfer Date, the
Depositor shall deliver to the Trustee and the Certificate Insurer a letter of
a nationally recognized firm of independent public accountants stating whether
or not the Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date
conform to the characteristics described in Section 2.01(e)(6) and (7).
Promptly after the end of the Funding Period, the Master Servicer shall
deliver to the Certificate Insurer a final data tape which includes all
Mortgage Loans as of the end of the Funding Period. Such data tape shall be in
a format and contain the information provided to the Certificate Insurer with
respect to the Initial Mortgage Loans.
(g) In connection with the transfer and assignment of each
Mortgage Loan, the Depositor has delivered to, and deposited with, the Trustee
(or, in the case of the Delay Delivery Mortgage Loans, will deliver to, and
deposit with, the Trustee within the time periods
47
specified in the definition of Delay Delivery Mortgage Loans) (except as
provided in clause (vi) below) for the benefit of the Certificateholders and
the Certificate Insurer, the following documents or instruments with respect
to each such Mortgage Loan so assigned (with respect to each Mortgage Loan,
clause (i) through (vi) below, together, the "Mortgage File" for each such
Mortgage Loan):
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all
intervening endorsements that show a complete chain of
endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note), or, if the original Mortgage Note has been lost
or destroyed and not replaced, an original lost note affidavit,
stating that the original Mortgage Note was lost or destroyed,
together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage or a copy of such
Mortgage, with recording information, and in the case of each
MERS Mortgage Loan, the original Mortgage or a copy of such
Mortgage, with recording information, noting the presence of
the MIN of the Mortgage Loan and language indicating that the
Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan,
with evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which such
Mortgage has been recorded;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to
"Home Equity Loan Asset Backed Certificates, Series 2007-S1,
CWHEQ, Inc., by The Bank of New York, a New York banking
corporation, as trustee under the Pooling and Servicing
Agreement dated as of February 1, 2007, without recourse" or a
copy of such assignment, with recording information, (each such
assignment, when duly and validly completed, to be in
recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which
such assignment relates);
(iv) the original recorded assignment or assignments of
the Mortgage or a copy of such assignments, with recording
information, together with all interim recorded assignments of
such Mortgage or a copy of such assignments, with recording
information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto
48
or, in the event such original title policy has not been
received from the insurer, such original or duplicate original
lender's title policy and all riders thereto shall be delivered
within one year of the Closing Date.
In addition, in connection with the assignment of any MERS
Mortgage Loan, each Seller agrees that it will cause, at such Seller's own
expense, the MERS(R) System to indicate (and provide evidence to the Trustee
that it has done so) that such Mortgage Loans have been assigned by such
Seller to the Trustee in accordance with this Agreement for the benefit of the
Certificateholders and the Certificate Insurer by including (or deleting, in
the case of Mortgage Loans which are repurchased in accordance with this
Agreement) in such computer files (a) the code "[IDENTIFY TRUSTEE SPECIFIC
CODE]" in the field "[IDENTIFY THE FIELD NAME FOR TRUSTEE]" which identifies
the Trustee and (b) the code "[IDENTIFY SERIES SPECIFIC CODE NUMBER]" in the
field "Pool Field" which identifies the series of the Certificates issued in
connection with such Mortgage Loans. The Sellers further agree that they will
not, and will not permit the Master Servicer to, and the Master Servicer
agrees that it will not, alter the codes referenced in this paragraph with
respect to any Mortgage Loan during the term of this Agreement unless and
until such Mortgage Loan is repurchased in accordance with the terms of this
Agreement.
In the event that in connection with any Mortgage Loan that is
not a MERS Mortgage Loan a Seller cannot deliver the original recorded
Mortgage or all interim recorded assignments of the Mortgage satisfying the
requirements of clause (ii), (iii) or (iv) concurrently with the execution and
delivery hereof, such Seller shall deliver or cause to be delivered to the
Trustee a true copy of such Mortgage and of each such undelivered interim
assignment of the Mortgage each certified by such Seller, the applicable title
company, escrow agent or attorney, or the originator of such Mortgage, as the
case may be, to be a true and complete copy of the original Mortgage or
assignment of Mortgage submitted for recording. For any such Mortgage Loan
that is not a MERS Mortgage Loan each Seller shall promptly deliver or cause
to be delivered to the Trustee such original Mortgage and such assignment or
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, or a copy thereof, certified, if
appropriate, by the relevant recording office, but in no event shall any such
delivery be made later than 270 days following the Closing Date; provided that
in the event that by such date such Seller is unable to deliver or cause to be
delivered each such Mortgage and each interim assignment by reason of the fact
that any such documents have not been returned by the appropriate recording
office, or, in the case of each interim assignment, because the related
Mortgage has not been returned by the appropriate recording office, such
Seller shall deliver or cause to be delivered such documents to the Trustee as
promptly as possible upon receipt thereof. If the public recording office in
which a Mortgage or interim assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall satisfy a Seller's
obligations in Section 2.01. If any document submitted for recording pursuant
to this Agreement is (x) lost prior to recording or rejected by the applicable
recording office, the applicable Seller shall immediately prepare or cause to
be prepared a substitute and submit it for recording, and shall deliver copies
and originals thereof in accordance with the foregoing or (y) lost after
recording, the applicable Seller shall deliver to the Trustee a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original recorded document. Each Seller
49
shall promptly forward or cause to be forwarded to the Trustee (x) from time
to time additional original documents evidencing an assumption or modification
of a Mortgage Loan and (y) any other documents required to be delivered by the
Depositor or the Master Servicer to the Trustee within the time periods
specified in this Section 2.01.
With respect to each Mortgage Loan other than a MERS Mortgage
Loan as to which the related Mortgaged Property and Mortgage File are located
in any jurisdiction under the laws of which the recordation of the assignment
specified in clause (iii) above is not necessary to protect the Trustee's, the
Certificate Insurer's and the Certificateholders' interest in the related
Mortgage Loan, as evidenced by an Opinion of Counsel delivered by CHL to the
Trustee and the Certificate Insurer within 90 days of the Closing Date (which
opinion may be in the form of a "survey" opinion and is not required to be
delivered by counsel admitted to practice law in the jurisdiction as to which
such opinion applies), in lieu of recording the assignment specified in clause
(iii) above, the applicable Seller may deliver an unrecorded assignment in
blank, in form otherwise suitable for recording to the Trustee; provided that
if the related Mortgage has not been returned from the applicable public
recording office, such assignment, or any copy thereof, of the Mortgage may
exclude the information to be provided by the recording office. As to any
Mortgage Loan other than a MERS Mortgage Loan, the procedures of the preceding
sentence shall be applicable only so long as the related Mortgage File is
maintained in the possession of the Trustee in the State or jurisdiction
described in such sentence. In the event that with respect to Mortgage Loans
other than MERS Mortgage Loans (I) any Seller, the Depositor, the Master
Servicer, the Certificate Insurer or the NIM Insurer gives written notice to
the Trustee that recording is required to protect the right, title and
interest of the Trustee on behalf of the Certificateholders in and to any
Mortgage Loan, (II) a court recharacterizes any sale of the Mortgage Loans as
a financing, or (III) as a result of any change in or amendment to the laws of
the State or jurisdiction described in the first sentence of this paragraph or
any applicable political subdivision thereof, or any change in official
position regarding application or interpretation of such laws, including a
holding by a court of competent jurisdiction, such recording is so required,
the Trustee shall complete the assignment in the manner specified in clause
(iii) above and CHL shall submit or cause to be submitted for recording as
specified above or, should CHL fail to perform such obligations, the Trustee
shall cause the Master Servicer, at the Master Servicer's expense, to cause
each such previously unrecorded assignment to be submitted for recording as
specified above. In the event a Mortgage File is released to the Master
Servicer as a result of the Master Servicer's having completed a Request for
Document Release, the Trustee shall complete the assignment of the related
Mortgage in the manner specified in clause (iii) above.
The Trustee or its agent shall maintain possession of the
Mortgage Files in the State of California and shall not remove the Mortgage
Files from the State of California. In the event that a Seller fails to record
an assignment of a Mortgage Loan as herein provided within 90 days of notice
of an event set forth in clause (I), (II) or (III) of the preceding paragraph,
the Master Servicer shall prepare and, if required hereunder, file such
assignments for recordation in the appropriate real property or other records
office. Each Seller hereby appoints the Master Servicer (and any successor
servicer hereunder) as its attorney-in-fact with full power and authority
acting in its stead for the purpose of such preparation, execution and filing.
50
In the case of Mortgage Loans that become the subject of a
Principal Prepayment between the Closing Date (in the case of Initial Mortgage
Loans) or related Subsequent Transfer Date (in the case of Subsequent Mortgage
Loans) and the Cut-off Date, CHL shall deposit or cause to be deposited in the
Certificate Account the amount required to be deposited therein with respect
to such payment pursuant to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement,
within thirty days after the Closing Date (in the case of Initial Mortgage
Loans) or within twenty days after the related Subsequent Transfer Date (in
the case of Subsequent Mortgage Loans), CHL (on behalf of each Seller) shall
either (i) deliver to the Trustee the Mortgage File as required pursuant to
this Section 2.01 for each Delay Delivery Mortgage Loan or (ii) (A) repurchase
the Delay Delivery Mortgage Loan or (B) substitute the Delay Delivery Mortgage
Loan for a Replacement Mortgage Loan, which repurchase or substitution shall
be accomplished in the manner and subject to the conditions set forth in
Section 2.03, provided that if CHL fails to deliver a Mortgage File for any
Delay Delivery Mortgage Loan within the period provided in the prior sentence,
the cure period provided for in Section 2.02 or in Section 2.03 shall not
apply to the initial delivery of the Mortgage File for such Delay Delivery
Mortgage Loan, but rather CHL shall have five (5) Business Days to cure such
failure to deliver. CHL shall promptly provide each Rating Agency and the
Certificate Insurer with written notice of any cure, repurchase or
substitution made pursuant to the proviso of the preceding sentence. On or
before the thirtieth (30th) day (or if such thirtieth day is not a Business
Day, the succeeding Business Day) after the Closing Date (in the case of
Initial Mortgage Loans) or within twenty days after the related Subsequent
Transfer Date (in the case of Subsequent Mortgage Loans), the Trustee shall,
in accordance with the provisions of Section 2.02, send a Delay Delivery
Certification substantially in the form annexed hereto as Exhibit G-3 (with
any applicable exceptions noted thereon) for all Delay Delivery Mortgage Loans
delivered within thirty (30) days after such date. The Trustee will promptly
send a copy of such Delay Delivery Certification to each Rating Agency and the
Certificate Insurer.
Each Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans sold by such Seller to the Depositor
and has agreed to take the actions specified herein. The Depositor,
concurrently with the execution and delivery of this Agreement, hereby sells,
transfers, assigns and otherwise conveys to the Trustee for the use and
benefit of the Certificateholders and the Certificate Insurer, without
recourse, all right title and interest in the portion of the Trust Fund not
otherwise conveyed to the Trust Fund pursuant to Sections 2.01(a) or (b).
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The Trustee acknowledges receipt, subject to the
limitations contained in and any exceptions noted in the Initial Certification
in the form annexed hereto as Exhibit G-1 and in the list of exceptions
attached thereto, of the documents referred to in clauses (i) and (iii) of
Section 2.01(g) above with respect to the Initial Mortgage Loans and all other
assets included in the Trust Fund and declares that it holds and will hold
such documents and the other documents delivered to it constituting the
Mortgage Files, and that it holds or will hold such other assets included in
the Trust Fund, in trust for the exclusive use and benefit of all present and
future Certificateholders and the Certificate Insurer.
51
The Trustee agrees to execute and deliver on the Closing Date
to the Depositor, the Master Servicer, CHL (on behalf of each Seller) and the
Certificate Insurer, an Initial Certification substantially in the form
annexed hereto as Exhibit G-1 to the effect that, as to each Initial Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Initial Mortgage
Loan paid in full or any Initial Mortgage Loan specifically identified in such
certification as not covered by such certification), the documents described
in Section 2.01(g)(i) and, in the case of each Initial Mortgage Loan that is
not a MERS Mortgage Loan, the documents described in Section 2.01(g)(iii) with
respect to such Initial Mortgage Loans as are in the Trustee's possession and
based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face and relate to such Initial
Mortgage Loan. The Trustee agrees to execute and deliver within 30 days after
the Closing Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and the Certificate Insurer, an Interim Certification substantially in
the form annexed hereto as Exhibit G-2 to the effect that, as to each Initial
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Initial
Mortgage Loan paid in full or any Initial Mortgage Loan specifically
identified in such certification as not covered by such certification) all
documents required to be delivered to the Trustee pursuant to the Agreement
with respect to such Initial Mortgage Loans are in its possession (except
those documents described in Section 2.01(g)(vi)) and based on its review and
examination and only as to the foregoing documents, (i) such documents appear
regular on their face and relate to such Initial Mortgage Loan, and (ii) the
information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of the
definition of the "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. On or before the thirtieth (30th) day after the
Closing Date (or if such thirtieth day is not a Business Day, the succeeding
Business Day), the Trustee shall deliver to the Depositor, the Master
Servicer, CHL (on behalf of each Seller) and the Certificate Insurer a Delay
Delivery Certification with respect to the Initial Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any applicable
exceptions noted thereon. The Trustee shall be under no duty or obligation to
inspect, review or examine such documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than 180 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer, CHL (on behalf of each
Seller), the Certificate Insurer and any Certificateholder that so requests, a
Final Certification with respect to the Initial Mortgage Loans substantially
in the form annexed hereto as Exhibit H, with any applicable exceptions noted
thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage File with
respect to the Initial Mortgage Loans to determine that such Mortgage File
contains the following documents:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all
intervening endorsements that show a complete chain of
endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that
Mortgage
52
Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit,
stating that the original Mortgage Note was lost or destroyed,
together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each Initial Mortgage Loan that is not
a MERS Mortgage Loan, the original recorded Mortgage or a copy
of such Mortgage, with recording information, and in the case
of each Initial Mortgage Loan that is a MERS Mortgage Loan, the
original Mortgage or a copy of such Mortgage, with recording
information, noting the presence of the MIN of the Initial
Mortgage Loan and language indicating that the Mortgage Loan is
a MOM Loan if the Initial Mortgage Loan is a MOM Loan, with
evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which
Mortgage has been recorded;
(iii) in the case of each Initial Mortgage Loan that is
not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage or a copy thereof with recording information, in
either case in the form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of
the Mortgage or a copy of such assignments, with recording
information, together with all interim recorded assignments of
such Mortgage or a copy of such assignments, with recording
information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include such exceptions in such Final Certification (and the Trustee shall
state in such Final Certification whether any Mortgage File does not then
include the original or duplicate original lender's title policy or a printout
of the electronic equivalent and all riders thereto). If the public recording
office in which a Mortgage or assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall be deemed to satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct or cure such defect referred to above within 90 days from the
date it was so notified of such defect and, if CHL does not correct or cure
such defect within such period, CHL shall either (A) if the time to cure such
defect expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Initial Mortgage Loan a Replacement Mortgage Loan,
which substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03, or (B) purchase such Initial Mortgage
Loan from the Trust Fund within 90 days from the date CHL was notified of such
defect in
53
writing at the Purchase Price of such Initial Mortgage Loan; provided that any
such substitution pursuant to (A) above or repurchase pursuant to (B) above
shall not be effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.05 hereof and any substitution pursuant to (A)
above shall not be effected prior to the additional delivery to the Trustee of
a Request for File Release. No substitution will be made in any calendar month
after the Determination Date for such month. The Purchase Price for any such
Initial Mortgage Loan shall be deposited by CHL in the Certificate Account
and, upon receipt of such deposit and Request for File Release with respect
thereto, the Trustee shall release the related Mortgage File to CHL and shall
execute and deliver at CHL's request such instruments of transfer or
assignment as CHL has prepared, in each case without recourse, as shall be
necessary to vest in CHL, or a designee, the Trustee's interest in any Initial
Mortgage Loan released pursuant hereto. If pursuant to the foregoing
provisions CHL repurchases an Initial Mortgage Loan that is a MERS Mortgage
Loan, the Master Servicer shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from
MERS to CHL and shall cause such Mortgage to be removed from registration on
the MERS(R) System in accordance with MERS' rules and regulations.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. Each Seller shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File that come into the possession of
such Seller from time to time.
It is understood and agreed that the obligation of CHL to
substitute for or to purchase any Mortgage Loan that does not meet the
requirements of Section 2.02(a) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor and any
Certificateholder against any Seller.
It is understood and agreed that the obligation of CHL to
substitute for or to purchase, pursuant to Section 2.02(a), any Initial
Mortgage Loan whose Mortgage File contains any document or documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and which defect
is not corrected or cured by CHL within 90 days from the date it was notified
of such defect, shall constitute the sole remedy respecting such defect
available to the Trustee, the Depositor and any Certificateholder against any
Seller.
(b) The Trustee agrees to execute and deliver on the Subsequent
Transfer Date to the Depositor, the Master Servicer, CHL (on behalf of each
Seller) and the Certificate Insurer an Initial Certification substantially in
the form annexed hereto as Exhibit G-4 to the effect that, as to each
Subsequent Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Subsequent Mortgage Loan paid in full or any Subsequent Mortgage Loan
specifically identified in such certification as not covered by such
certification), the documents described in Section 2.01(g)(i) and, in the case
of each Subsequent Mortgage Loan that is not a MERS Mortgage Loan, the
documents described in Section 2.01(g)(iii), with respect to such Subsequent
Mortgage Loan are in its possession, and based on its review and examination
and only as to the foregoing documents, such documents appear regular on their
face and relate to such Subsequent Mortgage Loan.
54
The Trustee agrees to execute and deliver within 30 days after
the Subsequent Transfer Date to the Depositor, the Master Servicer, CHL (on
behalf of each Seller) and the Certificate Insurer an Interim Certification
substantially in the form annexed hereto as Exhibit G-2 to the effect that, as
to each Subsequent Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Subsequent Mortgage Loan paid in full or any Subsequent Mortgage Loan
specifically identified in such certification as not covered by such
certification), all documents required to be delivered to it pursuant to this
Agreement with respect to such Subsequent Mortgage Loan are in its possession
(except those described in Section 2.01(g)(vi)) and based on its review and
examination and only as to the foregoing documents, (i) such documents appear
regular on their face and relate to such Subsequent Mortgage Loan, and (ii)
the information set forth in items (i), (iv), (v), (vi), (viii) and (ix) of
the definition of the "Mortgage Loan Schedule" accurately reflects information
set forth in the Mortgage File. On or before the thirtieth (30th) day after
the Subsequent Transfer Date (or if such thirtieth day is not a Business Day,
the succeeding Business Day), the Trustee shall deliver to the Depositor, the
Master Servicer, CHL (on behalf of each Seller) and the Certificate Insurer a
Delay Delivery Certification with respect to the Subsequent Mortgage Loans
substantially in the form annexed hereto as Exhibit G-3, with any applicable
exceptions noted thereon, together with a Subsequent Certification
substantially in the form annexed hereto as Exhibit G-4. The Trustee shall be
under no duty or obligation to inspect, review or examine such documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face.
Not later than 180 days after the Subsequent Transfer Date, the
Trustee shall deliver to the Depositor, the Master Servicer, CHL (on behalf of
each Seller), the Certificate Insurer and to any Certificateholder that so
requests a Final Certification with respect to the Subsequent Mortgage Loans
substantially in the form annexed hereto as Exhibit H, with any applicable
exceptions noted thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage File with
respect to the Subsequent Mortgage Loans to determine that such Mortgage File
contains the following documents:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in blank in the following form: "Pay to the
order of ________________ without recourse", with all
intervening endorsements that show a complete chain of
endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note), or, if the original Mortgage Note has been lost
or destroyed and not replaced, an original lost note affidavit,
stating that the original Mortgage Note was lost or destroyed,
together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each Subsequent Mortgage Loan that is
not a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in the
case of each Subsequent Mortgage Loan that is a MERS Mortgage
Loan, the original Mortgage or a copy of such Mortgage, with
55
recording information, noting the presence of the MIN of the
Subsequent Mortgage Loan and language indicating that the
Subsequent Mortgage Loan is a MOM Loan if the Subsequent
Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon, or a copy of the Mortgage certified by the
public recording office in which Mortgage has been recorded;
(iii) in the case of each Subsequent Mortgage Loan that is
not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage or a copy thereof with recording information, in
either case in the form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of
the Mortgage or a copy of such assignments, with recording
information, together with all interim recorded assignments of
such Mortgage or a copy of such assignments, with recording
information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any; and
(vi) the original or duplicate original lender's title
policy or a copy of lender's title policy or a printout of the
electronic equivalent and all riders thereto.
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include such exceptions in such Final Certification (and the Trustee shall
state in such Final Certification whether any Mortgage File does not then
include the original or duplicate original lender's title policy or a printout
of the electronic equivalent and all riders thereto). If the public recording
office in which a Mortgage or assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall be deemed to satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct or cure such defect referred to above within 90 days from the
date it was so notified of such defect and, if CHL does not correct or cure
such defect within such period, CHL shall either (A) if the time to cure such
defect expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Subsequent Mortgage Loan a Replacement Mortgage
Loan, which substitution shall be accomplished in the manner and subject to
the conditions set forth in Section 2.03, or (B) purchase such Subsequent
Mortgage Loan from the Trust Fund within 90 days from the date CHL was
notified of such defect in writing at the Purchase Price of such Subsequent
Mortgage Loan; provided that any such substitution pursuant to (A) above or
repurchase pursuant to (B) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05 hereof and
any substitution pursuant to (A) above shall not be effected prior to the
additional delivery to the Trustee of a Request for File Release. No
substitution will be made in any calendar month after the Determination Date
for such month. The Purchase Price for any such Subsequent Mortgage Loan shall
be deposited by CHL in the Certificate Account and, upon receipt of such
deposit and Request for File Release with respect thereto, the Trustee shall
release the related Mortgage File to CHL and shall execute and deliver at
CHL's request such instruments of transfer or
56
assignment as CHL has prepared, in each case without recourse, as shall be
necessary to vest in CHL, or a designee, the Trustee's interest in any
Subsequent Mortgage Loan released pursuant hereto. If pursuant to the
foregoing provisions CHL repurchases a Subsequent Mortgage Loan that is a MERS
Mortgage Loan, the Master Servicer shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from
MERS to CHL and shall cause such Mortgage to be removed from registration on
the MERS(R) System in accordance with MERS' rules and regulations.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. Each Seller shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File that come into the possession of
such Seller from time to time.
It is understood and agreed that the obligation of the Sellers
to substitute for or to purchase, pursuant to Section 2.02(b), any Subsequent
Mortgage Loan whose Mortgage File contains any document or documents that does
not meet the requirements of clauses (i)-(iv) and (vi) above and which defect
is not corrected or cured by such Seller within 90 days from the date it was
notified of such defect, shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder
against the Sellers.
Section 2.03 Representations, Warranties and Covenants of the
Master Servicer and the Sellers.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the date
hereof with respect to the Initial Mortgage Loans, and the related Subsequent
Transfer Date with respect to the Subsequent Mortgage Loans:
(1) The Master Servicer is duly organized as a Texas
limited partnership and is validly existing and in good
standing under the laws of the State of Texas and is duly
authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Master
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.
(2) The Master Servicer has the full partnership power and
authority to sell and 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 partnership action on the part of
the Master 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 Master Servicer, enforceable
57
against the Master 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.
(3) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the
Master Servicer 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 Master Servicer and will
not (A) result in a material breach of any term or provision of
the certificate of limited partnership, partnership agreement
or other organizational document of the Master 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 Master 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 Master Servicer of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over the Master Servicer; and the
Master 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 Master Servicer's ability to perform or
meet any of its obligations under this Agreement.
(4) The Master Servicer is an approved servicer of
conventional mortgage loans for ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac and
is a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to sections 203 and 211 of the National
Housing Act.
(5) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer
that would materially and adversely affect the execution,
delivery or enforceability of this Agreement or the ability of
the Master Servicer to service the Mortgage Loans or to perform
any of its other obligations under this Agreement or any
Subsequent Transfer Agreement in accordance with the terms
hereof or thereof.
(6) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Master Servicer of,
or compliance by the Master Servicer with, this Agreement or
the consummation of the transactions contemplated hereby, or if
any such consent, approval, authorization or order is required,
the Master Servicer has obtained the same.
(7) The Master Servicer is a member of MERS in good
standing, and will comply in all material respects with the
rules and procedures of MERS in connection with the servicing
of the Mortgage Loans for as long as such Mortgage Loans are
registered with MERS.
58
(b) CHL hereby represents and warrants to the Depositor, the
Certificate Insurer and the Trustee as follows, as of the Initial Cut-off Date
in the case of the Initial Mortgage Loans and as of the related Subsequent
Cut-off Date in the case of the Subsequent Mortgage Loans (unless otherwise
indicated or the context otherwise requires, percentages with respect to the
Initial Mortgage Loans in the Trust Fund are measured by the Cut-off Date
Principal Balance of the Initial Mortgage Loans in the Trust Fund):
(1) CHL is duly organized as a New York corporation and is
validly existing and in good standing under the laws of the State of
New York and is duly authorized and qualified to transact any and
all business contemplated by this Agreement and each Subsequent
Transfer Agreement to be conducted by CHL 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 sell the CHL Mortgage Loans in accordance with the terms of
this Agreement and each Subsequent Transfer Agreement and to perform
any of its other obligations under this Agreement and each
Subsequent Transfer Agreement in accordance with the terms hereof
and thereof.
(2) CHL has the full corporate power and authority to sell each
CHL Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement
and each Subsequent Transfer Agreement and has duly authorized by
all necessary corporate action on the part of CHL the execution,
delivery and performance of this Agreement and each Subsequent
Transfer Agreement; and this Agreement and each Subsequent Transfer
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of CHL, enforceable against CHL 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.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by CHL, the sale of the CHL Mortgage
Loans by CHL under this Agreement and each Subsequent Transfer
Agreement, the consummation of any other of the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement, and the fulfillment of or compliance with the terms
hereof and thereof are in the ordinary course of business of CHL and
will not (A) result in a material breach of any term or provision of
the charter or by-laws of CHL 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 CHL is a party or by which it may
be bound, or (C) constitute a material violation of any statute,
order or regulation applicable to CHL of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
CHL; and CHL 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
59
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair CHL's
ability to perform or meet any of its obligations under this
Agreement and each Subsequent Transfer Agreement.
(4) CHL is an approved seller of conventional mortgage loans
for ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of CHL's
knowledge, threatened, against CHL that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of CHL
to sell the CHL Mortgage Loans or to perform any of its other
obligations under this Agreement or any Subsequent Transfer
Agreement in accordance with the terms hereof or thereof.
(6) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by CHL of, or compliance by CHL with, this
Agreement or any Subsequent Transfer Agreement or the consummation
of the transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, CHL has obtained the
same.
(7) The information set forth on the Mortgage Loan Schedule
with respect to each Initial Mortgage Loan is true and correct in
all material respects as of the Closing Date and is true and correct
in all material respects as of the Subsequent Transfer Date with
respect to the related Subsequent Mortgage Loans.
(8) CHL will treat the transfer of the CHL Mortgage Loans to
the Depositor as a sale of the CHL Mortgage Loans for all tax,
accounting and regulatory purposes.
(9) None of the Mortgage Loans is 30 days or more delinquent.
(10) No Mortgage Loan had a Combined Loan-to-Value Ratio at
origination in excess of 100.00%.
(11) Each Mortgage Loan is secured by a valid and enforceable
second lien on the related Mortgaged Property subject only to (1)
the lien of non-delinquent current real property taxes and
assessments, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record
being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection with the
origination of the related Mortgage Loan, (3) other matters to which
like properties are commonly subject that do not materially
interfere with the benefits of the security intended to be provided
by such Mortgage (4) any senior mortgage loan secured by such
Mortgaged Property and identified in the Mortgage File related to
such Mortgage Loan.
60
(12) Immediately prior to the assignment of each CHL Mortgage
Loan to the Depositor, CHL had good title to, and was the sole owner
of, such CHL Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to this Agreement.
(13) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(14) There is no valid offset, claim, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note.
(15) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property that are or may be a lien
prior to, or equal with, the lien of such Mortgage, except those
that are insured against by the title insurance policy referred to
in item (18) below.
(16) As of the Closing Date in the case of the Initial Mortgage
Loans and as of the related Subsequent Transfer Date in the case of
the Subsequent Mortgage Loans, to the best of CHL's knowledge, each
Mortgaged Property is free of material damage and is in good repair.
(17) As of the Closing Date in the case of the Initial Mortgage
Loans and as of the related Subsequent Transfer Date in the case of
the Subsequent Mortgage Loans, neither CHL nor any prior holder of
any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written
instrument that has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and
the Certificate Insurer and the original or a copy of which has been
delivered to the Trustee); satisfied, cancelled or subordinated such
Mortgage in whole or in part; released the related Mortgaged
Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification
(except as expressly permitted above) or satisfaction with respect
thereto.
(18) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date
Principal Balance of each such Mortgage Loan or a commitment
(binder) to issue the same was effective on the date of the
origination of each Mortgage Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by
a title insurer qualified to do business in the jurisdiction where
the Mortgaged Property is located and acceptable to ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac and is in a form acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇
Mac, which policy insures the Sellers and successor owners of
indebtedness secured by the insured Mortgage, as to the second
priority lien, of the Mortgage subject to the exceptions set forth
in paragraph (11) above; to the best of CHL's knowledge, no claims
have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including any Seller,
61
has done, by act or omission, anything that would impair the
coverage of such mortgage title insurance policy.
(19) No Initial Mortgage Loan was the subject of a Principal
Prepayment in full between the Initial Cut-off Date and the Closing
Date. No Subsequent Mortgage Loan was the subject of a Principal
Prepayment in full between the Subsequent Cut-off Date and the
Subsequent Transfer Date.
(20) To the best of CHL's knowledge, all of the improvements
that were included for the purpose of determining the Appraised
Value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of such property, and no improvements on
adjoining properties encroach upon the Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement located on
or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of CHL's knowledge,
all inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and
the Mortgaged Property is lawfully occupied under applicable law.
(22) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms and under
applicable law, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. To the best of CHL's knowledge, all parties to the Mortgage
Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Mortgage Note and Mortgage have been
duly and properly executed by such parties.
(23) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording the Mortgage Loan were
paid.
(24) The related Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure.
62
(25) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Certificateholders or the Trust Fund to the trustee
under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor.
(26) [Reserved].
(27) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow
deposits or payments of other charges or payments due the Sellers
have been capitalized under the Mortgage or the related Mortgage
Note.
(28) The origination, underwriting, servicing and collection
practices with respect to each Mortgage Loan have been in all
respects legal, proper, prudent and customary in the mortgage
lending and servicing business, as conducted by prudent lending
institutions which service mortgage loans of the same type in the
jurisdiction in which the Mortgaged Property is located.
(29) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations.
(30) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(31) Each Mortgage Loan contains a customary "due on sale"
clause.
(32) No less than approximately the percentage specified in the
Collateral Schedule of the Initial Mortgage Loans are secured by
single family detached dwellings. No more than approximately the
percentage specified in the Collateral Schedule of the Initial
Mortgage Loans are secured by two- to four-family dwellings. No more
than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans are secured by low-rise
condominium units. No more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans
are secured by high-rise condominium units. No more than
approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans are secured by manufactured housing. No
more than approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans are secured by PUDs.
(33) Each Initial Mortgage Loan was originated on or after the
date specified in the Collateral Schedule.
(34) [Reserved];
(35) Approximately the percentage specified in the Collateral
Schedule of the Initial Mortgage Loans provide for a Prepayment
Charge.
63
(36) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately the percentage
specified in the Collateral Schedule of the Initial Mortgage Loans,
respectively, are secured by investor properties, and no less than
approximately the percentage specified in the Collateral Schedule of
the Initial Mortgage Loans respectively, are secured by
owner-occupied Mortgaged Properties that are primary residences.
(37) At the Cut-off Date, the improvements upon each Mortgaged
Property are covered by a valid and existing hazard insurance policy
with a generally acceptable carrier that provides for fire and
extended coverage and coverage for such other hazards as are
customary in the area where the Mortgaged Property is located in an
amount that is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan or
(ii) the greater of (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 Mortgagor and/or the
mortgagee from becoming a co-insurer. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such individual
insurance policies and all flood policies referred to in item (38)
below contain a standard mortgagee clause naming the applicable
Seller or the original mortgagee, and its successors in interest, as
mortgagee, and the applicable Seller has received no notice that any
premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance,
including flood insurance, at the Mortgagor's cost and expense, and
upon the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement therefor from the
Mortgagor.
(38) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy in a form
meeting the requirements of the current guidelines of the Flood
Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement
cost basis, or (C) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973, as amended.
(39) To the best of CHL's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial
condemnation of the Mortgaged Property.
(40) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of CHL's
knowledge, there is no material event that, with the passage of time
or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration
under the Mortgage or the related Mortgage Note; and no Seller has
waived any default, breach, violation or event of acceleration or
received notice of default of any senior mortgage loan related to a
Mortgaged Property that has not been cured by a party other than the
Sellers or the Master Servicer.
64
(41) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and
dwelling units in PUDs. To the best of CHL's knowledge, no
improvement to a Mortgaged Property includes a cooperative or a
mobile home or constitutes other than real property under state law.
(42) Each Mortgage Loan is being serviced by the Master
Servicer.
(43) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the Mortgage Loan Schedule. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. The
Mortgage Note does not permit or obligate the Master Servicer to
make future advances to the Mortgagor at the option of the
Mortgagor.
(44) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground
rents that previously became due and owing have been paid, or an
escrow of funds has been established in an amount sufficient to pay
for every such item that remains unpaid and that has been assessed,
but is not yet due and payable. Except for (A) payments in the
nature of escrow payments, and (B) interest accruing from the date
of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is later, to the day that precedes by one month
the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the
Master Servicer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage.
(45) The Mortgage Loans originated by CHL were underwritten in
all material respects in accordance with CHL's underwriting
guidelines for closed-end second lien mortgage loans or, with
respect to Mortgage Loans purchased by CHL were underwritten in all
material respects in accordance with customary and prudent
underwriting guidelines generally used by originators of closed-end
second lien mortgage loans.
(46) Prior to the approval of the Mortgage Loan application, an
appraisal of the related Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no
interest, direct or indirect, in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan; such
appraisal is in a form acceptable to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac.
(47) None of the Mortgage Loans is a graduated payment mortgage
loan or a growing equity mortgage loan, and no Mortgage Loan is
subject to a buydown or similar arrangement.
65
(48) The Mortgage Rates borne by the Initial Mortgage Loans as
of the Cut-off Date ranged between the approximate per annum
percentages specified on the Collateral Schedule and the weighted
average Mortgage Rate of the Initial Mortgage Loans as of the
Cut-off Date was approximately the per annum rate specified on the
Collateral Schedule.
(49) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the applicable
Seller's portfolio at the Closing Date as to which the
representations and warranties made as to the Mortgage Loans set
forth in this Section 2.03(b) and Sections 2.03(c), 2.03(d) and
2.03(e) can be made. No selection was made in a manner that would
adversely affect the interests of Certificateholders or the
Certificate Insurer.
(50) [Reserved].
(51) Each of the Initial Mortgage Loans in the Mortgage Pool
has a Due Date on or before the date specified in the Collateral
Schedule.
(52) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
(53) There is no obligation on the part of any Seller under the
terms of the Mortgage or related Mortgage Note to make payments in
addition to those made by the Mortgagor.
(54) Any leasehold estate securing a Mortgage Loan has a term
of not less than five years in excess of the term of the related
Mortgage Loan.
(55) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860(a)(3) of the Code (but without
regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2) that
treats a defective obligation as a qualified mortgage, or any
substantially similar successor provision) and applicable Treasury
regulations promulgated thereunder.
(56) No Mortgage Loan was either a "consumer credit contract"
or a "purchase money loan" as such terms are defined in 16 C.F.R.
ss. 433 nor is any Mortgage Loan a "mortgage" as defined in 15
U.S.C. ss. 1602(aa).
(57) Each Mortgage Loan, at the time it was originated and as
of the Closing Date or the related Subsequent Transfer Date, as
applicable, complied in all material respects with applicable local,
state and federal laws, including, but not limited to, all predatory
and abusive lending laws.
(58) None of the Mortgage Loans is a "high cost" mortgage loan
as defined by applicable federal, state and local predatory and
abusive lending laws.
(59) Each Prepayment Charge is enforceable and was originated
in compliance with all applicable federal, state and local laws.
66
(60) None of the Mortgage Loans that are secured by property
located in the State of Illinois are in violation of the provisions
of the Illinois Interest Act; 815 Ill. Comp. Stat. 205/0.01 (2004).
(61) There is no Mortgage Loan in the Trust Fund that was
originated on or after March 7, 2003, which is a "high cost home
loan" as defined under the Georgia Fair Lending Act.
(62) No Mortgage Loan in the Trust Fund is a High Cost Loan or
Covered Loan, as applicable (as such terms are defined in the
then-current Standard & Poor's LEVELS(R) Glossary which is now
Version 5.7, Appendix E) and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia
Fair Lending Act.
(63) Each Mortgage Loan is secured by a "single family
residence" within the meaning of Section 25(e)(10) of the Internal
Revenue Code of 1986 (as amended) (the "Code"). The fair market
value of the manufactured home securing each Mortgage Loan was at
least equal to 80% of the adjusted issue price of the contract at
either (i) the time the contract was originated (determined pursuant
to the REMIC Provisions) or (ii) the time the contract is
transferred to the purchaser. Each Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code.
(64) No Mortgage Loan in the Trust Fund is a "high cost home,"
"covered" (excluding home loans defined as "covered home loans" in
the New Jersey Home Ownership Security Act of 2002 that were
originated between November 26, 2003 and July 7, 2004), "high risk
home" or "predatory" loan under any applicable state, federal or
local law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having
high interest rates, points and/or fees).
(65) There is no Mortgage Loan in the Trust Fund that was
originated on or after October 1, 2002 and before March 7, 2003,
which is secured by property located in the State of Georgia.
(66) The representations in Section 2.03(c)(1)-(6),
2.03(d)(1)-(6) and 2.03(e)(1)-(6) are true and correct.
(c) Park Granada hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the
Cut-off Date:
(1) Park Granada is duly organized as a Delaware corporation
and is validly existing and in good standing under the laws of the
State of Delaware and is duly authorized and qualified to transact
any and all business contemplated by this Agreement and each
Subsequent Transfer Agreement to be conducted by Park Granada in any
state in which a Mortgaged Property securing a Park Granada Mortgage
Loan is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary
to ensure its ability to enforce each Park Granada Mortgage Loan, to
sell the Park Granada
67
Mortgage Loans in accordance with the terms of this Agreement and
each Subsequent Transfer Agreement and to perform any of its other
obligations under this Agreement in accordance with the terms
hereof.
(2) Park Granada has the full company power and authority to
sell each Park Granada Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement and has duly authorized by all necessary corporate action
on the part of Park Granada the execution, delivery and performance
of this Agreement and each Subsequent Transfer Agreement; and this
Agreement and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of Park
Granada, enforceable against Park Granada 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.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Granada, the sale of the Park
Granada Mortgage Loans by Park Granada under this Agreement and each
Subsequent Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Park Granada
and will not (A) result in a material breach of any term or
provision of the certificate of incorporation or by-laws of Park
Granada 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 Park Granada is a party or by which it may be
bound, or (C) constitute a material violation of any statute, order
or regulation applicable to Park Granada of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over Park Granada; and Park Granada 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
Park Granada's ability to perform or meet any of its obligations
under this Agreement.
(4) No litigation is pending or, to the best of Park Granada's
knowledge, threatened, against Park Granada that would materially
and adversely affect the execution, delivery or enforceability of
this Agreement or any Subsequent Transfer Agreement or the ability
of Park Granada to sell the Park Granada Mortgage Loans or to
perform any of its other obligations under this Agreement or any
Subsequent Transfer Agreement in accordance with the terms hereof or
thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by
68
Park Granada of, or compliance by Park Granada with, this Agreement
or any Subsequent Transfer Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, Park Granada has obtained the
same.
(6) Park Granada will treat the transfer of the Park Granada
Mortgage Loans to the Depositor as a sale of the Park Granada
Mortgage Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Granada
Mortgage Loan to the Depositor, Park Granada had good title to, and
was the sole owner of, such Park Granada Mortgage Loan free and
clear of any pledge, lien, encumbrance or security interest and had
full right and authority, subject to no interest or participation
of, or agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
(d) Park Monaco hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the
Cut-off Date:
(1) Park Monaco is duly organized as a Delaware corporation and
is validly existing and in good standing under the laws of the State
of Delaware and is duly authorized and qualified to transact any and
all business contemplated by this Agreement and each Subsequent
Transfer Agreement to be conducted by Park Monaco in any state in
which a Mortgaged Property securing a Park Monaco Mortgage Loan is
located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the
doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Park Monaco Mortgage Loan, to
sell the Park Monaco Mortgage Loans in accordance with the terms of
this Agreement and each Subsequent Transfer Agreement and to perform
any of its other obligations under this Agreement in accordance with
the terms hereof.
(2) Park Monaco has the full company power and authority to
sell each Park Monaco Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement and has duly authorized by all necessary corporate action
on the part of Park Monaco the execution, delivery and performance
of this Agreement and each Subsequent Transfer Agreement; and this
Agreement and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of Park
Monaco, enforceable against Park Monaco 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.
69
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Monaco, the sale of the Park
Monaco Mortgage Loans by Park Monaco under this Agreement and each
Subsequent Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Park Monaco
and will not (A) result in a material breach of any term or
provision of the certificate of incorporation or by-laws of Park
Monaco 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
Park Monaco is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation
applicable to Park Monaco of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Park Monaco; and Park Monaco 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
Park Monaco's ability to perform or meet any of its obligations
under this Agreement.
(4) No litigation is pending or, to the best of Park Monaco's
knowledge, threatened, against Park Monaco that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of
Park Monaco to sell the Park Monaco Mortgage Loans or to perform any
of its other obligations under this Agreement or any Subsequent
Transfer Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by Park Monaco of, or compliance by Park
Monaco with, this Agreement or any Subsequent Transfer Agreement or
the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, Park
Monaco has obtained the same.
(6) Park Monaco will treat the transfer of the Park Monaco
Mortgage Loans to the Depositor as a sale of the Park Monaco
Mortgage Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Monaco
Mortgage Loan to the Depositor, Park Monaco had good title to, and
was the sole owner of, such Park Monaco Mortgage Loan free and clear
of any pledge, lien, encumbrance or security interest and had full
right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
70
(e) Park Sienna hereby represents and warrants to the
Depositor, the Certificate Insurer and the Trustee as follows, as of the
Cut-off Date:
(1) Park Sienna is duly organized as a Delaware limited
liability company and is validly existing and in good standing under
the laws of the State of Delaware and is duly authorized and
qualified to transact any and all business contemplated by this
Agreement and each Subsequent Transfer Agreement to be conducted by
Park Sienna in any state in which a Mortgaged Property securing a
Park Sienna Mortgage Loan is located or is otherwise not required
under applicable law to effect such qualification and, in any event,
is in compliance with the doing business laws of any such state, to
the extent necessary to ensure its ability to enforce each Park
Sienna Mortgage Loan, to sell the Park Sienna Mortgage Loans in
accordance with the terms of this Agreement and each Subsequent
Transfer Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(2) Park Sienna has the full company power and authority to
sell each Park Sienna Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and each Subsequent Transfer
Agreement and has duly authorized by all necessary company action on
the part of Park Sienna the execution, delivery and performance of
this Agreement and each Subsequent Transfer Agreement; and this
Agreement and each Subsequent Transfer Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of Park
Sienna, enforceable against Park Sienna 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.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by Park Sienna, the sale of the Park
Sienna Mortgage Loans by Park Sienna under this Agreement and each
Subsequent Transfer Agreement, the consummation of any other of the
transactions contemplated by this Agreement and each Subsequent
Transfer Agreement and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Park Sienna
and will not (A) result in a material breach of any term or
provision of the certificate of formation or limited liability
company agreement of Park Sienna 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 Park Sienna is a party or by which
it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to Park Sienna of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Park Sienna; and Park Sienna 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 Park Sienna's ability to perform or meet any of
its obligations under this Agreement.
71
(4) No litigation is pending or, to the best of Park Sienna's
knowledge, threatened, against Park Sienna that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or any Subsequent Transfer Agreement or the ability of
Park Sienna to sell the Park Sienna Mortgage Loans or to perform any
of its other obligations under this Agreement or any Subsequent
Transfer Agreement in accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by Park Sienna of, or compliance by Park
Sienna with, this Agreement or any Subsequent Transfer Agreement or
the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, Park
Sienna has obtained the same.
(6) Park Sienna will treat the transfer of the Park Sienna
Mortgage Loans to the Depositor as a sale of the Park Sienna
Mortgage Loans for all tax, accounting and regulatory purposes.
(7) Immediately prior to the assignment of each Park Sienna
Mortgage Loan to the Depositor, Park Sienna had good title to, and
was the sole owner of, such the Park Sienna Mortgage Loan free and
clear of any pledge, lien, encumbrance or security interest and had
full right and authority, subject to no interest or participation
of, or agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
(f) Upon discovery by any of the parties hereto of a breach of
a representation or warranty set forth in Section 2.03(a) through (e) that
materially and adversely affects the interests of the Certificateholders or
the Certificate Insurer in any Mortgage Loan, the party discovering such
breach shall give prompt notice thereof to the other parties, the NIM Insurer
and the Certificate Insurer. Each of the Master Servicer and the Sellers
(each, a "Representing Party") hereby covenants with respect to the
representations and warranties set forth in Sections 2.03(a) through (e) that
within 90 days of the earlier of the discovery by such Representing Party or
receipt of written notice by such Representing Party from any party of a
breach of any representation or warranty set forth herein made that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan or the Certificate Insurer, it shall cure such breach in all material
respects and, if such breach is not so cured, shall, (i) if such 90-day period
expires prior to the second anniversary of the Closing Date, remove such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute
in its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner
set forth below; provided that (a) any such substitution pursuant to (i) above
or repurchase pursuant to (ii) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, (b) any such substitution pursuant to (i) above shall not be effected
prior to the additional delivery to the Trustee of a Request for File Release
and (c) any such substitution pursuant to (i) above shall include a payment by
the applicable Representing Party of any amount as calculated under item (iii)
of the definition of "Purchase Price". Any Representing Party liable for a
breach under this Section 2.03 shall promptly reimburse the Master Servicer or
the Trustee for any expenses reasonably incurred by the Master Servicer or the
Trustee in respect of enforcing the remedies for such breach. To enable the
Master Servicer to amend the Mortgage Loan Schedule, any Representing Party
liable
72
for a breach under this Section 2.03 shall, unless it cures such breach in a
timely fashion pursuant to this Section 2.03, promptly notify the Master
Servicer whether such Representing Party intends either to repurchase, or to
substitute for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties described in this Section that are made to the
best of the Representing Party's knowledge, if it is discovered by any of the
Depositor, the Master Servicer, the Sellers, the Certificate Insurer or the
Trustee that the substance of such representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the value of the related
Mortgage Loan, notwithstanding the Representing Party's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the
applicable Seller delivering such Replacement Mortgage Loan shall deliver to
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer the related Mortgage Note, Mortgage and assignment of the Mortgage,
and such other documents and agreements as are required by Section 2.01, with
the Mortgage Note endorsed and the Mortgage assigned as required by Section
2.01. No substitution will be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Replacement Mortgage Loans in the Due Period related to the Distribution Date
on which such proceeds are to be distributed shall not be part of the Trust
Fund and will be retained by the applicable Seller delivering such Replacement
Mortgage Loan on such Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Scheduled Payment due on
any Deleted Mortgage Loan for the related Due Period and thereafter the
applicable Seller shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage
Loan Schedule for the benefit of the Certificateholders to reflect the removal
of such Deleted Mortgage Loan and the substitution of the Replacement Mortgage
Loan or Loans and the Master Servicer shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Replacement Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects, and
the applicable Seller delivering such Replacement Mortgage Loan shall be
deemed to have made with respect to such Replacement Mortgage Loan or Loans,
as of the date of substitution, the representations and warranties set forth
in Section 2.03(b), (c), (d) or (e) with respect to such Mortgage Loan. Upon
any such substitution and the deposit to the Certificate Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release to the
Representing Party the Mortgage File relating to such Deleted Mortgage Loan
and held for the benefit of the Certificateholders and shall execute and
deliver at the Master Servicer's direction such instruments of transfer or
assignment as have been prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the applicable Seller, or its
respective designee, title to the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
For any month in which any Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution
is less than the Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) of all such
Deleted Mortgage Loans. An amount equal to the aggregate of the deficiencies
described in the
73
preceding sentence (such amount, the "Substitution Adjustment Amount") shall
be forwarded by the applicable Seller to the Master Servicer and deposited by
the Master Servicer into the Certificate Account not later than 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.
In the event that a Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the Certificate
Account pursuant to Section 3.05 on the Determination Date for the
Distribution Date in the month following the month during which such Seller
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05, if any, and the receipt of a Request for File Release, the
Trustee shall release the related Mortgage File held for the benefit of the
Certificateholders to such Seller, and the Trustee shall execute and deliver
at such Person's direction the related instruments of transfer or assignment
prepared by such Seller, in each case without recourse, as shall be necessary
to transfer title from the Trustee for the benefit of the Certificateholders
and transfer the Trustee's interest to such Seller to any Mortgage Loan
purchased pursuant to this Section 2.03. It is understood and agreed that the
obligation under this Agreement of the Sellers to cure, repurchase or replace
any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Sellers respecting such breach
available to Certificateholders, the Depositor or the Trustee.
(g) The representations and warranties set forth in this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
with respect to each Mortgage Loan.
Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master
Servicer, the Certificate Insurer and the Trustee as follows, as of the date
hereof and as of each Subsequent Transfer Date:
(1) 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 each Subsequent Transfer Agreement.
(2) 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 each Subsequent
Transfer Agreement and has duly authorized, by all necessary
corporate action on its part, the execution, delivery and
performance of this Agreement and each Subsequent Transfer
Agreement; and this Agreement and each Subsequent Transfer
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
74
principles of equity, regardless of whether enforcement is sought in
a proceeding in equity or at law.
(3) The execution and delivery of this Agreement and each
Subsequent Transfer Agreement by the Depositor, the consummation 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 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 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 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.
(4) 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 or any Subsequent Transfer
Agreement or the ability of the Depositor to perform its obligations
under this Agreement or any Subsequent Transfer Agreement in
accordance with the terms hereof or thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement or any Subsequent Transfer 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 or the related
Subsequent Transfer Date, as applicable, following the transfer of such
Mortgage Loan to it by the Sellers, the Depositor had good title to the
Initial Mortgage Loans or related Subsequent Mortgage Loans, as applicable,
and the related Mortgage Notes were subject to no offsets, claims, defenses or
counterclaims.
It is understood and agreed that the representations and
warranties set forth in the two immediately preceding paragraphs shall survive
delivery of the Mortgage Files to the Trustee. Upon discovery by the
Depositor, the Certificate Insurer or the Trustee, of a breach of any of the
foregoing representations and warranties set forth in the immediately
preceding paragraph or any representations in Section 10.04(b) hereof
(referred to herein as a "breach"), which breach materially and adversely
affects the interest of the Certificateholders or the Certificate Insurer, the
party discovering such breach shall give prompt written notice to the others
and to each Rating Agency and the NIM Insurer. The Depositor hereby covenants
with respect to the representations and warranties made by it in this Section
2.04 or any
75
representations in Section 10.04(b) hereof that within 90 days of the earlier
of the discovery by it or receipt of written notice by it from any party of a
breach of any representation or warranty set forth herein made that materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan or the Certificate Insurer, it shall cure such breach in all material
respects and, if such breach is not so cured, shall repurchase or replace the
affected Mortgage Loan or Loans in accordance with the procedure set forth in
Section 2.03(f).
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which
default is not imminent, no repurchase or substitution pursuant to Sections
2.02, 2.03 or 2.04 shall be made unless the Representing Party making such
repurchase or substitution delivers to the Trustee and the Certificate Insurer
an Opinion of Counsel (which such Representing Party shall use reasonable
efforts to obtain), addressed to the Trustee to the effect that such
repurchase or substitution would not (i) result in the imposition of the tax
on "prohibited transactions" of the Trust Fund or contributions after the
Closing Date, as defined in sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii) cause the any REMIC formed hereunder to fail to qualify
as a REMIC at any time that any Certificates are outstanding. Any Mortgage
Loan as to which repurchase or substitution was delayed pursuant to this
paragraph shall be repurchased or the substitution therefor shall occur
(subject to compliance with Sections 2.02, 2.03 or 2.04) upon the earlier of
(a) the occurrence of a default or imminent default with respect to such loan
and (b) receipt by the Trustee and the Certificate Insurer of an Opinion of
Counsel to the effect that such repurchase or substitution, as applicable,
will not result in the events described in clause (i) or clause (ii) of the
preceding sentence.
(b) Upon discovery by the Depositor, any Seller, the Master
Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of section 860G(a)(3) of the Code, the
party discovering such fact shall promptly (and in any event within five
Business Days of discovery) give written notice thereof to the other parties
and the NIM Insurer and the Certificate Insurer. In connection therewith, the
Trustee shall require CHL, at CHL's option, to either (i) substitute, if the
conditions in Section 2.03(f) 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 CHL 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, has
executed, authenticated and delivered, to or upon the order of the Depositor,
the Certificates in authorized denominations evidencing the entire ownership
of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
76
rights referred to above for the benefit of all present and future Holders of
the Certificates and the Certificate Insurer and to perform the duties set
forth in this Agreement.
Section 2.07 Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor, the
Certificate Insurer and the Trustee as follows:
(a) the Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements of
the insurer under each Required Insurance Policy;
(b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the Depositor,
any affiliate of the Depositor, the Certificate Insurer or the Trustee and
prepared by the Master Servicer pursuant to this Agreement will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the information, certificate, statement or report not misleading; and
(c) the Master Servicer shall ensure that the Covered Loans are
serviced in accordance with the requirements of the Credit Insurance Policy so
as not to cause any of the Covered Loans to be excluded from coverage or have
the related coverage reduced under the Credit Insurance Policy, otherwise the
Master Servicer shall be required to repurchase the Mortgage Loan at the
related Purchase Price, which shall be the sole remedy in respect of such
breach.
Section 2.08 Sponsor Loss Coverage Obligation.
CHL hereby agrees that, for the benefit of the
Certificateholders and the Certificate Insurer, on the Business Day
immediately preceding each Distribution Date it will remit to the Trustee for
deposit into the Distribution Account the amount of any Loss Coverage Payment
due for such Distribution Date as specified in the remittance report delivered
by the Master Servicer. The obligation of CHL to remit Loss Coverage Payments
will terminate when the Sponsor Loss Coverage Amount has been reduced to zero.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master
Servicer shall service and administer the Mortgage Loans in accordance with
customary and usual standards of practice of prudent mortgage loan lenders in
the respective states in which the Mortgaged Properties are located, including
taking all required and appropriate actions under each Required Insurance
Policy and taking all required and appropriate actions under the Credit
Insurance Policy on behalf of the Trustee, other than the payment of the
Credit Insurance Premium. In connection with such servicing and
administration, the Master Servicer shall have full power and authority,
77
acting alone and/or through subservicers as provided in Section 3.02 hereof,
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, other Liquidation Proceeds and Subsequent Recoveries, and (iv)
subject to Section 3.12(b), to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan; provided
that the Master Servicer shall take no action that is inconsistent with or
prejudices the interests of the Trustee, the Certificate Insurer or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Depositor, the Certificate Insurer and the Trustee under this Agreement. The
Master Servicer shall represent and protect the interest of the Trustee 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
and shall not make or permit any modification, waiver or amendment of any term
of any Mortgage Loan which would (i) cause any REMIC formed hereunder to fail
to qualify as a REMIC, (ii) result in the imposition of any tax under section
860(a) or 860(d) of the Code or (iii) cause any Covered Loan to not be covered
by the Credit Insurance Policy, but in any case the Master Servicer shall not
act in any manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Master Servicer believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and
all other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery
by any or all of them as are necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Master Servicer. The Master Servicer further is authorized
and empowered by the Trustee, on behalf of the Certificateholders and the
Trustee, in its own name or in the name of the Subservicer, when the Master
Servicer or the Subservicer, as the case may be, believes it appropriate in
its best judgment to register any Mortgage Loan on the MERS(R) System, or
cause the removal from the registration of any Mortgage Loan on the MERS(R)
System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording
of a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
3.06, and further as provided in Section 3.08. All costs incurred by the
Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
78
The Master Servicer shall deliver a list of Servicing Officers
to the Trustee by the Closing Date.
In addition, the Master Servicer shall administer the Credit
Insurance Policy on behalf of itself, the Sellers, the Depositor, and the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
when it is necessary to make claims and receive payments under the Credit
Insurance Policy. In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
the Trustee and the Certificateholders, claims to the insurer under any
primary insurance policies and, in this regard, to take any reasonable action
necessary to permit recovery under any primary insurance policies respecting
defaulted Mortgage Loans. Any amounts collected by the Master Servicer under
any primary insurance policies shall be deposited in the Certificate Account.
The Master Servicer shall take whatever action is appropriate
to maximize the amounts payable under the Credit Insurance Policy and to
service the Covered Loans in the manner required by the Credit Insurance
Policy. The Master Servicer shall prepare and submit all claims eligible for
submission under the Credit Insurance Policy and shall, except as otherwise
specified in this Agreement, perform all of the obligations of the insured
under the Credit Insurance Policy.
In the event that a shortfall in any collection on or liability
with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Scheduled Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the
terms of the related Mortgage Note and this Agreement, the Master Servicer,
upon discovery or receipt of notice thereof, immediately shall deliver to the
Trustee for deposit in the Distribution Account from its own funds the amount
of any such shortfall and shall indemnify and hold harmless the Trust Fund,
the Trustee, the Depositor and any successor master servicer in respect of any
such liability. Such indemnities shall survive the termination or discharge of
this Agreement. Notwithstanding the foregoing, this Section 3.01 shall not
limit the ability of the Master Servicer to seek recovery of any such amounts
from the related Mortgagor under the terms of the related Mortgage Note, as
permitted by law and shall not be an expense of the Trust.
Section 3.02 Subservicing; Enforcement of the Obligations of
Master Servicer.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided 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 subservicing agreements would not result in a withdrawal or a downgrading
by any Rating Agency of the ratings on any Class of Certificates (without
regard to the Certificate Insurance Policy in the case of the Class A
Certificates), as evidenced by a letter to that effect delivered by each
Rating Agency to the Depositor, the Certificate Insurer and the NIM Insurer
and (iii) the NIM Insurer shall have consented to such subservicing agreements
(which consent shall not be unreasonably withheld) with Subservicers, for the
servicing and administration of the Mortgage Loans. The Master Servicer shall
deliver to the Trustee copies of all Sub-Servicing Agreements,
79
and any amendments or modifications thereof, promptly upon the Master
Servicer's execution and delivery of such instruments. The Master Servicer,
with the written consent of the NIM Insurer (which consent shall not be
unreasonably withheld), shall be entitled to terminate any Subservicing
Agreement and the rights and obligations of any Subservicer pursuant to any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement. Notwithstanding the provisions of any subservicing
agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Master Servicer or a subservicer or reference to
actions taken through a subservicer or otherwise, the Master Servicer shall
remain obligated and liable to the Depositor, the Trustee, the Certificate
Insurer and the Certificateholders for the servicing and administration of the
Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as
if the Master Servicer alone were servicing and administering the Mortgage
Loans. Every subservicing agreement entered into by the Master Servicer shall
contain a provision giving the successor Master Servicer the option to
terminate such agreement without cost in the event a successor Master Servicer
is appointed. All actions of each subservicer performed pursuant to the
related subservicing agreement shall be performed as an agent of the Master
Servicer with the same force and effect as if performed directly by the Master
Servicer.
(b) For purposes of this Agreement, the Master Servicer shall
be deemed to have received any collections, recoveries or payments with
respect to the Mortgage Loans that are received by a subservicer regardless of
whether such payments are remitted by the subservicer to the Master Servicer.
Section 3.03 Rights of the Depositor, the Sellers, the
Certificateholders, the NIM Insurer, the
Certificate Insurer and the Trustee in Respect of
the Master Servicer.
None of the Trustee, the Sellers, the Certificateholders, the
NIM Insurer, the Certificate Insurer or the Depositor shall have any
responsibility or liability for any action or failure to act by the Master
Servicer, and none of them is obligated to supervise the performance of the
Master Servicer hereunder or otherwise. The Master Servicer shall afford (and
any Subservicing Agreement shall provide that each Subservicer shall afford)
the Depositor, the NIM Insurer, the Certificate Insurer and the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer (and any such Subservicer) in respect of the
Master Servicer's rights and obligations hereunder and access to officers of
the Master Servicer (and those of any such Subservicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor,
the NIM Insurer, the Certificate Insurer and the Trustee its (and any such
Subservicer's) most recent financial statements and such other information
relating to the Master Servicer's capacity to perform its obligations under
this Agreement that it possesses. To the extent such information is not
otherwise available to the public, the Depositor, the NIM Insurer, the
Certificate Insurer and the Trustee shall not disseminate any information
obtained pursuant to the preceding two sentences without the Masters
Servicer's (or any such Subservicer's) written consent, except as required
pursuant to this Agreement or to the extent that it is necessary to do so (i)
in working with legal counsel, auditors, taxing authorities or other
governmental agencies, rating agencies or reinsurers or (ii)
80
pursuant to any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee, the NIM Insurer, the Certificate Insurer or the Trust
Fund, and in either case, the Depositor, the NIM Insurer, the Certificate
Insurer or the Trustee, as the case may be, shall use its reasonable best
efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the
obligations of the Master Servicer under this Agreement and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted
obligation of the Master Servicer under this Agreement or exercise the rights
of the Master Servicer under this Agreement; provided by virtue of such
performance by the Depositor of its designee. The Depositor shall not have any
responsibility or liability for any action or failure to act by the Master
Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
Section 3.04 Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of
Default or termination by the Depositor), the Trustee or its designee shall
thereupon assume all of the rights and obligations of the Master Servicer
hereunder arising thereafter (except that the Trustee shall not be (i) liable
for losses of the Master Servicer pursuant to Section 3.10 hereof or any acts
or omissions of the predecessor Master Servicer hereunder, (ii) obligated to
make Advances if it is prohibited from doing so by applicable law, (iii)
obligated to effectuate repurchases or substitutions of Mortgage Loans
hereunder, including pursuant to Section 2.02 or 2.03 hereof, (iv) responsible
for expenses of the Master Servicer pursuant to Section 2.03 or (v) deemed to
have made any representations and warranties hereunder, including pursuant to
Section 2.03 or the first paragraph of Section 6.02 hereof). If the Master
Servicer shall for any reason no longer be the Master Servicer (including by
reason of any Event of Default or termination by the Depositor), the Trustee
(or any other successor servicer) may, at its option, succeed to any rights
and obligations of the Master Servicer under any subservicing agreement in
accordance with the terms thereof; provided 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 succeed to the rights
and obligations of the Master Servicer thereunder; and the Master Servicer
shall not thereby be relieved of any liability or obligations under the
subservicing agreement arising prior to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party all
documents and records relating to each subservicing agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected
held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.
Section 3.05 Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account; Pre-Funding Account;
Capitalized Interest Account; Premium Account.
(a) The Master Servicer shall make reasonable efforts in
accordance with customary and usual standards of practice of prudent mortgage
lenders in the respective states in
81
which the Mortgaged Properties are located to collect all payments called for
under the terms and provisions of the Mortgage Loans to the extent such
procedures shall be consistent with this Agreement and the terms and
provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, subject to Section 3.20, any Prepayment Charge or penalty
interest in connection with the prepayment of a Mortgage Loan and (ii) extend
the due dates for payments due on a Mortgage Note for a period not greater
than 270 days; provided that the Master Servicer will not extend the due date
of any such Mortgage Loan past the maturity date for the latest maturing
Mortgage Loan as of the Cut-off Date. In the event of any such arrangement,
the Master Servicer shall make Advances on the related Mortgage Loan during
the scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements. In
addition, the NIM Insurer's prior written consent shall be required for any
waiver of Prepayment Charges or for the extension of the due dates for the
payments due on a Mortgage Note, if the aggregate number of Mortgage Loans
that have been granted such waivers or extensions exceeds 5% of the aggregate
number of the Mortgage Loans. The Master 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.
(b) The Master Servicer shall establish and maintain a
Certificate Account into which the Master Servicer shall deposit or cause to
be deposited on a daily basis within two Business Days of receipt, except as
otherwise specifically provided herein, the following payments and collections
remitted by Subservicers or received by it in respect of Mortgage Loans
subsequent to the Cut-off Date (other than in respect of principal and
interest due on the Mortgage Loans on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(1) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(2) all payments on account of interest on the Mortgage
Loans (net of the related Servicing Fee and Prepayment Interest
Excess permitted under Section 3.15 hereof to the extent not
previously paid to or withheld by the Master Servicer);
(3) all Insurance Proceeds (including proceeds from the
Credit Insurance Policy) and Charged-off Loan Proceeds;
(4) all Liquidation Proceeds and Subsequent Recoveries,
other than proceeds to be applied to the restoration or repair
of the Mortgaged Property or released to the Mortgagor in
accordance with the Master Servicer's normal servicing
procedures;
(5) all Compensating Interest;
(6) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(f) in connection with any
losses on Permitted Investments;
82
(7) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.10 hereof;
(8) the Purchase Price and any Substitution Adjustment
Amount;
(9) all Advances made by the Master Servicer or the
Trustee pursuant to Section 4.01 hereof;
(10) all Prepayment Charges and Master Servicer Prepayment
Charge Payment Amounts; and
(11) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master
Servicer into the Certificate Account shall be exclusive, it being understood
and agreed that, without limiting the generality of the foregoing, payments in
the nature of late payment charges or assumption fees, if collected, need not
be remitted by the Master Servicer. In the event that the Master 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 institution maintaining the Certificate Account, to withdraw such
amount from the Certificate Account, any provision herein to the contrary
notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the institution maintaining the
Certificate Account, that describes the amounts deposited in error in the
Certificate Account. The Master Servicer shall maintain adequate records with
respect to all withdrawals made pursuant to this Section. All funds deposited
in the Certificate Account shall be held in trust for the Certificateholders
and the Certificate Insurer until withdrawn in accordance with Section 3.08.
No later than 1:00 p.m. Pacific time on the Business Day prior
to the Master Servicer Advance Date, CHL shall remit to the Master Servicer,
and the Master Servicer shall deposit in the Certificate Account, the Seller
Interest Shortfall Payments (if any) for such Master Servicer Advance Date.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders and the Certificate Insurer, the Distribution Account. The
Trustee shall, promptly upon receipt, deposit in the Distribution Account and
retain therein the following:
(1) the aggregate amount remitted by the Master Servicer
pursuant to the second paragraph of Section 3.08(a);
(2) any Loss Coverage Payment made by CHL pursuant to
Section 2.08;
(3) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(f) in connection with any
losses on Permitted Investments; and
(4) any amount to be deposited by the Trustee in the
Distribution Account pursuant to Section 3.05(d) and 3.05(e).
83
The foregoing requirements for remittance by the Master
Servicer and deposit by the Trustee into the Distribution Account shall be
exclusive. In the event that the Master 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 direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering a written
notice to the Trustee that describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders and the Certificate
Insurer until disbursed in accordance with this Agreement or withdrawn in
accordance with Section 3.08. In no event shall the Trustee incur liability
for withdrawals from the Distribution Account at the direction of the Master
Servicer.
(d) If the Pre-Funded Amount is greater than zero, the Trustee
shall establish and maintain, on behalf of the Certificateholders and the
Certificate Insurer, the Pre-Funding Account, and on the Closing Date, CHL
shall remit the Pre-Funded Amount to the Trustee for deposit in the
Pre-Funding Account.
On the Business Day before the Distribution Date following the
end of the Funding Period, the Trustee shall (i) withdraw the amount on
deposit in the Pre-Funding Account (net of investment income), (ii) promptly
deposit such amount in the Distribution Account, and (iii) distribute each
amount to the Certificates on the Distribution Date pursuant to Section 4.04.
(e) If the Capitalized Interest Deposit is greater than zero,
the Trustee shall establish and maintain, on behalf of the Certificateholders
and the Certificate Insurer, the Capitalized Interest Account. On the Closing
Date, CHL shall remit the Capitalized Interest Deposit to the Trustee for
deposit in the Capitalized Interest Account. On each Distribution Account
Deposit Date related to a Funding Period Distribution Date, the Trustee shall
transfer from the Capitalized Interest Account to the Distribution Account an
amount equal to the Capitalized Interest Requirement (which, to the extent
required, may include investment earnings on amounts on deposit therein) for
the related Distribution Date.
If any funds remain in the Capitalized Interest Account at the
end of the Distribution Account Deposit Date for the last Funding Period
Distribution Date, the Trustee shall distribute any such remaining funds to
the order of CHL on the last Funding Period Distribution Date.
(f) Each institution that maintains the Certificate Account,
the Distribution Account, the Premium Account, the Pre-Funding Account or the
Capitalized Interest Account shall invest the funds in each such account, as
directed by the Master Servicer, in Permitted Investments, which shall mature
not later than (x) in the case of the Certificate Account, the second Business
Day next preceding the related Distribution Account Deposit Date (except that
if such Permitted Investment is an obligation of the institution that
maintains such Certificate Account, then such Permitted Investment shall
mature not later than the Business Day next preceding such Distribution
Account Deposit Date) and (y) in the case of the Distribution Account, the
Premium Account, the Pre-Funding Account and the Capitalized Interest Account,
the Business Day immediately preceding the first Distribution Date that
follows the date of such
84
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Distribution Account, the Premium Account or
Pre-Funding Account, then such Permitted Investment shall mature not later
than such Distribution Date), in each case, shall not be sold or disposed of
prior to its maturity. All such Permitted Investments shall be made in the
name of the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer. In the case of (i) the Certificate Account and the
Distribution Account, all income and gain net of any losses realized from any
such investment shall be for the benefit of the Master Servicer as servicing
compensation and shall be remitted to it monthly as provided herein, (ii) the
Pre-Funding Account, all income and gain net of any losses realized from any
such investment shall be for the benefit of the Depositor and shall be
remitted to the Depositor as provided herein, (iii) the Capitalized Interest
Account, all income and gain net of any losses realized from any such
investment on deposit therein shall be credited thereto and (iv) the Premium
Account, all income and gain net of any losses realized from any such
investment shall be for the benefit of the Certificateholders and the
Certificate Insurer and shall be remitted to the Premium Account. The amount
of any losses incurred in the Certificate Account or the Distribution Account
in respect of any such investments shall be deposited by the Master Servicer
in the Certificate Account or paid to the Trustee for deposit into the
Distribution Account out of the Master Servicer's own funds immediately as
realized. The amount of any losses incurred in the Pre-Funding Account or the
Capitalized Interest Account in respect of any such investments shall be paid
by the Master Servicer to the Trustee for deposit into the Pre-Funding Account
or the Capitalized Interest Account, as applicable, out of the Master
Servicer's own funds immediately as realized. The Trustee shall not be liable
for the amount of any loss incurred in respect of any investment or lack of
investment of funds held in the Certificate Account, the Distribution Account,
the Premium Account, the Pre-Funding Account or the Capitalized Interest
Account and made in accordance with this Section 3.05 (other than as obligor
on any such investment). The Master Servicer shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Premium Account and made in accordance with this Section
3.05.
(g) The Master Servicer shall give at least 30 days advance
notice to the Trustee, each Seller, the Certificate Insurer, each Rating
Agency and the Depositor of any proposed change of location of the Certificate
Account prior to any change thereof. The Trustee shall give at least 30 days
advance notice to the Master Servicer, each Seller, the Certificate Insurer,
each Rating Agency and the Depositor of any proposed change of the location of
the Distribution Account, the Pre-Funding Account, the Premium Account, the
Carryover Reserve Fund or the Capitalized Interest Account prior to any change
thereof.
(h) Except as otherwise expressly provided in this Agreement,
if any default occurs under any Permitted Investment, the Trustee may and,
subject to Sections 8.01 and 8.02(a)(4), at the request of the Holders of
Certificates representing more than 50% of the Voting Rights), or the NIM
Insurer, shall take any action appropriate to enforce payment or performance,
including the institution and prosecution of appropriate proceedings.
(i) Upon its initial receipt of written instructions from the
Master Servicer pursuant to Section 3.08(b)(vi) directing the Trustee to
deposit an amount in the Premium Account, the Trustee shall establish and
maintain, on behalf of the Certificateholders and the Certificate Insurer, the
Premium Account.
85
Section 3.06 Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.
To the extent required by the related Mortgage Note, the Master
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 Master Servicer) for the payment of taxes, assessments,
hazard insurance premiums or comparable items for the account of the
Mortgagors. Nothing herein shall require the Master 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 Master 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.
The Master Servicer shall afford the Depositor, the NIM
Insurer, the Trustee and the Certificate Insurer reasonable access to all
records and documentation regarding the Mortgage Loans and all accounts,
insurance policies and other matters relating to this Agreement, such access
being afforded without charge, but only upon reasonable request and during
normal business hours at the offices of the Master Servicer designated by it.
Upon request, the Master Servicer shall furnish to the Trustee and the NIM
Insurer its most recent publicly available financial statements and any other
information relating to its capacity to perform its obligations under this
Agreement reasonably requested by the NIM Insurer.
Upon reasonable advance notice in writing if required by
federal regulation, the Master Servicer will provide to each Certificateholder
or Certificate Owner 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 or
Certificate Owner to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates;
provided that the Master Servicer shall be entitled to be reimbursed by each
such Certificateholder or Certificate Owner for actual expenses incurred by
the Master Servicer in providing such reports and access.
86
Section 3.08 Permitted Withdrawals from the Certificate
Account, Distribution Account, Carryover Reserve
Fund and the Principal Reserve Fund.
(a) The Master Servicer may from time to time make withdrawals
from the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not
previously paid to or withheld by the Master 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 to the
Master Servicer, those other amounts set forth in Section 3.15;
(ii) to reimburse each of the Master Servicer and the
Trustee 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, Liquidation Proceeds,
Insurance Proceeds and Subsequent Recoveries (other than
proceeds of the Credit Insurance Policy) but not Charged-off
Loan 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) [Reserved];
(iv) to reimburse each of the Master Servicer and the
Trustee for any Nonrecoverable Advance previously made;
(v) to reimburse the Master Servicer from Insurance
Proceeds (other than proceeds of the Credit Insurance Policy)
for Insured Expenses covered by the related Insurance Policy;
(vi) to pay the Master Servicer any unpaid Servicing Fees
and to reimburse it for any unreimbursed Servicing Advances,
the Master 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, Insurance Proceeds and Subsequent Recoveries,
Charged-off Loan 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 applicable Seller, the Depositor or
the Master 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, 2.04 or 3.12,
all amounts received thereon and not taken into account in
determining the related Purchase Price of such repurchased
Mortgage Loan;
(viii) to reimburse the applicable Seller, the Master
Servicer, the NIM Insurer or the Depositor for expenses
incurred by any of them in connection with
87
the Mortgage Loans or Certificates and reimbursable pursuant to
Section 6.03 hereof; provided that such amount shall only be
withdrawn following the withdrawal from the Certificate Account
for deposit into the Distribution Account pursuant to the
following paragraph;
(ix) to pay any lender-paid primary mortgage insurance
premiums (other than the Credit Insurance Premium);
(x) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein; and
(xi) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific time on the
Distribution Account Deposit Date, the Master Servicer shall withdraw from the
Certificate Account and remit to the Trustee the Interest Remittance Amount,
the Principal Remittance Amount, Prepayment Charges collected and the Master
Servicer Prepayment Charge Payment Amount, and the Trustee shall deposit such
amount in the Distribution Account.
The Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Trustee. On
the Closing Date, CHL shall deposit into the Principal Reserve Fund $200.00.
Funds on deposit in the Principal Reserve Fund shall not be invested. The
Principal Reserve Fund shall be treated as an "outside reserve fund" under
applicable Treasury regulations and shall not be part of any REMIC created
under this Agreement.
On the Business Day before the first Distribution Date, the
Trustee shall transfer $100.00 from the Principal Reserve Fund to the
Distribution Account, and on the first Distribution Date, the Trustee shall
withdraw $100 and distribute such amount to the Class A-R Certificates in
reduction of the Certificate Principal Balance thereof.
On the Business Day before the Class P Principal Distribution
Date, the Trustee shall transfer from the Principal Reserve Fund to the
Distribution Account $100.00 and shall distribute such amount to the Class P
Certificates on the Class P Principal Distribution Date. Following the
distributions to be made in accordance with the preceding sentence, the
Trustee shall then terminate the Principal Reserve Fund.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant to subclauses
(i), (ii), (iv), (v), (vi), (vii), (viii), (ix) and (x) above. Prior to making
any withdrawal from the Certificate Account pursuant to subclause (iv), the
Master Servicer shall deliver to the Trustee and the Certificate Insurer an
Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loan(s), and their respective
portions of such Nonrecoverable Advance.
88
(b) The Trustee shall withdraw funds from the Distribution
Account for distribution to the Certificateholders and the Certificate Insurer
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
the third paragraph of Section 8.11). On each Distribution Date, the Trustee
shall pay (or cause to be paid) the applicable Credit Insurance Premium to the
Credit Insurer from funds on deposit in the Distribution Account. To the
extent the Trustee receives any payments under the Credit Insurance Policy, it
shall notify the Master Servicer and promptly deposit such amounts into the
Certificate Account. Payments to the Credit Insurer shall be made by the
Trustee by wire transfer of immediately available funds to the following
account, unless the Credit Insurer notifies the Trustee in writing:
ABA#▇▇▇▇▇▇▇▇▇, DDA#198002383687, Bank Name: US Bank, Re: Policy No. V25,
[include reporting month here]. In addition, the Trustee may from time to time
make withdrawals from the Distribution Account for the following purposes:
(i) to pay the Trustee the Trustee Fee on each
Distribution Date;
(ii) to pay to the Master Servicer, as additional
servicing compensation, earnings on or investment income with
respect to funds in or credited to the Distribution Account;
(iii) to withdraw pursuant to Section 3.05 any amount
deposited in the Distribution Account and not required to be
deposited therein;
(iv) to reimburse the Trustee for any unreimbursed
Advances made by it pursuant to Section 4.01(d) hereof, such
right of reimbursement pursuant to this subclause (iv) being
limited to (x) amounts received on the related Mortgage Loan(s)
in respect of which any such Advance was made and (y) amounts
not otherwise reimbursed to the Trustee pursuant to Section
3.08(a)(ii) hereof;
(v) to reimburse the Trustee (other than from amounts
representing Charged-off Loan Proceeds) for any Nonrecoverable
Advance previously made by the Trustee pursuant to Section
4.01(d) hereof, such right of reimbursement pursuant to this
subclause (v) being limited to amounts not otherwise reimbursed
to the Trustee pursuant to Section 3.08(a)(iv) hereof;
(vi) upon receipt with written instructions by the Master
Servicer, deposit all or a portion of the Credit Insurance
Premium into the Premium Account; and
(vii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
89
(c) The Trustee shall withdraw funds from the Carryover Reserve
Fund 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 the third paragraph of
Section 8.11). In addition, the Trustee may from time to time make withdrawals
from the Carryover Reserve Fund for the following purposes:
(1) to withdraw any amount deposited in the Carryover
Reserve Fund and not required to be deposited therein; and
(2) to clear and terminate the Carryover Reserve Fund upon
termination of the Agreement pursuant to Section 9.01 hereof.
Section 3.09 [Reserved].
Section 3.10 Maintenance of Hazard Insurance.
The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is at
least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan 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 Master 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 described
below. Pursuant to Section 3.05 hereof, any amounts collected by the Master
Servicer under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Certificate
Account. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating monthly distributions to
the Certificateholders or remittances to the Trustee for their benefit, be
added to the principal balance of the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds or Subsequent Recoveries to the extent permitted by
Section 3.08 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 Master Servicer shall cause flood insurance to be
maintained with respect to such Mortgage Loan. Such flood insurance shall be
in an amount equal to the 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. If the hazard policy contains a deductible
clause, the Master Servicer will be required to deposit from its own
90
funds into the Certificate Account the amounts that would have been deposited
therein but for the deductible clause.
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 Master Servicer shall to the extent that it has knowledge of
such conveyance, enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer is not required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies
the terms and conditions contained in the Mortgage Note and Mortgage related
thereto and the consent of the mortgagee under such Mortgage Note or Mortgage
is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that the Master Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Master Servicer is
authorized, subject to Section 3.11(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 Master Servicer enters such
agreement) by the applicable Required Insurance Policies. The Master 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. The Master Servicer shall notify the
Trustee that any such substitution, modification or assumption agreement has
been completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
(b) Subject to the Master 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 Master Servicer shall prepare and deliver or cause to be
prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to
whom the Mortgaged Property is to be conveyed and such modification agreement
or supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person. In connection with
any such assumption, no material term of the Mortgage Note (including, but not
limited to,
91
the Mortgage Rate, the amount of the Scheduled Payment and any other term
affecting the amount or timing of payment on the Mortgage Loan) may be
changed. In addition, the substitute Mortgagor and the Mortgaged Property must
be acceptable to the Master Servicer in accordance with its underwriting
standards as then in effect. The Master Servicer shall notify the Trustee that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee the original of such substitution or assumption agreement,
which in the case of the original shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement will be retained by the
Master Servicer as additional servicing compensation.
Section 3.12 Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized
Losses; Repurchase of Certain Mortgage Loans;
Auction of Charged-off Mortgage Loans.
(a) Notwithstanding the first sentence of Section 3.01, the
Master Servicer may agree to any modification of any Mortgage Loan (the
"Modified Mortgage Loan") if (i) CHL purchases the Modified Mortgage Loan from
the Trust Fund immediately following the modification as described below and
(ii) the Stated Principal Balance of such Mortgage Loan, when taken together
with the aggregate of the Stated Principal Balances of all other Mortgage
Loans that have been so modified since the Closing Date at the time of those
modifications, does not exceed an amount equal to 5% of the aggregate
Certificate Principal Balance of the related Certificates. Effective
immediately after the modification, and, in any event, on the same Business
Day on which the modification occurs, all interest of the Trustee in the
Modified Mortgage Loan shall automatically be deemed transferred and assigned
to CHL and all benefits and burdens of ownership thereof, including the right
to accrued interest thereon from the date of modification and the risk of
default thereon, shall pass to CHL. The Master Servicer shall promptly deliver
to the Trustee a certification of a Servicing Officer to the effect that all
requirements of this paragraph have been satisfied with respect to the
Modified Mortgage Loan. For federal income tax purposes, the Trustee shall
account for such purchase as a prepayment in full of the Modified Mortgage
Loan. CHL shall remit the Purchase Price to the Master Servicer for deposit
into the Certificate Account pursuant to Section 3.05 within one Business Day
after the purchase of the Modified Mortgage Loan. Upon receipt by the Trustee
of written notification of any such deposit signed by a Servicing Officer, the
Trustee shall release to CHL or its designee the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in CHL any Modified
Mortgage Loan previously transferred and assigned pursuant hereto. CHL
covenants and agrees to indemnify the Trust Fund against any liability for any
"prohibited transaction" taxes and any related interest, additions, and
penalties imposed on the Trust Fund established hereunder as a result of any
modification of a Mortgage Loan effected pursuant to this subsection (a), any
holding of a Modified Mortgage Loan by the Trust Fund or any purchase of a
Modified Mortgage Loan by CHL (but such obligation shall not prevent CHL or
any other appropriate Person from in good faith contesting any such tax in
appropriate proceedings and shall not prevent CHL from withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). CHL
shall have no right of reimbursement for any amount paid pursuant to the
foregoing indemnification, except to the extent that the amount of any tax,
interest, and
92
penalties, together with interest thereon, is refunded to the Trust Fund or
CHL. If the Master Servicer agrees to a modification of any Mortgage Loan
pursuant to this Section 3.12(a), and if such Mortgage Loan carries a
Prepayment Charge provision, CHL shall deliver to the Trustee the amount of
the Prepayment Charge, if any, that would have been due had such Mortgage Loan
been prepaid at the time of such modification, for deposit into the
Certificate Account (not later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date immediately succeeding the date of such modification)
for distribution in accordance with the terms of this Agreement.
(b) The Master Servicer shall use reasonable efforts to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments. In connection with such foreclosure or other conversion,
the Master Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and the requirements of the insurer under any
Required Insurance Policy; provided that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan after reimbursement to itself of such expenses and (ii) that
such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account pursuant to Section 3.08 hereof). The Master Servicer
shall be responsible for all other costs and expenses incurred by it in any
such proceedings; provided that it shall be entitled to reimbursement thereof
from the proceeds of liquidation of the related Mortgaged Property and any
related Subsequent Recoveries, as contemplated in Section 3.08 hereof. If the
Master Servicer has knowledge that a Mortgaged Property that the Master
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 Master Servicer, the Master Servicer
will, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with its established environmental review
procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such
REO Property solely as the Trustee hereunder and not in its individual
capacity. The Master Servicer shall ensure that the title to such REO Property
references this Agreement and the Trustee's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Master Servicer and the Certificateholders for the period
prior to the sale of such REO Property. The Master Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO
Property at such times as is necessary to enable the Trustee to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Certificate
Account no later than the close of business on each
93
Determination Date. The Master 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 Master Servicer shall dispose of such
Mortgaged Property as soon as practicable in a manner that maximizes the
Liquidation Proceeds, but in no event later than three years after its
acquisition by the Trust Fund or, at the expense of the Trust Fund, the Master
Servicer shall 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. In the event the Trustee shall have been supplied with an Opinion of
Counsel (such opinion not to be an expense of the Trustee) 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 as defined in section 860F of the Code or
cause any REMIC formed hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding, and the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion
of Counsel) after the expiration of such three-year period. Notwithstanding
any other provision of this Agreement, no Mortgaged Property acquired by the
Trust Fund shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such Mortgaged Property
to fail to qualify as "foreclosure property" within the meaning of section
860G(a)(8) of the Code or (ii) subject the Trust Fund 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 Master
Servicer has agreed to indemnify and hold harmless the Trust Fund with respect
to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of
bringing such a proceeding. The income earned from the management of any
Mortgaged Properties acquired through foreclosure or other judicial
proceeding, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management and
net of unreimbursed 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 Certificate 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 and any Subsequent Recoveries, net of any payment to the Master Servicer
as provided above, shall be deposited in the Certificate Account as provided
in Section 3.05 for distribution on the related
94
Distribution Date, except that any Excess Proceeds shall be retained by the
Master Servicer as additional servicing compensation.
The proceeds of any Liquidated Mortgage 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 Master 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 Master Servicer for any unreimbursed
Advances, pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan 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.
(c) [Reserved].
(d) The Master 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 150 days or more
delinquent at a price equal to the Purchase Price; provided, however, that the
Master Servicer may only exercise this right on or before the last day of the
calendar month in which such Mortgage Loan became 150 days delinquent (such
month, the "Eligible Repurchase Month"); provided further, that any such
Mortgage Loan which becomes current but thereafter becomes delinquent may be
purchased by the Master Servicer pursuant to this Section in any ensuing
Eligible Repurchase Month. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Certificate Account. Any purchase of a
Mortgage Loan pursuant to this Section 3.12(d) shall be accomplished by
remittance to the Master Servicer for deposit in the Certificate Account of
the Purchase Price. The Trustee, upon receipt of certification from the Master
Servicer of such deposit and a Request for File Release from the Master
Servicer, shall release or cause to be released to the purchaser of such
Mortgage Loan the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto
and the purchaser of such Mortgage Loan shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation
to the Trustee or the Certificateholders with respect thereto.
(e) The Master Servicer shall use reasonable efforts to solicit
bids on a quarterly basis from at least two unaffiliated third parties for the
purchase of a Charged-off Mortgage Loan during the related Auction Period. If
more than one Charged-off Mortgage Loan exists, the Master Servicer may
solicit bids for a single Charged-off Mortgage Loan, a portion of the
outstanding Charged-off Mortgage Loans or all of the outstanding Charged-off
Mortgage Loans. If fewer than two bids with respect to a Charged-off Mortgage
Loan are received during the related Auction Period, the Master Servicer
shall, in accordance with Section 3.12(b), use reasonable efforts to foreclose
the Mortgaged Property securing the related Charged-off Mortgage Loan to the
extent that the Master Servicer determines that the proceeds of such
95
foreclosure would exceed the costs and expenses of bringing such a proceeding.
If two or more bids with respect to a Charged-off Mortgage Loan are received
during the related Auction Period, the Master Servicer shall arrange for the
sale of the Charged-off Mortgage Loan to the highest bidder. The Master
Servicer shall prepare any necessary documentation required to transfer title
to the Charged-off Mortgage Loans to the related purchaser. The Master
Servicer shall deduct from the proceeds of the sale or foreclosure of such
Charged-off Mortgage Loan the related Charged-off Mortgage Loan Servicing Fee
and any unreimbursed Servicing Advances with respect to such Charged-off
Mortgage Loan in accordance with Section 3.08. The Master Servicer and its
affiliates shall not purchase Charged-off Mortgage Loans in any auction
described in this subsection.
Section 3.13 Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will promptly
notify the Trustee by delivering a Request for File Release. Upon receipt of
such request, the Trustee shall promptly release the related Mortgage File to
the Master Servicer, and the Trustee shall at the Master Servicer's direction
execute and deliver to the Master Servicer the request for reconveyance, deed
of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of
cancellation thereon. The Master Servicer is authorized to cause the removal
from the registration on the MERS(R) System of such Mortgage and to execute
and deliver, on behalf of the Trust Fund and the Certificateholders or any of
them, any and all instruments of satisfaction or cancellation or of partial or
full release. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account, the Distribution Account, the Carryover Reserve Fund 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 shall, upon delivery to the Trustee
of a Request for Document Release or a Request for File Release, as
applicable, release the documents specified in such request or the Mortgage
File, as the case may be, to the Master Servicer. Subject to the further
limitations set forth below, the Master Servicer shall cause the Mortgage File
or documents so released to be returned to the Trustee when the need therefor
by the Master Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the Certificate Account,
in which case the Master Servicer shall deliver to the Trustee a Request for
File Release for any remaining documents in the Mortgage File not in the
possession of the Master Servicer.
If the Master Servicer at any time seeks to initiate a
foreclosure proceeding in respect of any Mortgaged Property as authorized by
this Agreement, the Master Servicer shall deliver or cause to be delivered to
the Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided
96
by the Mortgage Note or the Mortgage or otherwise available at law or in
equity. Notwithstanding the foregoing, the Master Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have
been released by the Trustee to be returned to the Trustee within 21 calendar
days after possession thereof shall have been released by the Trustee unless
(i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Certificate Account,
and the Master Servicer shall have delivered to the Trustee a Request for File
Release 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 Master Servicer shall have
delivered to the Trustee 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
Master Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Trustee as required by this Agreement
all documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise
are collected by the Master Servicer as Liquidation Proceeds, Insurance
Proceeds or Subsequent Recoveries in respect of any Mortgage Loan. All
Mortgage Files and funds collected or held by, or under the control of, the
Master Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds or Subsequent
Recoveries including but not limited to, any funds on deposit in the
Certificate Account, shall be held by the Master Servicer for and on behalf of
the Trust Fund and shall be and remain the sole and exclusive property of the
Trust Fund, subject to the applicable provisions of this Agreement. The Master
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Certificate Account, the
Distribution Account, the Pre-Funding Account, the Premium Account, the
Carryover Reserve Fund or in any Escrow Account (as defined in Section 3.06),
or any funds that otherwise are or may become due or payable to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer, 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 Master Servicer shall be
entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Master Servicer under this Agreement.
Section 3.15 Servicing Compensation.
As compensation for its activities hereunder, the Master
Servicer shall be entitled to retain or withdraw from the Certificate 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 for the period covered by such
interest payment.
97
Additional servicing compensation in the form of any Excess
Proceeds, assumption fees, late payment charges, Prepayment Interest Excess,
and all income and gain net of any losses realized from Permitted Investments
shall be retained by the Master Servicer to the extent not required to be
deposited in the Certificate Account pursuant to Section 3.05 or 3.12(b)
hereof. The Master 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 Master Servicer shall provide to the OTS and the FDIC and
to comparable regulatory authorities supervising Holders of the Certificates
and Certificate Owners and the examiners and supervisory agents of the OTS,
the FDIC and such other authorities, access to the documentation regarding the
Mortgage Loans required by applicable regulations of the OTS and the FDIC.
Such access shall be afforded without charge, but only upon reasonable and
prior written request and during normal business hours at the offices of the
Master Servicer designated by it. Nothing in this Section shall limit the
obligation of the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
Section 3.17 Annual Statement as to Compliance.
(a) The Master Servicer shall deliver to the Depositor, the
Certificate Insurer and the Trustee on or before March 15 of each year,
commencing with its 2008 fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year (or applicable portion thereof) and of the
performance of the Master Servicer under this Agreement, has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Master Servicer has fulfilled all its obligations
under this Agreement, in all material respects throughout such year (or
applicable portion thereof), or, if there has been a failure to fulfill any
such obligation in any material respect, specifying each such failure known to
such officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Subservicer has fulfilled all its obligations under
its Subservicing Agreement in all material respects throughout such year, or,
if there has been a failure to fulfill any such obligation in any material
respect specifying each such failure known to such officer and the nature and
status thereof.
(b) The Master Servicer shall cause each Subservicer to deliver
to the Depositor, the Certificate Insurer and the Trustee on or before March
15 of each year, commencing with its 2008 fiscal year, an Officer's
Certificate stating, as to the signer thereof, that (i) a review of the
activities of such Subservicer during the preceding calendar year (or
applicable portion thereof) and of the performance of the Subservicer under
the applicable Subservicing Agreement or primary servicing agreement, has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, such Subservicer has fulfilled all its
obligations under the applicable Subservicing Agreement or
98
primary servicing agreement, in all material respects throughout such year (or
applicable portion thereof), or, if there has been a failure to fulfill any
such obligation in any material respect, specifying each such failure known to
such officer and the nature and status thereof.
(c) The Trustee shall forward a copy of each such statement to
each Rating Agency. Copies of such statement shall be provided by the Trustee
to any Certificateholder or Certificate Owner upon request at the Master
Servicer's expense, provided such statement is delivered by the Master
Servicer to the Trustee.
Section 3.18 The Corridor Contract.
CHL shall cause The Bank of New York to enter into the Corridor
Contract Administration Agreement and shall assign all of its right, title and
interest in and to the interest rate corridor transaction evidenced by the
Corridor Contract to, and shall cause all of its obligations in respect of
such transaction to be assumed by, the Corridor Contract Administrator, on the
terms and conditions set forth in the Corridor Contract Assignment Agreement.
The Trustee's rights to receive certain proceeds of the Corridor Contract as
provided in the Corridor Contract Administration Agreement will be an asset of
the Trust Fund but will not be an asset of any REMIC. The Trustee shall
deposit any amounts received from time to time with respect to the Corridor
Contract into the Carryover Reserve Fund. The Master Servicer shall deposit
any amounts received on behalf of the Trustee from time to time with respect
to the Corridor Contract into the Carryover Reserve Fund.
No later than two Business Days following each Distribution
Date, the Trustee shall provide the Corridor Contract Administrator with
information regarding the Certificate Principal Balance of the Class A-1-A
Certificates after all distributions on such Distribution Date.
The Trustee shall direct the Corridor Contract Administrator to
terminate the Corridor Contract upon the occurrence of certain events of
default or termination events to the extent specified thereunder. Upon any
such termination, the Corridor Contract Counterparty will be obligated to pay
the Corridor Contract Administrator an amount in respect of such termination,
and the portion of such amount that is distributable to the Trust Fund
pursuant to the Corridor Contract Administration Agreement and received by the
Trustee or the Master Servicer for the benefit of the Trust Fund, as the case
may be, in respect of such termination shall be deposited and held in the
Carryover Reserve Fund to pay Net Rate Carryover for the Class A-1-A
Certificates as provided in Section 4.04(e) on the Distribution Dates
following such termination to and including the Corridor Contract Termination
Date, and shall not be available for distribution to the Class C Certificates
pursuant to Section 4.08(c) until such Corridor Contract Termination Date. On
the Corridor Contract Termination Date, after all other distributions on such
date, if any such amount in respect of early termination of the Corridor
Contract remains in the Carryover Reserve Fund, such amounts shall be
distributed by the Trustee to the Class C Certificates.
Section 3.19 [Reserved].
99
Section 3.20 Prepayment Charges.
(a) Notwithstanding anything in this Agreement to the contrary,
in the event of a Principal Prepayment in full or in part of a Mortgage Loan,
the Master Servicer may not waive any Prepayment Charge or portion thereof
required by the terms of the related Mortgage Note unless (i) such Mortgage
Loan is in default or the Master Servicer believes that such a default is
imminent, and the Master Servicer determines that such waiver would maximize
recovery of Liquidation Proceeds for such Mortgage Loan, taking into account
the value of such Prepayment Charge, or (ii) (A) the enforceability thereof is
limited (1) by bankruptcy, insolvency, moratorium, receivership, or other
similar law relating to creditors' rights generally or (2) due to acceleration
in connection with a foreclosure or other involuntary payment, or (B) the
enforceability is otherwise limited or prohibited by applicable law. In the
event of a Principal Prepayment in full or in part with respect to any
Mortgage Loan, the Master Servicer shall deliver to the Trustee an Officer's
Certificate substantially in the form of Exhibit T no later than the third
Business Day following the immediately succeeding Determination Date with a
copy to the Class P Certificateholders. If the Master Servicer has waived or
does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Master Servicer, other than as provided above, the Master Servicer shall
deliver to the Trustee, together with the Principal Prepayment in full or in
part, the amount of such Prepayment Charge (or such portion thereof as had
been waived) for deposit into the Certificate Account (not later than 1:00
p.m. Pacific time on the immediately succeeding Master Servicer Advance Date,
in the case of such Prepayment Charge) for distribution in accordance with the
terms of this Agreement.
(b) Upon discovery by the Master Servicer or a Responsible
Officer of the Trustee of a breach of the foregoing subsection (a), the party
discovering the breach shall give prompt written notice to the other parties.
(c) CHL represents and warrants to the Depositor and the
Trustee, as of the Closing Date and each Subsequent Transfer Date, that the
information in the Prepayment Charge Schedule (including the attached
prepayment charge summary) is complete and accurate in all material respects
at the dates as of which the information is furnished and each Prepayment
Charge is permissible and enforceable in accordance with its terms under
applicable state law, except as the enforceability thereof is limited due to
acceleration in connection with a foreclosure or other involuntary payment.
(d) Upon discovery by the Master Servicer or a Responsible
Officer of the Trustee of a breach of the foregoing clause (c) that materially
and adversely affects right of the Holders of the Class P Certificates to any
Prepayment Charge, the party discovering the breach shall give prompt written
notice to the other parties hereto. Within 60 days of the earlier of discovery
by the Master Servicer or receipt of notice by the Master Servicer of breach,
the Master Servicer shall cure the breach in all material respects or shall
pay into the Certificate Account the amount of the Prepayment Charge that
would otherwise be due from the Mortgagor, less any amount representing such
Prepayment Charge previously collected and paid by the Master Servicer into
the Certificate Account.
100
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports.
(a) Within two Business Days after each Determination Date, the
Master Servicer shall deliver to the Trustee by facsimile or electronic mail
(or by such other means as the Master Servicer and the Trustee, as the case
may be, may agree from time to time) a Remittance Report with respect to the
related Distribution Date. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.
(b) Subject to the conditions of this Article IV, the Master
Servicer, as required below, shall make an Advance and deposit such Advance in
the Certificate Account. Each such Advance shall be remitted to the
Certificate Account no later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date in immediately available funds. The Trustee will provide
notice to the Master Servicer by facsimile by the close of business on any
Master Servicer Advance Date in the event that the amount remitted by the
Master Servicer to the Trustee on the Distribution Account Deposit Date is
less than the Advances required to be made by the Master Servicer for such
Distribution Date. The Master Servicer shall be obligated to make any such
Advance only to the extent that such advance would not be a Nonrecoverable
Advance; provided however, that the Master Servicer shall not have the
obligation (and shall not) make an Advance with respect to any Charged-off
Mortgage Loan after the related Charge-off Date. If the Master Servicer shall
have determined that it has made a Nonrecoverable Advance or that a proposed
Advance or a lesser portion of such Advance would constitute a Nonrecoverable
Advance, the Master 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, each Rating Agency, the
Certificate Insurer and the Trustee an Officer's Certificate setting forth the
basis for such determination.
(c) In lieu of making all or a portion of such Advance from its
own funds, the Master Servicer may (i) cause to be made an appropriate entry
in its records relating to the Certificate Account that any Amount Held for
Future Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or becomes a Liquidated Mortgage Loan
or a Charged-off Mortgage Loan or until the purchase or repurchase thereof (or
substitution therefor) from the Trustee pursuant to any applicable provision
of this Agreement, except as otherwise provided in this Section 4.01.
(d) If the Master Servicer determines that it will be unable to
comply with its obligation to make the Advances as and when described in
paragraphs (b) and (c) immediately
101
above, it shall use its best efforts to give written notice thereof to the
Trustee (each such notice a "Trustee Advance Notice"; and such notice may be
given by facsimile), not later than 3:00 p.m., New York time, on the Business
Day immediately preceding the related Master Servicer Advance Date, specifying
the amount that it will be unable to deposit (each such amount an "Advance
Deficiency") and certifying that such Advance Deficiency constitutes an
Advance hereunder and is not a Nonrecoverable Advance. If the Trustee receives
a Trustee Advance Notice on or before 3:30 p.m., (New York time) on a Master
Servicer Advance Date, the Trustee shall, not later than 3:00 p.m., (New York
time), on the related Distribution Date, deposit in the Distribution Account
an amount equal to the Advance Deficiency identified in such Trustee Advance
Notice unless it is prohibited from so doing by applicable law.
Notwithstanding the foregoing, the Trustee shall not be required to make such
deposit if the Trustee shall have received written notification from the
Master Servicer that the Master Servicer has deposited or caused to be
deposited in the Certificate Account an amount equal to such Advance
Deficiency. All Advances made by the Trustee pursuant to this Section 4.01(d)
shall accrue interest on behalf of the Trustee at the Trustee Advance Rate
from and including the date such Advances are made to but excluding the date
of repayment, with such interest being an obligation of the Master Servicer
and not the Trust Fund. The Master Servicer shall reimburse the Trustee for
the amount of any Advance made by the Trustee pursuant to this Section 4.01(d)
together with accrued interest, not later than 6:00 p.m. (New York time) on
the Business Day following the related Distribution Date. In the event that
the Master Servicer does not reimburse the Trustee in accordance with the
requirements of the preceding sentence, the Trustee shall immediately (i)
terminate all of the rights and obligations of the Master Servicer under this
Agreement in accordance with Section 7.01 and (ii) subject to the limitations
set forth in Section 3.04, assume all of the rights and obligations of the
Master Servicer hereunder.
(e) The Master Servicer shall, not later than the close of
business on the second Business Day immediately preceding each Distribution
Date, deliver to the Trustee a report (in form and substance reasonably
satisfactory to the Trustee) that indicates (i) the Mortgage Loans with
respect to which the Master Servicer has determined that the related Scheduled
Payments should be advanced and (ii) the amount of the related Scheduled
Payments. The Master Servicer shall deliver to the Trustee and the Certificate
Insurer on the related Master Servicer Advance Date an Officer's Certificate
of a Servicing Officer indicating the amount of any proposed Advance
determined by the Master Servicer to be a Nonrecoverable Advance.
Section 4.02 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 Master Servicer shall remit any related
Compensating Interest as part of the related Interest Remittance Amount as
provided in this Agreement. The Master Servicer shall not be entitled to any
recovery or reimbursement for Compensating Interest from the Depositor, the
Trustee, any Seller, the Trust Fund, the Certificate Insurer or the
Certificateholders.
Section 4.03 [Reserved].
102
Section 4.04 Distributions.
(a) On each Distribution Date, the Interest Funds for such
Distribution Date shall be distributed by the Trustee from the Distribution
Account in the following order of priority:
(i) to the Certificate Insurer, the Certificate Insurance
Policy Premium for such Distribution Date;
(ii) concurrently to each Class of Class A Certificates,
the Current Interest for each such Class and such Distribution
Date, pro rata, based on their respective entitlements;
(iii) to the Certificate Insurer, the Certificate
Insurance Reimbursement Amount for such Distribution Date;
(iv) concurrently to each Class of Class A Certificates,
the Interest Carry Forward Amount for each such Class and such
Distribution Date, pro rata, based on their respective
entitlements; and
(v) any remainder as part of the Excess Cashflow.
(b) On each Distribution Date, the Principal Distribution
Amount for such Distribution Date shall be distributed by the Trustee from the
Distribution Account in the following order of priority (with the Principal
Distribution Amount exclusive of the portion thereof consisting of the Extra
Principal Distribution Amount being applied first and the Extra Principal
Distribution Amount being applied thereafter):
(i) to the Certificate Insurer, any Certificate Insurance
Policy Premium for such Distribution Date remaining unpaid
after application of Interest Funds on such Distribution Date;
(ii) to the Class A Certificates, in an amount up to the
Class A Principal Distribution Amount, sequentially:
(a) the NAS Principal Distribution Amount to the
Class A-6 Certificates, until the Certificate Principal
Balance thereof is reduced to zero,
(b) concurrently, to the Class A-1-A and Class A-2-B
Certificates, pro rata, until their respective Certificate
Principal Balances are reduced to zero, and
(c) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class
A-4, Class A-5 and Class A-6 Certificates, in that order,
until their respective Certificate Principal Balances are
reduced to zero;
103
(iii) to the Certificate Insurer, any Certificate
Insurance Reimbursement Amount for such Distribution Date
remaining unpaid after application of Interest Funds on such
Distribution Date; and
(iv) any remainder as part of the Excess Cashflow.
(c) On each Distribution Date, the Charged-off Loan Proceeds
received during the related Due Period, if any, will be distributed
sequentially in the following order (after application of Excess Cashflow on
such Distribution Date):
(i) to the Certificate Insurer, any Certificate
Insurance Reimbursement Amount for such Distribution Date
remaining unpaid after application of Interest Funds, Excess
Cashflow and the Principal Distribution Amount on such
Distribution Date;
(ii) to the Class or Classes of Class A Certificates
then entitled to receive distributions in respect of principal,
in an aggregate amount equal to the Overcollateralization
Deficiency Amount remaining unpaid after taking into account
all distributions on that Distribution Date other than the
distribution of Charged-off Loan Proceeds and the payments
under the Certificate Insurance Policy, payable to each such
Class in the order of priority set forth in Section 4.04(b)
above;
(iii) concurrently, to each Class of Class A
Certificates, pro rata based on the Unpaid Realized Loss
Amounts for those Classes, in an amount equal to the Unpaid
Realized Loss Amount for each such Class (after taking into
account all distributions on that Distribution Date other than
distribution of Charged-off Loan Proceeds and payments under
the Certificate Insurance Policy), provided, however, that to
the extent an Applied Realized Loss Amount was covered under
the Certificate Insurance Policy and not previously paid as
part of the Certificate Insurance Reimbursement Amount, then
any related amounts otherwise payable to the Class A
Certificates pursuant to this clause (iii) will instead be paid
to the Certificate Insurer; and
(iv) to the Class E-P Certificates, any remaining
Charged-off Loan Proceeds.
(d) With respect to any Distribution Date, any Excess Cashflow
shall be distributed to the Classes of Certificates in the following order of
priority:
(1) to the Class or Classes of Class A Certificates then
entitled to receive distributions in respect of principal, in
an aggregate amount equal to the Extra Principal Distribution
Amount, payable as part of the Principal Distribution Amount
pursuant to Section 4.04(b) above;
(2) concurrently, to each Class of Class A Certificates,
pro rata based on the Unpaid Realized Loss Amounts for each
such Classes, in each case in an amount equal to the Unpaid
Realized Loss Amount for such Class; provided, however that to
the extent an Applied Realized Loss Amount was covered under
the Certificate Insurance
104
Policy and not previously paid as part of the Certificate
Insurance Reimbursement Amount, then any related amounts
otherwise payable to the Class A Certificates pursuant to this
clause (2) shall instead be paid to the Certificate Insurer;
(3) to each Class of Class A Certificates (in the case of
the Class A-1-A Certificates, after application of amounts
received by the Trust Fund in respect of the Corridor Contract
to cover Net Rate Carryover), pro rata based on the Certificate
Principal Balances thereof, to the extent needed to pay any Net
Rate Carryover for each such Class; provided that any Excess
Cashflow remaining after such allocation to pay Net Rate
Carryover based on the Certificate Principal Balances of those
Certificates shall be distributed to each Class of Class A
Certificates with respect to which there remains any unpaid Net
Rate Carryover (after the distribution based on Certificate
Principal Balances), pro rata, based on the amount of such
unpaid Net Rate Carryover;
(4) to the Carryover Reserve Fund, in an amount equal to
the Required Carryover Reserve Fund Deposit (after giving
effect to other deposits and withdrawals therefrom on such
Distribution Date without regard to any amounts allocated to
the Trust Fund in respect of the Corridor Contract not required
to cover Net Rate Carryover on the Class A-1-A Certificates on
such Distribution Date);
(5) to the Class C Certificateholders, the Class C
Distributable Amount for such Distribution Date; and
(6) to the Class A-R Certificates, any remaining amount.
(e) On each Distribution Date on or prior to the Corridor
Contract Termination Date and prior to the distribution of Excess Cashflow on
such Distribution Date, amounts received by the Trustee in respect of the
Corridor Contract for such Distribution Date shall be withdrawn from the
Carryover Reserve Fund and distributed to the Class A-1-A Certificates to the
extent needed to pay any Net Rate Carryover with respect to such Class. Any
amounts remaining in the Carryover Reserve Fund in respect of the Corridor
Contract shall be distributed to the Holders of the Class C Certificates as
provided in Section 4.08(c).
(f) To the extent that a Class of Interest-Bearing Certificates
receives interest in excess of the applicable Net Rate Cap, if such interest
is paid pursuant to Section 4.04(d), then it shall be deemed to have been paid
to the Carryover Reserve Fund and then paid by the Carryover Reserve Fund to
those Certificateholders. For purposes of the Code, amounts deemed deposited
in the Carryover Reserve Fund shall be deemed to have first been distributed,
in the case of any such amounts relating to the Corridor Contract, to the
Class C Certificates.
(g) On each Distribution Date, all Prepayment Charges
(including amounts deposited in connection with the full or partial waiver of
such Prepayment Charges pursuant to Section 3.20) shall be allocated to the
Class P Certificates.
(h) On each Distribution Date, the Trustee shall allocate any
Applied Realized Loss Amount to reduce the Certificate Principal Balances of
the Class A Certificates, pro rata, based on their respective Certificate
Principal Balances, until the Certificate Principal Balances of such Classes
have been reduced to zero. On each Distribution Date, the Certificate Insurer
is
105
obligated to pay to the Class A Certificates an amount equal to the Applied
Realized Loss Amount allocated to the Class A Certificates on such
Distribution Date; provided, however, if the Premium Account is funded
pursuant to Section 3.08(b)(vi), the Certificate Insurer shall only be
obligated to pay any Applied Realized Loss Amount to the extent that funds on
deposit in the Premium Account (after giving effect to all deposits to be made
to the Premium Account on such Distribution Date) are insufficient to cover
the Applied Realized Loss Amount for such Distribution Date.
(i) On each Distribution Date, the Trustee shall allocate the
amount of the Subsequent Recoveries with respect to the Mortgage Loans, if
any, to increase the Certificate Principal Balances of the Class A
Certificates to which Applied Realized Loss Amounts have been previously
allocated, on a pro rata basis according to their respective Certificate
Principal Balances and in each case by not more than the amount of the Unpaid
Realized Loss Amount of such Class; provided, however, that to the extent an
Applied Realized Loss Amount was covered under the Certificate Insurance
Policy, then any related Subsequent Recovery otherwise payable to the Class A
Certificateholders will instead be paid to the Certificate Insurer and will
not increase the Certificate Principal Balances of any Class A Certificates by
the amount of any such Subsequent Recoveries.
Holders of Certificates to which any Subsequent Recoveries have
been allocated shall not be entitled to any payment in respect of Current
Interest on the amount of such increases for any Accrual Period preceding the
Distribution Date on which such increase occurs.
(j) On any Distribution Date on which there are any amounts on
deposit in the Premium Account (after taking into account any deposit to the
Premium Account on such Distribution Date pursuant to Section 3.08(b)(vi)) and
(i) any amounts payable to the Class A Certificates pursuant to Sections
4.04(a)(ii) or 4.04(a)(iv) remain unpaid, (ii) Applied Realized Loss Amounts
are allocable to the Class A Certificates on such Distribution Date, (iii)
Unpaid Realized Loss Amounts are outstanding and/or (iv) on the Final
Scheduled Distribution Date, the aggregate Certificate Principal Balance of
the Class A Certificates has not been reduced to zero after making all
distributions on such Distribution Date but prior to any draw on the
Certificate Insurance Policy, the Trustee shall apply the amounts on deposit
in the Premium Account in the following amounts and order of priority:
(i) first, concurrently to each Class of Class A
Certificates, the unpaid Current Interest for each such Class
and such Distribution Date, pro rata, based on their respective
entitlements;
(ii) second, concurrently to each Class of Class A
Certificates, the unpaid Interest Carry Forward Amount for each
such Class and such Distribution Date, pro rata, based on their
respective entitlements;
(iii) third, concurrently, to each Class of Class A
Certificates, in an amount up to the Applied Realized Loss
Amount allocable to such Class pursuant to Section 4.04(h) on
such Distribution Date, pro rata, based on the amount of
Applied Realized Loss Amounts allocable to each such Class on
such Distribution Date;
106
(iv) fourth, concurrently, to each Class of Class A
Certificates, pro rata based on the Unpaid Realized Loss
Amounts for such Classes, in each case in an amount up to the
Unpaid Realized Loss Amount for such Class; provided, however
that to the extent an Applied Realized Loss Amount was covered
under the Certificate Insurance Policy and not previously paid
as part of the Certificate Insurance Reimbursement Amount, then
any related amounts otherwise payable to the Class A
Certificates pursuant to this paragraph shall instead be paid
to the Certificate Insurer;
(v) fifth, on the Final Scheduled Distribution Date, to
each Class of Class A Certificates with an outstanding
Certificate Principal Balance, pro rata, until the Certificate
Principal Balances thereof are reduced to zero; and
(vi) sixth, to the Certificate Insurer, the amount of any
Certificate Insurance Reimbursement Amount remaining unpaid.
(k) 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 (i) such
Holder has so notified the Trustee at least five Business Days prior to the
related Record Date and (ii) such Holder shall hold Regular Certificates with
an aggregate initial Certificate Principal Balance of not less than $1,000,000
or evidencing a Percentage Interest aggregating 10% or more with respect to
such Class 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. Payments to the Certificate Insurer shall be made
by wire transfer of immediately available funds to the following account,
unless the Certificate Insurer notifies the Trustee in writing: Account Name:
MBIA Insurance Corporation, Account Number ▇▇▇-▇-▇▇▇▇▇▇, Bank - JPMorgan Chase
Bank, ABA Number ▇▇▇-▇▇▇-▇▇▇, Re: CWHEQ 2007-S1, Policy No. 492490 Class A
Certificates.
On or before 5:00 p.m. Pacific time on the fifth Business Day
following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee (in the form of a
computer readable magnetic tape or by such other means as the Master Servicer
and the Trustee may agree from time to time) containing such data and
information as agreed to by the Master Servicer and the Trustee such as to
permit the Trustee to prepare the Monthly Statement and make the required
distributions for the related Distribution Date (the "Remittance Report"). The
Trustee shall not be responsible to recompute, recalculate or verify
information provided to it by the Master Servicer and shall be permitted to
conclusively rely on any information provided to it by the Master Servicer.
107
Section 4.05 Monthly Statements to Certificateholders.
(a) Concurrently with each distribution on a Distribution Date,
the Trustee will forward by mail to each Rating Agency, the Certificate
Insurer and the NIM Insurer and make available to Certificateholders and the
Certificate Insurer on the Trustee's website
(▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇) a statement generally setting forth the
information contained in Exhibit W.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information regarding (i) the amount of distributions to that
Certificateholder allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein, (ii) the
amount of distributions to that Certificateholder allocable to interest and
(iii) the related amount of the Servicing Fees paid to or retained by the
Master Servicer, in each case 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 A-R Certificates 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 A-R Certificates with respect
to the following matters:
(1) The original projected principal and interest cash
flows on the Closing Date on each related Class of regular and
residual interests created hereunder and on the Mortgage Loans,
based on the Prepayment Assumption;
(2) The projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to
each related Class of regular and residual interests created
hereunder and the Mortgage Loans, based on the Prepayment
Assumption;
(3) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal
and interest cash flows described above;
(4) 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 related 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;
108
(5) 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 related REMIC with respect to such
regular interests or bad debt deductions claimed with respect
to the Mortgage Loans;
(6) The amount and timing of any non-interest expenses of
the related REMIC; and
(7) Any taxes (including penalties and interest) imposed
on the related REMIC, 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 (1), (2), (3) and (4) above
shall be provided by the Depositor pursuant to Section 8.11.
Section 4.06 Certificate Insurance Policy; Rights of the
Certificate Insurer.
(a) If, on the third Business Day before any Distribution Date,
the Trustee determines that a there will be a Deficiency Amount for such
Distribution Date, the Trustee shall determine the amount of any such
deficiency and shall give notice to the Certificate Insurer by telephone or
telecopy of the amount of such deficiency, confirmed in writing by notice
substantially in the form of Exhibit A to the Certificate Insurance Policy, by
12:00 p.m., New York time on such third Business Day. The Trustee's
responsibility for delivering the notice to the Certificate Insurer as
provided in the preceding sentence is limited to the availability, timeliness
and accuracy of the information provided by the Master Servicer.
(b) In the event the Trustee receives a certified copy of an
order of the appropriate court that any scheduled payment of principal or
interest on a Class A Certificate has been voided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall (i)
promptly notify the Certificate Insurer and (ii) comply with the provisions of
the Certificate Insurance Policy, to obtain payment by the Certificate Insurer
of such voided scheduled payment. In addition, the Trustee shall mail notice
to all Holders of the Class A Certificates so affected that, in the event that
any such Holder's scheduled payment is so recovered, such Holder will be
entitled to payment pursuant to the terms of the Certificate Insurance Policy,
a copy of which shall be made available to such Holders by the Trustee. The
Trustee shall furnish to the Certificate Insurer its records listing the
payments on the affected Class A Certificates, if any, that have been made by
the Trustee and subsequently recovered from the affected Holders, and the
dates on which such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes
hereof, the Trustee shall establish a special purpose trust account in the
name of the Trustee for the benefit of Holders of the Class A Certificates
(the "Class A Insurance Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class A Insurance Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount
paid under the Certificate Insurance Policy into the Class A Insurance
Payments Account and distribute such amount only for the purposes of making
the payments to Holders of the Class A Certificates, in respect of the related
Deficiency Amount for which the related claim was made
109
under the Certificate Insurance Policy. Such amounts shall be allocated by the
Trustee to Holders of Class A Certificates affected by such shortfalls in the
same manner as principal and interest payments are to be allocated with
respect to such Certificates pursuant to Section 4.04. It shall not be
necessary for such payments to be made by checks or wire transfers separated
from the checks or wire transfers used to make regular payments hereunder with
funds withdrawn from the Distribution Account. However, any payments made on
the Class A Certificates from funds in the Class A Insurance Payments Account
shall be noted as provided in subsection (e) below. Funds held in the Class A
Insurance Payments Account shall not be invested by the Trustee.
(d) Any funds received from the Certificate Insurer for deposit
into the Class A Insurance Payments Account pursuant to the Certificate
Insurance Policy in respect of a Distribution Date or otherwise as a result of
any claim under the Certificate Insurance Policy shall be applied by the
Trustee directly to the payment in full (i) of the related Deficiency Amount
on such Distribution Date or (ii) of other amounts payable under the
Certificate Insurance Policy. Funds received by the Trustee as a result of any
claim under the Certificate Insurance Policy shall be used solely for payment
to the Holders of the Class A Certificates and may not be applied for any
other purpose, including, without limitation, satisfaction of any costs,
expenses or liabilities of the Trustee, the Master Servicer, the Depositor,
the NIM Insurer or the Trust Fund. Any funds remaining in the Class A
Insurance Payments Account on the first Business Day after each Distribution
Date shall be remitted promptly to the Certificate Insurer in accordance with
the instructions set forth in Section 4.04(k).
(e) The Trustee shall keep complete and accurate records in
respect of (i) all funds remitted to it by the Certificate Insurer and
deposited into the Class A Insurance Payments Account and (ii) the allocation
of such funds to (A) payments of interest on and principal in respect of any
Class A Certificates and (B) the amount of funds available to make
distributions on the Class A Certificates pursuant to Sections 4.04(a), (b),
(c), (d), (h), (i) and (j). The Certificate Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon
three Business Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A
Certificate by its acceptance of the Class A Certificate agrees, that, without
the need for any further action on the part of the Certificate Insurer or the
Trustee, to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on any Class A
Certificates, the Certificate Insurer will be fully subrogated to the rights
of the Holders of such Class A Certificates to receive such principal and
interest from the Trust Fund. The Holders of the Class A Certificates, by
acceptance of the Class A Certificates, assign their rights as Holders of the
Class A Certificates to the extent of the Certificate Insurer's interest with
respect to amounts paid under the Certificate Insurance Policy. Anything
herein to the contrary notwithstanding, solely for purposes of determining the
Certificate Insurer's rights, as applicable, as subrogee for payments
distributable pursuant to Section 4.04, any payment with respect to
distributions to the Class A Certificates which is made with funds received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Class A Certificates from the Trust Fund and shall
not result in the distribution or the provision for the distribution in
reduction of the Certificate Principal Balance of the Class A Certificates
within the meaning of Article IV.
110
(g) Upon its becoming aware of the occurrence of an Event of
Default, the Trustee shall promptly notify the Certificate Insurer of such
Event of Default.
(h) The Trustee shall promptly notify the Certificate Insurer
of either of the following as to which it has actual knowledge: (A) the
commencement of any proceeding by or against the Depositor commenced under the
United States bankruptcy code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding") and
(B) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") of any
distribution made with respect to the Class A Certificates as to which it has
actual knowledge. Each Holder of a Class A Certificate, by its purchase of
Class A Certificates, and the Trustee hereby agrees that the Certificate
Insurer (so long as no Certificate Insurer Default exists) 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 any
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 Certificate Insurer shall be subrogated to the rights of the
Trustee and each Holder of a Class A Certificate in the conduct of any
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.
(i) The Master Servicer shall designate a Certificate Insurer
Contact Person who shall be available to the Certificate Insurer to provide
reasonable access to information regarding the Mortgage Loans. The initial
Certificate Insurer Contact Person is to the attention of Secondary Marketing.
(j) The Trustee shall surrender the Certificate Insurance
Policy to the Certificate Insurer for cancellation upon the reduction of the
Certificate Principal Balance of the Class A Certificates to zero.
(k) The Trustee shall send to the Certificate Insurer the
reports prepared pursuant to Section 3.17 and the statements prepared pursuant
to Section 4.05, as well as any other statements or communications sent to
Holders of the Class A Certificates, in each case at the same time such
reports, statements and communications are otherwise sent.
(l) For so long as there is no continuing default by the
Certificate Insurer under its obligations under the Certificate Insurance
Policy (a "Certificate Insurer Default"), each Holder of a Class A Certificate
agrees that the Certificate Insurer shall be treated by the Depositor, the
Master Servicer and the Trustee as if the Certificate Insurer were the Holder
of all of the Class A Certificates, for the purpose (and solely for the
purpose) of the giving of any consent, the making of any direction or the
exercise of any voting or other control rights otherwise given to the Holders
of the Class A Certificates hereunder.
(m) With respect to this Section 4.06, the terms "Receipt" and
"Received" shall mean actual delivery to the Certificate Insurer, if any,
prior to 12:00 p.m., New York time, on a Business Day; delivery either on a
day that is not a Business Day or after 12:00 p.m., New York time, shall be
deemed to be Receipt on the next succeeding Business Day. If any notice or
111
certificate given under the Certificate Insurance Policy by the Trustee is not
in proper form or is not properly completed, executed or delivered, it shall
be deemed not to have been Received. The Certificate Insurer shall promptly so
advise the Trustee and the Trustee may submit an amended notice.
(n) All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to the Rating Agencies or the Class A
Certificateholders shall also be sent at such time to the Certificate Insurer
at the notice address set forth in Section 10.05.
(o) The Certificate Insurer shall be an express third party
beneficiary of this Agreement for the purpose of enforcing the provisions
hereof to the extent of the Certificate Insurer's rights explicitly specified
herein as if a party hereto.
(p) All references herein to the ratings assigned to the
Certificates and to the interests of any Certificateholders shall be without
regard to the Certificate Insurance Policy, in the case of the Class A
Certificates.
Section 4.07 Termination of the Credit Insurance Policy.
If the Credit Insurance Policy is terminated for any reason
other than the exhaustion of its coverage, or if the claims-paying ability
rating of Credit Insurer is reduced to "A+" or below by S&P or "A1" or below
by ▇▇▇▇▇'▇ or if the Credit Insurer fails to make any payment due under the
Credit Insurance Policy, the Master Servicer shall use its best efforts to
obtain a comparable policy in form and substance acceptable to the Certificate
Insurer from an insurer that is acceptable to the Rating Agencies and to the
Certificate Insurer. The replacement policy shall provide coverage equal to
the then remaining coverage of the Credit Insurance Policy if available.
However, if the premium cost of a replacement policy exceeds the premium cost
of the Credit Insurance Policy, the Master Servicer, at the written direction
of the Certificate Insurer, will either (i) obtain a replacement credit
insurance policy with reduced coverage so that its premium cost will not
exceed the premium cost of the Credit Insurance Policy or (ii) from interest
collections on the Mortgage Loans for each Due Period, deposit into the
Premium Account the amounts that would have been paid as premium on the Credit
Insurance Policy had it not been terminated, which amounts will be available
to make payments as provided in Section 4.04(j) prior to making any draws on
the Certificate Insurance Policy. The amount remaining in the Premium Account
after the payment in full of the Class A Certificates and amounts owing to the
Certificate Insurer will be paid to the Class C Certificates.
In addition, if during the period which the Depositor is
required to file Exchange Act Reports with respect to the Trust Fund, the
Credit Insurer shall fail to provide to the Depositor with any information
required to comply with the Depositor's reporting obligations under the
related Exchange Act Reports, within 5 days of the Depositor's request
therefor, then the Trustee shall act at the written direction of the Depositor
as to whether to terminate the Credit Insurance Policy (either by not paying
the renewal premium or by terminating the Credit Insurance Policy in
accordance with its terms); provided, however, that the Depositor shall not
direct the Trustee to terminate the Credit Insurance Policy until it has
procured one or more replacement credit insurance policies in form and
substance acceptable to the Certificate Insurer covering the then-outstanding
Covered Loans from an insurer under a policy or policies
112
acceptable to the Certificate Insurer and the Rating Agencies and such credit
insurance policy must cover the Covered Loans outstanding as of such date, if
available. The Credit Insurance Policy will not be amended in any manner that
materially and adversely affects the coverage provided thereby without the
prior written consent of the Certificate Insurer.
Section 4.08 Carryover Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the
Certificates, the Carryover Reserve Fund and shall deposit $1,000 therein. The
Carryover Reserve Fund shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled
with, any other moneys, including without limitation, other moneys held by the
Trustee pursuant to this Agreement.
(b) On each Distribution Date, the Trustee shall deposit all
amounts received in respect of the Corridor Contract in the Carryover Reserve
Fund. The Trustee shall make withdrawals from the Carryover Reserve Fund to
make distributions in respect of Net Rate Carryover as to the extent required
by Section 4.04.
(c) Any amounts received in respect of the Corridor Contract
with respect to a Distribution Date and remaining after the distributions
required pursuant to Section 4.04(e) shall be distributed to the Class C
Certificates; provided, however, that if the Corridor Contract is subject to
early termination, early termination payments received in respect of the
Corridor Contract shall be deposited by the Trustee in the Carryover Reserve
Fund and withdrawn from the Carryover Reserve Fund to pay any Net Rate
Carryover for the applicable Classes of Certificates as provided in Section
4.04(e) on the Distribution Dates following such termination to and including
the Corridor Contract Termination Date, but such early termination payments
shall not be available for distribution to the Class C Certificates on future
Distribution Dates until the Corridor Contract Termination Date.
(d) (1) Funds in the Carryover Reserve Fund in respect of
amounts received under the Corridor Contract may be invested in Permitted
Investments at the written direction of the Majority Holder of the Class C
Certificates, which Permitted Investments shall mature not later than 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 the Carryover Reserve Fund, then
such Permitted Investment shall mature not later than such Distribution Date)
and shall not be sold or disposed of prior to maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. In the absence of such written direction, all funds in the
Carryover Reserve Fund in respect of amounts received under the Corridor
Contract shall be invested by the Trustee in The Bank of New York cash
reserves. Any net investment earnings on such amounts shall be payable pro
rata to the Holders of the Class C Certificates in accordance with their
Percentage Interests. Any losses incurred in the Carryover Reserve Fund in
respect of any such investments shall be charged against amounts on deposit in
the Carryover Reserve Fund (or such investments) immediately as realized.
(2) The Trustee shall not be liable for the amount of
any loss incurred in respect of any investment or lack of investment of funds
held in the Carryover Reserve Fund and
113
made in accordance with this Section 4.08. The Carryover Reserve Fund shall
not constitute an asset of any REMIC created hereunder. The Class C
Certificates shall evidence ownership of the Carryover Reserve Fund for
federal tax purposes
114
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates.
The Certificates shall be substantially in the forms attached
hereto as Exhibits A-1-A through ▇-▇, ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇-▇,
Exhibit D-2 and Exhibit E. The Certificates shall be issuable in registered
form, in the minimum dollar denominations, integral dollar multiples in excess
thereof and aggregate dollar denominations as set forth in the following
table:
Original Certificate
Principal Balance/
Integral Multiples in Original Notional
Class Minimum Denomination Excess of Minimum Amount
------------------------------------------------------------------------------
A-1-A $25,000 $1 $ 531,454,000
A-1-B $25,000 $1 $ 165,000,000
A-2 $25,000 $1 $ 175,901,000
A-3 $25,000 $1 $ 310,125,000
A-4 $25,000 $1 $ 119,172,000
A-5 $25,000 $1 $ 138,348,000
A-6 $25,000 $1 $ 160,000,000
E-P (2) (2) N/A
A-R $99.95(1) N/A $100
C N/A N/A N/A
P (2) (2) $100
(1) The Tax Matters Person Certificate may be issued in a denomination of
$0.05.
(2) The minimum denomination for the Class P Certificates is a 20% Percentage
Interest. Any Percentage Interest in excess of 20% is an authorized
denomination.
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the
time when such signatures were affixed, authorized to sign on behalf of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the 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.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
115
Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain 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 the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
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 the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for
any registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under
the Securities Act and any applicable state securities laws or is exempt from
the registration requirements under 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 state securities laws, in order
to assure compliance with the Securities Act and such state securities laws,
the Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall (except in connection with
any transfer of a Private Certificate to an affiliate of the Depositor (either
directly or through a nominee) in connection with the initial issuance of the
Certificates) each certify to the Trustee in writing the facts surrounding the
Transfer in substantially the forms set forth in Exhibit J-2 and, in the case
of a Class A-R Certificate, Exhibit J-1 (the "Transferor Certificate") and (i)
deliver a letter in substantially the form of either Exhibit K (in the case of
the Class P, Class E-P and Class C Certificates only) (the "Investment
Letter") or Exhibit L (in the case of any Private Certificate) (the "Rule 144A
Letter") or (ii) there shall be delivered to the Trustee at the expense of the
Certificateholder desiring to effect such transfer an Opinion of Counsel that
such Transfer may be made pursuant to an exemption from the Securities Act;
provided, however, that in the case of the delivery of an Investment Letter in
connection with the transfer of any Class C, Class E-P or Class P Certificate
to a transferee that is formed with the purpose of issuing notes backed by
116
such Class C, Class E-P or Class P Certificate, as the case may be, clause (b)
and (c) of the form of Investment Letter shall not be applicable and shall be
deleted by such transferee. The Depositor shall provide to any Holder of a
Private Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee and the Master
Servicer shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably
request to meet its obligation under the preceding sentence. Each Holder of a
Private Certificate desiring to effect such Transfer shall, and does hereby
agree to, indemnify the Trustee, the Depositor, the Trust Fund, each Seller,
the Master Servicer, the Certificate Insurer and the NIM Insurer 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 (other than a
transfer of an ERISA-Restricted Certificate to an affiliate of the Depositor
(either directly or through a nominee) in connection with the initial issuance
of the Certificates) shall be made unless the Trustee shall have received
either (i) a representation from the transferee of such Certificate acceptable
to and in form and substance satisfactory to the Trustee (in the event such
Certificate is a Private Certificate, such requirement is satisfied only by
the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit K or Exhibit L, or in the event such
Certificate is a Residual Certificate, such requirement is satisfied only by
the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I), to the effect that (x) such
transferee is not a Plan, or (y) in the case of an ERISA-Restricted
Certificate that has been the subject of an ERISA-Qualifying Underwriting, a
representation that the transferee is an insurance company which is purchasing
such Certificate with funds contained in an "insurance company general
account" (as such term is defined in section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
such Certificate satisfy the requirements for exemptive relief under Sections
I and III of PTCE 95-60 or (ii) in the case of any ERISA-Restricted
Certificate presented for registration in the name of an employee benefit plan
or arrangement subject to ERISA, or a plan or arrangement subject to Section
4975 of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or arrangement or any other person acting on behalf
of any such plan or arrangement, an Opinion of Counsel satisfactory to the
Trustee, addressed to the Trustee and the Master Servicer, to the effect that
the purchase or holding of such ERISA-Restricted Certificate will not result
in a non-exempt prohibited transaction under ERISA or the Code and will not
subject the Trustee or the Master Servicer to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Certificate Insurer, the Master
Servicer, or the Trust Fund. For purposes of the preceding sentence, one of
such representations, as appropriate, 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 such
Class of ERISA-Restricted Certificates) unless the Trustee shall have received
from the transferee an Opinion of Counsel as described in clause (ii) or a
representation letter acceptable in form and substance to the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer
of an ERISA-
117
Restricted Certificate to or on behalf of an employee benefit plan subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code without the
delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
meeting the requirements of clause (i) of the first sentence of this paragraph
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 Trustee, with respect to the
transfer of such Classes of Certificates, required delivery of such
certificates and other documentation or evidence as are expressly required by
the terms of this Agreement and examined such certificates and other
documentation or evidence to determine compliance as to form with the express
requirements hereof. 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 or arrangement subject to Section 406 of ERISA or a
plan or arrangement subject to Section 4975 of the Code or a Person acting on
behalf of any such plan or arrangement at the time it became a Holder or, at
such subsequent time as it became such a plan or arrangement or Person acting
on behalf of such a plan or arrangement, 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
arrangement or Person acting on behalf of a plan or arrangement.
(c) Each Person who has or who acquires any Ownership Interest
in a Class A-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 A-R Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership
Interest in a Class A-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.
(2) Except in connection with (i) the registration of the
Tax Matters Person Certificate in the name of the Trustee or
(ii) any registration in the name of, or transfer of a Class
A-R Certificate to, an affiliate of the Depositor (either
directly or through a nominee) in connection with the initial
issuance of the Certificates, no Ownership Interest in a Class
A-R Certificate may be registered or transferred, and the
Trustee shall not register the Transfer of any Class A-R
Certificate, unless 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
I.
(3) Each Person holding or acquiring any Ownership
Interest in a Class A-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 A-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 A-R Certificate and (C)
not to Transfer its Ownership Interest in a Class A-R
Certificate, or to cause the Transfer of an Ownership Interest
in a Class A-R Certificate to any other
118
Person, if it has actual knowledge that such Person is not a
Permitted Transferee or that such Transfer Affidavit is false.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-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 A-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 A-R Certificate.
The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class A-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 and Transferor Certificate. The Trustee shall be
entitled but not obligated to recover from any Holder of a
Class A-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 A-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.
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee,
all information necessary to compute any tax imposed under
section 860E(e) of the Code as a result of a Transfer of an
Ownership Interest in a Class A-R Certificate to any Holder who
is not a Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable
portions of the legend on a Class A-R Certificate may be deleted) with respect
to Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee, any Seller or
the Master Servicer, to the effect that the elimination of such restrictions
will not cause any REMIC formed hereunder to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class A-R Certificate, by
acceptance of its Ownership Interest, shall be deemed to consent to any
amendment of this Agreement that, based on an Opinion of Counsel furnished to
the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class A-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 A-R Certificate that
is held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(d) The preparation and delivery of all affidavits,
certifications and opinions referred to above in this Section 5.02 shall not
be an expense of the Trust Fund, the Trustee, the Depositor, any Seller or the
Master Servicer.
119
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 Master Servicer and the Trustee (and with respect to the
Class A Certificates, the Certificate 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 Master Servicer, the Trustee, the NIM Insurer, the
Certificate Insurer and any agent of the Master Servicer, the Trustee, the NIM
Insurer or the Certificate Insurer may treat the person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions as provided in this Agreement and for all other
purposes whatsoever, and none of the Master Servicer, the Trustee, the NIM
Insurer, the Certificate Insurer or any agent of the Master Servicer, the
Trustee, the NIM Insurer or the Certificate Insurer 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 or Certificate Owners (a)
request such information in writing from the Trustee, (b) state that such
Certificateholders or Certificate Owners desire to communicate with other
Certificateholders or Certificate Owners with respect to their rights under
this Agreement or under the Certificates and (c) provide a copy of the
communication that such Certificateholders or Certificate Owners propose to
transmit or if the Depositor or Master Servicer shall request such information
in writing from the Trustee, then the Trustee shall, within ten Business Days
after the receipt of such request, provide the Depositor, the Master Servicer
or such Certificateholders or Certificate Owners 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 or Certificate
Owner, 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.
120
Section 5.06 Book-Entry Certificates.
The Book-Entry Certificates, upon original issuance, shall be
issued in the form of one typewritten Certificate (or more than one, if
required by the Depository) for each Class of such Certificates, to be
delivered to the Depository by or on behalf of the Depositor. Such
Certificates shall initially be registered on the Certificate Register in the
name of the Depository or its nominee, and no Certificate Owner of such
Certificates 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 such
Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor, the Sellers, the Master Servicer and the
Trustee 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 such 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 such
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 such 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 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.
121
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, 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 Depositor advises the Trustee that the Depository
is no longer willing or able to discharge properly its responsibilities under
the Depository Agreement with respect to such Certificates and the Trustee or
the Depositor is unable to locate a qualified successor or (b) 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 Certificates, 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 in New York City where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust MBS Administration, as offices for
such purposes. The Trustee will give prompt written notice to the
Certificateholders and the Certificate Insurer of any change in such location
of any such office or agency.
122
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the
Master Servicer and the Sellers.
The Depositor, the Master Servicer and each Seller shall each
be liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor, the
Master Servicer or the Sellers.
The Depositor will keep in full effect its existence, rights
and franchises as a corporation under the laws of the United States or under
the laws of one of the states thereof and will 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 duties under this Agreement. The Master Servicer will keep in effect its
existence, rights and franchises as a limited partnership under the laws of
the United States or under the laws of one of the states thereof and will
obtain and preserve its qualification or registration to do business as a
foreign partnership in each jurisdiction in which such qualification or
registration is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or any
Seller may be merged or consolidated, or any Person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or any Seller
shall be a party, or any person succeeding to the business of the Depositor,
the Master Servicer or any Seller, shall be the successor of the Depositor,
the Master Servicer or such Seller, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided that
the successor or surviving Person to the Master Servicer shall be qualified to
service mortgage loans on behalf of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac.
As a condition to the effectiveness of any merger or
consolidation, at least 15 calendar days prior to the effective date of any
merger or consolidation of the Master Servicer, the Master Servicer shall
provide (x) written notice to the Depositor of any successor pursuant to this
Section and (y) in writing and in form and substance reasonably satisfactory
to the Depositor, all information reasonably requested by the Depositor in
order to comply with its reporting obligation under Item 6.02 of Form 8-K with
respect to a replacement Master Servicer.
Section 6.03 Limitation on Liability of the Depositor, the
Sellers, the Master Servicer, the NIM Insurer and
Others.
None of the Depositor, the Sellers, the NIM Insurer or the
Master Servicer or any of the directors, officers, employees or agents of the
Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be under
any liability to the Trustee (except as provided in Section
123
8.05), 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 that this provision shall not
protect the Depositor, the Sellers, the Master Servicer or any such Person
against any breach of representations or warranties made by it herein or
protect the Depositor, the Sellers, the Master Servicer or any such Person
from any liability that would otherwise be imposed by reasons of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Sellers, the NIM Insurer, the Master Servicer and any director,
officer, employee or agent of the Depositor, the Sellers, the NIM Insurer or
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Sellers, the NIM Insurer, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Sellers, the NIM Insurer or the Master Servicer shall be indemnified by the
Trust Fund and held harmless against any loss, liability or expense incurred
in connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason
of reckless disregard of obligations and duties hereunder. None of the
Depositor, the Sellers, the NIM Insurer or the Master Servicer shall be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided that any of the Depositor,
the Sellers, the NIM Insurer or the Master Servicer may, in its discretion
undertake any such action that it may deem necessary or desirable in respect
of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be, expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Sellers, the NIM Insurer and the Master Servicer shall be
entitled to be reimbursed therefor out of the Certificate Account as provided
by Section 3.08 hereof.
Section 6.04 Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that its duties
hereunder are no longer permissible under applicable law or (ii) upon
appointment of a successor servicer that is reasonably acceptable to the
Trustee, the Certificate Insurer and the NIM Insurer and the written
confirmation from each Rating Agency (which confirmation shall be furnished to
the Depositor, the Trustee, the Certificate Insurer and the NIM Insurer) that
such resignation will not cause such Rating Agency to reduce the then-current
rating of the Certificates (such determination to be made without regard to
the Certificate Insurance Policy). Any such determination pursuant to clause
(i) of the preceding sentence permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Trustee and the Certificate Insurer. No resignation of the Master
Servicer shall become effective until the Trustee shall have assumed the
Master Servicer's responsibilities, duties, liabilities (other than those
liabilities arising prior to the appointment of such successor) and
obligations under this Agreement and the Depositor shall have received the
information described in the following sentence. As a
124
condition to the effectiveness of any such resignation, at least 15 calendar
days prior to the effective date of such resignation, the Master Servicer
shall provide (x) written notice to the Depositor of any successor pursuant to
this Section and (y) in writing and in form and substance reasonably
satisfactory to the Depositor, all information reasonably requested by the
Depositor in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to the resignation of the Master Servicer.
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds.
The Master 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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac
for persons performing servicing for mortgage loans purchased by ▇▇▇▇▇▇ Mae
and ▇▇▇▇▇▇▇ Mac. In the event that any such policy or bond ceases to be in
effect, the Master 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.
The Master Servicer shall provide the Trustee, the Certificate
Insurer and the NIM Insurer (upon such party's reasonable request) with copies
of any such insurance policies and fidelity bond. The Master Servicer shall be
deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer.
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(1) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution 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
the earlier of the related Distribution Date or five calendar
days and, with respect to a payment required to be made under
Section 4.01(b) or (c) hereof, for one Business Day, in each
case, after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee,
the NIM Insurer, the Certificate Insurer or the Depositor, or
to the Trustee, the NIM Insurer, the Certificate Insurer and
the Master Servicer by the Holders of Certificates evidencing
not less than 25% of the Voting Rights; or
(2) any failure by the Master Servicer to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement (except with respect to a failure related to a
Limited Exchange Act Reporting Obligation) or any
representation or warranty shall prove to be
125
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 Master Servicer by
the Trustee, the NIM Insurer, the Certificate Insurer or the
Depositor, or to the Trustee by the Holders of Certificates
evidencing not less than 25% of the Voting Rights; provided,
that the sixty-day cure period shall not apply to the initial
delivery of the Mortgage File for Delay Delivery Mortgage Loans
or the failure to repurchase or substitute in lieu thereof; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days;
or
(4) the Master Servicer shall consent to the appointment
of a receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Master Servicer or all or
substantially all of the property of the Master Servicer; or
(5) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case
under, any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(6) the Master Servicer shall fail to reimburse in full
the Trustee not later than 6:00 p.m. (New York time) on the
Business Day following the related Distribution Date for any
Advance made by the Trustee pursuant to Section 4.01(d)
together with accrued and unpaid interest.
If an Event of Default shall occur, then, and in each and every
such case, so long as such Event of Default shall not have been remedied, the
Trustee shall, but only at the direction of either the NIM Insurer, or the
Holders of Certificates evidencing not less than 25% of the Voting Rights
(subject to the consent of the Certificate Insurer, which consent shall not be
unreasonably withheld) or at the direction of the Certificate Insurer (so long
as no Certificate Insurer Default is continuing), by notice in writing to the
Master Servicer (with a copy to each Rating Agency and the Depositor),
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, other
than its rights as a Certificateholder hereunder. In addition, if during the
period that the Depositor is required to file Exchange Act Reports with
respect to the Trust Fund, the Master Servicer shall fail to observe or
perform any of the obligations that constitute a Limited Exchange Act
Reporting Obligation or the obligations set forth in Section 3.17(a) or
Section 11.07(a)(1) and (2), and such failure continues for the lesser of 10
calendar days or such period in which the applicable Exchange Act Report can
be filed timely (without taking into account any extensions), so long as such
failure shall not have been remedied, the Trustee shall, but only at the
direction of the Depositor, terminate all of the rights and obligations of the
Master Servicer
126
under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than its rights as a Certificateholder hereunder. The Depositor
shall not be entitled to terminate the rights and obligations of the Master
Servicer if a failure of the Master Servicer to identify a Subcontractor
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB was attributable solely to the role or functions of such
Subcontractor with respect to mortgage loans other than the Mortgage Loans.
On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer hereunder, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee. The Trustee shall thereupon make any Advance 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 Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, or otherwise. Unless expressly provided in such written notice, no
such termination shall affect any obligation of the Master Servicer to pay
amounts owed pursuant to Article VIII. The Master Servicer agrees to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee of all cash amounts which shall at the time be
credited to the Certificate Account, or thereafter be received with respect to
the Mortgage Loans. The Trustee shall promptly notify the Rating Agencies, the
Certificate Insurer and the Depositor of the occurrence of an Event of
Default.
Notwithstanding any termination of the activities of a Master
Servicer hereunder, such Master 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 such Master Servicer's rights and obligations
as Master Servicer hereunder and received after such notice, that portion
thereof to which such Master Servicer would have been entitled pursuant to
Sections 3.08(a)(i) through (viii), and any other amounts payable to such
Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
If the Master Servicer is terminated, the Trustee shall provide
the Depositor in writing and in form and substance reasonably satisfactory to
the Depositor, all information reasonably requested by the Depositor in order
to comply with its reporting obligation under Item 6.02 of Form 8-K with
respect to a successor master servicer in the event the Trustee should succeed
to the duties of the Master Servicer as set forth herein.
Section 7.02 Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Master 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 Master Servicer by the terms
and provisions hereof and applicable law including the obligation to make
advances pursuant to Section 4.01. As compensation therefor, the Trustee shall
be entitled to all fees, costs and expenses relating to the
127
Mortgage Loans that the Master Servicer would have been entitled to if the
Master Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Master Servicer in accordance
with Section 7.01 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, (i) appoint any
established mortgage loan servicing institution acceptable to the NIM Insurer
and the Certificate Insurer (as evidenced by the prior written consent of the
NIM Insurer and the Certificate Insurer (which consent shall not be
unreasonably withheld by the Certificate Insurer)), or (ii) if it is unable
for 60 days to appoint a successor servicer acceptable to the NIM Insurer,
petition a court of competent jurisdiction to appoint any established mortgage
loan servicing institution, the appointment of which does not adversely affect
the then-current rating of the Certificates (without regard to the Certificate
Insurance Policy, in the case of the Class A Certificates) and the NIM Insurer
guaranteed notes (without giving any effect to any policy or guaranty provided
by the NIM Insurer) by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor Master Servicer shall be an institution that is a ▇▇▇▇▇▇ Mae 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 Master Servicer (other than liabilities and indemnities of the Master
Servicer under Section 6.03 hereof incurred prior to termination of the Master
Servicer under Section 7.01), with like effect as if originally named as a
party to this Agreement; and provided further that each Rating Agency
acknowledges in writing delivered to the Trustee and the Certificate Insurer
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 (without regard to the Certificate Insurance Policy,
in the case of the Class A Certificates). No appointment of a successor to the
Master Servicer hereunder shall be effective until (i) the Trustee and the
Certificate Insurer shall have consented thereto (which consent shall not be
unreasonably withheld by the Certificate Insurer), (ii) written notice of such
proposed appointment shall have been provided by the Trustee to each
Certificateholder and the Certificate Insurer and (iii) at least 15 calendar
days prior to the effective date of such appointment, (x) the Trustee shall
provide written notice to the Depositor of such successor pursuant to this
Section 7.02 and (y) such successor Master Servicer shall provide to the
Depositor in writing and in form and substance reasonably satisfactory to the
Depositor, all information reasonably requested by the Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect
to a replacement master servicer. 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 Master 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 herein
above 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
that no such compensation shall be in excess of that permitted the Master
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be
deemed to be in default hereunder by reason
128
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Master Servicer to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.
Any successor to the Master Servicer as servicer shall give
notice to the NIM Insurer and 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 Master Servicer is required to maintain pursuant to
Section 6.05.
In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Trustee if the Trustee is acting as successor Master Servicer, shall represent
and warrant that it is a member of MERS in good standing and shall agree to
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS, or (ii) the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to execute and deliver an assignment
of Mortgage in recordable form to transfer the Mortgage from MERS to the
Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee promptly upon receipt of the original with evidence of recording
thereon or a copy certified by the public recording office in which such
assignment was recorded.
Section 7.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, to the Certificate 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 notice
of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
129
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 to the requirements of this Agreement, to the extent
provided in this Agreement. If any such instrument is found not to conform to
the requirements of this Agreement in a material manner, the Trustee shall
take action as it deems appropriate to have the instrument corrected.
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 that:
(1) 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;
(2) 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;
(3) 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 Holders of each Class of Certificates
evidencing not less than 25% 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
(4) without in any way limiting the provisions of this
Section 8.01 or Section 8.02 hereof, the Trustee shall be
entitled to rely conclusively on the information delivered to
it by the Master Servicer in a Trustee Advance Notice in
determining whether or not it is required to make an Advance
under Section 4.01(d), shall have no responsibility to
ascertain or confirm any information contained in any Trustee
Advance Notice, and shall have no obligation to make any
Advance under Section 4.01(d) in the absence of a Trustee
Advance Notice or actual knowledge by a Responsible Officer
that (A) a required Advance was not made and (B) such required
Advance was not a Nonrecoverable Advance.
130
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(1) 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;
(2) the Trustee may consult with counsel and any Opinion
of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(3) 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;
(4) 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, the Certificate Insurer or the Holders of
each Class of Certificates evidencing not less than 25% of the
Voting Rights of such Class; provided, however, that if the
payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee
not reasonably assured to the Trustee by the NIM Insurer or
such Certificateholders, the Trustee may require reasonable
indemnity against such expense, or liability from the NIM
Insurer or such Certificateholders as a condition to taking any
such action;
(5) 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;
(6) 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;
(7) 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);
(8) the Trustee shall not be deemed to have knowledge of
an Event of Default until a Responsible Officer of the Trustee
shall have received written notice thereof; and
131
(9) 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 the NIM
Insurer or any of the Certificateholders, pursuant to the
provisions of this Agreement, unless the NIM Insurer or such
Certificateholders, as applicable, shall have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or
thereby.
(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 Master 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 or of any
Mortgage Loan or related document or of MERS or the MERS(R) System other than
with respect to the Trustee's execution and authentication of the
Certificates. The Trustee shall not be accountable for the use or application
by the Depositor or the Master Servicer of any funds paid to the Depositor or
the Master Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Certificate Account by the Depositor or the Master
Servicer.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights as it would have if
it were not the Trustee.
Section 8.05 Master Servicer to Pay Trustee's Fees and
Expenses.
The Master Servicer covenants and agrees to pay or reimburse
the Trustee, upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee on behalf of the Trust Fund in
accordance with any of the provisions of this Agreement (including, without
limitation: (A) the reasonable compensation and the expenses and disbursements
of its counsel, but only for representation of the Trustee acting in their
capacities as trustees hereunder and (B) to the extent that the Trustee must
engage persons not regularly in its employ to perform acts or services on
behalf of the Trust Fund, which acts or services are not in the ordinary
course of the duties of a trustee, paying agent or certificate registrar, in
the absence of a breach or default by any party hereto, the reasonable
compensation, expenses and disbursements of such persons, except any such
expense, disbursement or advance as may arise from its negligence, bad faith
or willful misconduct). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to
132
this Agreement or the Certificates, or in connection with the performance of
any of the Trustee's duties hereunder, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of any of the Trustee's duties hereunder or by reason of
reckless disregard of the Trustee's obligations and duties hereunder or (ii)
resulting from any error in any tax or information return prepared by the
Master Servicer. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Trustee hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with a
credit rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates (without regard to the
Certificate Insurance Policy, in the case of the Class A 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). If such corporation or
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 8.06 the combined capital and surplus of
such corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The corporation
or national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Sellers and the Master Servicer
and their respective affiliates; provided that such corporation cannot be an
affiliate of the Master Servicer other than the Trustee in its role as
successor to the Master Servicer.
Section 8.07 Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by (1) giving written notice of resignation to the
Depositor and the Master Servicer and by mailing notice of resignation by
first class mail, postage prepaid, to the Certificateholders at their
addresses appearing on the Certificate Register, the Certificate Insurer and
each Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 8.08, such resignation is to take effect, and
(2) acceptance of appointment by a successor trustee in accordance with
Section 8.08 and meeting the qualifications set forth in Section 8.06. 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.
As a condition to the effectiveness of any such resignation, at
least 15 calendar days prior to the effective date of such resignation, the
Trustee shall provide (x) written notice to the Depositor of any successor
pursuant to this Section and (y) in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the
133
Depositor in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to the resignation of the Trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by the NIM Insurer, the Certificate Insurer or
the Depositor, (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, (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, or (iv) during the period which the Depositor is required to
file Exchange Act Reports with respect to the Trust Fund, the Trustee fails to
comply with its obligations under the last sentence of Section 7.01, the
preceding paragraph, Section 8.09 or Article XI and such failure is not
remedied within the lesser of 10 calendar days or such period in which the
applicable Exchange Act Report can be filed timely (without taking into
account any extensions), then, in the case of clauses (i) through (iii), the
Depositor, the NIM Insurer or the Master Servicer, or in the case of clause
(iv), the Depositor, may remove the Trustee and appoint a successor trustee,
reasonably acceptable to the Certificate Insurer, the Certificate Insurer and
the NIM Insurer, by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Trustee, one copy of which shall be
delivered to the Master Servicer and one copy of which shall be delivered to
the successor trustee.
The Certificate Insurer (so long as no Certificate Insurer
Default is continuing) or Holders evidencing at least 51% of the Voting Rights
of each Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered by the successor Trustee to the Master
Servicer one complete set to the Trustee so removed, one complete set to the
successor so appointed and one complete set to the Depositor, together with a
written description of the basis for such removal. Notice of any removal of
the Trustee shall be given to each Rating Agency and the Certificate Insurer
by the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof which successor trustee shall be reasonably
acceptable to the Certificate Insurer.
Section 8.08 Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
hereof shall execute, acknowledge and deliver to the Depositor, its
predecessor trustee and the Master Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. In addition, if the
Corridor Contract is still outstanding, the Person appointed as
134
successor trustee shall execute, acknowledge and deliver to the predecessor
trustee, CHL and the Master Servicer an instrument accepting the appointment
as successor Corridor Contract Administrator under the Corridor Contract
Administration Agreement.
No successor trustee shall accept appointment as provided in
this Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof, is reasonably
acceptable to the Certificate Insurer and the NIM Insurer, its appointment
shall not adversely affect the then-current ratings of the Certificates
(without regard to the Certificate Insurance Policy, in the case of the Class
A Certificates) and has provided to the Depositor in writing and in form and
substance reasonably satisfactory to the Depositor, all information reasonably
requested by the Depositor in order to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement Trustee.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, the Depositor shall mail notice of the
succession of such trustee hereunder to the Certificate Insurer, the NIM
Insurer and 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 8.09 Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to 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 8.06 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.
As a condition to the effectiveness of any merger or
consolidation, at least 15 calendar days prior to the effective date of any
merger or consolidation of the Trustee, the Trustee shall provide (x) written
notice to the Depositor of any successor pursuant to this Section and (y) in
writing and in form and substance reasonably satisfactory to the Depositor,
all information reasonably requested by the Depositor in order to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to a
replacement Trustee.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing any Mortgage Note may at
the time be located, the Master Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee and reasonably acceptable to the NIM
Insurer and the Certificate 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 and the Certificate
Insurer, such title to the Trust Fund or any part thereof, whichever is
applicable, and,
135
subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. If the Master Servicer shall not have joined
in such appointment, or the NIM Insurer shall not have approved such
appointment, within 15 days after 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 shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(1) All rights, powers, duties and obligations conferred
or imposed upon the Trustee, except for the obligation of the
Trustee under this Agreement to advance funds on behalf of the
Master Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee hereunder
or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations (including the holding of title to the 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;
(2) No trustee hereunder shall be held personally liable
by reason of any act or omission of any other trustee
hereunder; and
(3) The Trustee 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 Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute
the Trustee its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
136
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11 Tax Matters.
It is intended that the Trust Fund shall constitute, and that
the affairs of the Trust Fund shall be conducted so that each REMIC created
pursuant to the Preliminary Statement qualifies as, a "real estate mortgage
investment conduit" as defined in and in accordance with the REMIC Provisions.
In furtherance of such intention, the Trustee covenants and agrees that it
shall act as agent (and the Trustee is hereby appointed to act as agent) on
behalf of the Trust Fund 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 Returns (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 REMIC created hereunder 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
the Trust Fund; (c) make or cause to be made elections, on behalf of each
REMIC created hereunder to be treated as a REMIC on the federal tax return of
each such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as
and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original
issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Class A-R
Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such tax);
(f) to the extent that they are under its control conduct the affairs of the
Trust Fund at all times that any Certificates are outstanding so as to
maintain the status of each REMIC created hereunder as a REMIC under the REMIC
Provisions; (g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any REMIC
created hereunder; (h) pay, from the sources specified in the third paragraph
of this Section 8.11, the amount of any federal, state and local taxes,
including prohibited transaction taxes as described below, imposed on any
REMIC created hereunder 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); (i) sign or cause to be signed federal, state or local income
tax or information returns; (j) maintain records relating to
137
each REMIC created hereunder, including but not limited to the income,
expenses, assets and liabilities of each such REMIC, 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 (k) as and when necessary
and appropriate, represent the Trust Fund 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
REMIC created hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust Fund, and otherwise act on behalf of any REMIC created
hereunder in relation to any tax matter involving any such REMIC.
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 ten 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 (and, to the extent not part of the
aforementioned, the information referred to in paragraphs (1), (2), (3) and
(4) of Section 4.05(d)). 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 indemnifies 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 the Trust Fund as defined in section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the Trust Fund 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, including, without limitation, any federal, state or local tax or
minimum tax imposed upon the Trust Fund pursuant to sections 23153 and 24872
of the California Revenue and Taxation Code 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, (ii) (x) the Master Servicer, in the case of
any such minimum tax, and (y) 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 (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 A-R
Certificateholders, and second with amounts otherwise to be distributed to all
other Certificateholders in the same manner as if such tax were a Realized
Loss. Notwithstanding anything to the contrary contained herein, to the extent
that such tax is payable by the Class A-R Certificates, the Trustee is hereby
authorized to retain on any Distribution Date, from the Holders of the Class
A-R Certificates (and, if necessary, second, from the Holders of the 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.
138
The Trustee shall treat the Carryover Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation 1.860G-2(h)
which is not an asset of any REMIC created hereunder. The Carryover Reserve
Fund shall be treated as owned by the Class C Certificateholders. The rights
of the Holders of each Class of Certificates (other than the Class P and Class
A-R Certificates) to receive payments from, and the deemed obligations of such
Holders to make payments to, the Carryover Reserve Fund shall be treated as
rights and obligations with respect to notional principal contracts written by
the Corridor Contract Counterparty in respect of any Net Rate Carryover funded
by the Corridor Contract and in respect of any residual payments from such
Corridor Contract received by the Class C Certificates and (ii) the Holders of
the Class C Certificates in respect of any Net Rate Carryover distributed
pursuant to Sections 4.04(d)(4). Thus, the Certificates (other than the Class
P and Class A-R Certificates), shall be treated as representing ownership of
Master REMIC regular interests coupled with contractual rights and obligations
within the meaning of Treasury Regulation 1.860G-2(i). For purposes of
determining the issue price of the various Master REMIC regular interests, the
Trustee shall assume that the Corridor Contract has a value of $19,000.
Section 8.12 Access to Records of the Trustee.
The Trustee shall afford the Sellers, the Depositor, the Master
Servicer, the NIM Insurer, the Certificate Insurer and each Certificate Owner
upon reasonable notice during normal business hours access to all records
maintained by the Trustee in respect of its duties under this Agreement and
access to officers of such entity responsible for performing its duties. Upon
request, the Trustee shall furnish the Depositor, the Master Servicer, the NIM
Insurer, the Certificate Insurer and any requesting Certificate Owner with its
most recent financial statements. The Trustee shall cooperate fully with the
Sellers, the Master Servicer, the Depositor, the NIM Insurer, the Certificate
Insurer and the Certificate Owner for review and copying any books, documents,
or records requested with respect to the Trustee's duties under this
Agreement. The Sellers, the Depositor, the Master Servicer, the Certificate
Insurer and the Certificate Owner shall not have any responsibility or
liability for any action for failure to act by the Trustee and are not
obligated to supervise the performance of the Trustee under this Agreement or
otherwise.
Section 8.13 Suits for Enforcement.
If an Event of Default or other material default by the Master
Servicer or the Depositor under this Agreement occurs and is continuing, at
the direction of the Certificateholders holding not less than 51% of the
Voting Rights, the Certificate Insurer (so long as no Certificate Insurer
Default is continuing) or the NIM Insurer, the Trustee shall proceed to
protect and enforce its rights and the rights of the Certificateholders, the
Certificate Insurer 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, the Certificate
Insurer and the Certificateholders.
139
Section 8.14 Monitoring of Significance Percentage.
With respect to each Distribution Date, the Trustee shall
calculate the "significance percentage" (as defined in Item 1115 of Regulation
AB) of each derivative instrument, if any, based on the aggregate Class
Principal Balance of the related Class(es) of Covered Certificates for such
derivative instrument and Distribution Date (after all distributions to be
made thereon on such Distribution Date) and based on the methodology provided
in writing by or on behalf of CHL no later than the fifth Business Day
preceding such Distribution Date. On each Distribution Date, the Trustee shall
provide to CHL a written report (which written report may include similar
information with respect to other derivative instruments relating to
securitization transactions sponsored by CHL) specifying the "significance
percentage" of each derivative instrument, if any, for that Distribution Date.
If the "significance percentage" of any derivative instrument exceeds 7.0%
with respect to any Distribution Date, the Trustee shall make a separate
notation thereof in the written report described in the preceding sentence.
Such written report may contain such assumptions and disclaimers as are deemed
necessary and appropriate by the Trustee.
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of all
Mortgage Loans.
Subject to Section 9.03 and Section 9.04, the Trust Fund shall
terminate and the obligations and responsibilities of the Depositor, the
Master Servicer, the Sellers and the Trustee created hereby shall terminate
upon the earlier of (a) the purchase by the Master Servicer or the NIM Insurer
(the party exercising such purchase option, the "Terminator") of all of the
Mortgage Loans (and REO Properties) remaining in the Trust Fund at the price
(the "Termination Price") equal to the sum of (i) 100% of the Stated Principal
Balance of each Mortgage Loan in the Trust Fund (other than in respect of an
REO Property), (ii) accrued interest thereon at the applicable Mortgage Rate
(or, if such repurchase is effected by the Master Servicer, at the applicable
Net Mortgage Rate), (iii) the appraised value of any REO Property in the Trust
Fund (up to the Stated Principal Balance of the related Mortgage Loan), such
appraisal to be conducted by an appraiser mutually agreed upon by the
Terminator and the Trustee, (iv) any remaining unpaid costs and damages
incurred by the Trust Fund that arises out of an actual violation of any
predatory or abusive lending law or regulation and (v) if the Terminator is
the NIM Insurer, any unreimbursed Servicing Advances, and the principal
portion of any unreimbursed Advances, made on the Mortgage Loans prior to the
exercise of such repurchase, (b) the purchase by the Winning Bidder of all of
the Mortgage Loans (and REO Properties) remaining in the Trust Fund after a
Successful Action is conducted pursuant to Section 9.04 and the related
auction proceeds are distributed pursuant to Section 9.02(c) and (c) the later
of (i) the maturity or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan remaining in the Trust Fund and the disposition of
all REO Property and (ii) the distribution to related 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
140
Possible Maturity Date. If any such termination will result in a Deficiency
Amount on the Certificate Insurance Policy, the consent of the Certificate
Insurer will also be required prior to exercising the option specified in
clause (a) of this paragraph.
The right to purchase all Mortgage Loans and REO Properties by
the Terminator pursuant to clause (a) of the immediately preceding paragraph
shall be conditioned upon (1) the Stated Principal Balance of the Mortgage
Loans, at the time of any such repurchase, aggregating ten percent (10%) or
less of the sum of the aggregate Cut-off Date Principal Balance of the Initial
Mortgage Loans and the Pre-Funded Amount and (2) unless the NIM Insurer
otherwise consents, the purchase price for such Mortgage Loans and REO
Properties shall result in a final distribution on any NIM Insurer guaranteed
notes that is sufficient (x) to pay such notes in full and (y) to pay any
amounts due and payable to the NIM Insurer pursuant to the indenture related
to such notes and (3) unless the Certificate Insurer otherwise consents, the
purchase price for such Mortgage Loans and REO Properties shall result in a
final distribution on the Class A Certificates and the Certificate Insurer
that is sufficient (x) to pay such Class A Certificates in full (without the
need of any Insured Payment) and (y) to pay any amounts due and payable to the
Certificate Insurer pursuant to the terms hereof and pursuant to the Insurance
and Indemnity Agreement.
The NIM Insurer's right to purchase all Mortgage Loans and REO
Properties shall be further conditioned upon the written consent of the Master
Servicer.
Section 9.02 Final Distribution on the Certificates.
(a) Timing of Notice of Final Distribution, Auction or Optional
Termination
(i) If on any Determination Date, (1) the Master Servicer
determines that there are no Outstanding Mortgage Loans and no other funds or
assets in the Trust Fund other than the funds in the Certificate Account, then
the Master Servicer shall direct the Trustee to send a final distribution
notice promptly to each Certificateholder and the Certificate Insurer in
accordance with Section 9.02(b) or (2) the Trustee determines that a Class of
Certificates shall be retired after a final distribution on such Class, the
Trustee shall notify the related Certificateholders and the Certificate
Insurer within five (5) 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 related Certificates at the Corporate Trust
Office of the Trustee. In the event such notice is given pursuant to clause
(1), the Master Servicer shall cause all funds in the Certificate Account to
be remitted to the Trustee for deposit in the Distribution Account on or
before the Business Day prior to the applicable Distribution Date , net of any
amounts permitted to be withdrawn pursuant to Section 3.08(a). Upon such final
deposit with respect to the Trust Fund and the receipt by the Trustee of a
Request for Release therefor, the Trustee shall promptly release to the Master
Servicer the Mortgage Files for the Mortgage Loans.
(ii) If the Directing Certificateholder chooses to exercise its
right to cause an auction pursuant to Section 9.04, then the Directing
Certificateholder shall provide written notice to the Master Servicer no later
than the 1st day of the calendar month in which such auction is to
141
be conducted. If a Successful Auction is held pursuant to the requirements of
Section 9.04, then the Trustee shall distribute the proceeds of the Successful
Auction that have been remitted to the Distribution Account to the
Certificateholders pursuant to Sections 4.04 and 9.04 hereof on the
Distribution Date in the calendar month immediately following the calendar
month in which the Successful Auction occurs.
(iii) If the Directing Certificateholder does not exercise its
right to cause an auction pursuant to Section 9.04 and the Terminator (after
prior written notice to the Master Servicer if the Terminator is the NIM
Insurer) elects to terminate the Trust Fund pursuant to Section 9.01, then at
least 20 days prior to the date notice is to be mailed to Certificateholders
in accordance with Section 9.02(b), the Terminator shall notify in writing the
Depositor, the Certificate Insurer and the Trustee of (a) its election to
terminate the Trust Fund, (b) the Distribution Date on which it intends to
terminate the Trust Fund pursuant to Section 9.01 and (c) the applicable
purchase price of the Mortgage Loans and REO Properties. In the event such
notice is given, the Terminator shall remit to the Master Servicer, on or
before the Business Day prior to the final Distribution Date, for deposit into
the Certificate Account, the Termination Price. The Master Servicer shall
cause all funds in the Certificate Account, including the Termination Price,
net of any amounts permitted to be withdrawn pursuant to Section 3.08(a), to
be remitted to the Trustee for deposit in the Distribution Account on or
before the Business Day prior to the applicable Distribution Date. Upon such
final deposit with respect to the Trust Fund and the receipt by the Trustee of
a Request for Release therefor, the Trustee shall promptly release to the
Master Servicer the Mortgage Files for the Mortgage Loans.
(b) Timing of Notice to Certificateholders of Termination.
Notice of any termination of the Trust Fund (whether because of a Successful
Auction, Optional Termination or otherwise), specifying the Distribution Date
on which related Certificateholders may surrender their Certificates for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to related 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 (i) the
Distribution Date upon which final distribution on related Certificates will
be made upon presentation and surrender of such Certificates at the office
therein designated, (ii) the amount of such final distribution, (iii) the
location of the office or agency at which such presentation and surrender must
be made, and (iv) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of such Certificates at the office therein
specified. The Master Servicer will give such notice to each Rating Agency at
the time such notice is given to the Certificateholders.
(c) Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders of each affected
Class and the Certificate Insurer the amounts allocable to such Certificates
and the Certificate Insurer held in the Distribution Account (and, if
applicable, the Carryover Reserve Fund) in the order and priority set forth in
Section 4.04 hereof (and with respect to the Class C Certificates after a
Successful Auction as set forth in Section 9.04(g) and (k)) on the final
Distribution Date and in proportion to their respective Percentage Interests.
Notwithstanding the reduction of the Certificate Principal Balance of any
Class of Certificates to zero, such Class will be outstanding hereunder
(solely for the purpose of receiving distributions (if any) to which it may be
entitled pursuant to the terms of
142
this Agreement and not for any other purpose) until the termination of the
respective obligations and responsibilities of the Depositor, each Seller, the
Master Servicer and the Trustee hereunder in accordance with Article IX.
(d) In the event that any affected Certificateholders shall not
surrender their respective 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 related 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 related Certificates shall not
have been surrendered for cancellation, the Certificate Insurer, with respect
to any unpaid Certificate Insurance Reimbursement Amounts, and then the Class
A-R Certificates shall be entitled to all unclaimed funds and other assets
that remain subject hereto.
Section 9.03 Additional Termination Requirements.
(a) In the event the Terminator exercises its purchase option,
as provided in Section 9.01 or if there is a Successful Auction pursuant to
Section 9.04, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Terminator (or the Directing
Certificateholder, in the case of a Successful Auction), 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 a REMIC, or (ii) cause any REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(1) The Master Servicer 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 Trust Fund's final
Tax Return pursuant to Treasury Regulation Section 1.860F-1. The Master
Servicer shall prepare a plan of complete liquidation and shall otherwise
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
delivered to the Trustee and the Depositor obtained at the expense of the
Terminator (or the Directing Certificateholder, in the case of a Successful
Auction);
(2) During such 90-day liquidation period, and at or prior
to the time of making the final payment on the Certificates, the Master
Servicer as agent of the Trustee shall sell all of the assets of the Trust
Fund to the Terminator (or the Winning Bidder in the case of a Successful
Auction) for cash in accordance with Section 9.01 and, if applicable, Section
9.04; and
(3) 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 A-R
143
Certificateholders all cash on hand (other than cash retained to meet claims)
related to such Class of Certificates, and the Trust Fund shall terminate at
that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Master Servicer to specify the 90-day liquidation
period for the Trust Fund, which authorization shall be binding upon all
successor Certificateholders. The Trustee shall attach a statement to the
final federal income tax return for each of any REMIC created hereunder
stating that pursuant to Treasury Regulation Section 1.860F-1, the first day
of the 90-day liquidation period for each the REMIC was the date on which the
Trustee sold the assets of the Trust Fund to the Terminator or the Winning
Bidder, as applicable.
(c) The Trustee as agent for each REMIC created hereunder
hereby agrees to adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer, and the receipt of the Opinion of
Counsel referred to in Section 9.03(a)(1), and together with the Holders of
the Class A-R Certificates agree to take such other action in connection
therewith as may be reasonably requested by the Terminator or the Directing
Certificateholder, as applicable.
Section 9.04 Auction of the Mortgage Loans and REO Properties.
(a) On or after the Optional Termination Date, the Holder of
the largest Percentage Interest of Class C Certificates (the "Directing
Certificateholder"), at its option, may by written instruction direct the
Trustee to solicit bids in a commercially reasonable manner from Qualified
Bidders for the purchase of the Mortgage Loans and any REO Properties owned by
the Trust Fund. The Directing Certificateholder shall provide written notice
to the Master Servicer, as provided in Section 9.02(a)(ii), of any such
direction to the Trustee. Any such direction by the Directing
Certificateholder shall (i) be made in writing and (ii) include contact
information for the Directing Certificateholder. Upon receipt of any direction
from the Directing Certificateholder meeting the requirements of the
immediately preceding sentence, the Trustee shall commence the auction process
described in this Section 9.04. The Trustee may engage a financial advisor,
which financial advisor may be CHL or one of its affiliates, in order to
perform any of the duties of the Trustee specified in Section 9.04. To
effectuate such sale, the Trustee (or such financial advisor) shall follow the
procedures specified in Section 9.04(b) below. The Trustee shall facilitate
the sale of the assets in the Trust Fund to the Winning Bidder so long as the
Trustee (or any financial advisor on its behalf) has received at least three
bids from Qualified Bidders and at least one such bid is at least equal to the
Acceptable Bid Amount. In the event the auction is not a Successful Auction,
the Trustee shall repeat this process at such frequency as directed by the
Directing Certificateholder until a Successful Auction is conducted or the
Terminator purchases all of the Mortgage Loans and REO Properties pursuant to
Section 9.01. The Trustee shall be reimbursed for its reasonable costs,
including expenses associated with engaging any financial advisor, from the
Directing Certificateholder if the auction is not a Successful Auction, and,
if the auction is a Successful Auction, from the proceeds of the auction
before the proceeds are distributed to Certificateholders.
The Trustee, upon inquiry from the Master Servicer, agrees to
provide the Master Servicer with the Percentage Interest of Class C
Certificates held by the Directing Certificateholder.
144
If CHL or any of its affiliates is the Directing
Certificateholder, such Directing Certificateholder shall not have the right
to direct the Trustee to solicit bids for the purchase of the Mortgage Loans
and any REO Properties owned by the Trust Fund.
(b) The Trustee (or any financial advisor on its behalf) shall
solicit bids for the purchase of assets owned by the Trust Fund as provided in
Section 9.04(a) not later than two Business Days following receipt of the
Directing Certificateholder's written instruction by contacting by telephone
or in writing at least three Qualified Bidders and requesting that each
Qualified Bidder bid on the Mortgage Loans and REO Properties owned by the
Trust Fund (on a non-recourse basis with no representations or warranties of
any nature whatsoever made by the Trustee (or such financial advisor)) and
providing to the Qualified Bidder any information relating to the Mortgage
Loans and REO Properties owned by the Trust Fund reasonably requested by such
Qualified Bidder, subject to the Qualified Bidder's written agreement not to
use such information in the purchase or sale of Certificates (it being
understood no Qualified Bidder shall be obligated to submit a bid or take any
other action in connection with any auction). The Master Servicer shall
cooperate with the Trustee (and any financial advisor on its behalf) during
the auction process. At 1:00 p.m. New York time on the second Business Day
after the date on which bids are last solicited (such second day, the "Bid
Determination Date"), the Trustee (or any financial advisor on its behalf)
shall determine the highest bid based on the bids received by the Trustee (or
any financial advisor on its behalf) on or before such time.
(c) If the highest of the bids that are submitted by Qualified
Bidders is less than the Minimum Auction Amount, then the Trustee shall
promptly inform the Directing Certificateholder of the amount of the shortfall
and indicate that the Directing Certificateholder must notify the Trustee
within 24 hours whether it will contribute the amount of such difference (such
difference being the "Auction Supplement Amount") so that the auction will be
a Successful Auction. If the highest of the bids that are submitted by
Qualified Bidders is equal to or greater than the Minimum Auction Amount, or
if the Directing Certificateholder notifies the Trustee within 24 hours of its
receipt of notice as described in the previous sentence that it will
contribute the Auction Supplement Amount, then the Trustee (or any financial
advisor on its behalf) shall notify promptly (but in any event no later than
3:00 p.m. New York time on the Business Day following the Bid Determination
Date) the Winning Bidder that its bid was the highest bid and shall provide
wiring instructions for payment of the bid amount into the Certificate Account
by 12:00 p.m. New York time on the second Business Day following the Bid
Determination Date and, if applicable, provide the Directing Certificateholder
with wiring instructions for payment of the Auction Supplement Amount into the
Certificate Account by such time.
(d) If such Winning Bidder does not wire the bid amount so that
it is received in the Certificate Account in immediately available funds by
12:00 p.m. New York time on the second Business Day following the Bid
Determination Date, the Trustee shall repeat the process specified in the
preceding paragraph with respect to the second highest bid, but only if such
bid is at least the Minimum Auction Amount or the Directing Certificateholder
agrees to pay the new Auction Supplement Amount. If no other bids are
available to be accepted pursuant to the preceding sentence, or if the amount
remitted by the Winning Bidder plus any Auction Supplement Amount remitted by
the Directing Certificateholder is less than the Minimum Auction Amount, then
the auction shall be considered to have failed for all purposes.
145
(e) The Trustee shall not be liable with regard to the
selection or engagement of, or for any act or omission of, a financial advisor
pursuant to this Section 9.04 if the Trustee engages CHL to be such financial
advisor.
(f) In the event of a Successful Auction and so long as the
Winning Bidder has wired its bid amount (and the Directing Certificateholder
has wired any Auction Supplement Amount, if applicable) to the Certificate
Account as provided above, then the Trustee shall promptly convey to the
Winning Bidder the Mortgage Loans and REO Properties owned by the Trust Fund.
The Master Servicer shall take all reasonable actions requested by the Trustee
to effect such conveyance, including remitting to the Distribution Account
from the Certificate Account, on the Business Day prior to the Distribution
Date on which final distribution on the Certificates is required to be paid
under this Agreement, all amounts on deposit in the Certificate Account, net
of any amounts permitted to be withdrawn pursuant to Section 3.08(a) and
amounts owing to the Trustee in reimbursement of its reasonable costs,
including expenses associated with engaging any financial advisor, incurred in
connection with the auction process. Such amounts owed to the Trustee shall be
withdrawn from the Certificate Account by the Master Servicer and paid to the
Trustee.
(g) Any amount paid by the Winning Bidder in excess of the
Minimum Auction Amount shall be distributed by the Trustee pro rata to the
Class C Certificates on the Distribution Date on which the final distribution
on the Certificates is made.
(h) [Reserved].
(i) [Reserved].
(j) The Master Servicer may purchase the Mortgage Loans and REO
Properties owned by the Trust Fund for its own account pursuant to Section
9.01 or consent to the NIM Insurer's purchase of the Mortgage Loans and REO
Properties owned by the Trust Fund pursuant to Section 9.01 only if (1) the
Directing Certificateholder chooses not to request an auction as described
above or if the immediately preceding auction is unsuccessful or (2) the
Master Servicer notifies the Directing Certificateholder no later than 30 days
prior to the date on which the Master Servicer or the NIM Insurer, as
applicable, intends to effect the purchase of the Mortgage Loans and REO
Properties owned by the Trust Fund and the Directing Certificateholder does
not direct the Trustee to conduct an auction prior to the end of that 30-day
period.
(k) If the Directing Certificateholder pays any Auction
Supplement Amount pursuant to Section 9.04(c) on the final Distribution Date
any amounts to be distributed to the Class C Certificates pursuant to Section
4.01 will be distributed as follows, first to the Directing Certificateholder,
in an amount up to the sum of such Auction Supplement Amount and second to the
Class C Certificates, pro rata. For federal income tax purposes, such Auction
Supplement Amount so distributed shall be deemed paid pro rata to the Class C
Certificates, and the portion of such amounts deemed distributed to holders of
the Class C Certificates other than the Directing Certificateholder shall be
deemed paid from such other holders to the Directing Certificateholder.
146
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.
This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Sellers and the Trustee with the consent
of the Certificate Insurer (such consent not to be unreasonably withheld) and
the NIM Insurer, without the consent of any of the Certificateholders (i) to
cure any ambiguity, (ii) to correct or supplement any provisions herein, (iii)
to conform this Agreement to the Prospectus Supplement or the Prospectus, (iv)
to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement to comply with any rules or regulations
promulgated by the Securities and Exchange Commission from time to time, or
(v) to make such other provisions with respect to matters or questions arising
under this Agreement, as shall not be inconsistent with any other provisions
herein if such action shall not, as evidenced by an Opinion of Counsel
delivered and addressed to the Trustee, adversely affect in any material
respect the interests of any Certificateholder; provided that any such
amendment shall be deemed not to adversely affect in any material respect the
interests of the Certificateholders and no such Opinion of Counsel shall be
required if the Person requesting such amendment obtains a letter from each
Rating Agency stating that such amendment would not result in the downgrading
or withdrawal of the respective ratings then assigned to the Certificates
(without regard to the Certificate Insurance Policy, in the case of the Class
A 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. Any amendment described above made solely to
conform this Agreement to the Prospectus or the Prospectus Supplement shall be
deemed not to adversely affect in any material respect the interests of the
Certificateholders. Notwithstanding the foregoing, no amendment that
significantly changes the permitted activities of the trust created by this
Agreement may be made without the consent of Certificateholders representing
not less than 51% of the Voting Rights of each Class of Certificates affected
by such amendment. Each party to this Agreement hereby agrees that it will
cooperate with each other party in amending this Agreement pursuant to clause
(iv) above.
The Trustee, the Depositor, the Master Servicer and the Sellers
with the consent of the NIM Insurer and the Certificate Insurer may also at
any time and from time to time amend this Agreement, without the consent of
the Certificateholders, to modify, eliminate or add to any of its provisions
to such extent as shall be necessary or appropriate to maintain the
qualification of the Trust Fund as a REMIC under the Code or to avoid or
minimize the risk of the imposition of any tax on the Trust Fund 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 has been
provided an Opinion of Counsel, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the
Trustee, 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 Master Servicer, the Sellers and the Trustee with the consent
of the NIM Insurer and the Holders
147
of each Class of Certificates affected thereby evidencing not less than 51% of
the Voting Rights of such Class, with the consent of the Certificate Insurer
(such consent not to be unreasonably withheld), 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 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% 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 provisions of this Agreement, the
Trustee and the NIM Insurer shall not consent to any amendment to this
Agreement unless each shall have first received an Opinion of Counsel
satisfactory to the Trustee and the NIM Insurer, which opinion shall be an
expense of the party requesting such amendment but in any case shall not be an
expense of the Trustee or the NIM Insurer, to the effect that such amendment
will not cause the imposition of any tax on the Trust Fund or the
Certificateholders or cause any REMIC formed hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this
Agreement, the Trustee shall furnish written notification of the substance of
such amendment to the Certificate Insurer and, if the amendment required the
consent of Certificateholders, to each Certificateholder and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter
into an amendment without receiving an Opinion of Counsel, reasonably
satisfactory to the Trustee and the NIM Insurer 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 and the Master Servicer shall not amend the Credit
Insurance Policy in any manner that materially and adversely affects the
coverage provided thereby without the prior written consent of the Certificate
Insurer and prior written notice to S&P.
Section 10.02 Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other
comparable jurisdictions in which any or all of the
148
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at its expense.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties.
(a) 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 or any Subsequent Transfer 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) with respect to all such
assets and security interests and (ii) the conveyance provided for in this
Agreement and any Subsequent Transfer Agreement shall be deemed to be an
assignment and a grant pursuant to the terms of this Agreement by the
Depositor to the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, 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, the
Certificate Insurer and the NIM Insurer 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.
(b) The Depositor hereby represents that:
(i) This Agreement creates a valid and continuing security
interest (as defined in the Uniform Commercial Code as enacted
in the State of New York
149
(the "NY UCC")) in the Mortgage Notes in favor of the Trustee,
which security interest is prior to all other liens, and is
enforceable as such as against creditors of and purchasers from
the Depositor.
(ii) The Mortgage Notes constitute "instruments" within
the meaning of the NY UCC.
(iii) Immediately prior to the assignment of each Mortgage
Loan to the Trustee, the Depositor owns and has good and
marketable title to such Mortgage Loan free and clear of any
lien, claim or encumbrance of any Person.
(iv) The Depositor has received all consents and approvals
required by the terms of the Mortgage Loans to the sale of the
Mortgage Loans hereunder to the Trustee.
(v) All original executed copies of each Mortgage Note
that are required to be delivered to the Trustee pursuant to
Section 2.01 have been delivered to the Trustee.
(vi) Other than the security interest granted to the
Trustee pursuant to this Agreement, the Depositor has not
pledged, assigned, sold, granted a security interest in, or
otherwise conveyed any of the Mortgage Loans. The Depositor has
not authorized the filing of and is not aware of any financing
statements against the Depositor that include a description of
collateral covering the Mortgage Loans other than any financing
statement relating to the security interest granted to the
Trustee hereunder or that has been terminated. The Depositor is
not aware of any judgment or tax lien filings against the
Depositor.
(c) The Master Servicer shall take such action as is reasonably
necessary to maintain the perfection and priority of the security interest of
the Trustee in the Mortgage Loans; provided, however, that the obligation to
deliver the Mortgage File to the Trustee pursuant to Section 2.01 shall be
solely the Depositor's obligation and the Master Servicer shall not be
responsible for the safekeeping of the Mortgage Files by the Trustee.
(d) It is understood and agreed that the representations and
warranties set forth in subsection (b) above shall survive delivery of the
Mortgage Files to the Trustee. Upon discovery by the Depositor or the Trustee
of a breach of any of the foregoing representations and warranties set forth
in subsection (b) above, which breach materially and adversely affects the
interest of the Certificateholders or the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the others, to the
Certificate Insurer and to each Rating Agency.
150
Section 10.05 Notices.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency and the Certificate Insurer with respect to each
of the following of which it has actual knowledge:
(1) Any material change or amendment to this Agreement;
(2) The occurrence of any Event of Default that has not
been cured;
(3) The resignation or termination of the Master Servicer
or the Trustee and the appointment of any successor;
(4) The repurchase or substitution of Mortgage Loans
pursuant to Sections 2.02, 2.03, 2.04, 2.07 and 3.12; and
(5) The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each
Rating Agency and the Certificate Insurer copies of the following:
(1) Each report to Certificateholders described in Section
4.05;
(2) Each annual statement as to compliance described in
Section 3.17; and
(3) Each annual independent public accountants' servicing
report described in Section 11.07.
(c) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when sent by facsimile
transmission, first class mail or delivered to (i) in the case of the
Depositor, CWHEQ, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, or such other address
as may be hereafter furnished to the Sellers, the Master Servicer, the
Certificate Insurer and the Trustee by the Depositor in writing; (ii) in the
case of CHL, Countrywide Home Loans, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, or
such other address as may be hereafter furnished to the Depositor, the Master
Servicer, the Certificate Insurer and the Trustee by the Sellers in writing;
(iii) in the case of Park Monaco, Park Monaco Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇
▇▇▇, or such other address as may be hereafter furnished to the Depositor, the
Master Servicer, the Certificate Insurer and the Trustee by the Sellers in
writing; (iv) in the case of Park Granada, Park Granada LLC., ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇, or such other address as may be hereafter furnished to
the Depositor, the Master Servicer, the Certificate Insurer and the Trustee by
the Sellers in writing; (v) in the case of Park Sienna, Park Sienna LLC, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇, or such other address as may be hereafter furnished to
the Depositor, the Master Servicer, the Certificate Insurer and the Trustee by
the Sellers in writing; (vi) in the case of the Master
151
Servicer, Countrywide Home Loans Servicing LP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇ or such
other address as may be hereafter furnished to the Depositor, the Sellers, the
Certificate Insurer and the Trustee by the Master Servicer in writing; (vii)
in the case of the Trustee, The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust MBS Administration, CWHEQ,
Series 2007-S1, or such other address as the Trustee may hereafter furnish to
the parties hereto and the Certificate Insurer; (viii) in the case of the
Rating Agencies, (1) ▇▇▇▇▇'▇ Investors Service, Inc., Attention: ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, and (2) Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Attention: Mortgage Surveillance Group, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (ix) in the case of the Corridor
Contract Counterparty, Swiss Re Financial Products Corporation, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department; and (x) in the
case of the Certificate Insurer, MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇ , Attention: Insured
Portfolio Management - Structured Finance (CWHEQ 2007-S1) or such other
address as may be hereafter furnished by the Certificate Insurer. Notices to
Certificateholders shall be deemed given when mailed, first 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 Master Servicer without the prior written consent of the
Trustee and the 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
152
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 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 and the Certificate Insurer has
given its prior written consent; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or
seek to obtain priority over or preference to any other such Holder or to
enforce any right under this Agreement, except in the manner herein provided
and for the common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 10.08, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 10.09 Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice, it
will permit any representative of the Depositor, any Seller, the NIM Insurer
or the Trustee during the Master Servicer's normal business hours, to examine
all the books of account, records, reports and other papers of the Master
Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor, a Seller, the NIM Insurer or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees and independent public accountants
(and by this provision the Master Servicer hereby authorizes 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 Depositor, any Seller,
the NIM Insurer or the Trustee of any right under this Section 10.09 shall be
borne by the party requesting such inspection; all other such expenses shall
be borne by the Master Servicer.
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.
153
Section 10.11 Rights of NIM Insurer.
(a) The rights of the NIM Insurer under this Agreement shall
exist only so long as either:
(1) the notes certain payments on which are guaranteed by
the NIM Insurer remain outstanding or
(2) the NIM Insurer is owed amounts paid by it with
respect to that guaranty.
(b) The rights of the NIM Insurer under this Agreement are
exercisable by the NIM Insurer only so long as no default by the NIM Insurer
under its guaranty of certain payments under notes backed or secured by the
Class C, Class E-P or Class P Certificates has occurred and is continuing. If
the NIM Insurer is the subject of any insolvency proceeding, the rights of the
NIM Insurer under this Agreement will be exercisable by the NIM Insurer only
so long as:
(1) the obligations of the NIM Insurer under its guaranty
of notes backed or secured by the Class C, Class E-P or Class P
Certificates have not been disavowed and
(2) CHL and the Trustee have received reasonable
assurances that the NIM Insurer will be able to satisfy its
obligations under its guaranty of notes backed or secured by
the Class C, Class E-P or Class P Certificates.
(c) The NIM Insurer is a third party beneficiary of this
Agreement to the same extent as if it were a party to this Agreement and may
enforce any of those rights under this Agreement.
(d) A copy of any documents of any nature required by this
Agreement to be delivered by the Trustee, or to the Trustee or the Rating
Agencies, shall in each case at the same time also be delivered to the NIM
Insurer. Any notices required to be given by the Trustee, or to the Trustee or
the Rating Agencies, shall in each case at the same time also be given to the
NIM Insurer. If the Trustee receives a notice or document that is required
hereunder to be delivered to the NIM Insurer, and if such notice or document
does not indicate that a copy thereof has been previously sent to the NIM
Insurer, the Trustee shall send the NIM Insurer a copy of such notice or
document. If such document is an Opinion of Counsel, the NIM Insurer shall be
an addressee thereof or such Opinion of Counsel shall contain language
permitting the NIM Insurer to rely thereon as if the NIM Insurer were an
addressee thereof.
(e) Anything in this Agreement that is conditioned on not
resulting in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies shall also be conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned by the Rating
Agencies to the notes backed or secured by the Class C, Class E-P or Class P
Certificates (without giving effect to any policy or guaranty provided by the
NIM Insurer).
154
155
ARTICLE XI.
EXCHANGE ACT REPORTING
Section 11.01 Filing Obligations.
The Master Servicer, the Trustee and each Seller shall
reasonably cooperate with the Depositor in connection with the satisfaction of
the Depositor's reporting requirements under the Exchange Act with respect to
the Trust Fund. In addition to the information specified below, if so
requested by the Depositor for the purpose of satisfying its reporting
obligation under the Exchange Act, the Master Servicer, the Trustee and each
Seller shall (and the Master Servicer shall cause each Subservicer to) provide
the Depositor with (a) such information which is available to such Person
without unreasonable effort or expense and within such timeframe as may be
reasonably requested by the Depositor to comply with the Depositor's reporting
obligations under the Exchange Act and (b) to the extent such Person is a
party (and the Depositor is not a party) to any agreement or amendment
required to be filed, copies of such agreement or amendment in
▇▇▇▇▇-compatible form.
Section 11.02 Form 10-D Filings.
(a) In accordance with the Exchange Act, the Trustee shall
prepare for filing and file within 15 days after each Distribution Date
(subject to permitted extensions under the Exchange Act) with the Commission
with respect to the Trust Fund, a Form 10-D with copies of the Monthly
Statement and, to the extent delivered to the Trustee, no later than 10 days
following the Distribution Date, such other information identified by the
Depositor or the Master Servicer, in writing, to be filed with the Commission
(such other information, the "Additional Designated Information"). If the
Depositor or Master Servicer directs that any Additional Designated
Information is to be filed with any Form 10-D, the Depositor or Master
Servicer, as the case may be, shall specify the Item on Form 10-D to which
such information is responsive and, with respect to any Exhibit to be filed on
Form 10-D, the Exhibit number. Any information to be filed on Form 10-D shall
be delivered to the Trustee in ▇▇▇▇▇-compatible form or as otherwise agreed
upon by the Trustee and the Depositor or the Master Servicer, as the case may
be, at the Depositor's expense, and any necessary conversion to
▇▇▇▇▇-compatible format will be at the Depositor's expense. At the reasonable
request of, and in accordance with the reasonable directions of, the Depositor
or the Master Servicer, subject to the two preceding sentences, the Trustee
shall prepare for filing and file an amendment to any Form 10-D previously
filed with the Commission with respect to the Trust Fund. The Master Servicer
shall sign the Form 10-D filed on behalf of the Trust Fund.
(b) No later than each Distribution Date, each of the Master
Servicer and the Trustee shall notify (and the Master Servicer shall cause any
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-D
Disclosure Item, together with a description of any such Form 10-D Disclosure
Item in form and substance reasonably acceptable to the Depositor. In addition
to such information as the Master Servicer and the Trustee are obligated to
provide pursuant to other provisions of this Agreement, if so requested by the
Depositor, each of the Master Servicer and the Trustee shall provide such
information which is available to the Master Servicer and the Trustee, as
applicable, without unreasonable effort or expense regarding the performance
or servicing of the Mortgage Loans (in the case of the Trustee, based on the
156
information provided by the Master Servicer) as is reasonably required to
facilitate preparation of distribution reports in accordance with Item 1121 of
Regulation AB. Such information shall be provided concurrently with the
Remittance Reports in the case of the Master Servicer and the Monthly
Statement in the case of the Trustee, commencing with the first such report
due not less than five Business Days following such request.
(c) The Trustee shall not have any responsibility to file any
items (other than those generated by it) that have not been received in a
format suitable (or readily convertible into a format suitable) for electronic
filing via the ▇▇▇▇▇ system and shall not have any responsibility to convert
any such items to such format (other than those items generated by it or that
are readily convertible to such format). The Trustee shall have no liability
to the Certificateholders, the Trust Fund, the Master Servicer, the Depositor
or the NIM Insurer with respect to any failure to properly prepare or file any
of Form 10-D to the extent that such failure is not the result of any
negligence, bad faith or willful misconduct on its part.
Section 11.03 Form 8-K Filings.
The Master Servicer shall prepare and file on behalf of the
Trust Fund any Form 8-K required by the Exchange Act. Each Form 8-K must be
signed by the Master Servicer. Each of the Master Servicer (and the Master
Servicer shall cause any Subservicer to promptly notify) and the Trustee shall
promptly notify the Depositor and the Master Servicer (if the notifying party
is not the Master Servicer), but in no event later than one (1) Business Day
after its occurrence, of any Reportable Event of which it has actual
knowledge. Each Person shall be deemed to have actual knowledge of any such
event to the extent that it relates to such Person or any action or failure to
act by such Person. Concurrently with any Subsequent Transfer, CHL shall
notify the Depositor and the Master Servicer, if any material pool
characteristic of the actual asset pool at the time of issuance of the
Certificates differs by 5% or more (other than as a result of the pool assets
converting into cash in accordance with their terms) from the description of
the asset pool in the Prospectus Supplement.
Section 11.04 Form 10-K Filings.
Prior to March 30th of each year, commencing in 2008 (or such
earlier date as may be required by the Exchange Act), the Depositor shall
prepare and file on behalf of the Trust Fund a Form 10-K, in form and
substance as required by the Exchange Act. A senior officer in charge of the
servicing function of the Master Servicer shall sign each Form 10-K filed on
behalf of the Trust Fund. Such Form 10-K shall include as exhibits each (i)
annual compliance statement described under Section 3.17, (ii) annual report
on assessments of compliance with servicing criteria described under Section
11.07 and (iii) accountant's report described under Section 11.07. Each Form
10-K shall also include any ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification required to be
included therewith, as described in Section 11.05.
If the Item 1119 Parties listed on Exhibit Z have changed since
the Closing Date, no later than March 1 of each year, the Master Servicer
shall provide each of the Master Servicer (and the Master Servicer shall
provide any Subservicer) and the Trustee with an updated Exhibit Z setting
forth the Item 1119 Parties. No later than March 15 of each year, commencing
in 2008, the Master Servicer and the Trustee shall notify (and the Master
Servicer shall cause any
157
Subservicer to notify) the Depositor and the Master Servicer of any Form 10-K
Disclosure Item, together with a description of any such Form 10-K Disclosure
Item in form and substance reasonably acceptable to the Depositor.
Additionally, each of the Master Servicer and the Trustee shall provide, and
shall cause each Reporting Subcontractor retained by the Master Servicer or
the Trustee, as applicable, and in the case of the Master Servicer shall cause
each Subservicer, to provide, the following information no later than March 15
of each year in which a Form 10-K is required to be filed on behalf of the
Trust Fund: (i) if such Person's report on assessment of compliance with
servicing criteria described under Section 11.07 or related registered public
accounting firm attestation report described under Section 11.07 identifies
any material instance of noncompliance, notification of such instance of
noncompliance and (ii) if any such Person's report on assessment of compliance
with servicing criteria or related registered public accounting firm
attestation report is not provided to be filed as an exhibit to such Form
10-K, information detailing the explanation why such report is not included.
Section 11.05 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification.
Each Form 10-K shall include a certification (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification") required by Rules 13a-14(d) and 15d-14(d)
under the Exchange Act (pursuant to Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 and the rules and regulations of the Commission promulgated thereunder
(including any interpretations thereof by the Commission's staff)). No later
than March 15 of each year, beginning in 2008, the Master Servicer and the
Trustee shall (unless such person is the Certifying Person), and the Master
Servicer shall cause each Subservicer and each Reporting Subcontractor and the
Trustee shall cause each Reporting Subcontractor to, provide to the Person who
signs the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (the "Certifying Person") a
certification (each, a "Performance Certification"), in the form attached
hereto as Exhibit X-1 (in the case of a Subservicer or any Reporting
Subcontractor of the Master Servicer or a Subservicer) and Exhibit X-2 (in the
case of the Trustee or any Reporting Subcontractor of the Trustee), on which
the Certifying Person, the entity for which the Certifying Person acts as an
officer, and such entity's officers, directors and Affiliates (collectively
with the Certifying Person, "Certification Parties") can reasonably rely. The
senior officer in charge of the servicing function of the Master Servicer
shall serve as the Certifying Person on behalf of the Trust Fund. Neither the
Master Servicer nor the Depositor will request delivery of a certification
under this clause unless the Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to the Trust Fund. In the
event that prior to the filing date of the Form 10-K in March of each year,
the Trustee or the Depositor has actual knowledge of information material to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification, the Trustee or the Depositor, as the case
may be, shall promptly notify the Master Servicer and the Depositor. The
respective parties hereto agree to cooperate with all reasonable requests made
by any Certifying Person or Certification Party in connection with such
Person's attempt to conduct any due diligence that such Person reasonably
believes to be appropriate in order to allow it to deliver any ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification or portion thereof with respect to the Trust Fund.
158
Section 11.06 Form 15 Filing.
Prior to January 30 of the first year in which the Depositor is
able to do so under applicable law, the Depositor shall file a Form 15
relating to the automatic suspension of reporting in respect of the Trust Fund
under the Exchange Act.
Section 11.07 Report on Assessment of Compliance and
Attestation.
(a) On or before March 15 of each calendar year, commencing in
2008:
(1) Each of the Master Servicer and the Trustee shall
deliver to the Depositor and the Master Servicer a report (in
form and substance reasonably satisfactory to the Depositor)
regarding the Master Servicer's or the Trustee's, as
applicable, assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1122 of Regulation AB. Such report shall be signed by an
authorized officer of such Person and shall address each of the
Servicing Criteria specified on a certification substantially
in the form of Exhibit Y hereto delivered to the Depositor
concurrently with the execution of this Agreement. To the
extent any of the Servicing Criteria are not applicable to such
Person, with respect to Asset Backed securities transactions
taken as a whole involving such Person and that are backed by
the same asset type backing the Certificates, such report shall
include such a statement to that effect. The Depositor and the
Master Servicer, and each of their respective officers and
directors shall be entitled to rely on upon each such servicing
criteria assessment.
(2) Each of the Master Servicer and the Trustee shall
deliver to the Depositor and the Master Servicer a report of a
registered public accounting firm reasonably acceptable to the
Depositor that attests to, and reports on, the assessment of
compliance made by Master Servicer or the Trustee, as
applicable, and delivered pursuant to the preceding paragraphs.
Such attestation shall be in accordance with Rules 1-02(a)(3)
and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act, including, without limitation that in the event
that an overall opinion cannot be expressed, such registered
public accounting firm shall state in such report why it was
unable to express such an opinion. Such report must be
available for general use and not contain restricted use
language. To the extent any of the Servicing Criteria are not
applicable to such Person, with respect to Asset Backed
securities transactions taken as a whole involving such Person
and that are backed by the same asset type backing the
Certificates, such report shall include such a statement that
that effect.
(3) The Master Servicer shall cause each Subservicer and
each Reporting Subcontractor to deliver to the Depositor an
assessment of compliance and accountant's attestation as and
when provided in paragraphs (a) and (b) of this Section 11.07.
(4) The Trustee shall cause each Reporting Subcontractor
to deliver to the Depositor and the Master Servicer an
assessment of compliance and accountant's attestation as and
when provided in paragraphs (a) and (b) of this Section.
159
(5) The Master Servicer and the Trustee shall execute (and
the Master Servicer shall cause each Subservicer to execute,
and the Master Servicer and the Trustee shall cause each
Reporting Subcontractor to execute) a reliance certificate to
enable the Certification Parties to rely upon each (i) annual
compliance statement provided pursuant to Section 3.17, (ii)
annual report on assessments of compliance with servicing
criteria provided pursuant to this Section 11.07 and (iii)
accountant's report provided pursuant to this Section 11.07 and
shall include a certification that each such annual compliance
statement or report discloses any deficiencies or defaults
described to the registered public accountants of such Person
to enable such accountants to render the certificates provided
for in this Section 11.07.
(b) In the event the Master Servicer, any Subservicer, the
Trustee or Reporting Subcontractor is terminated or resigns during the term of
this Agreement, such Person shall provide documents and information required
by this Section 11.07 with respect to the period of time it was subject to
this Agreement or provided services with respect to the Trust Fund, the
Certificates or the Mortgage Loans.
(c) Each assessment of compliance provided by a Subservicer
pursuant to Section 11.07(a)(3) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit Y hereto
delivered to the Depositor concurrently with the execution of this Agreement
or, in the case of a Subservicer subsequently appointed as such, on or prior
to the date of such appointment. An assessment of compliance provided by a
Subcontractor pursuant to Section 11.07(a)(3) or (4) need not address any
elements of the Servicing Criteria other than those specified by the Master
Servicer or the Trustee, as applicable, pursuant to Section 11.07(a)(1).
Section 11.08 Use of Subservicers and Subcontractors.
(a) The Master Servicer shall cause any Subservicer used by the
Master Servicer (or by any Subservicer) for the benefit of the Depositor to
comply with the provisions of Section 3.17 and this Article XI to the same
extent as if such Subservicer were the Master Servicer (except with respect to
the Master Servicer's duties with respect to preparing and filing any Exchange
Act Reports or as the Certifying Person). The Master Servicer shall be
responsible for obtaining from each Subservicer and delivering to the
Depositor any servicer compliance statement required to be delivered by such
Subservicer under Section 3.17, any assessment of compliance and attestation
required to be delivered by such Subservicer under Section 11.07 and any
certification required to be delivered to the Certifying Person under Section
11.05 as and when required to be delivered. As a condition to the succession
to any Subservicer as subservicer under this Agreement by any Person (i) into
which such Subservicer may be merged or consolidated, or (ii) which may be
appointed as a successor to any Subservicer, the Master Servicer shall provide
to the Depositor, at least 15 calendar days prior to the effective date of
such succession or appointment, (x) written notice to the Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Depositor, all information reasonably requested
by the Depositor in order to comply with its reporting obligation under Item
6.02 of Form 8-K.
160
(b) It shall not be necessary for the Master Servicer, any
Subservicer or the Trustee to seek the consent of the Depositor or any other
party hereto to the utilization of any Subcontractor. The Master Servicer or
the Trustee, as applicable, shall promptly upon request provide to the
Depositor (or any designee of the Depositor, such as the Master Servicer or
administrator) a written description (in form and substance satisfactory to
the Depositor) of the role and function of each Subcontractor utilized by such
Person (or in the case of the Master Servicer, any Subservicer), specifying
(i) the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided by
each Subcontractor identified pursuant to clause (ii) of this paragraph.
As a condition to the utilization of any Subcontractor
determined to be a Reporting Subcontractor, the Master Servicer or the
Trustee, as applicable, shall cause any such Subcontractor used by such Person
(or in the case of the Master Servicer, any Subservicer) for the benefit of
the Depositor to comply with the provisions of Sections 11.07 and 11.09 of
this Agreement to the same extent as if such Subcontractor were the Master
Servicer (except with respect to the Master Servicer's duties with respect to
preparing and filing any Exchange Act Reports or as the Certifying Person) or
the Trustee, as applicable. The Master Servicer or the Trustee, as applicable,
shall be responsible for obtaining from each Subcontractor and delivering to
the Depositor and the Master Servicer, any assessment of compliance and
attestation required to be delivered by such Subcontractor under Section 11.05
and Section 11.07, in each case as and when required to be delivered.
Section 11.09 Amendments.
In the event the parties to this Agreement desire to further
clarify or amend any provision of this Article XI, this Agreement shall be
amended to reflect the new agreement between the parties covering matters in
this Article XI pursuant to Section 10.01, which amendment shall not require
any Opinion of Counsel or Rating Agency confirmations or the consent of any
Certificateholder, the Certificate Insurer or the NIM Insurer provided that
written notice of such amendment shall promptly be delivered by the Master
Servicer to the Certificate Insurer.
If, during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust Fund, the Master Servicer is no
longer an Affiliate of the Depositor, the Depositor shall assume the
obligations and responsibilities of the Master Servicer in this Article XI
with respect to the preparation and filing of the Exchange Act Reports and/or
acting as the Certifying Person, if the Depositor has received indemnity from
such successor Master Servicer satisfactory to the Depositor, and such Master
Servicer has agreed to provide a ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification to the Depositor
substantially in the form of Exhibit AA and the certifications referred to in
Section 11.07.
161
Section 11.10 Reconciliation of Accounts.
Any reconciliation of Account performed by any party hereto, or
any Subservicer or Subcontractor, shall be prepared no later than 45 calendar
days after the bank statement cutoff date.
162
IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized as
of the day and year first above written.
CWHEQ, INC.,
as Depositor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
PARK GRANADA LLC,
as a Seller
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
PARK MONACO INC.,
as a Seller
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
PARK SIENNA LLC,
as a Seller
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK
(solely with respect to its obligations under
Section 4.01(d))
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
Exhibits A-1-A
through A-6
[Exhibits A-1-A through A-6 are
photocopies of such Certificates as delivered.]
[See appropriate documents delivered at closing.]
Exhibit B
Exhibit B is a photocopy
of the Class P Certificates
as delivered.
[See appropriate document delivered at closing.]
Exhibit C
Exhibit C is a photocopy
of the Class C Certificates
as delivered.
[See appropriate document delivered at closing.]
Exhibit D-1
Exhibit D-1 is a photocopy
of the Class A-R Certificate
as delivered.
[See appropriate documents delivered at closing.]
Exhibit D-2
Exhibit D-2 is a photocopy
of the Class E-P Certificate
as delivered.
[See appropriate documents delivered at closing.]
Exhibit E
Exhibit E is a photocopy
of the Tax Matters Person Certificate
as delivered.
[See appropriate documents delivered at closing.]
Exhibit F-1 and F-2
[Exhibits F-1 and F-2 are schedules of Mortgage Loans]
[Delivered to Trustee at closing and on file with the Trustee.]
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2007 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC,
as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, hereby certifies that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed in the attached list of exceptions) the Trustee has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of ______________,
without recourse", or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note; and
(ii) a duly executed assignment of the Mortgage or a copy of such
assignment, in either case in the form permitted by Section 2.01 of the
Pooling and Servicing Agreement.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of
G-1-1
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
G-1-2
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
---------------------------------------
Name:
Title:
G-1-3
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2007 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller , Park Monaco Inc., as a Seller, Park Sienna
LLC, as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and
the undersigned, as Trustee, hereby certifies that [, with respect to the
Subsequent Mortgage Loans delivered in connection with the Subsequent Transfer
Agreement, dated as of __________ (the "Subsequent Transfer Agreement") among
CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller and The Bank of New York, as Trustee], except as listed in the
following paragraph, as to each [Initial Mortgage Loan][Subsequent Mortgage
Loan] listed in the [Mortgage Loan Schedule][Loan Number and Borrower
Identification Mortgage Loan Schedule] (other than any [Mortgage Loan][Loan
Number and Borrower Identification Mortgage Loan Schedule] paid in full or
listed on the attached list of exceptions) the Trustee has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(ii) the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in the case of each
[Initial Mortgage Loan][Subsequent Mortgage
G-2-1
Loan] that is a MERS Mortgage Loan, the original Mortgage or a copy of such
Mortgage, with recording information, noting thereon the presence of the MIN
of the [Initial Mortgage Loan][Subsequent Mortgage Loan] and language
indicating that the [Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM
Loan if the [Initial Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan,
with evidence of recording indicated thereon, or a copy of the Mortgage
certified by the public recording office in which such Mortgage has been
recorded;
(iii) the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2007-S1,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement dated as of February 1,
2007, without recourse" or a copy of such assignment, with recording
information, or, in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] with respect to property located in the State of California
that is not a MERS Mortgage Loan, a duly executed assignment of the Mortgage
in blank (each such assignment, when duly and validly completed, to be in
recordable form and sufficient to effect the assignment of and transfer to the
assignee thereof, under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
or a copy of such assignments, with recording information, together with all
interim recorded assignments of such Mortgage or a copy of such assignments,
with recording information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or a
copy of lender's title policy or a printout of the electronic equivalent and
all riders thereto or, in the event such original title policy has not been
received from the insurer, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company, with the original policy of title insurance to
be delivered within one year of the Closing Date.
In the event that in connection with any [Initial Mortgage
Loan][Subsequent Mortgage Loan] that is not a MERS Mortgage Loan the
applicable Seller cannot deliver the original recorded Mortgage or all interim
recorded assignments of the Mortgage satisfying the requirements of clause
(ii), (iii) or (iv), as applicable, the Trustee has received, in lieu thereof,
a true and complete copy of such Mortgage and/or such assignment or
assignments of the Mortgage, as applicable, each certified by the applicable
Seller, the applicable title company, escrow agent or attorney, or the
originator of such [Initial Mortgage Loan][Subsequent Mortgage Loan], as the
case may be, to be a true and complete copy of the original Mortgage or
assignment of Mortgage submitted for recording.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
[Initial Mortgage Loan][Subsequent Mortgage Loan], and (ii) the information
set forth in items (i), (iv), (v), (vi),
G-2-2
(viii) and (ix) of the definition of the "Mortgage Loan Schedule" in Section
1.01 of the Pooling and Servicing Agreement accurately reflects information
set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the [Initial
Mortgage Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any
such Mortgage Loan.
G-2-3
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
--------------------------------------
Name:
Title:
G-2-4
EXHIBIT G-3
FORM OF DELAY DELIVERY CERTIFICATION
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1
--------------------------------------------
Gentlemen:
Reference is made to the Initial Certification of Trustee relating
to the above-referenced series, with the schedule of exceptions attached
thereto, delivered by the undersigned, as Trustee, on the Closing Date in
accordance with Section 2.02 of the Pooling and Servicing Agreement dated as
of February 1, 2007 (the "Pooling and Servicing Agreement") among CWHEQ, Inc.,
as Depositor, Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as
a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and the undersigned,
as Trustee. The undersigned hereby certifies that [, with respect to the
Subsequent Mortgage Loans delivered in connection with the Subsequent Transfer
Agreement, dated as of __________ (the "Subsequent Transfer Agreement") among
CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park
Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller and The Bank of New York, as Trustee,] as to each Delay Delivery
Mortgage Loan listed on the Schedule A attached hereto (other than any
[Initial Mortgage Loan][Subsequent Mortgage Loan] paid in full or listed on
Schedule B attached hereto) the Trustee has received:
(1) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements;
(2) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, a duly executed assignment of the
Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2007-S1,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement
G-3-1
dated as of February 1, 2007, without recourse" or a copy of such assignment,
with recording information, or, in the case of each [Initial Mortgage
Loan][Subsequent Mortgage Loan] with respect to property located in the State
of California that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage in blank (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which such assignment
relates).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the [Initial
Mortgage Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the collectibility, insurability, effectiveness or suitability of any
such [Initial Mortgage Loan][Subsequent Mortgage Loan].
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
---------------------------------------
Name:
Title:
G-3-2
EXHIBIT G-4
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(SUBSEQUENT MORTGAGE LOANS)
[Date]
[Depositor]
[Sellers]
[Master Servicer]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2007 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC,
as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, the undersigned hereby certifies that, as to each
Subsequent Mortgage Loan listed in the Loan Number and Borrower Identification
Mortgage Loan Schedule (other than any Subsequent Mortgage Loan paid in full
or listed in the attached list of exceptions) the Trustee has received:
(1) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of _______________
without recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Person endorsing the Mortgage
Note (each such endorsement being sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note), or, if the original Mortgage Note has been lost or
destroyed and not replaced, an original lost note affidavit, stating that the
original Mortgage Note was lost or destroyed, together with a copy of the
related Mortgage Note and all such intervening endorsements; and
(2) a duly executed assignment of the Mortgage or a copy of such
assignment with recording information, in either case in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
G-4-1
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the Subsequent
Mortgage Loans identified on the Loan Number and Borrower Identification
Mortgage Loan Schedule or (ii) the collectibility, insurability, effectiveness
or suitability of any such Subsequent Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
------------------------------------
Name:
Title:
G-4-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Master Servicer]
[Sellers]
[Certificate Insurer]
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1
Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of February 1, 2007 (the "Pooling and Servicing Agreement")
among CWHEQ, Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller,
Park Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC,
as a Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and the
undersigned, as Trustee, the undersigned, as Trustee, hereby certifies that[,
with respect to the Subsequent Mortgage Loans delivered in connection with the
Subsequent Transfer Agreement, dated as of __________ (the "Subsequent
Transfer Agreement") among CWHEQ, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Granada LLC, as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller and The Bank of New York, as Trustee,] as
to each [Initial Mortgage Loan][Subsequent Mortgage Loan] listed in the
[Mortgage Loan Schedule][Loan Number and Borrower Identification Mortgage Loan
Schedule] (other than any [Initial Mortgage Loan][Subsequent Mortgage Loan]
paid in full or listed on the attached Document Exception Report) the Trustee
has received:
(i) the original Mortgage Note, endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of
_________________ without recourse", with all intervening endorsements that
show a complete chain of endorsement from the originator to the Person
endorsing the Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so endorsing, as
noteholder or assignee thereof, in and to that Mortgage Note), or, if the
original Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit, stating that the original Mortgage Note was lost
or destroyed, together with a copy of the related Mortgage Note and all such
intervening endorsements;
(ii) in the case of each [Initial Mortgage Loan][Subsequent Mortgage
Loan] that is not a MERS Mortgage Loan, the original recorded Mortgage or a
copy of such Mortgage, with recording information, and in the case of each
[Initial Mortgage Loan][Subsequent Mortgage Loan] that is a MERS Mortgage
Loan, the original Mortgage or a copy of such Mortgage, with recording
information, noting the presence of the MIN of the [Initial Mortgage
H-1
Loan][Subsequent Mortgage Loan] and language indicating that the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan if the [Initial
Mortgage Loan][Subsequent Mortgage Loan] is a MOM Loan, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded];
(iii) in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] that is not a MERS Mortgage Loan, a duly executed assignment of
the Mortgage to "Home Equity Loan Asset Backed Certificates, Series 2007-S1,
CWHEQ, Inc., by The Bank of New York, a New York banking corporation, as
trustee under the Pooling and Servicing Agreement dated as of February 1,
2007, without recourse" or a copy of such assignment, with recording
information, or, in the case of each [Initial Mortgage Loan][Subsequent
Mortgage Loan] with respect to property located in the State of California
that is not a MERS Mortgage Loan, a duly executed assignment of the Mortgage
in blank (each such assignment, when duly and validly completed, to be in
recordable form and sufficient to effect the assignment of and transfer to the
assignee thereof, under the Mortgage to which such assignment relates);
(iv) the original recorded assignment or assignments of the Mortgage
or a copy of such assignments, with recording information, together with all
interim recorded assignments of such Mortgage or a copy of such assignments,
with recording information (in each case noting the presence of a MIN in the
case of each MERS Mortgage Loan);
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original or duplicate original lender's title policy or a
copy of lender's title policy or a printout of the electronic equivalent and
all riders thereto or any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company.
If the public recording office in which a Mortgage or assignment
thereof is recorded has retained the original of such Mortgage or assignment,
the Trustee has received, in lieu thereof, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v),
(vi), (viii) and (ix) of the definition of the "Mortgage Loan Schedule" in
Section 1.01 of the Pooling and Servicing Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in each Mortgage File of any of the [Initial
Mortgage Loans][Subsequent Mortgage Loans] identified on the [Mortgage Loan
Schedule][Loan Number and Borrower Identification Mortgage Loan Schedule] or
(ii) the
H-2
collectibility, insurability, effectiveness or suitability of any such
[Initial Mortgage Loan][Subsequent Mortgage Loan].
H-3
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
---------------------------------
Name:
Title:
H-4
EXHIBIT I
TRANSFER AFFIDAVIT FOR THE CLASS A-R CERTIFICATES
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated
as of February 1, 2007 (the "Agreement"), by and among CWHEQ, Inc., as
depositor (the "Depositor"), Countrywide Home Loans, Inc., as a Seller, Park
Granada LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a
Seller, Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank
of New York, as Trustee. Capitalized terms used, but not defined herein or in
Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.
2. The Transferee is not an employee benefit plan that is subject to
Title I of ERISA or to section 4975 of the Internal Revenue Code of 1986, nor
is it acting on behalf of or with plan assets of any such plan. The Transferee
is, as of the date hereof, and will be, as of the date of the Transfer, a
Permitted Transferee. The Transferee will endeavor to remain a Permitted
Transferee for so long as it retains its Ownership Interest in the
Certificate. The Transferee is acquiring its Ownership Interest in the
Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
I-1
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit J-1 to the Agreement (a "Transferor Certificate") to
the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Class A-R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code section
7701(a)(30).
10. The Transferee is aware that the Class A-R Certificates may be
"noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax. In
addition, as the holder of a noneconomic residual interest, the Transferee may
incur tax liabilities in excess of any cash flows generated by the interest
and the Transferee hereby represents that it intends to pay taxes associated
with holding the residual interest as they become due.
11. The Transferee has provided financial statements or other
financial information requested by the Transferor in connection with the
transfer of the Class A-R Certificates to permit the Transferor to assess the
financial capability of the Transferee to pay such taxes.
* * *
I-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By:
---------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
-----------------------------
[Assistant] Secretary
Personally appeared before me the above-named _____________, known
or proved to me to be the same person who executed the foregoing instrument
and to be the ____________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ____ day of _______, 20__.
-------------------------------------
NOTARY PUBLIC
My Commission expires the ___ day of
, 20__.
I-3
Certain Definitions
"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.
"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 any Class A-R Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" as defined in section 775 of the Code, (vi) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, or other entity (treated as a corporation or a partnership for
federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, or an estate
whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trustor
unless such Person has furnished the transferor and the Trustee with a duly
completed Internal Revenue Service Form W-8ECI, and (vii) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the Transfer
of an Ownership Interest in a Class A-R Certificate to such Person may cause
any REMIC formed hereunder to fail to qualify as a REMIC at any time that any
Certificates are Outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and,
with the exception of the Federal Home Loan Mortgage Corporation, a majority
of its board of directors is not selected by such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency
or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
I-4
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership Interest in a
Class A-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 A-R
Certificate are expressly subject to the following provisions:
(1) Each Person holding or acquiring any Ownership Interest in
a Class A-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.
(2) Except in connection with (i) the registration of the Tax
Matters Person Certificate in the name of the Trustee or (ii) any
registration in the name of, or transfer of a Class A-R Certificate
to, an affiliate of the Depositor (either directly or through a
nominee) in connection with the initial issuance of the
Certificates, no Ownership Interest in a Class A-R Certificate may
be registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class A-R
Certificate, unless 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 I.
(3) Each Person holding or acquiring any Ownership Interest in
a Class A-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 A-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 A-R Certificate and (C) not to Transfer its Ownership
Interest in a Class A-R Certificate, or to cause the Transfer of an
Ownership Interest in a Class A-R Certificate to any other Person,
if it has actual knowledge that such Person is not a Permitted
Transferee.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-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 A-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 A-R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class
A-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 and Transferor Certificate. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class A-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 A-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.
I-5
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under section
860E(e) of the Code as a result of a Transfer of an Ownership
Interest in a Class A-R Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set forth
in this Section 5.02(c) shall cease to apply (and the applicable portions of
the legend on a Class A-R Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee, the Sellers
or the Master Servicer to the effect that the elimination of such restrictions
will not cause any constituent REMIC of any REMIC formed hereunder to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust Fund, a Certificateholder or another
Person. Each Person holding or acquiring any ownership Interest in a Class A-R
Certificate hereby consents to any amendment of this Agreement that, based on
an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Class
A-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 A-R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.
I-6
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWHEQ, Inc.
as Depositor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bank of New York
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1
Ladies and Gentlemen:
In connection with our disposition of the Class A-R Certificates, we
certify that we have no knowledge that 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 February 1, 2007, among CWHEQ, Inc., as Depositor, Countrywide
Home Loans, Inc., as a Seller, Park Granada LLC, as a Seller, Park Monaco
Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and The Bank of New York, as Trustee.
Very truly yours,
-------------------------------------
Name of Transferor
By: _________________________________
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWHEQ, Inc.,
as Depositor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1, Class [ ]
Ladies and Gentlemen:
In connection with our disposition of the above-captioned
Certificates we certify that (a) we understand that the Certificates have not
been registered under the Securities Act of 1933, as amended (the "Act"), and
are being disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act. 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 February 1, 2007, among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a
Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of New
York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferor
By: _______________________________
Name:
Title:
J-2-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWHEQ, Inc.,
as Depositor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
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 are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement, or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below),
(f) 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, or taken any other action which would
result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration requirements, and
if
K-1
requested, we will at our expense provide an opinion of counsel satisfactory
to the addressees of this Certificate that such sale, transfer or other
disposition may be made pursuant to an exemption from the Act, (2) the
purchaser or transferee of such Certificate has executed and delivered to you
a certificate to substantially the same effect as this certificate, and (3)
the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement.
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 February 1, 2007, among CWHEQ, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Granada LLC, as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as
Master Servicer, and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By: _______________________________
Authorized Officer
k-2
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWHEQ, Inc.,
as Depositor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: CWHEQ Home Equity Loan Trust, Series 2007-S1, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement, or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we have not, nor has anyone acting on
our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificates, any interest in the Certificates or any other
similar 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,
L-1
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 either of the forms of certification to that effect attached hereto
as Annex 1 or Annex 2. We are aware that the sale to us is being made in
reliance on Rule 144A. We are acquiring the Certificates for our own account
or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration under
the Securities Act.
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 February 1, 2007, among CWHEQ, Inc., as Depositor, Countrywide Home Loans,
Inc., as a Seller, Park Granada LLC, as a Seller, Park Monaco Inc., as a
Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans Servicing LP, as
Master Servicer, and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By: _______________________________
Authorized Officer
L-2
ANNEX 1 TO EXHIBIT L
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:
As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer
of the Buyer.
In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the
Buyer owned and/or invested on a discretionary basis either at
least $100,000,000 in securities or, if Buyer is a dealer, Buyer
must own and/or invest on a discretionary basis at least
$10,000,000 in securities (except for the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked
below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of
L-3
risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the
District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if
the Buyer is a dealer, (iii) securities issued or guaranteed by the
U.S. or any instrumentality thereof, (iv) bank deposit notes and
certificates of deposit, (v) loan participations, (vi) repurchase
agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
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.
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.
L-4
Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such
notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of
such purchase. In addition, if the Buyer is a bank or savings and
loan is provided above, the Buyer agrees that it will furnish to
such parties updated annual financial statements promptly after
they become available.
------------------------------------
Print Name of Buyer
By:
------------------------------------
Name:
Title:
Date:
----------------------------
L-5
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
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.
In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i)
the Buyer is an investment company registered under the
Investment Company Act of 1940, as amended and (ii) as marked
below, the Buyer alone, or the Buyer's Family of Investment
Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year. For purposes of
determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such
securities was used, except (i) where the Buyer or the Buyer's
Family of Investment Companies reports its securities holdings
in its financial statements on the basis of their market value,
and (ii) no current information with respect to the cost of
those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at
market.
___ The Buyer owned $ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
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).
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
L-6
agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity
swaps.
The Buyer is familiar with Rule 144A and under-stands 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.
Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes
in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of
the date of such purchase.
________________________________________
Print Name of Buyer or Adviser
By: ____________________________________
Name:
Title:
IF AN ADVISER:
________________________________________
Print Name of Buyer
Date: __________________________________
L-7
EXHIBIT M
FORM OF REQUEST FOR DOCUMENT RELEASE
Loan Information
Name of Mortgagor:
------------------------------------------
Master Servicer
Loan No.:
------------------------------------------
Trustee
Name:
------------------------------------------
Address:
------------------------------------------
Trustee
Mortgage File No.:
------------------------------------------
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________________________, as Trustee for the
Holders of Home Equity Loan Asset Backed Certificates, Series 2007-S1, the
documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Document Release shall have the meanings
given them in the Pooling and Servicing Agreement dated as of February 1, 2007
(the "Pooling and Servicing Agreement") among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as a Seller, Park Granada LLC, as a Seller, Park
Monaco Inc., as a Seller, Park Sienna LLC, as a Seller, Countrywide Home Loans
Servicing LP, as Master Servicer, and The Bank of New York, as Trustee.
( ) Mortgage Note dated ___________, ____, in the original principal sum of
$________, made by __________________, payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no. ________________
in the County Recorder's Office of the County of ________________, State
of _______________ in book/reel/docket _______________ of official
records at page/image ___________.
( ) Deed of Trust recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image ___________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________ in the County Recorder's
Office of
M-1
the County of __________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) __________________________________________________
( ) __________________________________________________
( ) __________________________________________________
( ) __________________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trust Fund, solely for
the purposes provided in the Pooling and Servicing Agreement.
(2) The Master Servicer shall not cause or knowingly permit
the Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions
nor shall the Master Servicer assert or seek to assert any claims or
rights of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Certificate Account and except as expressly provided in
the Pooling and Servicing Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trust Fund, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
[Master Servicer]
By
------------------------------------
Its
------------------------------------
Date: _________________, ____
M-2
EXHIBIT N
FORM OF REQUEST FOR FILE RELEASE
OFFICER'S CERTIFICATE AND TRUST RECEIPT
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 2007-S1
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
[ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.] [THE PURCHASE PRICE
FOR SUCH MORTGAGE LOANS HAS BEEN PAID.] [THE MORTGAGE LOANS HAVE BEEN
LIQUIDATED AND THE RELATED [INSURANCE PROCEEDS] [LIQUIDATION PROCEEDS] HAVE
BEEN DEPOSITED PURSUANT TO SECTION 3.13 OF THE POOLING AND SERVICING
AGREEMENT.] [A REPLACEMENT MORTGAGE LOAN HAS BEEN DELIVERED TO THE TRUSTEE IN
THE MANNER AND OTHERWISE IN ACCORDANCE WITH THE CONDITIONS SET FORTH IN
SECTIONS 2.02 AND 2.03 OF THE POOLING AND SERVICING AGREEMENT.]
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
[For Substitution or Repurchase Only: The Master Servicer certifies that [an]
[no] opinion is required by Section 2.05 [and is attached hereto].]
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO
SECTION 3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
____________ _____________________
DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
N-1
Exhibit O
Exhibit O is a photocopy
of the Depository Agreement
as delivered.
[See appropriate documents delivered at closing.]
EXHIBIT P
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated as of ____________, 200[_]
(this "Subsequent Transfer Agreement"), among CWHEQ, INC., a Delaware
corporation, as depositor (the "Depositor"), COUNTRYWIDE HOME LOANS, INC., a
New York corporation, in its capacity as a seller under the Pooling and
Servicing Agreement referred to below ("CHL"), PARK GRANADA LLC, a Delaware
corporation, in its capacity as a seller under the Pooling and Servicing
Agreement ("Park Granada"), PARK MONACO INC., a Delaware corporation, in its
capacity as a seller under the Pooling and Servicing Agreement ("Park
Monaco"), PARK SIENNA LLC, a Delaware limited liability company, in its
capacity as a seller under the Pooling and Servicing Agreement ("Park Sienna"
and, together with CHL, Park Granada and Park Monaco, the "Sellers") and The
Bank of New York, a New York banking corporation, as trustee (the "Trustee");
WHEREAS, the Depositor, CHL, Park Granada, Park Monaco, Park Sienna,
the Trustee, Countrywide Home Loans Servicing LP, as Master Servicer, and The
Bank of New York, as Trustee, have entered in the Pooling and Servicing
Agreement, dated as of February 1, 2007 (the "Pooling and Servicing
Agreement"), relating to the CWHEQ, Inc. Home Equity Loan Asset Backed
Certificates, Series 2007-S1 (capitalized terms not otherwise defined herein
are used as defined in the Pooling and Servicing Agreement);
WHEREAS, Section 2.01(b) of the Pooling and Servicing Agreement
provides for the parties hereto to enter into this Subsequent Transfer
Agreement in accordance with the terms and conditions of the Pooling and
Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged the parties hereto agree as follows:
(a) The "Subsequent Transfer Date" with respect to this Subsequent
Transfer Agreement shall be ________ __, 200[_].
(b) The "Subsequent Transfer Date Purchase Amount" with respect to
this Subsequent Transfer Agreement shall be $_______________.
(c) The Subsequent Mortgage Loans conveyed on the Subsequent
Transfer Date shall be subject to the terms and conditions of the Pooling and
Servicing Agreement.
(d) Annex I hereto sets forth a list of the Mortgage Loans which are
Delay Delivery Mortgage Loans.
(e) In case any provision of this Subsequent Transfer Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions or obligations shall not in any way
be affected or impaired thereby.
P-1
(f) In the event of any conflict between the provisions of this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement, the
provisions of the Pooling and Servicing Agreement shall prevail.
(g) This Subsequent Transfer Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws of the State of
New York.
(h) The Subsequent Transfer Agreement may be executed in one or more
counterparts, each of which so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
P-2
IN WITNESS WHEREOF, the parties to this Subsequent Transfer
Agreement have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
P-6
CWHEQ, INC.,
as Depositor
By: __________________________________
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as a Seller
By: __________________________________
Name:
Title:
PARK GRANADA LLC,
as a Seller
By: __________________________________
Name:
Title:
PARK MONACO INC.,
as a Seller
By: __________________________________
Name:
Title:
PARK SIENNA LLC,
as a Seller
P-4
By: __________________________________
Name:
Title:
▇-▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
not in its individual capacity,
but solely as Trustee
By:___________________________________
Name:
Title:
P-6
Annex I
Mortgage Loans for which All or a Portion of a Related Mortgage File is not
Delivered to the Trustee on or prior to the Subsequent Transfer Date
P-7
EXHIBIT Q
[Reserved]
EXHIBIT R
[Reserved]
EXHIBIT S-1
[Reserved]
EXHIBIT S-2
[Reserved]
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
Series 2007-S1
[Date]
Via Facsimile
The Bank of New York,
as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sir or Madam:
Reference is made to the Pooling and Servicing Agreement, dated as
of February 1, 2007, (the "Pooling and Servicing Agreement") among CWHEQ,
Inc., as Depositor, Countrywide Home Loans, Inc., as a Seller, Park Granada
LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as a Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, and The Bank of New
York, as Trustee. Capitalized terms used herein shall have the meanings
ascribed to such terms in the Pooling and Servicing Agreement.
__________________ hereby certifies that he/she is a Servicing
Officer, holding the office set forth beneath his/her name and hereby further
certifies as follows:
With respect to the Distribution Date in _________ 20[ ] and each
Mortgage Loan set forth in the attached schedule:
1. A Principal Prepayment in full or in part was received during the
related Prepayment Period;
2. Any Prepayment Charge due under the terms of the Mortgage Note
with respect to such Principal Prepayment was or was not, as indicated on the
attached schedule using "Yes" or "No", received from the Mortgagor and
deposited in the Certificate Account;
3. As to each Mortgage Loan set forth on the attached schedule for
which all or part of the Prepayment Charge required in connection with the
Principal Prepayment was waived by the Master Servicer, such waiver was, as
indicated on the attached schedule, based upon:
(i) the Master Servicer's determination that such waiver would
maximize recovery of Liquidation Proceeds for such Mortgage Loan,
taking into account the value of such Prepayment Charge, or
T-1
(ii)(A) the enforceability thereof is limited (1) by
bankruptcy, insolvency, moratorium, receivership, or other similar
law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or
prohibited by applicable law; and
4. We certify that all amounts due in connection with the waiver of
a Prepayment Charge inconsistent with clause 3 above which are required to be
deposited by the Master Servicer pursuant to Section 3.20 of the Pooling and
Servicing Agreement, have been or will be so deposited.
COUNTRYWIDE HOME LOANS, INC.,
as Master Servicer
By:___________________________________
Name:
Title:
T-2
SCHEDULE OF MORTGAGE LOANS FOR WHICH A PREPAYMENT WAS RECEIVED DURING THE
RELATED PREPAYMENT PERIOD
---------------------------------------- -------------------------------------- --------------------------------------
Loan Number Clause 2: Yes/No Clause 3: (i) or (ii)
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
T-3
EXHIBIT U
[Reserved]
EXHIBIT V-1
[Reserved]
EXHIBIT V-2
[Reserved]
EXHIBIT V-3
[Reserved]
EXHIBIT W
MONTHLY STATEMENT
[On file with Trustee]
EXHIBIT X-1
FORM OF PERFORMANCE CERTIFICATION
(Subservicer)
Re: The Pooling and Servicing Agreement dated as of February 1, 2007
(the "Pooling and Servicing Agreement") among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Granada
LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as
a Seller, Countrywide Home Loans Servicing LP, as Master Servicer,
and the undersigned, as Trustee, and [Subservicing Agreement] dated
as of [ ] (the "Agreement")
I, ________________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to the Depositor and the Master
Servicer, and their officers, with the knowledge and intent that they will
rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and
15d-18 under Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Item 1122 of Regulation AB (the "Servicing Assessment"), the
registered public accounting firm's attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the "Attestation Report"), all
servicing reports, officer's certificates and other information relating
to the servicing of the Mortgage Loans by the Company during 200[ ] that
were delivered by the Company to the Depositor, the Master Servicer and
the Trustee pursuant to the Agreement (collectively, the "Company
Servicing Information");
(2) Based on my knowledge, the Company Servicing Information, 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
the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer];
(4) I am responsible for reviewing the activities performed by the
Company as a servicer under the Agreement, and based on my knowledge and
the compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations
under the Agreement; and
X-1-1
(5) The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the Master
Servicer. Any material instances of noncompliance described in such
reports have been disclosed to the Master Servicer. Any material instance
of noncompliance with the Servicing Criteria has been disclosed in such
reports.
Date: _________________________
By: ________________________________
Name:
Title:
X-1-2
EXHIBIT X-2
FORM OF PERFORMANCE CERTIFICATION
(Trustee)
Re: The Pooling and Servicing Agreement dated as of February 1, 2007
(the "Pooling and Servicing Agreement") among CWHEQ, Inc., as
Depositor, Countrywide Home Loans, Inc., as a Seller, Park Granada
LLC, as a Seller, Park Monaco Inc., as a Seller, Park Sienna LLC, as
a Seller, Countrywide Home Loans Servicing LP, as Master Servicer,
and the undersigned, as Trustee.
I, ________________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to the Depositor and the Master
Servicer, and their officers, with the knowledge and intent that they will
rely upon this certification, that:
(1) I have reviewed the report on assessment of the Company's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria"), provided in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Item 1122 of Regulation AB (the "Servicing
Assessment"), the registered public accounting firm's attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB (the "Attestation Report"), [all
reports on Form 10-D containing statements to certificateholders filed in
respect of the period included in the year covered by the annual report
of the Trust Fund] (collectively, the "Distribution Date Statements");
(2) Assuming the accuracy and completeness of the information
delivered to the Company by the Master Servicer as provided in the
Pooling and Servicing Agreement and subject to paragraph (4) below, the
distribution information determined by the Company and set forth in the
Distribution Date Statements contained in all Form 10-D's included in the
year covered by the annual report of such Trust on Form 10-K for the
calendar year 200[ ], is complete and does not contain any material
misstatement of fact as of the last day of the period covered by such
annual report;
(3) Based solely on the information delivered to the Company by the
Master Servicer as provided in the Pooling and Servicing Agreement, (i)
the distribution information required under the Pooling and Servicing
Agreement to be contained in the Trust Fund's Distribution Date
Statements and (ii) the servicing information required to be provided by
the Master Servicer to the trustee for inclusion in the Trust Fund's
Distribution Date Statements, to the extent received by the Trustee from
the Master Servicer in accordance with the Pooling and Servicing
Agreement, is included in such Distribution Date Statements;
(4) The Company is not certifying as to the accuracy, completeness
or correctness of the information which it received from the Master
Servicer and did not
X-2-1
independently verify or confirm the accuracy, completeness or correctness
of the information provided by the Master Servicer;
(5) I am responsible for reviewing the activities performed by the
Company as a person "performing a servicing function" under the Pooling
and Servicing Agreement, and based on my knowledge and the compliance
review conducted in preparing the Servicing Assessment and except as
disclosed in the Servicing Assessment or the Attestation Report, the
Company has fulfilled its obligations under the Pooling and Servicing
Agreement; and
(6) The Servicing Assessment and Attestation Report required to be
provided by the Company and by Subcontractor pursuant to the Pooling and
Servicing Agreement, have been provided to the Master Servicer and the
Depositor. Any material instances of noncompliance described in such
reports have been disclosed to the Master Servicer and the Depositor. Any
material instance of noncompliance with the Servicing Criteria has been
disclosed in such reports.
Date: _________________________
By: ________________________________
Name:
Title:
X-2-2
EXHIBIT Y
FORM OF
SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by [the
Master Servicer] [Trustee] [Name of Subservicer] shall address, at a
minimum, the criteria identified as below as "Applicable Servicing
Criteria":
-----------------------------------------------------------------------------------------------------------------
Servicing Criteria Applicable Servicing
Criteria
-----------------------------------------------------------------------------------------------------------------
Reference Criteria
-----------------------------------------------------------------------------------------------------------------
General Servicing Considerations
-------------------- ----------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
-------------------- ----------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
such servicing activities.
-------------------- ----------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain
a back-up servicer for the mortgage loans are maintained.
-------------------- ----------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing function
throughout the reporting period in the amount of coverage
required by and otherwise in accordance with the terms of
the transaction agreements.
-------------------- ----------------------
Cash Collection and Administration
-------------------- ----------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days following
receipt, or such other number of days specified in the
transaction agreements.
-------------------- ----------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
personnel.
-------------------- ----------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash
flows or distributions, and any interest or other fees
charged for such advances, are made, reviewed and approved
as specified in the transaction agreements.
-------------------- ----------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(iv)
-------------------- ----------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally
insured depository institution" with respect to a foreign
financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
-------------------- ----------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent
unauthorized access.
-------------------- ----------------------
Y-1
-----------------------------------------------------------------------------------------------------------------
Servicing Criteria Applicable Servicing
Criteria
-----------------------------------------------------------------------------------------------------------------
Reference Criteria
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all Asset
Backed securities related bank accounts, including custodial
accounts and related bank clearing accounts. These reconciliations
are (A) mathematically accurate; (B) prepared within 30 calendar
days after the bank statement cutoff date, or such other number of
days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items.
These reconciling items are resolved within 90 calendar days of
their original identification, or such other number of days
specified in the transaction agreements.
-------------------- ----------------------
Investor Remittances and Reporting
-------------------- ----------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements. Specifically,
such reports (A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms specified in
the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with
investors' or the trustee's records as to the total unpaid
principal balance and number of mortgage loans serviced by the
Servicer.
-------------------- ----------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and other
terms set forth in the transaction agreements.
-------------------- ----------------------
Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction agreements.
1122(d)(3)(iii)
-------------------- ----------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
custodial bank
1122(d)(3)(iv) statements.
-------------------- ----------------------
Pool Asset Administration
-------------------- ----------------------
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related mortgage
loan documents.
-------------------- ----------------------
Mortgage loan and related documents are safeguarded as required by
1122(d)(4)(ii) the transaction agreements
-------------------- ----------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool
are made, reviewed and approved in accordance with any
conditions or requirements in the transaction agreements.
-------------------- ----------------------
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are posted to
the Servicer's obligor records maintained no more than two business
days after receipt, or such other number of days specified in the
transaction agreements, and allocated to principal, interest or
other items (e.g., escrow) in accordance with the related mortgage
loan documents.
-------------------- ----------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
unpaid principal balance.
-------------------- ----------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's
mortgage loans (e.g., loan modifications or re-agings) are
made, reviewed and approved by authorized personnel in
accordance with the transaction agreements and related pool
asset documents.
-------------------- ----------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
transaction agreements.
-------------------- ----------------------
Y-2
-----------------------------------------------------------------------------------------------------------------
Servicing Criteria Applicable Servicing
Criteria
-----------------------------------------------------------------------------------------------------------------
Reference Criteria
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained during the
period a mortgage loan is delinquent in accordance with the
transaction agreements. Such records are maintained on at least a
monthly basis, or such other period specified in the transaction
agreements, and describe the entity's activities in monitoring
delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency
is deemed temporary (e.g., illness or unemployment).
-------------------- ----------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
the related mortgage loan documents.
-------------------- ----------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at least an annual basis, or
such other period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to obligors in
accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or such other
number of days specified in the transaction agreements.
-------------------- ----------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such other
number of days specified in the transaction agreements.
-------------------- ----------------------
1122(d)(4)(xii) Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless the
late payment was due to the obligor's error or omission.
-------------------- ----------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
specified in the transaction agreements.
1122(d)(4)(xiii)
-------------------- ----------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
-------------------- ----------------------
Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation AB,
is maintained as set forth in the transaction agreements.
1122(d)(4)(xv)
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
[NAME OF MASTER SERVICER] [NAME OF
TRUSTEE] [NAME OF SUBSERVICER]
Date: _________________________
By: ________________________________
Name:
Title:
Y-3
EXHIBIT Z
[FORM OF] LIST OF ITEM 1119 PARTIES
ASSET BACKED CERTIFICATES,
Series 200_-__
[Date]
-------------------------------------------------------------------------------------------------
Party Contact Information
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Z-1
EXHIBIT AA
FORM OF
▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
(Replacement Master Servicer)
(On file with Trustee)
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE AND PREPAYMENT CHARGE SUMMARY
[Delivered to Trustee at closing and on file with the Trustee.]
SCHEDULE II
COLLATERAL SCHEDULE
----------------------------------------------------------------------------------------------------
Characteristic Applicable Mortgage Loans
Section
----------------------------------------------------------------------------------------------------
Single-Family Detached Dwellings 2.03(b)(32) 67.59%
----------------------------------------------------------------------------------------------------
Two- to Four-Family Dwellings 2.03(b)(32) 2.56%
----------------------------------------------------------------------------------------------------
Low-Rise Condominium Units 2.03(b)(32) 7.65%
----------------------------------------------------------------------------------------------------
High-Rise Condominium Units 2.03(b)(32) 0.92%
----------------------------------------------------------------------------------------------------
Manufactured Housing 2.03(b)(32) 0.00%
----------------------------------------------------------------------------------------------------
PUDs 2.03(b)(32) 21.21%
----------------------------------------------------------------------------------------------------
Earliest Origination Date 2.03(b)(33) 8/15/2003
----------------------------------------------------------------------------------------------------
Prepayment Penalty 2.03(b)(35) 38.31%
----------------------------------------------------------------------------------------------------
Investor Properties 2.03(b)(36) 2.55%
----------------------------------------------------------------------------------------------------
Primary Residences 2.03(b)(36) 95.27%
----------------------------------------------------------------------------------------------------
Lowest Current Mortgage Rate 2.03(b)(48) 4.875%
----------------------------------------------------------------------------------------------------
Highest Current Mortgage Rate 2.03(b)(48) 18.825%
----------------------------------------------------------------------------------------------------
Weighted Average Current Mortgage Rate 2.03(b)(48) 8.600%
----------------------------------------------------------------------------------------------------
Date on or before which each Initial Mortgage Loan has a
Due Date 2.03(b)(51) 4/1/2007
----------------------------------------------------------------------------------------------------
S-II-1