Exhibit 4.1
WAMU ASSET ACCEPTANCE CORP.,
as Depositor
and
[_____],
as Servicer
and
[_____],
as Trustee
and
[_____],
as Delaware Trustee
POOLING AND SERVICING AGREEMENT
$[_____]
WaMu Asset Acceptance Corp.
WaMu Mortgage Pass-Through Certificates
Series [_____]
Cut-Off Date: [_____]
TABLE OF CONTENTS
Page
ARTICLE I .....................................................................3
Section 1.01. Definitions...................................................3
Adjustment Date..........................................................3
Aggregate Certificate Principal Balance..................................3
Appraised Value..........................................................3
Assignment of Proprietary Lease..........................................3
Authenticating Agent.....................................................4
Authorized Denomination..................................................4
Available Distribution Amount............................................4
Bankruptcy Loss..........................................................5
Beneficial Holder........................................................5
Benefit Plan Opinion.....................................................5
Book-Entry Certificates..................................................5
Business Day.............................................................5
Buydown Agreement........................................................5
Buydown Fund.............................................................5
Buydown Fund Account.....................................................6
Buydown Loan.............................................................6
Carry-Forward Subsequent Recoveries Amount...............................6
Certificate..............................................................6
Certificate Account......................................................6
Certificateholder or Holder..............................................6
Certificate Interest Rate................................................7
Certificate of Trust.....................................................7
Certificate Principal Balance............................................7
Certificate Register and Certificate Registrar...........................7
Class....................................................................7
Class [_____] Certificates...............................................7
Class B Certificates.....................................................7
Class [_____] Certificates...............................................7
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(Continued)
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Class [_____] Certificates...............................................7
Class [_____] Certificates...............................................7
Class [_____] Certificates...............................................7
Class [_____] Certificates...............................................7
Class [_____] Certificates...............................................8
Class Principal Balance..................................................8
Class [_____] Certificates...............................................8
Clean-Up Call Percentage.................................................8
Clearing Agency..........................................................8
Closing Date.............................................................8
Code.....................................................................8
Company..................................................................8
Compensating Interest....................................................9
Cooperative..............................................................9
Cooperative Apartment....................................................9
Cooperative Lease........................................................9
Cooperative Loans........................................................9
Cooperative Stock........................................................9
Cooperative Stock Certificate............................................9
Corporate Trust Office...................................................9
Corporation..............................................................9
Cumulative Carry-Forward Subsequent Recoveries Amount....................9
Curtailment.............................................................10
Curtailment Shortfall...................................................10
Custodial Account for P&I...............................................10
Custodial Account for Reserves..........................................10
Custodial Agreement.....................................................11
Custodian...............................................................11
Cut-Off Date............................................................11
Definitive Certificates.................................................11
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(Continued)
Page
Delaware Trustee........................................................11
Depositary Agreement....................................................11
Destroyed Mortgage Note.................................................11
Determination Date......................................................11
Disqualified Organization...............................................11
Distribution Amount.....................................................11
Distribution Date.......................................................13
DTC.....................................................................13
DTC Participant.........................................................14
Due Date................................................................14
Eligible Institution....................................................14
Eligible Investments....................................................14
ERISA...................................................................15
ERISA Restricted Certificate............................................15
Event of Default........................................................16
Excess Liquidation Proceeds.............................................16
Excess Subsequent Recoveries............................................16
FDIC....................................................................16
FHA.....................................................................16
▇▇▇▇▇▇ ▇▇▇..............................................................16
Final Maturity Date.....................................................16
Fitch...................................................................16
Fraud Loss..............................................................16
▇▇▇▇▇▇▇ Mac.............................................................16
Index...................................................................16
Indirect DTC Participants...............................................16
Initial Custodial Agreement.............................................16
Initial Custodian.......................................................17
Insurance Proceeds......................................................17
Interest Distribution Amount............................................17
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(Continued)
Page
Investment Account......................................................17
Investment Depository...................................................17
Junior Subordinate Certificates.........................................17
Last Scheduled Distribution Date........................................17
Lender..................................................................17
Liquidated Mortgage Loan................................................17
Liquidation Principal...................................................18
Liquidation Proceeds....................................................18
Loan-to-Value Ratio.....................................................18
Lowest Class B Owner....................................................18
Margin..................................................................18
MERS....................................................................18
MERS Loan...............................................................18
MERS'r' System..........................................................18
MIN ....................................................................18
MOM Loan................................................................19
Monthly P&I Advance.....................................................19
Monthly Payment.........................................................19
▇▇▇▇▇'▇.................................................................19
Mortgage................................................................19
Mortgage File...........................................................19
Mortgage Interest Rate..................................................21
Mortgage Loan Schedule..................................................22
Mortgage Loans..........................................................22
Mortgage Note...........................................................22
Mortgage Pool...........................................................22
Mortgage Pool Assets....................................................22
Mortgaged Property......................................................23
Mortgagor...............................................................23
Nonrecoverable Advance..................................................23
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TABLE OF CONTENTS
(continued)
Page
Non-U.S. Person.........................................................23
Notice Addresses........................................................23
OTS.....................................................................23
Officer's Certificate...................................................24
One-Year CMT............................................................24
Opinion of Counsel......................................................24
Original Trust Agreement................................................24
Original Value..........................................................24
Ownership Interest......................................................24
Pass-Through Entity.....................................................24
Pass-Through Rate.......................................................24
Paying Agent............................................................24
Payoff..................................................................25
Payoff Earnings.........................................................25
Payoff Interest.........................................................25
Payoff Period...........................................................25
Percentage Interest.....................................................25
Periodic Cap............................................................25
Permitted Transferee....................................................26
Person..................................................................26
Prepaid Monthly Payment.................................................26
Primary Insurance Policy................................................26
Principal Balance.......................................................26
Principal Payment.......................................................27
Principal Payment Amount................................................27
Principal Prepayment....................................................27
Principal Prepayment Amount.............................................27
Prior Period............................................................27
Prospectus..............................................................27
Purchase Obligation.....................................................27
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(continued)
Page
Purchase Price..........................................................27
Qualified Insurer.......................................................28
Rate Ceiling............................................................28
Rate Floor..............................................................28
Rating Agency...........................................................28
Ratings.................................................................28
Realized Loss...........................................................28
Recognition Agreement...................................................29
Record Date.............................................................29
Relief Act Shortfall....................................................29
REMIC...................................................................30
REMIC Provisions........................................................30
REMIC I.................................................................30
REMIC I Assets..........................................................30
REMIC I Regular Interests...............................................30
Residual Certificates...................................................30
Residual Distribution Amount............................................30
Responsible Officer.....................................................30
S&P.....................................................................30
Secretary of State......................................................30
Securities Act..........................................................30
Security Agreement......................................................30
Selling and Servicing Contract..........................................30
Senior Certificates.....................................................31
Senior Liquidation Amount...............................................31
Senior Percentage.......................................................31
Senior Prepayment Percentage............................................31
Senior Principal Distribution Amount....................................33
Senior Subordinate Certificates.........................................33
Servicer................................................................33
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TABLE OF CONTENTS
(continued)
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Servicer Business Day...................................................33
Servicing Fee...........................................................33
Servicing Fee Rate......................................................33
Servicing Officer.......................................................33
Special Primary Insurance Policy........................................33
Special Primary Insurance Premium.......................................33
Statutory Trust Statute.................................................34
Subordinate Certificates................................................34
Subordinate Liquidation Amount..........................................34
Subordinate Percentage..................................................34
Subordinate Prepayment Percentage.......................................34
Subordinate Principal Distribution Amount...............................34
Subordinate Principal Prepayments Distribution Amount...................34
Subordination Level.....................................................34
Subsequent Recoveries...................................................34
Substitute Mortgage Loan................................................35
Tax Matters Person......................................................35
Termination Date........................................................35
Termination Payment.....................................................35
Transfer................................................................35
Transferee..............................................................35
Transferee Affidavit and Agreement......................................35
Trust...................................................................35
Trustee.................................................................35
Uncollected Interest....................................................35
Uncompensated Interest Shortfall........................................36
Underwriters............................................................36
Underwriting Standards..................................................36
Uninsured Cause.........................................................36
U.S. Person.............................................................36
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(continued)
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VA......................................................................36
Weighted Average Pass-Through Rate......................................36
Withdrawal Date.........................................................36
ARTICLE II CREATION OF THE TRUST; CONVEYANCE OF THE MORTGAGE POOL
ASSETS; REMIC ELECTION AND DESIGNATIONS; ORIGINAL ISSUANCE OF
CERTIFICATES...................................................37
Section 2.01. Creation of the Trust.....................................37
Section 2.02. Restrictions on Activities of the Trust...................38
Section 2.03. Separateness Requirements.................................38
Section 2.04. Conveyance of Mortgage Pool Assets; Security Interest.....40
Section 2.05. Delivery of Mortgage Files................................41
Section 2.06. REMIC Election for REMIC I................................42
Section 2.07. Acceptance by Trustee.....................................44
Section 2.08. Representations and Warranties of the Company Concerning
the Mortgage Loans........................................46
Section 2.09. Acknowledgment of Transfer of Mortgage Pool Assets........50
Section 2.10. Acknowledgement of Transfer of REMIC I Assets;
Authentication of Certificates............................50
Section 2.11. Legal Title...............................................51
Section 2.12. Compliance with ERISA Requirements........................51
Section 2.13. Additional Representation of the Company Concerning the
Mortgage Loans............................................51
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................51
Section 3.01. ___________ to Act as Servicer............................51
Section 3.02. Custodial Accounts and Buydown Fund Accounts..............54
Section 3.03. The Investment Account; Eligible Investments..............55
Section 3.04. The Certificate Account...................................56
Section 3.05. Permitted Withdrawals from the Certificate Account, the
Investment Account and Custodial Accounts for P&I and of
Buydown Funds from the Buydown Fund Accounts..............57
Section 3.06. Maintenance of Primary Insurance Policies; Collections
Thereunder................................................59
Section 3.07. Maintenance of Hazard Insurance...........................59
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(continued)
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Section 3.08. Enforcement of Due-on-Sale Clauses; Assumption
Agreements................................................60
Section 3.09. Realization Upon Defaulted Mortgage Loans.................61
Section 3.10. Trustee to Cooperate; Release of Mortgage Files...........63
Section 3.11. Compensation to the Servicer and the Servicers............63
Section 3.12. Reports to the Trustee; Certificate Account Statement.....64
Section 3.13. Annual Statement as to Compliance.........................64
Section 3.14. Access to Certain Documentation and Information
Regarding the Mortgage Loans..............................64
Section 3.15. Annual Independent Public Accountants' Servicing
Report....................................................65
Section 3.16. [Reserved.]...............................................65
Section 3.17. [Reserved.]...............................................65
Section 3.18. [Reserved.]...............................................65
Section 3.19. [Reserved.]...............................................65
Section 3.20. Assumption or Termination of Selling and Servicing
Contracts by Trustee......................................65
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS; PAYMENT OF EXPENSES............66
Section 4.01. Distributions to Certificateholders; Payment of Special
Primary Insurance Premiums................................66
Section 4.02. Advances by the Servicer; Distribution Reports to the
Trustee...................................................67
Section 4.03. Nonrecoverable Advances...................................68
Section 4.04. Statements to Certificateholders..........................68
ARTICLE V THE CERTIFICATES...............................................69
Section 5.01. The Certificates..........................................69
Section 5.02. Certificates Issuable in Classes; Distributions of
Principal and Interest; Authorized Denominations..........75
Section 5.03. Registration of Transfer and Exchange of Certificates.....76
Section 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.........76
Section 5.05. Persons Deemed Owners.....................................77
Section 5.06. Temporary Certificates....................................77
Section 5.07. Book-Entry for Book-Entry Certificates....................77
Section 5.08. Notices to Clearing Agency................................78
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Section 5.09. Definitive Certificates...................................79
Section 5.10. Office for Transfer of Certificates.......................79
Section 5.11. Nature of Certificates....................................79
ARTICLE VI THE COMPANY AND THE SERVICER...................................80
Section 6.01. Liability of the Company and the Servicer.................80
Section 6.02. Merger or Consolidation of the Company or the Servicer....80
Section 6.03. Limitation on Liability of the Company, the Servicer and
Others....................................................80
Section 6.04. The Company and the Servicer not to Resign................81
Section 6.05. Trustee Access............................................81
ARTICLE VII DEFAULT........................................................81
Section 7.01. Events of Default.........................................81
Section 7.02. Trustee to Act; Appointment of Successor..................84
Section 7.03. Notification to Certificateholders........................85
ARTICLE VIII CONCERNING THE TRUSTEES........................................85
Section 8.01. Duties of Trustees........................................85
Section 8.02. Certain Matters Affecting the Trustees....................87
Section 8.03. Trustees Not Liable for Certificates or Mortgage Loans....88
Section 8.04. Trustees May Own Certificates.............................88
Section 8.05. The Servicer to Pay Trustees' Fees and Expenses...........88
Section 8.06. Eligibility Requirements for Trustees.....................89
Section 8.07. Resignation and Removal of Trustees.......................89
Section 8.08. Successor Trustee.........................................90
Section 8.09. Merger or Consolidation of Trustee........................90
Section 8.10. Appointment of Co-Trustee or Separate Trustee.............91
Section 8.11. Authenticating Agents.....................................92
Section 8.12. Paying Agents.............................................92
Section 8.13. Duties of Delaware Trustee................................93
Section 8.14. Amendment to Certificate of Trust.........................94
Section 8.15. Limitation of Liability...................................94
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(continued)
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ARTICLE IX TERMINATION....................................................94
Section 9.01. Termination Upon Purchase by the Servicer or
Liquidation of All Mortgage Loans.........................94
Section 9.02. Additional Termination Requirements.......................96
Section 9.03. Trust Irrevocable.........................................97
ARTICLE X MISCELLANEOUS PROVISIONS.......................................97
Section 10.01. Amendment.................................................97
Section 10.02. Recordation of Agreement..................................98
Section 10.03. Limitation on Rights of Certificateholders................98
Section 10.04. Access to List of Certificateholders......................99
Section 10.05. Governing Law............................................100
Section 10.06. Notices..................................................100
Section 10.07. Severability of Provisions...............................100
Section 10.08. Counterpart Signatures...................................100
Section 10.09. Benefits of Agreement....................................100
Section 10.10. Notices and Copies to Rating Agencies....................101
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Exhibit A Form of Certificates
Exhibit B [Reserved]
Exhibit C [Reserved]
Exhibit D Mortgage Loan Schedule
Exhibit E Selling And Servicing Contract
Exhibit F Form of Transferor Certificate For Junior Subordinate
Certificates
Exhibit G Form of Transferee's Agreement For Junior Subordinate
Certificates
Exhibit H Form of Additional Matter Incorporated Into The Certificates
Exhibit I Transferor Certificate
Exhibit J Transferee Affidavit And Agreement
Exhibit K [Reserved]
Exhibit L Form of Investment Letter
Exhibit M Form of Trustee's Certification Pursuant to Section 2.02
Exhibit N Officer's Certificate With Respect to ERISA Matters Pursuant
to Section 5.01(d)
Exhibit O Officer's Certificate With Respect to ERISA Matters Pursuant
to Section 5.01(g)
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This Pooling and Servicing Agreement, dated and effective as of [_____]
(this "Agreement"), is executed by and among WaMu Asset Acceptance Corp., as
depositor (the "Company"), [_____], a ______________, as Servicer (the
"Servicer"), [_____], a national banking association with a corporate trust
office at [_____], as Trustee (the "Trustee"), and [_____], as Delaware Trustee
(the "Delaware Trustee"). Capitalized terms used in this Agreement and not
otherwise defined have the meanings ascribed to such terms in Article I hereof.
PRELIMINARY STATEMENT
The Company at the Closing Date is the owner of the Mortgage Loans and the
other property being conveyed by it to the Trust. On the Closing Date, the
Company will acquire the Certificates from the Trust as consideration for its
transfer to the Trust of the Mortgage Loans and certain other assets and will be
the owner of the Certificates. The Company has duly authorized the execution and
delivery of this Agreement to provide for (i) the conveyance to the Trust of the
Mortgage Loans and certain other assets and (ii) the issuance to the Company of
the Certificates, representing in the aggregate the entire beneficial interest
in REMIC I. Each of the Company and the Servicer is entering into this
Agreement, and the Trustee and the Delaware Trustee are each accepting the trust
created hereby, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged.
The Certificates issued hereunder, other than the Junior Subordinate
Certificates, have been offered for sale pursuant to a Prospectus, dated
[_____], and a Prospectus Supplement, dated [_____], of the Company (together,
the "Prospectus"). The Junior Subordinate Certificates have been offered for
sale pursuant to a Private Placement Memorandum, dated [_____]. The Trust
created hereunder is intended to be the "Trust" described in the Prospectus and
the Private Placement Memorandum and the Certificates are intended to be the
"Certificates" described therein. The following table sets forth the
designation, type of interest, Certificate Interest Rate, initial Class
Principal Balance and Final Maturity Date for the Certificates:
1
REMIC I Interests
Class Designation for Certificate Initial Class
each Class of Type of Interest Principal Final Maturity
Certificates Interest Rate (1) Balance Date*
--------------------- -------- ----------- ------------- --------------
Class [_] [_____] [_____](2) $[_____] [_____]
Class [_] [_____] [_____](3) [_____] [_____]
Class [_] [_____] [_____] [_____] [_____]
Class [_] [_____] [_____] [_____] [_____]
Class [_] [_____] [_____] [_____] [_____]
Class [_] [_____] [_____] [_____] [_____]
Class [_] [_____] [_____] [_____] [_____]
Class [_] [_____] [_____]% [_____] [_____]
* [_____]
(1) [_____]
(2) [_____]
(3) [_____]
As provided herein, with respect to REMIC I, the Company will cause an
election to be made on behalf of REMIC I to be treated for federal income tax
purposes as a REMIC. The Certificates (other than the Class [_____]
Certificates) will be designated regular interests in REMIC I and the Class
[_____] Certificates will be designated the sole class of residual interest in
REMIC I, for purposes of the REMIC Provisions. As of the Cut-Off Date, the
Mortgage Loans have an aggregate Principal Balance of $[_____]and the
Certificates have an Aggregate Certificate Principal Balance of $[_____].
WITNESSETH :
WHEREAS, the Company is a corporation duly organized and existing under and
by virtue of the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to undertake the obligations
undertaken by it herein;
WHEREAS, the Servicer is a _____________ duly organized and existing under
and by virtue of the laws of ____________ and has full [corporate] power and
authority to enter into this Agreement and to undertake the obligations
undertaken by it herein;
WHEREAS, the Trustee is a national banking association duly organized and
existing under the laws of the United States of America and has full power and
authority to enter into this Agreement;
WHEREAS, the Delaware Trustee is a banking corporation duly organized and
existing under the laws of the State of Delaware and has full power and
authority to enter into this Agreement;
2
WHEREAS, prior to the execution and delivery hereof, the Company and the
Delaware Trustee have entered into the Original Trust Agreement, and the
Delaware Trustee has filed the Certificate of Trust;
WHEREAS, it is the intention of the Company, the Trustee and the Delaware
Trustee that the Trust created by this Agreement constitute a statutory trust
under the Statutory Trust Statute, that this Agreement constitute the governing
instrument of the Trust, and that this Agreement amend and restate the Original
Trust Agreement;
WHEREAS, the Company is the owner of the Mortgage Loans identified in the
Mortgage Loan Schedule hereto having unpaid Principal Balances on the Cut-Off
Date as stated therein; and
WHEREAS, the Company has been duly authorized to create the Trust to (i)
hold the Mortgage Loans and certain other property and (ii) issue the
Certificates.
NOW, THEREFORE, in order to declare the terms and conditions upon which the
Certificates are to be issued, and in consideration of the premises and of the
purchase and acceptance of the Certificates by the Holders thereof, the Company
covenants and agrees with the Servicer, the Trustee and the Delaware Trustee,
for the equal and proportionate benefit of the respective Holders from time to
time of the Certificates, as applicable, as follows:
ARTICLE I
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Adjustment Date: As to each Mortgage Loan, a Due Date on or about the fifth
anniversary of the first Due Date and annually thereafter, as set forth in the
related Mortgage Note, on which date an adjustment to the Mortgage Interest Rate
of such Mortgage Loan becomes effective.
Aggregate Certificate Principal Balance: At any given time, the sum of the
then current Class Principal Balances of the Certificates.
Appraised Value: The amount set forth in an appraisal made by or for (a)
the mortgage originator in connection with its origination of each Mortgage Loan
(including a Mortgage Loan originated to refinance mortgage debt), (b) with
respect to a Mortgage Loan originated to refinance mortgage debt, the originator
of the mortgage debt that was refinanced or (c) the Servicer, at any time, in
accordance with the Selling and Servicing Contract.
Assignment of Proprietary Lease: With respect to a Cooperative Loan, the
assignment or mortgage of the related Cooperative Lease from the Mortgagor to
the originator of the Cooperative Loan.
3
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 8.11.
Authorized Denomination: With respect to each Class of the Certificates,
other than the Class [_____] Certificates, an initial Certificate Principal
Balance equal to $[_____] and multiples of $1 in excess thereof, except that one
Certificate of each Class of the Junior Subordinate Certificates may be issued
in an amount that is not an integral multiple of $[_____]. With respect to the
Class [_____] Certificates, one Certificate with a Percentage Interest equal to
[_____]% and one Certificate with a Percentage Interest equal to [_____]%.
Available Distribution Amount: For any Distribution Date, the sum of the
following amounts with respect to the Mortgage Loans (together with, for the
first Distribution Date, the amount deposited by the Company in the Certificate
Account pursuant to the last paragraph of Section 2.01):
(1) the total amount of all cash received by or on behalf of the Servicer
with respect to such Mortgage Loans by the Determination Date for such
Distribution Date and not previously distributed, including Monthly P&I Advances
made by Servicers, Liquidation Proceeds and scheduled amounts of distributions
from Buydown Funds respecting Buydown Loans, if any, except:
(a) all scheduled payments of principal and interest collected but due
subsequent to such Distribution Date;
(b) all Curtailments received after the Prior Period;
(c) all Payoffs received after the Payoff Period immediately preceding
such Distribution Date (together with any interest payment received with
such Payoffs to the extent that it represents the payment of interest
accrued on the Mortgage Loans for the period subsequent to the Prior
Period), and interest which was accrued and received on Payoffs received
during the period from the 1st to the 14th day of the month of such
Distribution Date, which interest shall not be included in the calculation
of the Available Distribution Amount for any Distribution Date;
(d) Insurance Proceeds, Liquidation Proceeds and Subsequent Recoveries
received on such Mortgage Loans after the Prior Period;
(e) all amounts in the Certificate Account which are due and
reimbursable to a Servicer pursuant to the terms of this Agreement;
(f) the sum of the Servicing Fee for each such Mortgage Loan and any
Special Primary Insurance Premium payable on such Distribution Date with
respect to such Mortgage Loan; and
(g) Excess Liquidation Proceeds;
(2) the sum, to the extent not previously distributed, of the following
amounts, to the extent advanced or received, as applicable, by the Servicer:
4
(a) any Monthly P&I Advance made by the Servicer to the Trustee with
respect to such Distribution Date relating to such Mortgage Loans; and
(b) Compensating Interest; and
(3) the total amount of any cash received during the Prior Period by the
Trustee or the Servicer in respect of a Purchase Obligation under Section 2.07
and Section 2.08 or any permitted purchase of such a Mortgage Loan.
Bankruptcy Loss: A loss on a Mortgage Loan arising out of (i) a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a case under the United States Bankruptcy Code, including,
without limitation, any such reduction that results in a permanent forgiveness
of principal, or (ii) with respect to any Mortgage Loan, a valuation, by a court
of competent jurisdiction in a case under such Bankruptcy Code, of the related
Mortgaged Property in an amount less than the then outstanding Principal Balance
of such Mortgage Loan.
Beneficial Holder: A Person holding a beneficial interest in any Book-Entry
Certificate as or through a DTC Participant or an Indirect DTC Participant or a
Person holding a beneficial interest in any Definitive Certificate.
Benefit Plan Opinion: With respect to any Certificate presented for
registration in the name of any Person, an Opinion of Counsel acceptable to and
in form and substance satisfactory to the Trustee and the Company to the effect
that the purchase or holding of such Certificate is permissible under applicable
law, will not constitute or result in a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code, and will not subject the
Trust, the Trustee, the Delaware Trustee, the Servicer or the Company to any
obligation or liability (including obligations or liabilities under Section 406
of ERISA or Section 4975 of the Code) in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trust, the
Trustee, the Delaware Trustee, the Servicer or the Company.
Book-Entry Certificates: The Class [_____] and Senior Subordinate
Certificates, beneficial ownership and transfers of which shall be made through
book entries as described in Section 5.07.
Business Day: Any day other than a Saturday, a Sunday, or a day on which
banking institutions in Stockton, California, [Chicago, Illinois], New York, New
York, Seattle, Washington or any city in which the Corporate Trust Office is
located are authorized or obligated by law or executive order to be closed.
Buydown Agreement: An agreement between a Person and a Mortgagor pursuant
to which such Person has provided a Buydown Fund.
Buydown Fund: A fund provided by the originator of a Mortgage Loan or
another Person with respect to a Buydown Loan which provides an amount
sufficient to subsidize regularly scheduled principal and interest payments due
on such Buydown Loan for a period. Buydown Funds may be (i) funded at the par
values of future payment subsidies, or (ii) funded in an amount less than the
par values of future payment subsidies, and determined by discounting such
5
par values in accordance with interest accruing on such amounts, in which event
they will be deposited in an account bearing interest. Buydown Funds may be held
in a separate Buydown Fund Account or may be held in a Custodial Account for P&I
or a Custodial Account for Reserves and monitored by a Servicer.
Buydown Fund Account: A separate account or accounts created and maintained
pursuant to Section 3.02 (a) with the corporate trust department of the Trustee
or another financial institution approved by the Servicer, (b) within FDIC
insured accounts (or other accounts with comparable insurance coverage
acceptable to the Rating Agencies) created, maintained and monitored by a
Servicer or (c) in a separate non-trust account without FDIC or other insurance
in an Eligible Institution. Such account or accounts may be non-interest bearing
or may bear interest. In the event that a Buydown Fund Account is established
pursuant to clause (b) of the preceding sentence, amounts held in such Buydown
Fund Account shall not exceed the level of deposit insurance coverage on such
account; accordingly, more than one Buydown Fund Account may be established.
Buydown Loan: A Mortgage Loan for which the Mortgage Interest Rate has been
subsidized through a Buydown Fund provided at the time of origination of such
Mortgage Loan.
Carry-Forward Subsequent Recoveries Amount: For any Distribution Date, the
excess, if any, of (i) the Subsequent Recoveries for such Distribution Date over
(ii) the amount by which the Class Principal Balance of the Class of Subordinate
Certificates with the lowest priority is increased in respect of Subsequent
Recoveries on such Distribution Date pursuant to the definition of "Class
Principal Balance" herein.
Certificate: Any one of the Certificates issued pursuant to this Agreement,
executed by the Trustee and authenticated by or on behalf of the Trustee
hereunder in substantially one of the forms set forth in Exhibit A and B hereto.
The additional matter appearing in Exhibit H shall be deemed incorporated into
Exhibit A as though set forth at the end of such Exhibit.
Certificate Account: The separate trust account created and maintained with
the Trustee, the Investment Depository or any other bank or trust company
acceptable to the Rating Agencies which is incorporated under the laws of the
United States of America or any state thereof pursuant to Section 3.04, which
account shall bear a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Trust or any other account
serving a similar function acceptable to the Rating Agencies. Funds in the
Certificate Account may be invested in Eligible Investments pursuant to Section
3.04(b) and reinvestment earnings thereon shall be paid to the Servicer as
additional servicing compensation. Funds deposited in the Certificate Account
(exclusive of the Servicing Fee) shall be held in trust for the
Certificateholders and for the uses and purposes set forth in Section 2.01,
Section 3.04, Section 3.05 and Section 4.01.
Certificateholder or Holder: With respect to the Certificates, the person
in whose name a Certificate is registered in the Certificate Register, except
that, solely for the purposes of giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Company[, the Servicer] or any
affiliate thereof shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite
6
percentage of Percentage Interests necessary to effect any such consent has been
obtained; provided, that the Trustee may conclusively rely upon an Officer's
Certificate to determine whether any Person is an affiliate of the Company [or
the Servicer].
Certificate Interest Rate: For each Class of Certificates, the per annum
rate set forth as the Certificate Interest Rate for such Class in the
Preliminary Statement hereto.
Certificate of Trust: The certificate of trust filed with respect to the
Trust with the Secretary of State in accordance with Section 3810(a) of the
Statutory Trust Statute.
Certificate Principal Balance: For each Certificate of any Class, the
portion of the related Class Principal Balance, if any, represented by such
Certificate.
Certificate Register and Certificate Registrar: The register maintained and
the registrar appointed, respectively, pursuant to Section 5.03.
Class: All Certificates having the same priority and rights to payments on
the Mortgage Loans from the Available Distribution Amount, which Certificates
shall be designated as a separate Class, and which shall be set forth in the
applicable forms of Certificates attached hereto as Exhibit A. Each Class of
Certificates shall be entitled to receive the amounts allocated to such Class
pursuant to the definition of "Distribution Amount" only to the extent of the
Available Distribution Amount for such Distribution Date remaining after
distributions in accordance with prior clauses of the definition of
"Distribution Amount."
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class [_____] Certificates: The Class [_____], Class [_____], Class
[_____], Class [_____], Class [_____] and Class [_____] Certificates.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A.
7
Class Principal Balance: For any Class of Certificates, the applicable
initial Class Principal Balance therefor set forth in the Preliminary Statement
hereto, corresponding to the rights of such Class in payments of principal due
to be passed through to the Certificateholders from principal payments on the
Mortgage Loans, as reduced from time to time by (x) distributions of principal
to the Certificateholders of such Class and (y) the portion of Realized Losses
allocated to the Class Principal Balance of such Class pursuant to the
definition of "Realized Loss" with respect to a given Distribution Date. For any
Distribution Date, the reduction of the Class Principal Balance of any Class of
Certificates pursuant to the definition of "Realized Loss" shall be deemed
effective after the determination and distribution of principal on such Class
pursuant to the definition of "Distribution Amount."
Notwithstanding the foregoing, any amounts distributed in respect of
principal losses pursuant to paragraph (xxii) of the definition of "Distribution
Amount" shall not cause a reduction in the Class Principal Balances of the
Certificates.
In addition to the foregoing, on each Distribution Date, the Class
Principal Balance of the Class of Subordinate Certificates with the lowest
priority then outstanding shall be increased by an amount equal to the lesser of
(i) the Subsequent Recoveries for such Distribution Date and (ii) the amount of
Realized Losses allocated to such Class on previous Distribution Dates (the
amount in this clause (ii) reduced by the amount, if any, by which such Class
Principal Balance has been increased on prior Distribution Dates pursuant to
this paragraph).
The Class Principal Balance for the Class [_____] Certificates shall be
referred to as the "Class [_____] Principal Balance," the Class Principal
Balance for the Class [_____] Certificates shall be referred to as the "Class
[_____] Principal Balance," and so on.
Class [_____] Certificates: The Certificates designated as "Class [_____]"
on the face thereof in substantially the form attached hereto as Exhibit A,
which Class has been designated as the sole class of "residual interest" in
REMIC I, pursuant to Section 2.06 for purposes of Section 860G(a)(2) of the
Code.
Clean-Up Call Percentage: [__]%.
Clearing Agency: An organization registered as a "clearing agency" pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended, which
initially shall be DTC.
Closing Date: [_____], which is the date of settlement of the sale of the
Certificates to the original purchasers thereof.
Code: The Internal Revenue Code of 1986, as amended.
Company: WaMu Asset Acceptance Corp., a Delaware corporation, or its
successor-in-interest.
Compensating Interest: For any Distribution Date, the least of (i) the sum
of (a) the aggregate Servicing Fee payable with respect to the Mortgage Loans on
such Distribution Date, (b) the aggregate Payoff Earnings with respect to the
Mortgage Loans for such Distribution Date and (c) the aggregate Payoff Interest
with respect to the Mortgage Loans for such Distribution
8
Date; (ii) the aggregate Uncollected Interest with respect to the Mortgage Loans
for such Distribution Date and (iii) 1/12 of 0.125% of the aggregate Principal
Balance of the Mortgage Loans immediately preceding such Distribution Date.
Cooperative: A private, cooperative housing corporation which owns or
leases land and all or part of a building or buildings, including apartments,
spaces used for commercial purposes and common areas therein and whose board of
directors authorizes, among other things, the sale of Cooperative Stock.
Cooperative Apartment: A dwelling unit in a multi-dwelling building owned
or leased by a Cooperative, which unit the Mortgagor has an exclusive right to
occupy pursuant to the terms of a proprietary lease or occupancy agreement.
Cooperative Lease: With respect to a Cooperative Loan, the proprietary
lease or occupancy agreement with respect to the Cooperative Apartment occupied
by the Mortgagor and relating to the related Cooperative Stock, which lease or
agreement confers an exclusive right to the holder of such Cooperative Stock to
occupy such apartment.
Cooperative Loans: Any of the Mortgage Loans made in respect of a
Cooperative Apartment, evidenced by a Mortgage Note and secured by (i) a
Security Agreement, (ii) the related Cooperative Stock Certificate, (iii) an
assignment or mortgage of the Cooperative Lease, (iv) financing statements and
(v) a stock power (or other similar instrument), and ancillary thereto, a
Recognition Agreement, each of which was transferred and assigned to the Trust
pursuant to Section 2.04.
Cooperative Stock: With respect to a Cooperative Loan, the single
outstanding class of stock, partnership interest or other ownership instrument
in the related Cooperative.
Cooperative Stock Certificate: With respect to a Cooperative Loan, the
stock certificate or other instrument evidencing the related Cooperative Stock.
Corporate Trust Office: The corporate trust office of the Trustee, at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this Agreement is located at ____________________, Attention: ____________.
Corporation: Any Person (other than an individual, partnership, joint
venture or unincorporated organization) incorporated, associated, organized,
chartered or existing under the laws of any state or under the federal laws of
the United States of America; provided, that such Person have indefinite
existence under the law of its domicile.
Cumulative Carry-Forward Subsequent Recoveries Amount: For any Distribution
Date, the sum of (i) the Carry-Forward Subsequent Recoveries Amount for such
Distribution Date and (ii) the Carry-Forward Subsequent Recoveries Amounts for
prior Distribution Dates to the extent such Carry-Forward Subsequent Recoveries
Amounts have not been applied in reduction of Realized Losses on prior
Distribution Dates pursuant to the first paragraph of the definition of
"Realized Loss" herein.
9
Curtailment: Any payment of principal on a Mortgage Loan, made by or on
behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid Monthly
Payment or a Payoff, which is applied to reduce the outstanding principal
balance of the Mortgage Loan. (Prepayment penalties are not payments of
principal and hence Curtailments do not include prepayment penalties.)
Curtailment Shortfall: For any Distribution Date and for any Curtailment
applied with a Monthly Payment in the Prior Period other than a Prepaid Monthly
Payment, an amount equal to one month's interest on such Curtailment at the
applicable Pass-Through Rate on such Mortgage Loan.
Custodial Account for P&I: The Custodial Account for principal and interest
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract and caused by the Servicer to be established and maintained
pursuant to Section 3.02 (a) with the corporate trust department of the Trustee
or another financial institution approved by the Servicer such that the rights
of the Servicer, the Trustee, the Trust, the Delaware Trustee and the
Certificateholders thereto shall be fully protected against the claims of any
creditors of the applicable Servicer and of any creditors or depositors of the
institution in which such account is maintained, (b) within FDIC insured
accounts (or other accounts with comparable insurance coverage acceptable to the
Rating Agencies) created, maintained and monitored by a Servicer or (c) in a
separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account for P&I is established
pursuant to clause (b) of the preceding sentence, amounts held in such Custodial
Account for P&I shall not exceed the level of deposit insurance coverage on such
account; accordingly, more than one Custodial Account for P&I may be
established. Any amount that is at any time not protected or insured in
accordance with the first sentence of this definition of "Custodial Account for
P&I" shall promptly be withdrawn from such Custodial Account for P&I and be
remitted to the Investment Account.
Custodial Account for Reserves: The Custodial Account for Reserves
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract and caused by the Servicer to be established and maintained
pursuant to Section 3.02 (a) with the corporate trust department of the Trustee
or another financial institution approved by the Servicer such that the rights
of the Servicer, the Trust, the Trustee, the Delaware Trustee and the
Certificateholders thereto shall be fully protected against the claims of any
creditors of the applicable Servicer and of any creditors or depositors of the
institution in which such account is maintained, (b) within FDIC insured
accounts (or other accounts with comparable insurance coverage acceptable to the
Rating Agencies) created, maintained and monitored by a Servicer or (c) in a
separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account for Reserves is established
pursuant to clause (b) of the preceding sentence, amounts held in such Custodial
Account for Reserves shall not exceed the level of deposit insurance coverage on
such account; accordingly, more than one Custodial Account for Reserves may be
established. Any amount that is at any time not protected or insured in
accordance with the first sentence of this definition of "Custodial Account for
Reserves" shall promptly be withdrawn from such Custodial Account for Reserves
and be remitted to the Investment Account.
10
Custodial Agreement: The agreement, if any, between the Trustee and a
Custodian (or the Trustee, a Custodian and the Servicer) providing for the
safekeeping of the Mortgage Files on behalf of the Trust.
Custodian: A custodian which is appointed by the Trustee with the consent
of the Servicer, as provided in Article II hereof, pursuant to a Custodial
Agreement. Any Custodian so appointed shall act as agent on behalf of the
Trustee. The reasonable fees and expenses of the Custodian shall be paid by the
Servicer. The Trustee shall remain at all times responsible under the terms of
this Agreement, notwithstanding the fact that certain duties have been assigned
to a Custodian.
Cut-Off Date: [_____].
Definitive Certificates: Certificates in definitive, fully registered and
certificated form.
Delaware Trustee: [_____], or its successor-in-interest as provided in
Section 8.09, or any successor trustee appointed as herein provided.
Depositary Agreement: The Letter of Representations, dated August 24, 2004
by and among DTC, the Trust and the Trustee. The Trustee is authorized to enter
into the Depositary Agreement on behalf of the Trust.
Destroyed Mortgage Note: A Mortgage Note the original of which (or a
portion of the original of which) was permanently lost or destroyed and has not
been replaced.
Determination Date: A day not later than the 10th day preceding a related
Distribution Date, as determined by the Servicer.
Disqualified Organization: Any Person which is not a Permitted Transferee,
but does not include any Pass-Through Entity which owns or holds a Residual
Certificate and of which a Disqualified Organization, directly or indirectly,
may be a stockholder, partner or beneficiary.
Distribution Amount: For any Distribution Date, the Available Distribution
Amount for such Distribution Date shall be distributed to the Certificates in
the following amounts and priority, to the extent of the Available Distribution
Amount for such Distribution Date:
(i) first, to the Class [_____] and Class [_____] Certificates,
concurrently, the sum of the Interest Distribution Amounts for such Classes
remaining unpaid from previous Distribution Dates, pro rata according to
their respective shares of such unpaid amounts;
(ii) second, to the Class [_____] and Class [_____] Certificates,
concurrently, the sum of the Interest Distribution Amounts for such Classes
for the current Distribution Date, pro rata according to their respective
Interest Distribution Amounts;
(iii) third, to the Class [_____] and Class [_____] Certificates, as
principal, the Senior Principal Distribution Amount, sequentially, as
follows:
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(a) first, to the Class [_____] Certificates, until the Class
[_____] Principal Balance has been reduced to zero; and
(b) second, to the Class [_____] Certificates, until the Class
[_____] Principal Balance has been reduced to zero;
(iv) fourth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid from
previous Distribution Dates;
(v) fifth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(vi) sixth, to the Class [_____] Certificates, the portion of the
Subordinate Principal Distribution Amount allocable to such Class of
Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount," until the Class [_____] Principal Balance has been
reduced to zero;
(vii) seventh, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid from
previous Distribution Dates;
(viii) eighth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(ix) ninth, to the Class [_____] Certificates, the portion of the
Subordinate Principal Distribution Amount allocable to such Class of
Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount," until the Class [_____] Principal Balance has been
reduced to zero;
(x) tenth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid from
previous Distribution Dates;
(xi) eleventh, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xii) twelfth, to the Class [_____] Certificates, the portion of the
Subordinate Principal Distribution Amount allocable to such Class of
Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount," until the Class [_____] Principal Balance has been
reduced to zero;
(xiii) thirteenth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid from
previous Distribution Dates;
(xiv) fourteenth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
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(xv) fifteenth, to the Class [_____] Certificates, the portion of the
Subordinate Principal Distribution Amount allocable to such Class of
Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount," until the Class [_____] Principal Balance has been
reduced to zero;
(xvi) sixteenth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid from
previous Distribution Dates;
(xvii) seventeenth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xviii) eighteenth, to the Class [_____] Certificates, the portion of
the Subordinate Principal Distribution Amount allocable to such Class of
Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount," until the Class [_____] Principal Balance has been
reduced to zero;
(xix) nineteenth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid from
previous Distribution Dates;
(xx) twentieth, to the Class [_____] Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xxi) twenty-first, to the Class [_____] Certificates, the portion of
the Subordinate Principal Distribution Amount allocable to such Class of
Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount," until the Class [_____] Principal Balance has been
reduced to zero;
(xxii) twenty-second, to the outstanding Classes of Certificates in
the order of seniority (which, from highest to lowest, shall be as follows:
the Class [_____] Certificates, and then Class [_____], Class [_____],
Class [_____], Class [_____], Class [_____] and Class [_____] of decreasing
seniority) the remaining portion, if any, of the Available Distribution
Amount, up to the amount of unreimbursed Realized Losses allocable to
principal previously allocated to each such Class, if any; provided,
however, that any amounts distributed pursuant to this paragraph (xxii) of
this definition of "Distribution Amount" shall not cause a further
reduction in the Class Principal Balances of any of the Classes of
Certificates; and
(xxiii) twenty-third, to the Class [_____] Certificates, the Residual
Distribution Amount for such Distribution Date.
Distribution Date: With respect to distributions on the Certificates, the
25th day (or, if such 25th day is not a Business Day, the Business Day
immediately succeeding such 25th day) of each month, with the first such date
being Class [_____]. The "related Due Date" for any Distribution Date is the Due
Date immediately preceding such Distribution Date.
DTC: The Depository Trust Company.
13
DTC Participant: A broker, dealer, bank, other financial institution or
other Person for whom DTC effects book-entry transfers and pledges of securities
deposited with DTC.
Due Date: The day on which the Monthly Payment for each Mortgage Loan is
due.
Eligible Institution: An institution having (i) the highest short-term debt
rating, and one of the two highest long-term debt ratings of the Rating
Agencies, (ii) with respect to any Custodial Account for P&I and special
Custodial Account for Reserves, an unsecured long-term debt rating of at least
one of the two highest unsecured long-term debt ratings of the Rating Agencies,
(iii) with respect to any Buydown Fund Account or Custodial Account which also
serves as a Buydown Fund Account, the highest unsecured long-term debt rating by
the Rating Agencies, or (iv) the approval of the Rating Agencies. Such
institution may be a Servicer if the applicable Selling and Servicing Contract
requires such Servicer to provide the Servicer with written notice on the
Business Day following the date on which such Servicer determines that its
short-term debt and unsecured long-term debt ratings fail to meet the
requirements of the prior sentence. Notwithstanding the foregoing, Washington
Mutual Bank, FA shall be an "Eligible Institution" if the following conditions
are satisfied: (i) Washington Mutual Bank, FA is acting as Servicer, (ii) if S&P
is a Rating Agency as defined herein, the long-term unsecured debt obligations
of Washington Mutual Bank, FA are rated no lower than "A-" by S&P and the
short-term unsecured debt obligations of Washington Mutual Bank, FA are rated no
lower than "A-2" by S&P, (iii) if Fitch is a Rating Agency as defined herein,
the long-term unsecured debt obligations of Washington Mutual Bank, FA are rated
no lower than "A" by Fitch and the short-term unsecured debt obligations of
Washington Mutual Bank, FA are rated no lower than "F1" by Fitch and (iv) if
▇▇▇▇▇'▇ is a Rating Agency as defined herein, the long-term unsecured debt
obligations of Washington Mutual Bank, FA are rated no lower than "A2" by
Moody's and the short-term unsecured debt obligations of Washington Mutual Bank,
FA are rated no lower than "P-1" by Moody's; provided, that if the long-term or
short-term unsecured debt obligations of Washington Mutual Bank, FA are
downgraded by any of the Rating Agencies to a rating lower than the applicable
rating specified in this sentence, Washington Mutual Bank, FA shall cease to be
an "Eligible Institution" ten Business Days after notification of such
downgrade.
Eligible Investments: Any one or more of the obligations or securities
listed below in which funds deposited in the Investment Account, the Certificate
Account, the Custodial Account for P&I and the Custodial Account for Reserves
may be invested:
(i) Obligations of, or guaranteed as to principal and interest by, the
United States of America or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States of
America;
(ii) Repurchase agreements on obligations described in clause (i) of
this definition of "Eligible Investments," provided that the unsecured
obligations of the party (including the Trustee in its commercial capacity)
agreeing to repurchase such obligations have at the time one of the two
highest short term debt ratings of the Rating Agencies and provided that
such repurchaser's unsecured long term debt has one of the two highest
unsecured long term debt ratings of the Rating Agencies;
14
(iii) Federal funds, certificates of deposit, time deposits and
bankers' acceptances of any U.S. bank or trust company incorporated under
the laws of the United States of America or any state (including the
Trustee in its commercial capacity), provided that the debt obligations of
such bank or trust company (or, in the case of the principal bank in a bank
holding company system, debt obligations of the bank holding company) at
the date of acquisition thereof have one of the two highest short term debt
ratings of the Rating Agencies and unsecured long term debt has one of the
two highest unsecured long term debt ratings of the Rating Agencies;
(iv) Obligations of, or obligations guaranteed by, any state of the
United States of America or the District of Columbia, provided that such
obligations at the date of acquisition thereof shall have the highest
long-term debt ratings available for such securities from the Rating
Agencies;
(v) Commercial paper of any corporation incorporated under the laws of
the United States of America or any state thereof, which on the date of
acquisition has the highest commercial paper rating of the Rating Agencies,
provided that the corporation has unsecured long term debt that has one of
the two highest unsecured long term debt ratings of the Rating Agencies;
(vi) Securities (other than stripped bonds or stripped coupons)
bearing interest or sold at a discount that are issued by any corporation
incorporated under the laws of the United States of America or any state
thereof and have the highest long-term unsecured rating available for such
securities from the Rating Agencies; provided, however, that securities
issued by any such corporation will not be investments to the extent that
investment therein would cause the outstanding principal amount of
securities issued by such corporation that are then held as part of the
Investment Account or the Certificate Account to exceed 20% of the
aggregate principal amount of all Eligible Investments then held in the
Investment Account and the Certificate Account; and
(vii) Units of taxable money market funds (which may be 12b-1 funds,
as contemplated under the rules promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940), which funds have the
highest rating available for such securities from the Rating Agencies or
which have been designated in writing by the Rating Agencies as Eligible
Investments;
provided, however, that such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury Regulations, and that
such period can in no event exceed thirteen months.
In no event shall an instrument be an Eligible Investment if such
instrument (a) evidences a right to receive only interest payments with respect
to the obligations underlying such instrument or (b) has been purchased at a
price greater than the outstanding principal balance of such instrument.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Restricted Certificate: Any Senior Subordinate Certificate.
15
Event of Default: Any event of default as specified in Section 7.01.
Excess Liquidation Proceeds: With respect to any Distribution Date, the sum
of (i) the excess, if any, of aggregate Liquidation Proceeds received during the
Prior Period over the amount that would have been received if Payoffs had been
made with respect to such Mortgage Loans on the date such Liquidation Proceeds
were received and (ii) any Excess Subsequent Recoveries for such Distribution
Date.
Excess Subsequent Recoveries: For any Distribution Date, the excess, if
any, of (i) amounts received by the Servicer during the Prior Period (after
deduction of amounts reimbursable under Section 3.05(a)(i) and (ii)) in
connection with the liquidation of defaulted Mortgage Loans after such Mortgage
Loans became Liquidated Mortgage Loans over (ii) the Subsequent Recoveries for
such Distribution Date.
FDIC: Federal Deposit Insurance Corporation, or any successor thereto.
FHA: Federal Housing Administration, or any successor thereto.
▇▇▇▇▇▇ Mae: The entity formerly known as the Federal National Mortgage
Association, or any successor thereto.
Final Maturity Date: With respect to each Class of Certificates, the date
set forth in the table contained in the Preliminary Statement hereto.
Fitch: Fitch Ratings, provided that at any time it be a Rating Agency.
Fraud Loss: A Realized Loss (or portion thereof) with respect to a Mortgage
Loan arising from any action, event or state of facts with respect to such
Mortgage Loan which, because it involved or arose out of any dishonest,
fraudulent, criminal, negligent or knowingly wrongful act, error or omission by
the Mortgagor, originator (or assignee thereof) of such Mortgage Loan, Lender, a
Servicer or the Servicer, would result in an exclusion from, denial of, or
defense to coverage which otherwise would be provided by a Primary Insurance
Policy previously issued with respect to such Mortgage Loan.
▇▇▇▇▇▇▇ Mac: The entity formerly known as the Federal Home Loan Mortgage
Corporation, or any successor thereto.
Index: Initially, One-Year CMT, as set forth on the Mortgage Loan Schedule.
In the event such initial Index is no longer available, the Servicer will choose
a new Index in accordance with the terms of the related Mortgage Note and in
compliance with applicable law.
Indirect DTC Participants: Entities such as banks, brokers, dealers or
trust companies, that clear through or maintain a custodial relationship with a
DTC Participant, either directly or indirectly.
Initial Custodial Agreement: The Custodial Agreement, dated the date
hereof, among the Trustee, the Servicer and the Initial Custodian.
16
Initial Custodian: Washington Mutual Bank fsb, which has been designated by
the Company to be appointed by the Trustee to act as Custodian, and whose
appointment has been approved by the Servicer.
Insurance Proceeds: Amounts paid or payable by the insurer under any
Primary Insurance Policy or any other insurance policy (including any
replacement policy permitted under this Agreement) covering any Mortgage Loan or
Mortgaged Property, including, without limitation, any hazard insurance policy
required pursuant to Section 3.07, any title insurance policy required pursuant
to Section 2.08 and any FHA insurance policy or VA guaranty.
Interest Distribution Amount: For any Distribution Date, for any Class of
Certificates, the amount of interest accrued during the Prior Period, at the
related Certificate Interest Rate for such Class for such Distribution Date, on
the respective Class Principal Balance immediately before such Distribution
Date, reduced by Uncompensated Interest Shortfall and the interest portion of
Realized Losses allocated to such Class on such Distribution Date pursuant to
the definitions of "Uncompensated Interest Shortfall" and "Realized Loss,"
respectively.
The computation of interest accrued shall be made on the basis of a 360-day
year of twelve 30-day months.
Investment Account: The commingled account (which shall be commingled only
with investment accounts related to series of pass-through certificates with a
class of certificates which has a rating equal to the highest of the Ratings of
the Certificates) maintained by the Servicer in the trust department of the
Investment Depository pursuant to Section 3.03 and which bears a designation
acceptable to the Rating Agencies.
Investment Depository: JPMorgan Chase Bank, or another bank or trust
company designated from time to time by the Servicer. The Investment Depository
shall at all times be an Eligible Institution.
Junior Subordinate Certificates: The Class [_____], Class [_____] and Class
[_____] Certificates.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the Final Maturity Date for such Class.
Lender: An institution from which the Company purchased any Mortgage Loans
pursuant to a Selling and Servicing Contract.
Liquidated Mortgage Loan: A Mortgage Loan (other than a Mortgage Loan with
respect to which a Payoff has been made) for which the Servicer or the
applicable Servicer has determined in accordance with its customary servicing
practices that it has received all amounts which it expects to recover from or
on account of such Mortgage Loan, whether from Insurance Proceeds, Liquidation
Proceeds or otherwise. For purposes of this definition, acquisition of a
Mortgaged Property by the Trust shall not constitute final liquidation of the
related Mortgage Loan.
17
Liquidation Principal: The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Mortgage
Loan (but not in excess of the principal balance thereof) during the Prior
Period.
Liquidation Proceeds: Amounts after deduction of amounts reimbursable under
Section 3.05(a)(i) and (ii) received and retained in connection with the
liquidation of defaulted Mortgage Loans, whether through foreclosure or
otherwise, other than any Subsequent Recoveries.
Loan-to-Value Ratio: The original principal amount of a Mortgage Loan
divided by the Original Value; provided, however, that references to "current
Loan-to-Value Ratio" or "Loan-to-Value Ratio as of the Cut-Off Date" in Section
2.08 shall be deemed to mean the then current Principal Balance of a Mortgage
Loan divided by the Original Value.
Lowest Class B Owner: An owner unaffiliated with the Company or the
Servicer of (i) a 100% interest in the Class of Class B Certificates with the
lowest priority or (ii) a 100% interest in a class of securities representing
such interest in such Class specified in clause (i) above.
Margin: For each Mortgage Loan, the applicable fixed per annum percentage
rate specified in the applicable Mortgage Note and designated as such in the
Mortgage Loan Schedule.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor thereto.
MERS Loan: Any Mortgage Loan registered on the MERS'r' System for which
MERS appears as the mortgagee of record on the Mortgage or on an assignment
thereof.
MERS'r' System: The system of electronically recording transfers of
Mortgages maintained by MERS.
MIN: The Mortgage Identification Number for a MERS Loan.
MOM Loan: A Mortgage Loan that was registered on the MERS'r' System at the
time of origination thereof and for which MERS appears as the mortgagee of
record on the Mortgage.
Monthly P&I Advance: An advance of funds by the Servicer pursuant to
Section 4.02 or a Servicer pursuant to its Selling and Servicing Contract to
cover delinquent principal and interest installments.
Monthly Payment: The scheduled payment of principal (if any) and interest
on a Mortgage Loan (including any amounts due from a Buydown Fund, if any) which
is due on the related Due Date for such Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., provided that at any time it be a
Rating Agency.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note.
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Mortgage File: The following documents or instruments with respect to each
Mortgage Loan transferred and assigned by the Company pursuant to Section 2.04,
(X) with respect to each Mortgage Loan that is not a Cooperative Loan:
(i) The original Mortgage Note endorsed (A) in blank, without
recourse, or (B) to "[_____], as Trustee, without recourse" or to "WaMu
Mortgage Pass-Through Certificates Series [_____] Trust, without recourse"
and all intervening endorsements evidencing a complete chain of
endorsements from the originator to the Trustee or the Trust, as
applicable, or, in the event of any Destroyed Mortgage Note, a copy or a
duplicate original of the Mortgage Note (or portion thereof, as
applicable), together with an original lost note affidavit from the
originator of the Mortgage Loan or the Company (or any affiliate of the
Company from which the Company acquired the Mortgage Loan), as applicable,
stating that the original Mortgage Note (or portion thereof, as applicable)
was lost, misplaced or destroyed, together with a copy of the Mortgage Note
(or portion thereof, as applicable); provided, however, that in the event
the Company acquired the Mortgage Loan from an affiliate of the Company,
then the Mortgage Note (or portion thereof, as applicable) need not be
endorsed in blank or to [_____] or the Trust as provided above (but, if not
so endorsed, shall be made payable to, or endorsed by the mortgagee named
therein to, such affiliate of the Company);
(ii) The Buydown Agreement, if applicable;
(iii) A Mortgage that is either
(1) (x) the original recorded Mortgage with evidence of recording
thereon for the jurisdiction in which the Mortgaged Property is
located (which original recorded Mortgage, in the case of a MOM Loan,
shall set forth the MIN and shall indicate that the Mortgage Loan is a
MOM Loan), (y) unless the Mortgage Loan is a MERS Loan, an original
Mortgage assignment thereof duly executed and acknowledged in
recordable form (A) in blank or (B) to "[_____], as Trustee," or to
"WaMu Mortgage Pass-Through Certificates Series [_____] Trust," and
(z) unless the Mortgage Loan is a MOM Loan, recorded originals of all
intervening assignments evidencing a complete chain of assignment,
from the originator to the name holder or the payee endorsing the
related Mortgage Note (or, in the case of a MERS Loan other than a MOM
Loan, from the originator to MERS); or
(2) (x) a copy (which may be in electronic form) of the Mortgage
(which Mortgage, in the case of a MOM Loan, shall set forth the MIN
and shall indicate that the Mortgage Loan is a MOM Loan) which
represents a true and correct reproduction of the original Mortgage
and which has either been certified (i) on the face thereof by the
public recording office in the appropriate jurisdiction in which the
Mortgaged Property is located, or (ii) by the originator, the related
Lender or the escrow or title company which provided closing services
in connection with such Mortgage Loan as a true and correct copy the
original of which has been sent for recordation, (y) unless the
Mortgage Loan is a MERS Loan, an original Mortgage assignment thereof
duly executed and acknowledged
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in recordable form (A) in blank or (B) to "[_____], as Trustee," or to
"WaMu Mortgage Pass-Through Certificates Series [_____] Trust" and (z)
unless the Mortgage Loan is a MOM Loan, true and correct copies,
certified by the applicable county recorder or by the originator or
Lender as described above, of all intervening assignments evidencing a
complete chain of assignment from the originator to the name holder or
the payee endorsing the related Mortgage Note (or, in the case of a
MERS Loan other than a MOM Loan, from the originator to MERS);
provided, however, that in the event the Company acquired the Mortgage Loan
from an affiliate of the Company, then the Mortgage File need not include a
Mortgage assignment executed in blank or to [_____] or the Trust as
provided in clause (X)(iii)(1)(y) or (X)(iii)(2)(y) above, as applicable
(but the Mortgage File shall, unless the Mortgage Loan was originated by
such affiliate of the Company, include an intervening Mortgage assignment
to such affiliate as provided in clause (X)(iii)(1)(z) or (X)(iii)(2)(z)
above, as applicable); and
(iv) For any Mortgage Loan that has been modified or amended, the
original instrument or instruments effecting such modification or
amendment;
and (Y) with respect to each Cooperative Loan:
(i) The original Mortgage Note endorsed (A) in blank, without
recourse, or (B) to "[_____], as Trustee, without recourse" or to "WaMu
Mortgage Pass-Through Certificates Series [_____] Trust, without recourse"
and all intervening endorsements evidencing a complete chain of
endorsements, from the originator to the Trustee or the Trust, as
applicable, or, in the event of any Destroyed Mortgage Note, a copy or a
duplicate original of the Mortgage Note (or portion thereof, as
applicable), together with an original lost note affidavit from the
originator of the Cooperative Loan or the Company (or any affiliate of the
Company from which the Company acquired the Mortgage Loan), as applicable,
stating that the original Mortgage Note (or portion thereof, as applicable)
was lost, misplaced or destroyed, together with a copy of the Mortgage Note
(or portion thereof, as applicable); provided, however, that in the event
the Company acquired the Cooperative Loan from an affiliate of the Company,
then the Mortgage Note need not be endorsed in blank or to [_____] or the
Trust as provided above (but, if not so endorsed, shall be made payable to,
or endorsed by the originator or successor lender named therein to, such
affiliate of the Company);
(ii) A counterpart of the Cooperative Lease and the Assignment of
Proprietary Lease to the originator of the Cooperative Loan;
(iii) The related Cooperative Stock Certificate, representing the
related Cooperative Stock pledged with respect to such Cooperative Loan,
together with an undated stock power (or other similar instrument) executed
in blank;
(iv) The Recognition Agreement;
(v) The Security Agreement;
20
(vi) Copies of the original UCC financing statement, and any
continuation statements, filed by the originator of such Cooperative Loan
as secured party, each with evidence of recording thereof, evidencing the
interest of the originator under the Security Agreement and the Assignment
of Proprietary Lease;
(vii) Copies of the filed UCC assignments or amendments of the
security interest referenced in clause (vi) above showing an unbroken chain
of title from the originator to the Trust, each with evidence of recording
thereof, evidencing the interest of the assignee under the Security
Agreement and the Assignment of Proprietary Lease;
(viii) An executed assignment of the interest of the originator in the
Security Agreement, the Assignment of Proprietary Lease and the Recognition
Agreement, showing an unbroken chain of title from the originator to the
Trust; and
(ix) For any Cooperative Loan that has been modified or amended, the
original instrument or instruments effecting such modification or
amendment;
provided, however, that in the event the Company acquired the Cooperative
Loan from an affiliate of the Company, then the Mortgage File need not
include (1) a UCC assignment or amendment of the security interest
referenced in clause (Y)(vi) above to the Trust as provided in clause
(Y)(vii) above (but the Mortgage File shall, unless the Cooperative Loan
was originated by such affiliate of the Company, include a UCC assignment
or amendment of such security interest to such affiliate) or (2) an
assignment of the interest of the originator in the Security Agreement, the
Assignment of Proprietary Lease and the Recognition Agreement to the Trust
as provided in clause (Y)(viii) above (but the Mortgage File shall, unless
the Cooperative Loan was originated by such affiliate of the Company,
include an assignment of such interest to such affiliate).
Mortgage Interest Rate: For any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan pursuant to the terms of the related
Mortgage Note.
Mortgage Loan Schedule: The schedule, as amended from time to time, of
Mortgage Loans attached hereto as Exhibit D, which shall set forth as to each
Mortgage Loan the following, among other things:
(i) its loan number,
(ii) the address of the Mortgaged Property,
(iii) the name of the Mortgagor,
(iv) the Original Value of the property subject to the Mortgage,
(v) the Principal Balance as of the Cut-Off Date,
(vi) the Mortgage Interest Rate, as of the Cut-Off Date, borne by the
Mortgage Note and the Rate Ceiling, Rate Floor, subsequent Periodic Cap,
Index and Margin, as applicable, borne by the Mortgage Note,
21
(vii) whether a Primary Insurance Policy is in effect as of the
Cut-Off Date, and, if so, whether such Primary Insurance Policy is a
Special Primary Insurance Policy,
(viii) the maturity of the Mortgage Note,
(ix) the Servicing Fee Rate, and
(x) whether it imposes penalties for early prepayments.
Mortgage Loans: The mortgage loans and cooperative loans (if any) listed on
the Mortgage Loan Schedule and transferred and assigned to the Trust pursuant
hereto. With respect to each Mortgage Loan that is a Cooperative Loan, "Mortgage
Loan" shall include, but not be limited to, the Mortgage Note, Security
Agreement, Assignment of Proprietary Lease, Recognition Agreement, Cooperative
Stock Certificate and Cooperative Lease, and, with respect to each Mortgage Loan
other than a Cooperative Loan, "Mortgage Loan" shall include, but not be limited
to the Mortgage Note and the related Mortgage.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
Mortgage Pool: All of the Mortgage Loans.
Mortgage Pool Assets: (i) The Mortgage Loans (including all Substitute
Mortgage Loans) identified on the Mortgage Loan Schedule, and all rights
pertaining thereto, including the related Mortgage Notes, Mortgages, Cooperative
Stock Certificates, Cooperative Leases, Security Agreements, Assignments of
Proprietary Lease, and Recognition Agreements, and all payments and
distributions with respect to the Mortgage Loans payable on and after the
Cut-Off Date; (ii) the Certificate Account, the Investment Account, and all
money, instruments, investment property, and other property credited thereto,
carried therein, or deposited therein (except amounts constituting the Servicing
Fee); (iii) the Custodial Accounts for P&I, the Custodial Accounts for Reserves,
any Buydown Fund Account (to the extent of the amounts on deposit or other
property therein attributable to the Mortgage Loans), and all money,
instruments, investment property, and other property credited thereto, carried
therein, or deposited therein (except amounts constituting the Servicing Fee);
(iv) all property that secured a Mortgage Loan and that has been acquired by
foreclosure or deed in lieu of foreclosure or, in the case of a Cooperative
Loan, a similar form of conversion, after the Cut-Off Date; and (v) each FHA
insurance policy, Primary Insurance Policy, VA guaranty, and other insurance
policy related to any Mortgage Loan, and all amounts paid or payable thereunder
and all proceeds thereof.
Mortgaged Property: With respect to any Mortgage Loan, other than a
Cooperative Loan, the real property, together with improvements thereto, and,
with respect to any Cooperative Loan, the related Cooperative Stock and
Cooperative Lease, securing the indebtedness of the Mortgagor under the related
Mortgage Loan. "Mortgaged Property" shall also refer to property which once
secured the indebtedness of a Mortgagor under the related Mortgage Loan but
which was acquired by the Trust upon foreclosure or other liquidation of such
Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
22
Nonrecoverable Advance: With respect to any Mortgage Loan, any advance
which the Servicer shall determine to be a Nonrecoverable Advance pursuant to
Section 4.03 and which was, or is proposed to be, made by (i) the Servicer or
(ii) a Servicer pursuant to its Selling and Servicing Contract.
Non-U.S. Person: A Person that is not a U.S. Person.
Notice Addresses: (a) In the case of the Company, ____________, Attention:
____________ (with a copy to: Washington Mutual Legal Department, 1201 Third
Avenue, WMT 1706, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ___________) or such other
address as may hereafter be furnished to the Trustee in writing by the Company,
(b) in the case of the Servicer, _______________, Attention: ___________ or such
other address as may hereafter be furnished to the Trustee in writing by the
Servicer, (c) in the case of the Trustee, at its Corporate Trust Office, or such
other address as may hereafter be furnished to the Servicer in writing by the
Trustee, (d) in the case of the Delaware Trustee, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other address as may hereafter be furnished to the
Servicer in writing by the Delaware Trustee, (e) in the case of the Trust, c/o
[_____], at the Corporate Trust Office, or such other address as may hereafter
be furnished to the Servicer in writing by the Trustee, (f) in the case of the
Certificate Registrar, at its Corporate Trust Office, or such other address as
may hereafter be furnished to the Trustee in writing by the Certificate
Registrar, (g) in the case of S&P, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ 10041-0003, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, or such other address as may hereafter
be furnished to the Trustee and Servicer in writing by S&P and (h) in the case
of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Monitoring,
or such other address as may hereafter be furnished to the Trustee and Servicer
in writing by ▇▇▇▇▇'▇.
OTS: The Office of Thrift Supervision, or any successor thereto.
Officer's Certificate: A certificate signed by the Chairman of the Board,
the President, a Vice President, or the Treasurer of the Servicer and delivered
to the Company, the Trustee or the Delaware Trustee, as applicable.
One-Year CMT: The weekly average yield on United States Treasury Securities
adjusted to a constant maturity of one year, as made available by the Federal
Reserve Board, published in Federal Reserve Statistical Release H.15(519) most
recently available as of 45 days before the applicable Adjustment Date.
Opinion of Counsel: A written opinion of counsel, who shall be reasonably
acceptable to the Trustee or the Delaware Trustee, as applicable, and who may be
counsel (including in-house counsel) for the Company or the Servicer.
Original Trust Agreement: The Trust Agreement, dated as of [_____], between
the Company and the Delaware Trustee, providing for the creation of the Trust.
Original Value: With respect to any Mortgage Loan other than a Mortgage
Loan originated for the purpose of refinancing an existing mortgage debt, the
lesser of (a) the Appraised Value (if any) of the Mortgaged Property at the time
the Mortgage Loan was originated or (b) the purchase price paid for the
Mortgaged Property by the Mortgagor. With
23
respect to a Mortgage Loan originated for the purpose of refinancing existing
mortgage debt, the Original Value shall be equal to the Appraised Value of the
Mortgaged Property.
Ownership Interest: With respect to any Residual Certificate, any ownership
or security interest in such Residual Certificate, including any interest in a
Residual Certificate as the Holder thereof and any other interest therein
whether direct or indirect, legal or beneficial, as owner or as pledgee.
Pass-Through Entity: Any regulated investment company, real estate
investment trust, common trust fund, partnership, trust or estate, and any
organization to which Section 1381 of the Code applies.
Pass-Through Rate: For each Mortgage Loan, the Mortgage Interest Rate for
such Mortgage Loan less (i) the Servicing Fee Rate for such Mortgage Loan and
(ii) if such Mortgage Loan was covered by a Special Primary Insurance Policy on
the Closing Date (even if no longer so covered), the per annum rate at which the
applicable Special Primary Insurance Premium for such Mortgage Loan is
calculated. For each Mortgage Loan, any calculation of monthly interest at such
rate shall be based upon annual interest at such rate (computed on the basis of
a 360-day year of twelve 30-day months) on the unpaid Principal Balance of such
Mortgage Loan divided by twelve, and any calculation of interest at such rate by
reason of a Payoff shall be based upon annual interest at such rate on the
outstanding Principal Balance of such Mortgage Loan multiplied by a fraction,
the numerator of which is the number of days elapsed from the Due Date of the
last scheduled payment of principal and interest to, but not including, the date
of such Payoff, and the denominator of which is (a) for Payoffs received on a
Due Date, 360, and (b) for all other Payoffs, 365.
Paying Agent: Any paying agent appointed by the Trustee pursuant to Section
8.12.
Payoff: Any Mortgagor payment of principal on a Mortgage Loan equal to the
entire outstanding Principal Balance of such Mortgage Loan, if received in
advance of the last scheduled Due Date for such Mortgage Loan and accompanied by
an amount of interest equal to accrued unpaid interest on the Mortgage Loan to
the date of such payment-in-full. (Prepayment penalties are not payments of
principal and hence Payoffs do not include prepayment penalties.)
Payoff Earnings: For any Distribution Date with respect to each Mortgage
Loan on which a Payoff was received by the Servicer during the Payoff Period,
the aggregate of the interest earned by the Servicer from investment of each
such Payoff from the date of receipt of such Payoff until the Business Day
immediately preceding the related Distribution Date (net of investment losses).
Payoff Interest: For any Distribution Date with respect to a Mortgage Loan
for which a Payoff was received on or after the first calendar day of the month
of such Distribution Date and before the 15th calendar day of such month, an
amount of interest thereon at the applicable Pass-Through Rate from the first
day of the month of distribution through the day of receipt thereof; to the
extent (together with Payoff Earnings and the aggregate Servicing Fee) not
required to be distributed as Compensating Interest on such Distribution Date,
Payoff Interest shall be payable to the Servicer as additional servicing
compensation.
24
Payoff Period: For the first Distribution Date, the period from the Cut-Off
Date through ________ 14, _____, inclusive; and for any Distribution Date
thereafter, the period from the 15th day of the Prior Period through the 14th
day of the month of such Distribution Date, inclusive.
Percentage Interest: (a) With respect to the right of each Certificate of a
particular Class in the distributions allocated to such Class, "Percentage
Interest" shall mean the percentage equal to:
(i) with respect to any Certificate (other than the Residual
Certificates), its Certificate Principal Balance divided by the applicable
Class Principal Balance; and
(ii) with respect to any Residual Certificate, the percentage set
forth on the face of such Certificate.
(b) With respect to the rights of each Certificate in connection with
Sections 5.09, 7.01, 8.01(c), 8.02, 8.07, 10.01 and 10.03, "Percentage Interest"
shall mean the percentage equal to:
(i) with respect to any Certificate (other than the Residual
Certificates), its Certificate Principal Balance divided by the Aggregate
Certificate Principal Balance of the Certificates; and
(ii) with respect to any Residual Certificate, zero.
Periodic Cap: For each Mortgage Loan, any applicable limit on adjustment of
the Mortgage Interest Rate for each Adjustment Date specified in the applicable
Mortgage Note and designated as such in the Mortgage Loan Schedule.
Permitted Transferee: With respect to the holding or ownership of any
Residual Certificate, any Person other than (i) the United States, a State or
any 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 Code Section 521) which is
exempt from the taxes imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Code Section 1381(a)(2)(C), (v) any "electing large partnership" as defined in
Section 775(a) of the Code, (vi) any Person from whom the Trustee has not
received an affidavit to the effect that it is not a "disqualified organization"
within the meaning of Section 860E(e)(5) of the Code, and (vii) any other Person
so designated by the Company based upon an Opinion of Counsel that the transfer
of an Ownership Interest in a Residual Certificate to such Person may cause
REMIC I to fail to qualify as a REMIC at any time that the Certificates are
outstanding. The terms "United States," "State" and "International Organization"
shall have the meanings set forth in Code Section 7701 or successor provisions.
A corporation shall not be treated as an instrumentality of the United States or
of any State or political subdivision thereof if all of its activities are
subject to tax, and, with the exception of the ▇▇▇▇▇▇▇ Mac, a majority of its
board of directors is not selected by such governmental unit.
25
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepaid Monthly Payment: Any Monthly Payment received prior to its
scheduled Due Date, which is intended to be applied to a Mortgage Loan on its
scheduled Due Date and held in the related Custodial Account for P&I until the
Withdrawal Date following its scheduled Due Date.
Primary Insurance Policy: A policy of mortgage guaranty insurance, if any,
on an individual Mortgage Loan or on pools of mortgage loans that include an
individual Mortgage Loan, providing coverage as required by Section 2.08(xi)
(including any Special Primary Insurance Policy).
Principal Balance: Except as used in Sections 2.07, 3.09 and 9.01 and for
purposes of the definition of Purchase Price, at the time of any determination,
the principal balance of a Mortgage Loan remaining to be paid at the close of
business on the Cut-Off Date, after application of all scheduled principal
payments due on or before the Cut-Off Date, whether or not received, reduced by
all amounts distributed or (except when such determination occurs earlier in the
month than the Distribution Date) to be distributed to Certificateholders
through the Distribution Date in the month of determination that are reported as
allocable to principal of such Mortgage Loan.
For purposes of the definition of Purchase Price and as used in Sections
2.07, 3.09 and 9.01, at the time of any determination, the principal balance of
a Mortgage Loan remaining to be paid at the close of business on the Cut-Off
Date, after deduction of all scheduled principal payments due on or before the
Cut-Off Date, whether or not received, reduced by all amounts distributed or to
be distributed to Certificateholders through the Distribution Date in the month
of determination that are reported as allocable to principal of such Mortgage
Loan.
In the case of a Substitute Mortgage Loan, "Principal Balance" shall mean,
at the time of any determination, the principal balance of such Substitute
Mortgage Loan transferred to the Trust, on the date of substitution, reduced by
all amounts distributed or to be distributed to Certificateholders through the
Distribution Date in the month of determination that are reported as allocable
to principal of such Substitute Mortgage Loan.
The Principal Balance of a Mortgage Loan (including a Substitute Mortgage
Loan) shall not be adjusted solely by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period. Whenever a
Realized Loss has been incurred with respect to a Mortgage Loan during a
calendar month, the Principal Balance of such Mortgage Loan shall be reduced by
the amount of such Realized Loss as of the Due Date next following the end of
such calendar month.
Principal Payment: Any payment of principal on a Mortgage Loan other than a
Principal Prepayment.
Principal Payment Amount: For any Distribution Date, the sum of (i) the
scheduled principal payments (if any) on the Mortgage Loans due on the related
Due Date, (ii) the principal
26
portion of proceeds received with respect to any Mortgage Loan which was
purchased or repurchased pursuant to a Purchase Obligation or as permitted by
this Agreement during the Prior Period and (iii) any other unscheduled payments
of principal which were received with respect to any Mortgage Loan during the
Prior Period, other than Payoffs, Curtailments, Liquidation Principal and
Subsequent Recoveries.
Principal Prepayment: Any payment of principal on a Mortgage Loan which
constitutes a Payoff or a Curtailment.
Principal Prepayment Amount: For any Distribution Date, the sum of (i)
Curtailments received during the Prior Period from the Mortgage Loans and (ii)
Payoffs received during the Payoff Period from the Mortgage Loans.
Prior Period: With respect to any Distribution Date, the calendar month
immediately preceding such Distribution Date.
Prospectus: The Prospectus, dated [_____], and the Prospectus Supplement,
dated [_____], of the Company.
Purchase Obligation: An obligation of the Company to repurchase Mortgage
Loans under the circumstances and in the manner provided in Section 2.07 or
Section 2.08.
Purchase Price: With respect to any Mortgage Loan to be purchased pursuant
to a Purchase Obligation or pursuant to Section 3.01, an amount equal to the sum
of (i) the Principal Balance thereof, (ii) unpaid accrued interest thereon, if
any, during the calendar month in which the date of purchase occurs to the last
day of such month at a rate equal to the applicable Pass-Through Rate and (iii)
with respect to any Mortgage Loan to be purchased pursuant to Section 2.08, any
costs and damages incurred by the Trust in connection with any violation by such
Mortgage Loan of any predatory and abusive lending laws, to the extent such
costs and damages result from a breach of the representation and warranty made
by the Company pursuant to clause (viii) of Section 2.08; provided, however,
that to the extent that such costs and damages constitute a set-off against the
principal balance of the Mortgage Loan, such costs and damages will not be paid
pursuant to this clause (iii), and the amount paid pursuant to clause (i) above
will be calculated without regard to such set-off; provided, further, that no
Mortgage Loan shall be purchased or required to be purchased pursuant to Section
2.08, or more than two years after the Closing Date under Section 2.07, unless
(a) the Mortgage Loan to be purchased is in default, or default is in the
judgment of the Company reasonably imminent, or (b) the Company, at its expense,
delivers to the Trustee an Opinion of Counsel addressed to the Trust and the
Trustee to the effect that the purchase of such Mortgage Loan will not give rise
to a tax on a prohibited transaction, as defined in Section 860F(a) of the Code.
Qualified Insurer: A mortgage guaranty insurance company duly qualified as
such under the laws of the states in which the Mortgaged Properties are located
if such qualification is necessary to issue the applicable insurance policy or
bond, duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided by the Primary Insurance
Policies and approved as an insurer by the Servicer. A Qualified Insurer must
have the rating required by the Rating Agencies.
27
Rate Ceiling: The maximum per annum Mortgage Interest Rate permitted under
the related Mortgage Note.
Rate Floor: The minimum per annum Mortgage Interest Rate permitted under
the related Mortgage Note.
Rating Agency: Initially, each of S&P and ▇▇▇▇▇'▇ and thereafter, each
nationally recognized statistical rating organization that has rated the
Certificates at the request of the Company, or their respective successors in
interest.
Ratings: As of any date of determination, the ratings, if any, of the
Certificates as assigned by the applicable Rating Agencies.
Realized Loss: For any Distribution Date, with respect to any Mortgage Loan
which became a Liquidated Mortgage Loan during the related Prior Period, the sum
of (i) the principal balance of such Mortgage Loan remaining outstanding and the
principal portion of Nonrecoverable Advances actually reimbursed with respect to
such Mortgage Loan (the principal portion of such Realized Loss), and (ii) the
accrued interest on such Mortgage Loan remaining unpaid and the interest portion
of Nonrecoverable Advances actually reimbursed with respect to such Mortgage
Loan (the interest portion of such Realized Loss); provided, however, that for
purposes of allocating Realized Losses to the Certificates pursuant to this
definition of "Realized Loss," the aggregate principal portion of Realized
Losses for any Distribution Date shall be reduced by the Cumulative
Carry-Forward Subsequent Recoveries Amount for such Distribution Date. For any
Distribution Date, with respect to any Mortgage Loan which is not a Liquidated
Mortgage Loan, the amount of the Bankruptcy Loss incurred with respect to such
Mortgage Loan as of the related Due Date.
Realized Losses shall be allocated among the Certificates (i) for Realized
Losses allocable to principal (a) first, to the Class [_____] Certificates,
until the Class [_____] Principal Balance has been reduced to zero, (b) second,
to the Class [_____] Certificates, until the Class [_____] Principal Balance has
been reduced to zero, (c) third, to the Class [_____] Certificates, until the
Class [_____] Principal Balance has been reduced to zero, (d) fourth, to the
Class [_____] Certificates, until the Class [_____] Principal Balance has been
reduced to zero, (e) fifth, to the Class [_____] Certificates, until the Class
[_____] Principal Balance has been reduced to zero, (f) sixth, to the Class
[_____] Certificates, until the Class [_____] Principal Balance has been reduced
to zero, (g) seventh, to the Class [_____] Certificates, in reduction of the
Class [_____] Principal Balance; and (ii) for Realized Losses allocable to
interest (a) first, to the Class [_____] Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class [_____] Principal
Balance, (b) second, to the Class [_____] Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class [_____] Principal
Balance, (c) third, to the Class [_____] Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class [_____] Principal
Balance, (d) fourth, to the Class [_____] Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class [_____] Principal
Balance, (e) fifth, to the Class [_____] Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class [_____] Principal
Balance, (f) sixth, to the Class [_____] Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class [_____] Principal
Balance, (g) seventh, to the Class [_____] Certificates,
28
in reduction of accrued but unpaid interest thereon and then in reduction of the
Class [_____] Principal Balance.
On each Distribution Date, after giving effect to the principal
distributions and allocations of losses as provided in this Agreement (without
regard to this paragraph), if the aggregate Class Principal Balance of all
outstanding Classes of Certificates (plus any Cumulative Carry-Forward
Subsequent Recoveries Amount for such Distribution Date) exceeds the aggregate
principal balance of the Mortgage Loans remaining to be paid at the close of
business on the Cut-Off Date, after deduction of (i) all principal payments due
on or before the Cut-Off Date in respect of each Mortgage Loan whether or not
paid, and (ii) all amounts of principal in respect of each Mortgage Loan that
have been received or advanced and included in the Available Distribution Amount
and all losses in respect of each Mortgage Loan that have been allocated to the
Certificates on such Distribution Date or prior Distribution Dates then such
excess will be deemed a principal loss and will be allocated to the most junior
Class of Class B Certificates, in reduction of the Class Principal Balance
thereof.
Recognition Agreement: With respect to a Cooperative Loan, the recognition
agreement between the Cooperative and the originator of such Cooperative Loan.
Record Date: The last Business Day of the month immediately preceding the
month of the related Distribution Date.
Relief Act Shortfall: For any Distribution Date for any Mortgage Loan with
respect to which the Servicemembers Civil Relief Act, formerly known as the
Soldiers' and Sailors' Civil Relief Act of 1940, or any comparable state
legislation (collectively, the "Relief Act"), limits the amount of interest
payable by the related Mortgagor, an amount equal to one month's interest on
such Mortgage Loan at an annual interest rate equal to the excess, if any, of
(i) the annual interest rate at which interest otherwise accrued during the
Prior Period under the terms of the related Mortgage Note over (ii) the annual
interest rate at which interest accrued during the Prior Period by application
of the Relief Act.
REMIC: A real estate mortgage investment conduit, as such term is defined
in the Code.
REMIC Provisions: Sections 860A through 860G of the Code, related Code
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
REMIC I: The segregated pool of assets of the Trust consisting of the REMIC
I Assets, which shall be a REMIC pursuant to the Code, with respect to which a
separate REMIC election is to be made and the beneficial interests in which
shall be the Certificates.
REMIC I Assets: All of the Mortgage Pool Assets.
REMIC I Regular Interests: The Certificates (other than the Class [_____]
Certificates).
Residual Certificates: The Class [_____] Certificates.
Residual Distribution Amount: For any Distribution Date, any portion of the
Available Distribution Amount remaining after all distributions of the Available
Distribution Amount
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pursuant to the definition of "Distribution Amount" (other than the
distributions pursuant to the last subclause thereof).
Upon termination of the obligations created by this Agreement and
liquidation of REMIC I, the amounts which remain on deposit in the Certificate
Account after payment to the Holders of the Certificates of the amounts set
forth in Section 9.01 of this Agreement, and subject to the conditions set forth
therein, shall be distributed to the Class [_____] Certificates in accordance
with the preceding sentences of this definition as if the date of such
distribution were a Distribution Date.
Responsible Officer: When used with respect to the Trustee or the Delaware
Trustee, any officer assigned to and working in the Corporate Trust Office (in
the case of the Trustee) or its corporate trust office (in the case of the
Delaware Trustee) or, in each case, in a similar group and also, with respect to
a particular matter, any other officer to whom such matter is referred because
of such officer's knowledge of and familiarity with the particular subject.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., provided that at any time it be a Rating Agency.
Secretary of State: The Secretary of State of the State of Delaware.
Securities Act: The Securities Act of 1933, as amended.
Security Agreement: With respect to a Cooperative Loan, the agreement or
mortgage creating a security interest in favor of the originator of the
Cooperative Loan in the related Cooperative Stock.
Selling and Servicing Contract: (a) The contract (including the WaMu Asset
Acceptance Corp. Selling Guide and WaMu Asset Acceptance Corp. Servicing Guide
to the extent incorporated by reference therein) between the Company and a
Person relating to the sale of the Mortgage Loans to the Company and the
servicing of such Mortgage Loans for the benefit of the Certificateholders,
which contract is substantially in the form of Exhibit E hereto, as such
contract may be amended or modified from time to time; provided, however, that
any such amendment or modification shall not materially adversely affect the
interests and rights of Certificateholders or (b) any other similar contract,
including any mortgage loan purchase and servicing agreement or any assignment,
assumption and recognition agreement related to a mortgage loan purchase and
sale agreement, providing substantially similar rights and benefits as those
provided by the forms of contract attached as Exhibit E hereto.
Senior Certificates: The Class [_____] Certificates and the Class [_____]
Certificates.
Senior Liquidation Amount: For any Distribution Date, the sum of (A) the
aggregate, for each Mortgage Loan which became a Liquidated Mortgage Loan during
the Prior Period, of the lesser of: (i) the Senior Percentage of the Principal
Balance of such Mortgage Loan and (ii) the Senior Prepayment Percentage of the
Liquidation Principal with respect to such Mortgage Loan and (B) the Senior
Prepayment Percentage of any Subsequent Recoveries for such Distribution Date.
30
Senior Percentage: For any Distribution Date, the aggregate Class Principal
Balance of the Class [_____] and Residual Certificates divided by the aggregate
Class Principal Balance of the Class [_____], Class B and Residual Certificates,
in each case immediately before such Distribution Date.
Senior Prepayment Percentage: Subject to the immediately succeeding
paragraph, (A) for any Distribution Date prior to the seventh anniversary of the
first Distribution Date, the Senior Prepayment Percentage shall equal 100% and
(B) for any Distribution Date on or after the seventh anniversary of the first
Distribution Date, the Senior Prepayment Percentage shall be calculated as
follows: (1) for any such Distribution Date on or after the seventh anniversary
but before the eighth anniversary of the first Distribution Date, the Senior
Percentage for such Distribution Date plus 70% of the Subordinate Percentage for
such Distribution Date; (2) for any such Distribution Date on or after the
eighth anniversary but before the ninth anniversary of the first Distribution
Date, the Senior Percentage for such Distribution Date plus 60% of the
Subordinate Percentage for such Distribution Date; (3) for any such Distribution
Date on or after the ninth anniversary but before the tenth anniversary of the
first Distribution Date, the Senior Percentage for such Distribution Date plus
40% of the Subordinate Percentage for such Distribution Date; (4) for any such
Distribution Date on or after the tenth anniversary but before the eleventh
anniversary of the first Distribution Date, the Senior Percentage for such
Distribution Date plus 20% of the Subordinate Percentage for such Distribution
Date; and (5) for any such Distribution Date thereafter, the Senior Percentage
for such Distribution Date; provided, however, that (x) for any Distribution
Date on or prior to the Distribution Date in ________ ____, if (i) the
Subordinate Percentage for such Distribution Date is greater than or equal to
twice the Subordinate Percentage as of the Closing Date and (ii) cumulative
Realized Losses on the Mortgage Loans allocated to the Class B Certificates, as
a percentage of the aggregate Class Principal Balance of the Class B
Certificates as of the Closing Date, do not exceed 20%, then the Senior
Prepayment Percentage shall equal the Senior Percentage for such Distribution
Date plus 50% of the Subordinate Percentage for such Distribution Date and (y)
for any Distribution Date after the Distribution Date in ________ ____, if (i)
the Subordinate Percentage for such Distribution Date is greater than or equal
to twice the Subordinate Percentage as of the Closing Date and (ii) cumulative
Realized Losses on the Mortgage Loans allocated to the Class B Certificates, as
a percentage of the aggregate Class Principal Balance of the Class B
Certificates as of the Closing Date, do not exceed 30%, then the Senior
Prepayment Percentage shall equal the Senior Percentage for such Distribution
Date.
Notwithstanding the immediately preceding paragraph, (A) for any
Distribution Date, if the Senior Percentage for such Distribution Date is
greater than the Senior Percentage as of the Closing Date, then the Senior
Prepayment Percentage shall equal 100%, (B) for any Distribution Date on or
before the seventh anniversary of the first Distribution Date, if any of the
tests specified in clauses (a) and (b) below is met, then the Senior Prepayment
Percentage shall equal 100% and (C) for any Distribution Date after the seventh
anniversary of the first Distribution Date, if any of the tests specified in
clauses (a) and (b) below is met (unless either (x) the Senior Percentage for
such Distribution Date is greater than the Senior Percentage as of the Closing
Date or (y) there is no Earlier Distribution Date (as defined below), in each of
which case the Senior Prepayment Percentage shall equal 100%), then the Senior
Prepayment Percentage shall be calculated as follows: (1) if the most recent
preceding Distribution Date on which none of the tests specified in clauses (a)
and (b) below was met (such date referred to as the "Earlier
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Distribution Date") is on or after the seventh anniversary but before the eighth
anniversary of the first Distribution Date, then the Senior Prepayment
Percentage shall equal the Senior Percentage for the current Distribution Date
plus 70% of the Subordinate Percentage for the current Distribution Date, (2) if
the Earlier Distribution Date is on or after the eighth anniversary but before
the ninth anniversary of the first Distribution Date, then the Senior Prepayment
Percentage shall equal the Senior Percentage for the current Distribution Date
plus 60% of the Subordinate Percentage for the current Distribution Date, (3) if
the Earlier Distribution Date is on or after the ninth anniversary but before
the tenth anniversary of the first Distribution Date, then the Senior Prepayment
Percentage shall equal the Senior Percentage for the current Distribution Date
plus 40% of the Subordinate Percentage for the current Distribution Date, (4) if
the Earlier Distribution Date is on or after the tenth anniversary but before
the eleventh anniversary of the first Distribution Date, then the Senior
Prepayment Percentage shall equal the Senior Percentage for the current
Distribution Date plus 20% of the Subordinate Percentage for the current
Distribution Date, and (5) if the Earlier Distribution Date is on or after the
eleventh anniversary of the first Distribution Date, then the Senior Prepayment
Percentage shall equal the Senior Percentage for the current Distribution Date:
(a) the mean aggregate Principal Balance, as of the Distribution Date in
each of the immediately preceding six calendar months, of the Mortgage
Loans which were 60 or more days delinquent as of such date (including
Mortgage Loans in bankruptcy or foreclosure and Mortgaged Properties
held by REMIC I) is greater than 50% of the aggregate Class Principal
Balance of the Class B Certificates as of the current Distribution
Date, or
(b) cumulative Realized Losses on the Mortgage Loans allocated to the
Class B Certificates, as a percentage of the aggregate Class Principal
Balance of the Class B Certificates as of the Closing Date, are
greater than, for any Distribution Date (1) before the eighth
anniversary of the first Distribution Date, 30%, (2) on or after the
eighth anniversary but before the ninth anniversary of the first
Distribution Date, 35%, (3) on or after the ninth anniversary but
before the tenth anniversary of the first Distribution Date, 40%, (4)
on or after the tenth anniversary but before the eleventh anniversary
of the first Distribution Date, 45%, and (5) on or after the eleventh
anniversary of the first Distribution Date, 50%.
If on any Distribution Date the allocation to the Class [_____]
Certificates of Principal Prepayments in the percentage required would reduce
the Class Principal Balance of such Certificates below zero, the Senior
Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce such Class Principal Balance to zero.
Senior Principal Distribution Amount: For any Distribution Date, an amount
equal to the sum of (a) the Senior Percentage of the Principal Payment Amount,
(b) the Senior Prepayment Percentage of the Principal Prepayment Amount and (c)
the Senior Liquidation Amount.
Senior Subordinate Certificates: The Subordinate Certificates other than
the Junior Subordinate Certificates.
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Servicer: Means, in the case of (i) "the Servicer", ___________, or any
successor thereto appointed as provided pursuant to Section 7.02, acting to
service and administer the Mortgage Loans pursuant to Section 3.01 or (ii) "a
Servicer", "all Servicers", "any Servicer", "applicable Servicer", "each
Servicer" or "such Servicer", a mortgage loan servicing institution to which the
Servicer has assigned servicing duties with respect to any Mortgage Loan under a
Selling and Servicing Contract; provided, however, the Servicer may designate
itself or one or more other mortgage loan servicing institutions as Servicer
upon termination of an initial Servicer's servicing duties.
Servicer Business Day: Any day other than a Saturday, a Sunday, or a day on
which banking institutions in _________ are authorized or obligated by law or
executive order to be closed.
Servicing Fee: For each Mortgage Loan, the monthly fee paid to the Servicer
or a Servicer, as applicable, to perform primary servicing functions with
respect to such Mortgage Loan, equal to 1/12 of the product of (i) the Servicing
Fee Rate for such Mortgage Loan and (ii) the outstanding Principal Balance of
such Mortgage Loan. In addition, any prepayment penalty received on a Mortgage
Loan will be paid as additional servicing compensation to the Servicer or the
related Servicer, as applicable.
Servicing Fee Rate: For each Mortgage Loan, the per annum rate payable to
the Servicer, as set forth for such Mortgage Loan in the Mortgage Loan Schedule,
equal to 0.375%.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans or the Certificates,
as applicable, whose name and specimen signature appear on a list of servicing
officers furnished to the Trustee by the Servicer, as such list may from time to
time be amended.
Special Primary Insurance Policy: Any Primary Insurance Policy covering a
Mortgage Loan the premium of which is payable by the Trustee pursuant to Section
4.01(a), if so identified in the Mortgage Loan Schedule. There are no Special
Primary Insurance Policies with respect to any of the Mortgage Loans.
Special Primary Insurance Premium: With respect to any Special Primary
Insurance Policy, the monthly premium payable thereunder.
Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del.C. Section 3801 et seq., as the same may be amended from time to time.
Subordinate Certificates: The Class B Certificates.
Subordinate Liquidation Amount: For any Distribution Date, the excess, if
any, of the sum of (A) the aggregate of Liquidation Principal for all Mortgage
Loans which became Liquidated Mortgage Loans during the Prior Period and (B) any
Subsequent Recoveries for such Distribution Date, over the Senior Liquidation
Amount for such Distribution Date.
Subordinate Percentage: For any Distribution Date, the excess of 100% over
the Senior Percentage for such date.
33
Subordinate Prepayment Percentage: For any Distribution Date, the excess of
100% over the Senior Prepayment Percentage for such Distribution Date; provided,
however, that if the aggregate Class Principal Balance of the Class [_____] and
Residual Certificates has been reduced to zero, then the Subordinate Prepayment
Percentage shall equal 100%.
Subordinate Principal Distribution Amount: For any Distribution Date, the
sum of (i) the Subordinate Percentage of the Principal Payment Amount, (ii) the
Subordinate Principal Prepayments Distribution Amount and (iii) the Subordinate
Liquidation Amount.
For any Distribution Date, the Subordinate Principal Distribution Amount
shall be allocated pro rata, by Class Principal Balance, among the Classes of
Class B Certificates and paid in the order of distribution to such Classes
pursuant to the definition of "Distribution Amount" except as otherwise stated
in such definition. Notwithstanding the foregoing, for any Distribution Date
prior to distributions on such date, if the Subordination Level for any Class or
Classes of Class B Certificates is less than such Subordination Level as of the
Closing Date, then the pro rata portion of the Subordinate Principal Prepayments
Distribution Amount, if any, otherwise allocable to such Class or Classes of
Class B Certificates shall be allocated to the more senior Classes of Class B
Certificates, pro rata according to the Class Principal Balances of such
Classes. For purposes of this definition and the definition of "Subordination
Level," the relative seniority, from highest to lowest, of the Class B
Certificates shall be as follows: Class [_____], Class [_____], Class [_____],
Class [_____], Class [_____] and Class [_____].
Subordinate Principal Prepayments Distribution Amount: For any Distribution
Date, the Subordinate Prepayment Percentage of the Principal Prepayment Amount.
Subordination Level: On any specified date, with respect to any Class of
Class B Certificates, the percentage obtained by dividing the aggregate Class
Principal Balance of such Class and the Classes of Class B Certificates which
are subordinate in right of payment to such Class by the aggregate Class
Principal Balance of the Certificates as of such date prior to giving effect to
distributions of principal and interest and allocations of Realized Losses on
the Mortgage Loans on such date.
Subsequent Recoveries: For any Distribution Date, amounts received by the
Servicer during the Prior Period (after deduction of amounts reimbursable under
Section 3.05(a)(i) and (ii)) in connection with the liquidation of defaulted
Mortgage Loans after such Mortgage Loans became Liquidated Mortgage Loans, for
each such Mortgage Loan up to the amount of Realized Losses, if any, previously
allocated in respect of such Mortgage Loan in reduction of the Class Principal
Balance of any Class of Certificates.
Substitute Mortgage Loan: A Mortgage Loan which is substituted for another
Mortgage Loan pursuant to and in accordance with the provisions of Section 2.07.
Tax Matters Person: A Holder of a Class [_____] Certificate with a
Percentage Interest of at least 0.01% or any Permitted Transferee of such Class
[_____] Certificateholder designated as succeeding to the position of Tax
Matters Person in a notice to the Trustee signed by authorized representatives
of the transferor and transferee of such Class [_____] Certificate. The Company
is hereby appointed to act as the Tax Matters Person for REMIC I so long as it
holds a Class
34
[_____] Certificate with a Percentage Interest of at least 0.01%. The Company is
hereby appointed to act as agent for the Tax Matters Person for REMIC I, to
perform the functions of such Tax Matters Person as provided herein, so long as
an affiliate of the Company is the Servicer hereunder, in the event that the
Company ceases to hold a Class [_____] Certificate with the required Percentage
Interest. In the event that an affiliate of the Company ceases to be the
Servicer hereunder, the Servicer is hereby appointed to act as agent for the Tax
Matters Person for REMIC I, to perform the functions of such Tax Matters Person
as provided herein. If the Tax Matters Person for REMIC I becomes a Disqualified
Organization, the last preceding Holder, that is not a Disqualified
Organization, of the Class [_____] Certificate held by the Disqualified
Organization shall be Tax Matters Person pursuant to and as permitted by Section
5.01(c). If any Person is appointed as tax matters person by the Internal
Revenue Service pursuant to the Code, such Person shall be Tax Matters Person.
Termination Date: The date upon which final payment of the Certificates
will be made pursuant to the procedures set forth in Section 9.01(b).
Termination Payment: The final payment delivered to the Certificateholders
on the Termination Date pursuant to the procedures set forth in Section 9.01(b).
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Residual Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership Interest
in a Residual Certificate.
Transferee Affidavit and Agreement: An affidavit and agreement in the form
attached hereto as Exhibit J.
Trust: WaMu Mortgage Pass-Through Certificates Series [_____] Trust, a
Delaware statutory trust, created pursuant to this Agreement.
Trustee: [_____], or its successor-in-interest as provided in Section 8.09,
or any successor trustee appointed as herein provided.
Uncollected Interest: With respect to any Distribution Date for any
Mortgage Loan on which a Payoff was made by a Mortgagor during the related
Payoff Period, except for Payoffs received during the period from the first
through the 14th day of the month of such Distribution Date, an amount equal to
one month's interest at the applicable Pass-Through Rate on such Mortgage Loan
less the amount of interest actually paid by the Mortgagor with respect to such
Payoff.
Uncompensated Interest Shortfall: For any Distribution Date, the sum of (i)
the aggregate Relief Act Shortfall for such Distribution Date, (ii) aggregate
Curtailment Shortfall for such Distribution Date and (iii) the excess, if any,
of (a) aggregate Uncollected Interest for such Distribution Date over (b)
Compensating Interest for such Distribution Date.
35
Uncompensated Interest Shortfall shall be allocated to the Class [_____]
and Class B Certificates, pro rata according to the amount of interest accrued
on each such Class during the immediately preceding accrual period, in reduction
thereof.
Underwriters: ______________.
Underwriting Standards: The underwriting standards of the Company,
[Washington Mutual Bank, FA, or Washington Mutual Bank, a Washington state
chartered savings bank], as applicable.
Uninsured Cause: Any cause of damage to a Mortgaged Property, the cost of
the complete restoration of which is not fully reimbursable under the hazard
insurance policies required to be maintained pursuant to Section 3.07.
U.S. Person: A citizen or resident of the United States of America, a
corporation, partnership or other entity created or organized in or under the
laws of the United States of America, any state thereof or the District of
Columbia, or an estate or trust that is subject to U.S. federal income tax
regardless of the source of its income.
VA: The Department of Veterans Affairs, formerly known as the Veterans
Administration, or any successor thereto.
Weighted Average Pass-Through Rate: For any Distribution Date, the weighted
average of the Pass-Through Rates on the Mortgage Loans as of the second
preceding Due Date (after giving effect to the payments due on the Mortgage
Loans on that Due Date).
Withdrawal Date: Any day during the period commencing on the 18th day of
the month of the related Distribution Date (or if such day is not a Business
Day, the immediately preceding Business Day) and ending on the last Business Day
prior to the 21st day of the month of such Distribution Date. The "related Due
Date" for any Withdrawal Date is the Due Date immediately preceding the related
Distribution Date.
ARTICLE II
Creation of the Trust; Conveyance of the Mortgage Pool Assets; REMIC
Election and Designations; Original Issuance of Certificates
Section 2.01. Creation of the Trust. The Trust is hereby created and shall
be known as "WaMu Mortgage Pass-Through Certificates Series [_____] Trust". The
purpose of the Trust is, and the Trust shall have the power and authority, to
engage in the following activities, all as provided by and subject to the terms
of this Agreement:
(i) to acquire, hold, lease, manage, administer, control, invest,
reinvest, operate and/or transfer the Mortgage Pool Assets;
(ii) to issue the Certificates;
(iii) to make distributions to the Certificates; and
36
(iv) to engage in such other activities, including entering into
agreements, as are described in or required by the terms of this
Agreement or as are necessary, suitable or convenient to accomplish
the foregoing or incidental thereto.
[_____] is hereby appointed as a trustee of the Trust, to have all the rights,
duties and obligations of the Trustee with respect to the Trust expressly set
forth hereunder, and [_____] hereby accepts such appointment and the Trust
created hereby. [_____], is hereby appointed as a Delaware trustee of the Trust,
to have all the rights, duties and obligations of the Delaware Trustee with
respect to the Trust hereunder, and [_____], hereby accepts such appointment and
the Trust created hereby. It is the intention of the Company, the Trustee and
the Delaware Trustee that the Trust constitute a statutory trust under the
Statutory Trust Statute, that this Agreement constitute the governing instrument
of the Trust, and that this Agreement amend and restate the Original Trust
Agreement. The parties hereto acknowledge and agree that, prior to the execution
and delivery hereof, the Delaware Trustee has filed the Certificate of Trust.
The assets of the Trust shall remain in the custody of the Trustee, on
behalf of the Trust, and shall be owned by the Trust except as otherwise
expressly set forth herein. Moneys to the credit of the Trust shall be held by
the Trustee and invested as provided herein. All assets received and held in the
Trust will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of either of [_____] or [_____] in its own right, or any
Person claiming through it. Neither the Trustee nor the Delaware Trustee, on
behalf of the Trust, shall have the power or authority to transfer, assign,
hypothecate, pledge or otherwise dispose of any of the assets of the Trust to
any Person, except as permitted herein. No creditor of a beneficiary of the
Trust, of the Trustee, of the Delaware Trustee, of the Servicer or of the
Company shall have any right to obtain possession of, or otherwise exercise
legal or equitable remedies with respect to, the property of the Trust, except
in accordance with the terms of this Agreement.
[On the Closing Date, the Company shall deposit in the Certificate Account
the amount of $__________ representing one month's interest with respect to
Mortgage Loans which do not have a Due Date until _________ ____.]
Section 2.02. Restrictions on Activities of the Trust. Notwithstanding any
other provision of this Agreement and any provision of law that otherwise so
empowers the Trust, so long as any Certificates are outstanding, the Trust shall
not, and none of the Trustee, the Delaware Trustee, the Company or the Servicer
shall knowingly cause the Trust to, do any of the following:
(i) engage in any business or activity other than those set forth in
Section 2.01;
(ii) incur or assume any indebtedness except for such indebtedness that may
be incurred by the Trust in connection with the execution or
performance of this Agreement or any other agreement contemplated
hereby;
(iii) guarantee or otherwise assume liability for the debts of any other
party;
(iv) do any act in contravention of this Agreement or any other agreement
contemplated hereby to which the Trust is a party;
37
(v) do any act which would make it impossible to carry on the ordinary
business of the Trust;
(vi) confess a judgment against the Trust;
(vii) possess or assign the assets of the Trust for other than a Trust
purpose;
(viii) cause the Trust to lend any funds to any entity, except as
contemplated by this Agreement; or
(ix) change the purposes and powers of the Trust from those set forth in
this Agreement.
Section 2.03. Separateness Requirements. Notwithstanding any other
provision of this Agreement and any provision of law that otherwise so empowers
the Trust, so long as any Certificates are outstanding, the Trust shall perform
the following:
(i) except as expressly permitted by this Agreement or the Custodial
Agreement, maintain its books, records, bank accounts and files
separate from those of any other Person;
(ii) except as expressly permitted by this Agreement, maintain its assets
in its own separate name and in such a manner that it is not costly or
difficult to segregate, identify, or ascertain such assets;
(iii) consider the interests of the Trust's creditors in connection with
its actions;
(iv) hold itself out to creditors and the public as a legal entity separate
and distinct from any other Person and correct any known
misunderstanding regarding its separate identity and refrain from
engaging in any activity that compromises the separate legal identity
of the Trust;
(v) prepare and maintain separate records, accounts and financial
statements in accordance with generally accepted accounting
principles, consistently applied, and susceptible to audit. To the
extent it is included in consolidated financial statements or
consolidated tax returns, such financial statements and tax returns
will reflect the separateness of the respective entities and indicate
that the assets of the Trust will not be available to satisfy the
debts of any other Person;
(vi) allocate and charge fairly and reasonably any overhead shared with any
other Person;
(vii) transact all business with affiliates on an arm's-length basis and
pursuant to written, enforceable agreements;
(viii) conduct business solely in the name of the Trust. In that regard all
written and oral communications of the Trust, including, without
limitation, letters, invoices, purchase orders and contracts, shall be
made solely in the name of the Trust;
38
(ix) maintain a separate office through which its business shall be
conducted, provided that such office may be an office of the Trustee,
which office shall not be shared with the Company or any affiliates of
the Company;
(x) in the event that services have been or are in the future performed or
paid by any Person on behalf of the Trust (other than the Trustee, the
Delaware Trustee, the Servicer or the Tax Matters Person as permitted
herein), reimburse such Person, as applicable, for the commercially
reasonable value of such services or expenses provided or incurred by
such Person. Accordingly, (i) the Trust shall reimburse such Person,
as applicable, for the commercially reasonable value of such services
or expenses provided or incurred by such Person; (ii) to the extent
invoices for such services are not allocated and separately billed to
the Trust, the amount thereof that was or is to be allocated and
separately billed to the Trust was or will be reasonably related to
the services provided to the Trust; and (iii) any other allocation of
direct, indirect or overhead expenses for items shared between the
Trust and any other Person, was or will be, to the extent practicable,
allocated on the basis of actual use or value of services rendered or
otherwise on a basis reasonably related to actual use or the value of
services rendered;
(xi) except as expressly permitted by this Agreement, not commingle its
assets or funds with those of any other Person;
(xii) except as expressly permitted by this Agreement, not assume,
guarantee, or pay the debts or obligations of any other Person;
(xiii) except as expressly permitted by this Agreement, not pledge its
assets for the benefit of any other Person;
(xiv) not hold out its credit or assets as being available to satisfy the
obligations of others;
(xv) pay its liabilities only out of its funds;
(xvi) pay the salaries of its own employees, if any; and
(xvii) cause the agents and other representatives of the Trust, if any, to
act at all times with respect to the Trust consistently and in
furtherance of the foregoing.
None of the Trustee, the Delaware Trustee, the Company or the Servicer
shall take any action that is inconsistent with the purposes of the Trust or
Section 2.02 or Section 2.03. Neither the Company nor the Servicer shall direct
the Trustee or the Delaware Trustee to take any action that is inconsistent with
the purposes of the Trust or Section 2.02 or Section 2.03.
Section 2.04. Conveyance of Mortgage Pool Assets; Security Interest.
Concurrently with the execution and delivery hereof, the Company does
hereby irrevocably sell, transfer, assign, set over and otherwise convey to the
Trust, without recourse, all
39
the Company's right, title and interest in and to the Mortgage Pool Assets (such
transfer and assignment by the Company to be referred to herein as the
"Conveyance").
It is the express intent of the parties hereto that the Conveyance of the
Mortgage Pool Assets to the Trust by the Company as provided in this Section
2.04 be, and be construed as, an absolute sale of the Mortgage Pool Assets. It
is, further, not the intention of the parties that such Conveyance be deemed the
grant of a security interest in the Mortgage Pool Assets by the Company to the
Trust to secure a debt or other obligation of the Company. However, in the event
that, notwithstanding the intent of the parties, the Mortgage Pool Assets are
held to be the property of the Company, or if for any other reason this
Agreement is held or deemed to create a security interest in the Mortgage Pool
Assets, then
(a) this Agreement shall constitute a security agreement;
(b) the conveyance provided for in this Section 2.04 shall be deemed to be
a grant by the Company to the Trust of, and the Company hereby grants to the
Trust, to secure all of the Company's obligations hereunder, a security interest
in all of the Company's right, title, and interest, whether now owned or
hereafter acquired, in and to:
(I) The Mortgage Pool Assets;
(II) All accounts, chattel paper, deposit accounts, documents, general
intangibles, goods, instruments, investment property, letter-of-credit
rights, letters of credit, money, and oil, gas, and other minerals,
consisting of, arising from, or relating to, any of the foregoing; and
(III) All proceeds of the foregoing.
The Company shall file such financing statements, and the Company and the
Trustee acting on behalf of the Trust at the direction of the Company shall, to
the extent consistent with this Agreement, take such other actions as may be
necessary to ensure that, if this Agreement were found to create a security
interest in the Mortgage Pool Assets, such security interest would be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. In connection herewith,
the Trust shall have all of the rights and remedies of a secured party and
creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
Section 2.05. Delivery of Mortgage Files.
In connection with the sale, transfer and assignment referred to in Section
2.04, the Company, concurrently with the execution and delivery hereof, does
deliver to, and deposit with, or cause to be delivered to and deposited with,
the Trustee or Custodian the Mortgage Files, which shall at all times be
identified in the records of the Trustee or the Custodian, as applicable, as
being held by or on behalf of the Trust.
Concurrently with the execution and delivery hereof, the Company shall
cause to be filed the UCC assignment or amendment referred to in clause (Y)(vii)
of the definition of "Mortgage File." In connection with its servicing of
Cooperative Loans, the Servicer will use its best efforts
40
to file timely continuation statements, if necessary, with regard to each
financing statement and assignment relating to Cooperative Loans.
In instances where the original recorded Mortgage or any intervening
assignment thereof (recorded or in recordable form) required to be included in
the Mortgage File pursuant to the definition of "Mortgage File" relating to a
Mortgage Loan is not included in the Mortgage File delivered to the Trustee (or
the Custodian) prior to or concurrently with the execution and delivery hereof
(due to a delay on the part of the recording office), the Company shall deliver
to the Trustee (or the Custodian) a fully legible reproduction (which may be in
electronic form) of the original Mortgage or intervening assignment provided
that the originator, the related Lender or the escrow or title company which
provided closing services in connection with such Mortgage Loan certifies on the
face of such reproduction(s) or copy as follows: "Certified true and correct
copy of original which has been transmitted for recordation." For purposes
hereof, transmitted for recordation means having been mailed or otherwise
delivered for recordation to the appropriate authority. In all such instances,
the Company shall transmit the original recorded Mortgage and any intervening
assignments with evidence of recording thereon (or a copy of such original
Mortgage or intervening assignment certified by the applicable recording office)
(which may be in electronic form) (collectively, "Recording Documents") to the
Trustee (or the Custodian) within 270 days after the execution and delivery
hereof. In instances where, due to a delay on the part of the recording office
where any such Recording Documents have been delivered for recordation, the
Recording Documents cannot be delivered to the Trustee within 270 days after
execution and delivery hereof, the Company shall deliver to the Trustee within
such time period a certificate (a "Company Officer's Certificate") signed by the
Chairman of the Board, President, any Vice President or Treasurer of the Company
stating the date by which the Company expects to receive such Recording
Documents from the applicable recording office. In the event that Recording
Documents have still not been received by the Company and delivered to the
Trustee (or the Custodian) by the date specified in its previous Company
Officer's Certificate delivered to the Trustee, the Company shall deliver to the
Trustee by such date an additional Company Officer's Certificate stating a
revised date by which the Company expects to receive the applicable Recording
Documents. This procedure shall be repeated until the Recording Documents have
been received by the Company and delivered to the Trustee (or the Custodian).
For Mortgage Loans for which the Company has received a Payoff after the
Cut-Off Date and prior to the date of execution and delivery hereof, the
Company, in lieu of delivering the above documents, herewith delivers to the
Trustee a certification of a Servicing Officer of the nature set forth in
Section 3.10.
The Trustee is authorized, with the Servicer's consent, to appoint any bank
or trust company approved by each of the Company and the Servicer as Custodian
of the documents or instruments referred to in this Section 2.05 or in Section
2.10, and to enter into a Custodial Agreement for such purpose; provided,
however, that the Trustee shall be and remain liable for the acts of any such
Custodian only to the extent that it is responsible for its own acts hereunder.
Any documents delivered by the Company or the Servicer to the Custodian, shall
be deemed to have been delivered to the Trustee for all purposes hereunder; and
any documents held by the Custodian, shall be deemed to be held by the Trustee
for all purposes hereunder. There shall be a written Custodial Agreement between
the Trustee and each Custodian. Each Custodial
41
Agreement shall contain an acknowledgment by the Custodian that all Mortgage
Pool Assets, Mortgage Files, and documents and property held by it at any time
are held by it for the benefit of the Trust. Pursuant to the Initial Custodial
Agreement, the Initial Custodian shall perform responsibilities of the Trustee
on the Trustee's behalf with respect to the delivery, receipt, examination and
custody of the Mortgage Files related to the Mortgage Loans identified in the
Initial Custodial Agreement, as provided therein.
On or promptly after the Closing Date, the Servicer shall cause the MERS'r'
System to indicate that each MERS Loan, if any, has been assigned to "[_____],
as Trustee, without recourse" or to "WaMu Mortgage Pass-Through Certificates
Series [_____] Trust, without recourse" by including in the MERS'r' System
computer files (a) the code necessary to identify the Trustee and (b) the code
necessary to identify the series of the Certificates issued in connection with
such Mortgage Loans; provided, however, that in the event the Company acquired
such Mortgage Loans from an affiliate of the Company, then the Servicer need not
cause the MERS'r' System to indicate such assignment. The Servicer shall not
alter the codes referenced in this paragraph with respect to any MERS Loan
during the term of this Agreement except in connection with an assignment of
such MERS Loan or de-registration thereof from the MERS'r' System in accordance
with the terms of this Agreement.
Section 2.06. REMIC Election for REMIC I.
The Tax Matters Person, shall, on behalf of REMIC I, elect to treat REMIC I
as a REMIC within the meaning of Section 860D of the Code and, if necessary,
under applicable state laws. Such election shall be included in the Form 1066
and any appropriate state return to be filed on behalf of REMIC I for its first
taxable year.
The Closing Date is hereby designated as the "startup day" of REMIC I
within the meaning of Section 860G(a)(9) of the Code.
The regular interests (as set forth in the table contained in the
Preliminary Statement hereto) relating to REMIC I are hereby designated as
"regular interests" in REMIC I for purposes of Section 860G(a)(1) of the Code.
The Class [_____] Certificates are hereby designated as the sole class of
"residual interest" in REMIC I for purposes of Section 860G(a)(2) of the Code.
The parties intend that the affairs of REMIC I shall constitute, and that
the affairs of REMIC I shall be conducted so as to qualify REMIC I as a REMIC.
In furtherance of such intention, the Tax Matters Person shall, on behalf of
REMIC I: (a) prepare and file, or cause to be prepared and filed, a federal tax
return using a calendar year as the taxable year and using an accrual method of
accounting for REMIC I when and as required by the REMIC Provisions and other
applicable federal income tax laws; (b) make an election, on behalf of the
trust, for REMIC I to be treated as a REMIC on the federal tax return of REMIC I
for its first taxable year, in accordance with the REMIC Provisions; (c) prepare
and forward, or cause to be prepared and forwarded, to the Certificateholders
and the Trustee, all information reports as and when required to be provided to
them in accordance with the REMIC Provisions, and make available the information
necessary for the application of Section 860E(e) of the Code; (d) conduct the
affairs of REMIC I at all times that any REMIC I Regular Interests are
outstanding so as to maintain the
42
status of REMIC I as a REMIC under the REMIC Provisions; (e) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of REMIC I; and (f) pay the amount of any
federal prohibited transaction penalty taxes imposed on REMIC I when and as the
same shall be due and payable (but such obligation shall not prevent the Company
or any other appropriate person from contesting any such tax in appropriate
proceedings and shall not prevent the Company from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); provided,
that the Company shall be entitled to be indemnified by REMIC I for any such
prohibited transaction penalty taxes if the Company's failure to exercise
reasonable care was not the primary cause of the imposition of such prohibited
transaction penalty taxes.
The Trustee and the Servicer shall promptly provide the Company with such
information in the possession of the Trustee or the Servicer, respectively, as
the Company may from time to time request for the purpose of enabling the
Company to prepare tax returns. If so requested by the Tax Matters Person, the
Trustee shall sign tax returns on behalf of REMIC I.
In the event that a Mortgage Loan is discovered to have a defect which, had
such defect been discovered before the startup day, would have prevented such
Mortgage Loan from being a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, and the Company does not repurchase such Mortgage Loan
within 90 days of such date, the Servicer, on behalf of the Trustee, shall
within 90 days of the date such defect is discovered sell such Mortgage Loan at
such price as the Servicer in its sole discretion, determines to be the greatest
price that will result in the purchase thereof within 90 days of such date,
unless the Servicer delivers to the Trustee an Opinion of Counsel to the effect
that continuing to hold such Mortgage Loan will not adversely affect the status
of the electing portion of REMIC I as a REMIC for federal income tax purposes.
In the event that any tax is imposed on "prohibited transactions" of REMIC
I as defined in Section 860F of the Code and not paid by the Company pursuant to
clause (f) of the third preceding paragraph, such tax shall be charged against
amounts otherwise distributable to the Class [_____] Certificates.
Notwithstanding anything to the contrary contained herein, the Trustee is hereby
authorized to retain from amounts otherwise distributable to the Class [_____]
Certificates on any Distribution Date sufficient funds to reimburse the Tax
Matters Person (or any agent therefor appointed in accordance with the
definition of "Tax Matters Person" herein, if applicable), for the payment of
such tax (upon the written request of the Tax Matters Person or its agent, to
the extent reimbursable, and to the extent that the Tax Matters Person or its
agent has not been previously reimbursed therefor).
Section 2.07. Acceptance by Trustee. The Trustee acknowledges receipt (or
with respect to any Mortgage Loan subject to a Custodial Agreement, receipt by
the Custodian thereunder) on behalf of the Trust of the documents (or certified
copies thereof as specified in Section 2.05) referred to in Section 2.05 above,
but without having made the review required to be made within 45 days pursuant
to this Section 2.07. The Trustee acknowledges that all Mortgage Pool Assets,
Mortgage Files, and related documents and property held by it at any time are
held by it in its capacity as Trustee of the Trust for the benefit of the
holders of the Certificates. The Trustee agrees, for the benefit of the Trust,
to review (or, with respect to the Mortgage Loans identified in the Initial
Custodial Agreement, cause the Initial Custodian to review) each Mortgage File
within 45 days after the Closing Date and deliver to the Company a certification
43
(or, with respect to the Mortgage Loans identified in the Initial Custodial
Agreement, cause the Initial Custodian to deliver to the Company a
certification, which satisfies the applicable requirements of this Agreement) in
the form attached as Exhibit M hereto, to the effect that, except as noted, all
documents required (in the case of instruments described in clauses (X)(iv) and
(Y)(ix) of the definition of "Mortgage File," known by the Trustee to be
required) pursuant to the definition of "Mortgage File" and Section 2.05 have
been executed and received, and that such documents relate to the Mortgage Loans
identified in the Mortgage Loan Schedule. In performing such review, the Trustee
may rely upon the purported genuineness and due execution of any such document,
and on the purported genuineness of any signature thereon. The Trustee shall not
be required to make any independent examination of any documents contained in
each Mortgage File beyond the review specifically required herein. The Trustee
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any Mortgage Loan. If the Trustee finds any document or documents
constituting a part of a Mortgage File not to have been executed or received, or
to be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule,
the Trustee shall promptly so notify the Company. The Company hereby covenants
and agrees that, if any such defect cannot be corrected or cured, the Company
shall, not later than 60 days after the Trustee's notice to it respecting such
defect, within the three-month period commencing on the Closing Date (or within
the two-year period commencing on the Closing Date if the related Mortgage Loan
is a "defective obligation" within the meaning of Section 860G(a)(4)(B)(ii) of
the Code and Treasury Regulation Section 1.860G-2(f)), either (i) repurchase the
related Mortgage Loan from the Trust at the Purchase Price, or (ii) substitute
for any Mortgage Loan to which such defect relates a different mortgage loan (a
"Substitute Mortgage Loan") which is a "qualified replacement mortgage" (as
defined in the Code) and, (iii) after such three-month or two-year period, as
applicable, the Company shall repurchase the Mortgage Loan from the Trust at the
Purchase Price but only if the Mortgage Loan is in default or default is, in the
judgment of the Company, reasonably imminent. If such defect would cause the
Mortgage Loan to be other than a "qualified mortgage" (as defined in the Code),
then notwithstanding the previous sentence or any provision in the definition of
"Purchase Price," the repurchase or substitution must occur within the sooner of
(i) 90 days from the date the defect was discovered or (ii) in the case of
substitution, two years from the Closing Date.
Such Substitute Mortgage Loan shall be an adjustable rate mortgage loan
with a first Adjustment Date occurring on approximately the same date as, but
not earlier than, the first Adjustment Date for the Mortgage Loan being
substituted for and adjustments annually thereafter, based on the Index, mature
no later than, and not more than two years earlier than, have a principal
balance and Loan-to-Value Ratio equal to or less than, and have a Pass-Through
Rate on the date of substitution equal to or no more than 1 percentage point
greater than, and a Margin, Rate Ceiling and Rate Floor equal to or greater
than, and a Periodic Cap no more than 0.5 percentage point greater or smaller
than, the Mortgage Loan being substituted for. In addition, if the Mortgage Loan
being substituted for does not provide for any payments of principal prior to
its first Adjustment Date, such substitute Mortgage Loan also shall not provide
for such payments of principal. If the aggregate of the principal balances of
the Substitute Mortgage Loans substituted for a Mortgage Loan is less than the
Principal Balance of such Mortgage Loan, the Company shall pay the difference in
cash, together with unpaid accrued interest, if any, on the difference between
the aggregate of the principal balances of the
44
Substitute Mortgage Loans and the Principal Balance of such Mortgage Loan during
the calendar month in which the substitution occurs to the last day of such
month at a rate equal to the applicable Pass-Through Rate, to the Trustee for
deposit into the Certificate Account, and such payment by the Company shall be
treated in the same manner as proceeds of the repurchase by the Company of a
Mortgage Loan pursuant to this Section 2.07. Furthermore, such Substitute
Mortgage Loan shall otherwise have such characteristics so that the
representations and warranties of the Company set forth in Section 2.08 hereof
would not have been incorrect had such Substitute Mortgage Loan originally been
a Mortgage Loan, and the Company shall be deemed to have made such
representations and warranties as to such Substitute Mortgage Loan. A Substitute
Mortgage Loan may be substituted for a defective Mortgage Loan whether or not
such defective Mortgage Loan is itself a Substitute Mortgage Loan.
Notwithstanding anything herein to the contrary, each Substitute Mortgage Loan
shall be deemed to have the same Pass-Through Rate as the Mortgage Loan for
which it was substituted.
The Purchase Price for each purchased or repurchased Mortgage Loan shall be
deposited by the Company in the Certificate Account and, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee shall (or, if applicable, shall cause the Custodian to) release to
the Company the related Mortgage File and shall execute and deliver (or, in the
event that the Mortgage Files are held in the name of the Custodian, shall cause
the Custodian to execute and deliver) on behalf of the Trust such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest in the Company or its designee or assignee title to any Mortgage Loan
released pursuant hereto. In furtherance of the foregoing, if such Mortgage Loan
is a MERS Loan and as a result of the repurchase thereof such Mortgage Loan
shall cease to be serviced by a servicer that is a member of MERS or if the
Company or its assignee shall so request, the Servicer shall cause MERS to
execute and deliver an assignment of the Mortgage in recordable form from MERS
to the Company or its assignee and shall cause the Mortgage Loan to be removed
from registration on the MERS'r' System in accordance with MERS' rules and
procedures. The obligation of the Company to repurchase or substitute any
Mortgage Loan as to which such a defect in a constituent document exists shall
constitute the sole remedy respecting such defect available to the Trust or the
Holders of the Certificates.
Section 2.08. Representations and Warranties of the Company Concerning the
Mortgage Loans. With respect to the conveyance of the Mortgage Loans provided
for in Section 2.04 herein, the Company hereby represents and warrants to the
Trust that as of the Cut-Off Date unless otherwise indicated:
(i) The information set forth in the Mortgage Loan Schedule was true
and correct in all material respects at the date or dates respecting which
such information is furnished;
(ii) As of the Closing Date, each Mortgage relating to a Mortgage Loan
that is not a Cooperative Loan is a valid and enforceable (subject to
Section 2.08(xvi)) first lien on an unencumbered estate in fee simple or
(if the related Mortgage Loan is secured by the interest of the Mortgagor
as a lessee under a ground lease) leasehold estate in the related Mortgaged
Property subject only to (a) liens for current real property taxes and
special assessments; (b) covenants, conditions and restrictions, rights of
way, easements
45
and other matters of public record as of the date of recording such
Mortgage, such exceptions appearing of record being acceptable to mortgage
lending institutions generally or specifically reflected in the appraisal
obtained in connection with the origination of the Mortgage Loan; (c)
exceptions set forth in the title insurance policy relating to such
Mortgage, such exceptions being acceptable to mortgage lending institutions
generally; and (d) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage;
(iii) Immediately upon the transfer and assignment contemplated
herein, the Trust shall have good title to, and will be the sole legal
owner of, each Mortgage Loan, free and clear of any encumbrance or lien
(other than any lien under this Agreement);
(iv) As of the day prior to the Cut-Off Date, all payments due on each
Mortgage Loan had been made and no Mortgage Loan had been delinquent (i.e.,
was more than 30 days past due) more than once in the preceding 12 months
and any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no late assessment for delinquent
taxes outstanding against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the
Mortgagor to pay the unpaid principal or interest on such Mortgage Note
except to the extent that the Buydown Agreement for a Buydown Loan forgives
certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, each Mortgaged Property is free of
damage and in good repair, ordinary wear and tear excepted;
(viii) Each Mortgage Loan at the time it was made complied with all
applicable local, state and federal laws, including, without limitation,
usury, equal credit opportunity, disclosure and recording laws, and
predatory and abusive lending laws applicable to the originating lender;
(ix) Each Mortgage Loan was originated by a savings association,
savings bank, credit union, insurance company, or similar institution which
is supervised and examined by a federal or state authority or by a
mortgagee approved by the FHA and will be serviced by an institution which
meets the servicer eligibility requirements established by the Company;
(x) As of the Closing Date, each Mortgage Loan that is not a
Cooperative Loan is covered by an ALTA form or CLTA form of mortgagee title
insurance policy or other form of policy of insurance which has been issued
by, and is the valid and binding obligation of, a title insurer which, as
of the origination date of such Mortgage Loan, was qualified to do business
in the state in which the related Mortgaged Property is located. Such
policy insures the originator of the Mortgage Loan, its successors and
assigns as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan subject to the exceptions set forth
in such policy. Such policy is in full force and
46
effect and inures to the benefit of the Trust upon the consummation of the
transactions contemplated by this Agreement and no claims have been made
under such policy, and no prior holder of the related Mortgage, including
the Company, has done, by act or omission, anything which would impair the
coverage of such policy;
(xi) All of the Mortgage Loans with a Loan-to-Value Ratio as of the
Cut-Off Date in excess of 80% were covered by a Primary Insurance Policy or
an FHA insurance policy or a VA guaranty, and such policy or guaranty is
valid and remains in full force and effect;
(xii) [As of the Closing Date, all policies of insurance required by
this Agreement or by a Selling and Servicing Contract have been validly
issued and remain in full force and effect, including such policies
covering the Company, the Servicer or any Servicer;]
(xiii) As of the Closing Date, each insurer issuing a Primary
Insurance Policy holds a rating acceptable to the Rating Agencies;
(xiv) Each Mortgage (exclusive of any riders thereto) was documented
by appropriate ▇▇▇▇▇▇ ▇▇▇/▇▇▇▇▇▇▇ Mac mortgage instruments in effect at the
time of origination, or other instruments approved by the Company;
(xv) As of the Closing Date, the Mortgaged Property securing each
Mortgage relating to a Mortgage Loan that is not a Cooperative Loan is
improved with a one- to four-family dwelling unit, including units in a
duplex, triplex, fourplex, condominium project, townhouse, a planned unit
development or a de minimis planned unit development;
(xvi) As of the Closing Date, each Mortgage and Mortgage Note is the
legal, valid and binding obligation of the maker thereof and is enforceable
in accordance with its terms, except only as such enforcement may be
limited by laws affecting the enforcement of creditors' rights generally
and principles of equity;
(xvii) As of the date of origination, as to Mortgaged Properties which
are units in condominiums or planned unit developments, all of such units
met the applicable Underwriting Standards, are located in a condominium or
planned unit development projects which have received ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac approval, or are approvable by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac or have
otherwise been approved by the Company;
(xviii) None of the Mortgage Loans are Buydown Loans;
(xix) Based solely on representations of the Mortgagors obtained at
the origination of the related Mortgage Loans, approximately ___% (by
Principal Balance) of the Mortgage Loans will be secured by owner occupied
Mortgaged Properties which are the primary residences of the related
Mortgagors, approximately ___% (by Principal Balance) of the Mortgage Loans
will be secured by owner occupied Mortgaged Properties which were second or
vacation homes of the Mortgagors and none of the
47
Mortgage Loans will be secured by Mortgaged Properties which were non-owner
occupied properties;
(xx) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(xxi) The Mortgage Loans have been underwritten substantially in
accordance with the applicable Underwriting Standards;
(xxii) All of the Mortgage Loans have due-on-sale clauses; however,
the due on sale provisions may not be exercised at the time of a transfer
if prohibited by law or the terms of the related Mortgage Note;
(xxiii) The Company used no adverse selection procedures in selecting
the Mortgage Loans from among the outstanding adjustable rate conventional
mortgage loans purchased by it which were available for inclusion in the
Mortgage Pool and as to which the representations and warranties in this
Section 2.08 could be made;
(xxiv) With respect to each Cooperative Loan, the Cooperative Stock
that is pledged as security for the Cooperative Loan is held by a person as
a tenant-stockholder (as defined in Section 216 of the Code) in a
cooperative housing corporation (as defined in Section 216 of the Code);
(xxv) Each Cooperative Loan is secured by a valid, subsisting and
enforceable (except as such enforcement may be limited by laws affecting
the enforcement of creditors' rights generally and principles of equity)
perfected first lien and security interest in the related Cooperative Stock
securing the related Mortgage Note, subject only to (a) liens of the
Cooperative for unpaid assessments representing the Mortgagor's pro rata
share of the Cooperative's payments for its blanket mortgage, current and
future real property taxes, insurance premiums, maintenance fees and other
assessments to which like collateral is commonly subject, and (b) other
matters to which like collateral is commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by the Security Agreement;
(xxvi) With respect to any Mortgage Loan as to which an affidavit has
been delivered to the Trustee certifying that the original Mortgage Note is
a Destroyed Mortgage Note, if such Mortgage Loan is subsequently in
default, the enforcement of such Mortgage Loan or of the related Mortgage
by or on behalf of the Trust will not be materially adversely affected by
the absence of the original Mortgage Note (or portion thereof, as
applicable);
(xxvii) Based upon an appraisal of the Mortgaged Property securing
each Mortgage Loan, approximately ___% (by Principal Balance) of the
Mortgage Loans had a current Loan-to-Value Ratio less than or equal to 80%,
approximately ___% (by Principal Balance) of the Mortgage Loans had a
current Loan-to-Value Ratio greater than 80% but less than or equal to 95%
and ___% of the Mortgage Loans had a current Loan-to-Value Ratio greater
than 95%;
48
(xxviii) Approximately ___% (by Principal Balance) of the Mortgage
Loans were originated for the purpose of refinancing existing mortgage
debt, including cash-out refinancings; and approximately ___% (by Principal
Balance) of the Mortgage Loans were originated for the purpose of
purchasing the Mortgaged Property;
(xxix) Not less than approximately ___% (by Principal Balance) of the
Mortgage Loans were originated under full documentation programs;
(xxx) Each Mortgage Loan constitutes a qualified mortgage under
Section 860G(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1);
(xxxi) No Mortgage Loan is subject to the Home Ownership and Equity
Protection Act of 1994 or Section 226.32 of Regulation Z, is a "high-cost"
loan or a "predatory" loan as defined under any state or local law or
regulation applicable to the originator of such Mortgage Loan or which
would result in liability to the purchaser or assignee of such Mortgage
Loan under any predatory or abusive lending law, or, without limiting the
generality of the foregoing, is a "covered" loan under the laws of the
states of California, Colorado or Ohio;
(xxxii) No Mortgage Loan is a High Cost Loan or Covered Loan (as such
terms are defined in the Standard & Poor's LEVELS'r' Glossary in effect on
the Closing Date, which is now Version 5.6 Revised, Appendix E, applicable
portions of which are attached hereto as Exhibit C) and no Mortgage Loan
originated on or after October 1, 2002 through March 6, 2003 is governed by
the Georgia Fair Lending Act; and
(xxxiii) With respect to each Mortgage Loan, the Periodic Cap shall
equal five percentage points on the first Adjustment Date and shall equal
two percentage points on each Adjustment Date thereafter.
It is understood and agreed that the representations and warranties set
forth in this Section 2.08 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian, as the case may be, and shall continue
throughout the term of this Agreement. Upon discovery by any of the Company, the
Servicer, the Trustee or the Custodian of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of the related Mortgage Loans or the interests of the Trust in the related
Mortgage Loans, the Company, the Servicer, the Trustee or the Custodian, as the
case may be, discovering such breach shall give prompt written notice to the
others. Any breach of the representation set forth in clause (xxxii) or (xxxiii)
of this Section 2.08 shall be deemed to materially and adversely affect the
value of the related Mortgage Loans or the interests of the Trust in the related
Mortgage Loans. Within 90 days of its discovery or its receipt of notice of
breach, the Company shall repurchase or the Servicer shall purchase, subject to
the limitations set forth in the definition of "Purchase Price," or substitute
for the affected Mortgage Loan or Mortgage Loans or any property acquired in
respect thereof from the Trust, unless it has cured such breach in all material
respects. After the end of the three-month period beginning on the "start-up
day," any such substitution shall be made only if the Company or Servicer, as
the case may be, provides to the Trustee an Opinion of Counsel addressed to the
Trust and the Trustee reasonably satisfactory to the Trustee that each
Substitute Mortgage Loan will be a "qualified replacement mortgage"
49
within the meaning of Section 860G(a)(4) of the Code. Such substitution shall be
made in the manner and within the time limits set forth in Section 2.07. Any
such repurchase by the Company shall be accomplished in the manner and at the
Purchase Price, if applicable, but shall not be subject to the time limits, set
forth in Section 2.07. It is understood and agreed that the obligation of the
Company or the Servicer, as the case may be, to provide such substitution or to
make such repurchase of any affected Mortgage Loan or Mortgage Loans or any
property acquired in respect thereof as to which a breach has occurred and is
continuing shall constitute the sole remedy respecting such breach available to
the Holders of the Certificates or the Trustee on behalf of the Holders of the
Certificates.
Section 2.09. Acknowledgment of Transfer of Mortgage Pool Assets. The
Trustee hereby acknowledges and accepts on behalf of the Trust the transfer and
assignment to the Trust of the Mortgage Pool Assets, but without having made the
review required to be made within 45 days pursuant to Section 2.07, and declares
that as of the Closing Date it (or the Custodian on behalf of the Trustee) holds
and shall hold any documents constituting a part of the Mortgage Pool Assets,
and the Mortgage Pool Assets, as Trustee in trust, upon the trust herein set
forth, for the use and benefit of all present and future Holders of the
Certificates. In connection therewith, as of the Closing Date, in exchange for
the Mortgage Pool Assets, the Trust does hereby issue to the Company the
Certificates.
Section 2.10. Acknowledgement of Transfer of REMIC I Assets; Authentication
of Certificates. The Trustee hereby acknowledges and accepts on behalf of the
Trust the assignment to the Trust of the REMIC I Assets and declares that as of
the Closing Date it holds and shall hold any documents constituting a part of
the REMIC I Assets, and the REMIC I Assets, as Trustee in trust, upon the trust
herein set forth, for the use and benefit of all present and future Holders of
the Certificates. In connection therewith, as of the Closing Date, in exchange
for the REMIC I Assets, the Trustee on behalf of the Trust shall cause to be
authenticated and delivered, upon and pursuant to the order of the Company, the
Certificates in Authorized Denominations.
Section 2.11. Legal Title. Legal title to all assets of the Trust shall be
vested at all times in the Trust as a separate legal entity.
Section 2.12. Compliance with ERISA Requirements. For purposes of ensuring
compliance with the requirements of the "underwriter's exemption" (U.S.
Department of Labor Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487
(Aug. 22, 2002)), issued under ERISA, and for the avoidance of any doubt as to
the applicability of other provisions of this Agreement, to the fullest extent
permitted by applicable law and except as contemplated by this Agreement, (1)
the Trust shall not be a party to any merger, consolidation or reorganization,
or liquidate or sell its assets and (2) so long as any Certificates are
outstanding, none of the Company, the Trustee or the Delaware Trustee shall
institute against the Trust, or join in any institution against the Trust of,
any bankruptcy or insolvency proceedings under any federal or state bankruptcy,
insolvency or similar law.
Section 2.13. Additional Representation of the Company Concerning the
Mortgage Loans. The Company hereby represents and warrants to the Trust that it
does not intend for the Mortgage Pool to include any Mortgage Loan that is a
"high-cost home loan" as defined under the New Jersey Home Ownership Security
Act of 2002 or the New Mexico Home Loan
50
Protection Act. Based on the foregoing representation and warranty and on the
Company's or the Servicer's obligation, pursuant to Section 2.08, to repurchase
or substitute for the affected Mortgage Loan in the event of a breach of the
representation set forth in clause (xxxi) of Section 2.08, the other parties
hereto agree and understand that it is not intended for the Mortgage Pool to
include any Mortgage Loan that is a "high-cost home loan" as defined under the
New Jersey Home Ownership Security Act of 2002 or the New Mexico Home Loan
Protection Act.
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. ___________ to Act as Servicer. __________ shall act as
Servicer to service and administer the Mortgage Loans on behalf of the Trust and
for the benefit of the Certificateholders in accordance with the terms hereof,
consistent with prudent mortgage loan servicing practices and (unless
inconsistent with prudent mortgage loan servicing practices) in the same manner
in which, and with the same care, skill, prudence and diligence with which, it
services and administers similar mortgage loans for other portfolios, and shall
have full power and authority to do or cause to be done any and all things in
connection with such servicing and administration which a prudent servicer of
mortgage loans would do under similar circumstances, including, without
limitation, the power and authority to bring actions and defend the Mortgage
Pool Assets on behalf of the Trust in order to enforce the terms of the Mortgage
Notes. The Servicer may perform its servicing responsibilities through agents or
independent contractors, but shall not thereby be released from any of its
responsibilities hereunder and the Servicer shall diligently pursue all of its
rights against such agents or independent contractors.
The Servicer shall make reasonable efforts to collect or cause to be
collected all payments called for under the terms and provisions of the Mortgage
Loans and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any Primary Insurance Policy, any FHA
insurance policy or VA guaranty, any hazard insurance policy, and federal flood
insurance, cause to be followed such collection procedures as are followed with
respect to mortgage loans comparable to the Mortgage Loans and held in
portfolios of responsible mortgage lenders in the local areas where each
Mortgaged Property is located. The Servicer shall enforce "due-on-sale" clauses
with respect to the related Mortgage Loans, to the extent permitted by law,
subject to the provisions set forth in Section 3.08.
Consistent with the foregoing, the Servicer may, in accordance with prudent
mortgage loan servicing practices, (i) waive or cause to be waived any
assumption fee or late payment charge in connection with the prepayment of any
Mortgage Loan and (ii) only upon determining that the coverage of any applicable
insurance policy or guaranty related to a Mortgage Loan will not be materially
adversely affected, arrange a schedule, running for no more than 180 days after
the first delinquent Due Date, for payment of any delinquent installment on any
Mortgage Note or for the liquidation of delinquent items. Subject to the fourth
sentence of this paragraph, the Servicer shall have the right, but not the
obligation, to purchase any Mortgage Loan delinquent 90 consecutive days or more
for an amount equal to its Purchase Price; provided, however, that the aggregate
Purchase Price of Mortgage Loans so purchased pursuant to this sentence shall
not exceed one-half of one percent (0.50%) of the aggregate Principal Balance,
as of the Cut-Off Date, of all Mortgage Loans. Subject to the fourth sentence of
this paragraph, the Servicer shall
51
also have the right, but not the obligation, to purchase, for an amount equal to
its Purchase Price, any Mortgage Loan delinquent 90 consecutive days or more,
for the purpose of requiring the Person who sold such Mortgage Loan to the
Company to repurchase such Mortgage Loan based on a breach of a representation
or warranty made by such Person in connection with the Company's purchase or
acquisition of such Mortgage Loan. Notwithstanding the immediately preceding two
sentences, the Servicer's right to purchase any Mortgage Loan pursuant to either
of such preceding sentences shall be subject to the following additional
conditions: (x) if the date on which the Mortgage Loan first became 90-day
delinquent (the "Initial Delinquency Date") occurred during the first two
calendar months of a calendar quarter, the Servicer may exercise the purchase
right during the period commencing on the Initial Delinquency Date and ending on
the last Servicer Business Day of such calendar quarter, (y) if the Initial
Delinquency Date occurred during the third calendar month of a calendar quarter,
the Servicer may exercise the purchase right during the period commencing on the
first day of the immediately succeeding calendar quarter and ending on the last
Servicer Business Day of such succeeding calendar quarter and (z) if the
Servicer does not exercise the purchase right with respect to a Mortgage Loan
during the period specified in clause (x) or (y), as applicable, such Mortgage
Loan shall thereafter again become eligible for purchase pursuant to the
preceding two sentences only after the Mortgage Loan ceases to be 90-day
delinquent and thereafter becomes 90-day delinquent again. For purposes of this
paragraph, a Mortgage Loan is considered delinquent for 90 consecutive days if a
Monthly Payment is not received by the first day of the third month following
the month during which such payment was due.
Consistent with the terms of this Section 3.01, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if it has determined, exercising its good faith business judgment in
the same manner as it would if it were the owner of the related Mortgage Loan,
that the security for, and the timely and full collectability of, such Mortgage
Loan would not be adversely affected by such waiver, modification, postponement
or indulgence; provided, however, that (unless the Mortgagor is in default with
respect to the Mortgage Loan or in the reasonable judgment of the Servicer such
default is imminent) the Servicer shall not permit any modification with respect
to any Mortgage Loan that would (i) change the applicable Mortgage Interest
Rate, defer or forgive the payment of any principal or interest, reduce the
outstanding principal balance (except for actual payments of principal) or
extend the final maturity date with respect to such Mortgage Loan, or (ii) be
inconsistent with the terms of any applicable Primary Insurance Policy, FHA
insurance policy, VA guaranty, hazard insurance policy or federal flood
insurance policy. Notwithstanding the foregoing, the Servicer shall not permit
any modification with respect to any Mortgage Loan that would both constitute a
sale or exchange of such Mortgage Loan within the meaning of Section 1001 of the
Code (including any proposed, temporary or final regulations promulgated
thereunder) (other than in connection with a proposed conveyance or assumption
of such Mortgage Loan that is treated as a Principal Prepayment or in a default
situation) and cause REMIC I to fail to qualify as such under the Code. The
Servicer shall be entitled to approve a request from a Mortgagor for a partial
release of the related Mortgaged Property, the granting of an easement thereon
in favor of another Person, any alteration or demolition of the related
Mortgaged Property or other similar matters if it has determined, exercising its
good faith business judgment in the same manner as it would if it were the owner
of the related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby
and that
52
REMIC I would not fail to continue to qualify as a REMIC under the Code as a
result thereof and that no tax on "prohibited transactions" or "contributions"
after the startup day would be imposed on REMIC I as a result thereof.
The Servicer is hereby authorized and empowered by the Trust to execute and
deliver or cause to be executed and delivered on behalf of the Holders of the
Certificates, and the Trust or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release, discharge or
modification, assignments of Mortgages and endorsements of Mortgage Notes in
connection with refinancings (in jurisdictions where such assignments are the
customary and usual standard of practice of mortgage lenders) and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties. The Servicer is hereby further authorized and
empowered by the Trust to execute and deliver or cause to be executed and
delivered on behalf of the Holders of the Certificates and the Trust, or any of
them, such instruments of assignment or other comparable instruments as the
Servicer shall, in its sole judgment, deem appropriate in order to register any
Mortgage Loan on the MERS'r' System or to cause the removal of any Mortgage Loan
from registration thereon. Any expenses incurred in connection with the actions
described in the preceding sentence shall be borne by the Servicer with no right
of reimbursement; provided, however, that any such expenses incurred as a result
of any termination by MERS of the MERS'r' System shall be reimbursable to the
Servicer. The Trustee on behalf of the Trust shall execute and furnish to the
Servicer, at the Servicer's direction, any powers of attorney and other
documents prepared by the Servicer and determined by the Servicer to be
necessary or appropriate to enable the Servicer to carry out its supervisory,
servicing and administrative duties under this Agreement.
The Servicer and each Servicer shall obtain (to the extent generally
commercially available) and maintain fidelity bond and errors and omissions
coverage acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac with respect to their
obligations under this Agreement and the applicable Selling and Servicing
Contract, respectively. The Servicer or each Servicer, as applicable, shall
establish escrow accounts for, or pay when due (by means of an advance), any tax
liens in connection with the Mortgaged Properties that are not paid by the
Mortgagors when due to the extent that any such payment would not constitute a
Nonrecoverable Advance when made.
In connection with the servicing and administering of each Mortgage Loan,
the Servicer, for so long as it is an affiliate of the Company, and any
affiliate of the Servicer (i) may perform services such as appraisals, default
management and (in the case of affiliates only) brokerage services that are not
customarily provided by servicers of mortgage loans, and shall be entitled to
reasonable compensation therefor and (ii) may, at its own discretion and on
behalf of the Trust, obtain credit information in the form of a "credit score"
from a credit repository.
Section 3.02. Custodial Accounts and Buydown Fund Accounts. The Servicer
shall cause to be established and maintained by each Servicer under the
Servicer's supervision the Custodial Account for P&I, Buydown Fund Accounts (if
any) and special Custodial Account for Reserves and shall deposit or cause to be
deposited therein daily the following amounts received or advanced by a Servicer
with respect to the Mortgage Loans:
(i) all scheduled payments of principal;
53
(ii) all scheduled payments of interest, net of the Servicing Fees due
the applicable Servicers;
(iii) all Curtailments and Payoffs; and
(iv) all Insurance Proceeds, Liquidation Proceeds, Excess Liquidation
Proceeds and Subsequent Recoveries;
provided, however, that (x) proceeds received with respect to individual
Mortgage Loans from any title, hazard, or FHA insurance policy, VA guaranty,
Primary Insurance Policy or other insurance policy (other than any Special
Primary Insurance Policy) covering such Mortgage Loans, if required for the
restoration or repair of the related Mortgaged Property, may be deposited either
in the Custodial Account for Reserves or the Custodial Account for P&I and (y)
such proceeds (other than proceeds from any Special Primary Insurance Policy),
if not required for the restoration or repair of the related Mortgaged Property,
and if not released to the Mortgagor in accordance with prudent mortgage loan
servicing practices, shall be deposited in the Custodial Account for P&I, and
shall be applied to the balances of the related Mortgage Loans as payments of
interest and principal.
The Servicer is hereby authorized to make withdrawals from and to issue
drafts against the Custodial Accounts for P&I and the Custodial Accounts for
Reserves for the purposes required or permitted by this Agreement. Each
Custodial Account for P&I and each Custodial Account for Reserves shall bear a
designation clearly showing the respective interests of the applicable Servicer,
as trustee, and of the Servicer, in substantially one of the following forms:
(a) With respect to the Custodial Account for P&I: (i) [Servicer's
Name], as agent, trustee and/or bailee of principal and interest custodial
account for WaMu Asset Acceptance Corp., its successors and assigns, for
various owners of interests in WaMu Asset Acceptance Corp. mortgage-backed
pools or (ii) [Servicer's Name] in trust for WaMu Asset Acceptance Corp.;
(b) With respect to the Custodial Account for Reserves: (i)
[Servicer's Name], as agent, trustee and/or bailee of taxes and insurance
custodial account for WaMu Asset Acceptance Corp., its successors and
assigns for various mortgagors and/or various owners of interests in WaMu
Asset Acceptance Corp. mortgage-backed pools or (ii) [Servicer's Name] in
trust for WaMu Asset Acceptance Corp. and various Mortgagors.
The Servicer hereby undertakes to assure remittance to the Certificate
Account of all amounts relating to the Mortgage Loans that have been collected
by any Servicer and are due to the Certificate Account pursuant to Section 4.01
of this Agreement.
Funds held in the Custodial Account for P&I and the Custodial Account for
Reserves may, at the Servicer's option, be invested in (i) one or more Eligible
Investments which shall in no event mature later than the Business Day prior to
the related Withdrawal Date (except if such Eligible Investments are obligations
of the Trustee, such Eligible Investments may mature on the Withdrawal Date), or
(ii) such other instruments as shall be required to maintain the Ratings.
54
Section 3.03. The Investment Account; Eligible Investments.(a) Not later
than the Withdrawal Date, the Servicer shall withdraw or direct the withdrawal
of funds in the Custodial Accounts for P&I, for deposit in the Investment
Account, in an amount representing:
(i) Scheduled installments of principal and interest on the Mortgage
Loans received or advanced by the applicable Servicers which were due on
the related Due Date, net of the Servicing Fees due the applicable
Servicers and less any amounts to be withdrawn later by the applicable
Servicers from the applicable Buydown Fund Accounts;
(ii) Payoffs and the proceeds of other types of liquidations of the
Mortgage Loans received by the applicable Servicer for such Mortgage Loans
during the applicable Payoff Period, with interest to the date of Payoff or
liquidation less any amounts to be withdrawn later by the applicable
Servicers from the applicable Buydown Fund Accounts; and
(iii) Curtailments received by the applicable Servicers in the Prior
Period.
At its option, the Servicer may invest funds withdrawn from the Custodial
Accounts for P&I, as well as any Buydown Funds, Insurance Proceeds and
Liquidation Proceeds previously received by the Servicer (including amounts paid
by the Company in respect of any Purchase Obligation or its substitution
obligations set forth in Section 2.07 or Section 2.08 or in connection with the
exercise of the option to terminate this Agreement pursuant to Section 9.01) for
its own account and at its own risk, during any period prior to their deposit in
the Certificate Account. Such funds, as well as any funds which were withdrawn
from the Custodial Accounts for P&I on or before the Withdrawal Date, but not
yet deposited into the Certificate Account, shall immediately be deposited by
the Servicer with the Investment Depository in an Investment Account in the name
of the Servicer and the Trust for investment only as set forth in this Section
3.03. The Servicer shall bear any and all losses incurred on any investments
made with such funds and shall be entitled to retain all gains realized on such
investments as additional servicing compensation. Not later than the Business
Day prior to the Distribution Date, the Servicer shall deposit such funds, net
of any gains (except Payoff Earnings) earned thereon, in the Certificate
Account.
(b) Funds held in the Investment Account shall be invested in (i) one or
more Eligible Investments which shall in no event mature later than the Business
Day prior to the related Distribution Date (except if such Eligible Investments
are obligations of the Trustee, such Eligible Investments may mature on the
Distribution Date), or (ii) such other instruments as shall be required to
maintain the Ratings.
Section 3.04. The Certificate Account.
(a) On or prior to the Closing Date, the Trustee shall establish the
Certificate Account, which shall be entitled "WaMu Asset Acceptance Corp.
Certificate Account under the Pooling and Servicing Agreement, dated as of
[_____], among WaMu Asset Acceptance Corp., as depositor, [________], as
Servicer, [_____], as the Trustee, and [_____], as the Delaware Trustee, for the
benefit of WaMu Mortgage Pass-Through Certificates Series [_____] Trust
55
created pursuant thereto". Promptly after the Closing Date, the Trustee shall
communicate to the Servicer the account number and wiring instructions for the
Certificate Account.
Not later than the Business Day prior to the related Distribution Date, the
Servicer shall direct the Investment Depository to deposit into the Certificate
Account the amounts previously deposited into the Investment Account (which may
include a deposit of Eligible Investments) to which the Holders of the
Certificates are entitled or which are necessary for payment of any Special
Primary Insurance Premiums. In addition, not later than the Business Day prior
to the Distribution Date, the Servicer shall deposit into the Certificate
Account any Monthly P&I Advances or other payments required to be made by the
Servicer pursuant to Section 4.02 of this Agreement and any Insurance Proceeds
or Liquidation Proceeds (including amounts paid by the Company in respect of any
Purchase Obligation) not previously deposited in the Custodial Accounts for P&I
or the Investment Account, and any amounts paid by the Servicer in connection
with the exercise of its option to terminate this Agreement pursuant to Section
9.01 or any other purchase of Mortgage Loans permitted by this Agreement.
(b) Funds held in the Certificate Account shall be invested at the written
direction of the Servicer in (i) one or more Eligible Investments which shall in
no event mature later than the Business Day prior to the related Distribution
Date (except if such Eligible Investments are obligations of the Trustee, such
Eligible Investments may mature on the Distribution Date), or (ii) such other
instruments as shall be required to maintain the Ratings. The Servicer shall be
entitled to receive any gains earned on such Eligible Investments and shall bear
any losses suffered in connection therewith. If the Trustee has not received
such written investment directions from the Servicer, the Trustee shall not
invest funds held in the Certificate Account. The Trustee shall have no
liability for any losses on investments of funds held in the Certificate
Account.
Section 3.05. Permitted Withdrawals from the Certificate Account, the
Investment Account and Custodial Accounts for P&I and of Buydown Funds from the
Buydown Fund Accounts.
(a) The Servicer is authorized to make withdrawals (or, in the case of the
Certificate Account, to direct the Trustee to make withdrawals), from time to
time, from the Investment Account, the Certificate Account or the Custodial
Accounts for P&I established by the Servicers of amounts deposited therein in
respect of the Certificates (and, to the extent applicable, to make deposits of
the amounts withdrawn), as follows:
(i) To reimburse itself or the applicable Servicer for Monthly P&I
Advances made pursuant to Section 4.02 or a Selling and Servicing Contract,
such right to reimbursement pursuant to this paragraph (i) being limited to
amounts received on particular Mortgage Loans (including, for this purpose,
Insurance Proceeds and Liquidation Proceeds) which represent late
recoveries of principal and/or interest respecting which any such Monthly
P&I Advance was made;
(ii) To reimburse itself or the applicable Servicer for amounts
expended by or for the account of the Servicer pursuant to Section 3.09 or
amounts expended by such Servicer pursuant to the Selling and Servicing
Contracts in connection with the
56
restoration of property damaged by an Uninsured Cause or in connection with
the liquidation of a Mortgage Loan;
(iii) To pay to itself, with respect to the related Mortgage Loans,
the Servicing Fee (net of Compensating Interest reduced by Payoff Earnings
and Payoff Interest) as to which no prior withdrawals from funds deposited
by the Servicer have been made;
(iv) To reimburse itself or the applicable Servicer for advances made
with respect to related Mortgage Loans (except for Mortgage Loans purchased
pursuant to a Purchase Obligation or pursuant to the second or third
sentence of the third paragraph of Section 3.01) which the Servicer has
determined to be Nonrecoverable Advances;
(v) To pay to itself reinvestment earnings deposited or earned in the
Investment Account and the Certificate Account to which it is entitled and
to reimburse itself for expenses incurred by and reimbursable to it
pursuant to Section 6.03;
(vi) To deposit to the Investment Account amounts in the Certificate
Account not required to be on deposit therein at the time of such
withdrawal;
(vii) To deposit in the Certificate Account, not later than the
Business Day prior to the related Distribution Date, the amounts in the
Investment Account specified in Section 3.04(a);
(viii) To pay on behalf of the Trustee any Special Primary Insurance
Premium payable by the Trustee pursuant to Section 4.01(a); provided, the
Servicer shall give written notice thereof to the Trustee prior to noon New
York City time two Business Days prior to the applicable Distribution Date;
and
after making or providing for the above withdrawals
(ix) To clear and terminate the Investment Account and the Certificate
Account following termination of this Agreement pursuant to Section 9.01.
Since, in connection with withdrawals pursuant to paragraphs (i) and (ii),
the Servicer's entitlement thereto is limited to collections or other recoveries
on the related Mortgage Loan, the Servicer or the applicable Servicer shall keep
and maintain separate accounting for each Mortgage Loan, for the purpose of
justifying any such withdrawals.
(b) The Servicer or the applicable Servicer, if such Servicer holds and
maintains a Buydown Fund Account, is authorized to make withdrawals, from time
to time, of Buydown Funds from the Buydown Fund Account or Custodial Account for
P&I established by any Servicer under its supervision (and, to the extent
applicable, to make deposits of the amounts withdrawn), as follows:
(i) To deposit each month in the Investment Account the amount
necessary to supplement payments received on Buydown Loans;
57
(ii) In the event of a Payoff of any Mortgage Loan having a related
Buydown Fund, to apply amounts remaining in Buydown Fund Accounts to reduce
the required amount of such principal Payoff (or, if the Mortgagor has made
a Payoff, to refund such remaining Buydown Fund amounts to the Person
entitled thereto);
(iii) In the event of foreclosure or liquidation of any Mortgage Loan
having a Buydown Fund, to deposit remaining Buydown Fund amounts in the
Investment Account as Liquidation Proceeds; and
(iv) To clear and terminate the portion of any account representing
Buydown Funds following termination of this Agreement pursuant to Section
9.01;
(c) The Trustee is authorized to make withdrawals from time to time from
the Certificate Account to reimburse itself for advances it has made pursuant to
Section 7.01(a) hereof that it has determined to be Nonrecoverable Advances.
(d) Each Servicer is authorized to make withdrawals, from time to time,
from the related Custodial Account for P&I, (i) to pay to itself, with respect
to the related Mortgage Loans, the Servicing Fee and (ii) to reimburse itself
for expenses to the same extent that the Servicer is authorized to make
withdrawals to reimburse such Servicer for expenses pursuant to clauses (i),
(ii) and (iv) of Section 3.05(a), in the case of each of clause (d)(i) and
(d)(ii), to the extent no prior withdrawals of such amounts have been made by
such Servicer or the Servicer.
Section 3.06. Maintenance of Primary Insurance Policies; Collections
Thereunder. The Servicer shall use commercially reasonable efforts to keep, or
to cause all Servicers to keep, in full force and effect each Primary Insurance
Policy (except any Special Primary Insurance Policy) required with respect to a
Mortgage Loan until no longer required, and the Servicer shall use commercially
reasonable efforts to keep in full force and effect each Special Primary
Insurance Policy, if any. Notwithstanding the foregoing, the Servicer shall have
no obligation to maintain any Primary Insurance Policy for a Mortgage Loan for
which the outstanding Principal Balance thereof at any time subsequent to
origination was 80% or less of the Appraised Value of the related Mortgaged
Property, unless required by applicable law.
Unless required by applicable law, the Servicer shall not cancel or refuse
to renew, or allow any Servicer under its supervision to cancel or refuse to
renew, any Primary Insurance Policy in effect at the date of the initial
issuance of the Certificates that is required to be kept in force hereunder;
provided, however, that neither the Servicer nor any Servicer shall advance
funds for the payment of any premium due under (i) any Primary Insurance Policy
(other than a Special Primary Insurance Policy) if it shall determine that such
an advance would be a Nonrecoverable Advance or (ii) any Special Primary
Insurance Policy.
Section 3.07. Maintenance of Hazard Insurance. The Servicer shall cause to
be maintained for each Mortgage Loan (other than a Cooperative Loan) fire
insurance with extended coverage in an amount which is not less than the
original principal balance of such Mortgage Loan, except in cases approved by
the Servicer in which such amount exceeds the value of the improvements to the
Mortgaged Property. The Servicer shall also require fire insurance with extended
coverage in a comparable amount on property acquired upon
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foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan (other than a
Cooperative Loan). Any amounts collected under any such policies (other than
amounts to be applied to the restoration or repair of the related Mortgaged
Property) shall be deposited into the Custodial Account for P&I, subject to
withdrawal pursuant to the applicable Selling and Servicing Contract and
pursuant to Section 3.03 and Section 3.05. Any unreimbursed costs incurred in
maintaining any insurance described in this Section 3.07 shall be recoverable as
an advance by the Servicer from the Investment Account or the Certificate
Account. Such insurance shall be with insurers approved by the Servicer and
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. Other additional insurance may be required of a
Mortgagor, in addition to that required pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. Where any part of any improvement to the Mortgaged
Property (other than a Mortgaged Property secured by a Cooperative Loan) is
located in a federally designated special flood hazard area and in a community
which participates in the National Flood Insurance Program at the time of
origination of the related Mortgage Loan, the Servicer shall cause flood
insurance to be provided. The hazard insurance coverage required by this Section
3.07 may be met with blanket policies providing protection equivalent to
individual policies otherwise required. The Servicer or the applicable Servicer
shall be responsible for paying any deductible amount on any such blanket
policy. The Servicer agrees to present, or cause to be presented, on behalf of
and for the benefit of the Trust, claims under the hazard insurance policy
respecting any Mortgage Loan, and in this regard to take such reasonable actions
as shall be necessary to permit recovery under such policy.
Section 3.08. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
When any Mortgaged Property is about to be conveyed by the Mortgagor, the
Servicer shall, to the extent it has knowledge of such prospective conveyance
and prior to the time of the consummation of such conveyance, exercise on behalf
of the Trust the Trust's rights to accelerate the maturity of such Mortgage
Loan, to the extent that such acceleration is permitted by the terms of the
related Mortgage Note, under any "due-on-sale" clause applicable thereto;
provided, however, that the Servicer shall not exercise any such right if the
due-on-sale clause, in the reasonable belief of the Servicer, is not enforceable
under applicable law or if such exercise would result in non-coverage of any
resulting loss that would otherwise be covered under any insurance policy. In
the event the Servicer is prohibited from exercising such right, the Servicer is
authorized to take or enter into an assumption and modification agreement from
or with the Person to whom a Mortgaged 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 or unless the Mortgage Note
contains a provision allowing a qualified borrower to assume the Mortgage Note,
the Mortgagor remains liable thereon; provided that the Mortgage Loan shall
continue to be covered (if so covered before the Servicer enters such agreement)
by any related Primary Insurance Policy. The Servicer is also authorized to
enter into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the Mortgage Note. The
Servicer shall not enter into any substitution or assumption with respect to a
Mortgage Loan if such substitution or assumption shall (i) both constitute a
"significant modification" effecting an exchange or reissuance of such Mortgage
Loan under the Code (or Treasury regulations promulgated thereunder) and cause
REMIC I to fail to qualify as a REMIC under the REMIC Provisions or (ii) cause
the imposition of any tax on "prohibited transactions" or "contributions" after
the startup day under the REMIC Provisions. The Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the
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original copy of such substitution or assumption agreement and other documents
and instruments constituting a part thereof. In connection with any such
assumption or substitution agreement, the terms of the related Mortgage Note
shall not be changed. Any fee collected by the applicable Servicer for entering
into an assumption or substitution of liability agreement shall be retained by
such Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.09. Realization Upon Defaulted Mortgage Loans. The Servicer shall
foreclose upon or otherwise comparably convert, or cause to be foreclosed upon
or comparably converted, the ownership of any Mortgaged Property securing a
Mortgage Loan which comes into and continues in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.01. In lieu of such foreclosure or other conversion, and
taking into consideration the desirability of maximizing net Liquidation
Proceeds after taking into account the effect of Insurance Proceeds upon
Liquidation Proceeds, the Servicer may, to the extent consistent with prudent
mortgage loan servicing practices, accept a payment of less than the outstanding
Principal Balance of a delinquent Mortgage Loan in full satisfaction of the
indebtedness evidenced by the related Mortgage Note and release the lien of the
related Mortgage upon receipt of such payment. The Servicer shall not foreclose
upon or otherwise comparably convert a Mortgaged Property if the Servicer is
aware of evidence of toxic waste, other hazardous substances or other evidence
of environmental contamination thereon and the Servicer determines that it would
be imprudent to do so. In connection with such foreclosure or other conversion,
the Servicer shall cause to be followed such practices and procedures as it
shall deem necessary or advisable and as shall be normal and usual in general
mortgage servicing activities. The foregoing is subject to the provision that,
in the case of damage to a Mortgaged Property from an Uninsured Cause, the
Servicer shall not be required to advance its own funds towards the restoration
of the property unless it shall be determined in the sole judgment of the
Servicer, (i) that such restoration will increase the proceeds of liquidation of
the Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds. The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof (as well as its normal servicing
compensation) as an advance. The Servicer shall maintain information required
for tax reporting purposes regarding any Mortgaged Property which is abandoned
or which has been foreclosed or otherwise comparably converted. The Servicer
shall report such information to the Internal Revenue Service and the Mortgagor
in the manner required by applicable law.
The Servicer may enter into one or more special servicing agreements with a
Lowest Class B Owner, subject to each Rating Agency's acknowledgment that the
Ratings of the Certificates in effect immediately prior to the entering into of
such agreement would not be qualified, downgraded or withdrawn and the
Certificates would not be placed on credit review status (except for possible
upgrading) as a result of such agreement. Any such agreement may contain
provisions whereby such Lowest Class B Owner may (a) instruct the Servicer to
instruct
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a Servicer to the extent permitted under the applicable Selling and Servicing
Contract to commence or delay foreclosure proceedings with respect to related
delinquent Mortgage Loans, provided that the Lowest Class B Owner deposits a
specified amount of cash with the Servicer that will be available for
distribution to Certificateholders if Liquidation Proceeds are less than they
otherwise may have been had such Servicer acted pursuant to its normal servicing
procedures, (b) purchase such delinquent Mortgage Loans from the Trust
immediately prior to the commencement of foreclosure proceedings at a price
equal to the aggregate outstanding Principal Balance of such Mortgage Loans plus
accrued interest thereon at the applicable Mortgage Interest Rate through the
last day of the month in which such Mortgage Loans are purchased and/or (c)
assume all of the servicing rights and obligations with respect to such
delinquent Mortgage Loans so long as (i) the Servicer has the right to transfer
the servicing rights and obligations of such Mortgage Loans to another servicer
and (ii) such Lowest Class B Owner will service such Mortgage Loans in
accordance with the applicable Selling and Servicing Contract.
REMIC I shall not acquire any real property (or personal property incident
to such real property) except in connection with a default or imminent default
of a Mortgage Loan. In the event that REMIC I acquires any real property (or
personal property incident to such real property) in connection with a default
or imminent default of a Mortgage Loan, such property shall be disposed of by
the Servicer as soon as practicable in a manner that, consistent with prudent
mortgage loan servicing practices, maximizes the net present value of the
recovery to the Trust, but in any event within three years after its acquisition
by the Servicer for REMIC I unless the Servicer provides to the Trustee an
Opinion of Counsel to the effect that the holding by REMIC I of such Mortgaged
Property subsequent to three years after its acquisition will not result in the
imposition of taxes on "prohibited transactions" of REMIC I as defined in
Section 860F of the Code or under the law of any state in which real property
securing a Mortgage Loan owned by REMIC I is located or cause REMIC I to fail to
qualify as a REMIC for federal income tax purposes or for state tax purposes
under the laws of any state in which real property securing a Mortgage Loan
owned by REMIC I is located at any time that any Certificates are outstanding.
The Servicer shall conserve, protect and operate each such property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) or result in the receipt by
the REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) of the Code or any "net income from foreclosure property"
which is subject to taxation under the REMIC Provisions. Pursuant to its efforts
to sell such property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such property in the same manner
and to such extent as is customary in the locality where such property is
located and may, incident to its conservation and protection of the assets of
the Trust, rent the same, or any part thereof, as the Servicer deems to be in
the best interest of the Servicer and the Trust for the period prior to the sale
of such property. Additionally, the Servicer shall perform the tax withholding
and shall file information returns with respect to the receipt of mortgage
interests received in a trade or business, the reports of foreclosures and
abandonments of any Mortgaged Property and the information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property
required by Sections 6050H, 6050J and 6050P, respectively, of the Code, and
deliver to the Trustee an Officers' Certificate on or before March 31 of each
year stating that such reports have been filed.
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Such reports shall be in form and substance sufficient to meet the reporting
requirements imposed by Sections 6050H, 6050J and 6050P of the Code.
Notwithstanding any other provision of this Agreement, the Servicer and the
Trustee, as applicable, shall comply with all federal withholding requirements
with respect to payments to Certificateholders of interest or original issue
discount that the Servicer or the Trustee reasonably believes are applicable
under the Code. The consent of Certificateholders shall not be required for any
such withholding. Without limiting the foregoing, the Servicer agrees that it
will not withhold with respect to payments of interest or original issue
discount in the case of a Certificateholder that has furnished or caused to be
furnished an effective Form W-8 or an acceptable substitute form or a successor
form and who is not a "10 percent shareholder" within the meaning of Code
Section 871(h)(3)(B) or a "controlled foreign corporation" described in Code
Section 881(c)(3)(C) with respect to REMIC I or the depositor. In the event the
Trustee withholds any amount from interest or original issue discount payments
or advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Trustee shall indicate the amount withheld to such
Certificateholder.
Section 3.10. Trustee to Cooperate; Release of Mortgage Files. Upon the
Payoff or scheduled maturity of any Mortgage Loan, the Servicer shall cause such
final payment to be immediately deposited in the related Custodial Account for
P&I or the Investment Account. The Servicer shall promptly notify the Trustee
thereof by a certification (which certification shall include a statement to the
effect that all amounts received in connection with such payment which are
required to be deposited in either such account have been so deposited) of a
Servicing Officer and shall request delivery to it of the Mortgage File;
provided, however, that such certification shall not be required if the Mortgage
File is held by a Custodian which is also the related Servicer of the Mortgage
Loan. Upon receipt of such certification and request, the Trustee shall, not
later than the fifth succeeding Business Day, release, or cause to be released,
the related Mortgage File to the Servicer or the applicable Servicer indicated
in such request. With any such Payoff or other final payment, the Servicer is
authorized (i) to prepare for and procure from the trustee or mortgagee under
the Mortgage which secured the Mortgage Note a deed of full reconveyance or
other form of satisfaction or assignment of Mortgage and endorsement of Mortgage
Note in connection with a refinancing covering the Mortgaged Property, which
satisfaction, endorsed Mortgage Note or assigning document shall be delivered by
the Servicer to the person or persons entitled thereto, and (ii) with respect to
any MERS Loan, to cause the removal of such Mortgage Loan from registration on
the MERS'r' System. No expenses incurred in connection with such satisfaction or
assignment shall be payable to the Servicer by the Trustee or from the
Certificate Account, the related Investment Account or the related Custodial
Account for P&I. From time to time as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the Trustee shall, upon request of the Servicer
and delivery to it of a trust receipt signed by a Servicing Officer, release not
later than the fifth Business Day following the date of receipt of such request
and trust receipt the related Mortgage File to the Servicer or the related
Servicer as indicated by the Servicer and shall execute such documents as shall
be necessary to the prosecution of any such proceedings. Such trust receipt
shall obligate the Servicer to return the Mortgage File to the Trustee when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan shall
be liquidated, in which case, upon receipt of a
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certificate of a Servicing Officer similar to that herein above specified, the
trust receipt shall be released by the Trustee to the Servicer.
Section 3.11. Compensation to the Servicer and the related Servicers. As
compensation for its activities hereunder, the Servicer shall be entitled to
receive from the Investment Account and the Certificate Account the amounts
provided for by Section 3.05(a)(iii). The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder and shall
not be entitled to reimbursement therefor, except as specifically provided
herein.
As compensation for its activities under the applicable Selling and
Servicing Contract, the applicable Servicer shall be entitled to withhold or
withdraw from the related Custodial Account for P&I the amounts provided for in
such Selling and Servicing Contract to the extent not inconsistent with this
Agreement (including Section 3.05(d)). Each Servicer is required to pay all
expenses incurred by it in connection with its servicing activities under its
Selling and Servicing Contract (including payment of premiums for Primary
Insurance Policies, other than Special Primary Insurance Policies, if required)
and shall not be entitled to reimbursement therefor except as specifically
provided in such Selling and Servicing Contract and not inconsistent with this
Agreement.
Section 3.12. Reports to the Trustee; Certificate Account Statement. Not
later than 15 days after each Distribution Date, the Servicer shall forward a
statement, certified by a Servicing Officer, to the Trustee setting forth the
status of the Certificate Account as of the close of business on such
Distribution Date and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the Certificate Account for each
category of deposit specified in Section 3.04 and each category of withdrawal
specified in Section 3.05, and stating that all distributions required by this
Agreement have been made (or if any required distribution has not been made,
specifying the nature and amount thereof). The Trustee shall make available such
statements to any Certificateholder upon request at the expense of the Servicer.
Such statement shall also, to the extent available, include information
regarding delinquencies on the Mortgage Loans, indicating the number and
aggregate Principal Balance of Mortgage Loans which are one, two, three or more
months delinquent, the number and aggregate Principal Balance of Mortgage Loans
with respect to which foreclosure proceedings have been initiated and the book
value of any Mortgaged Property acquired by the Trust through foreclosure, deed
in lieu of foreclosure or other exercise of the Trust's security interest in the
Mortgaged Property.
Section 3.13. Annual Statement as to Compliance. The Servicer shall deliver
to the Trustee, on or before April 30 of each year, beginning with the first
April 30 succeeding the Cut-Off Date by at least six months, an Officer's
Certificate stating as to the signer thereof, that (i) a review of the
activities of the Servicer during the preceding calendar year and performance
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 Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof.
Copies of such statement shall be provided by the Servicer to Certificateholders
upon request or by the Trustee (solely to the extent that such copies are
available to the Trustee) at the expense of the Servicer, should the Servicer
fail to so provide such copies.
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Section 3.14. Access to Certain Documentation and Information Regarding the
Mortgage Loans. In the event that the Certificates are legal for investment by
federally-insured savings associations, the Servicer shall provide to the OTS,
the FDIC and the supervisory agents and examiners of the OTS and the FDIC access
to the documentation regarding the related Mortgage Loans required by applicable
regulations of the OTS or the FDIC, as applicable, and shall in any event
provide such access to the documentation regarding such Mortgage Loans to the
Trustee and its representatives, such access being afforded without charge, but
only upon reasonable request and during normal business hours at the offices of
the Servicer designated by it.
Section 3.15. Annual Independent Public Accountants' Servicing Report. On
or before April 30 of each year, beginning with the first April 30 succeeding
the Cut-Off Date by at least six months, the Servicer, at its expense, shall
furnish to the Trustee a copy of a report delivered to the Servicer by a firm of
independent public accountants (who may also render other services to the
Servicer or any affiliate thereof) to the effect that, on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, the Servicer has
complied with certain minimum residential mortgage loan servicing standards in
its role as Servicer with respect to the servicing of residential mortgage loans
(including the Mortgage Loans) during the most recently completed fiscal year.
In rendering its report such firm may rely, (a) as to matters relating to the
Certificates, upon a statistical sampling of series of mortgage-backed
certificates which may include the Certificates and (b) as to matters relating
to the direct servicing of residential mortgage loans by subservicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those subservicers.
Section 3.16. [Reserved.]
Section 3.17. [Reserved.]
Section 3.18. [Reserved.]
Section 3.19. [Reserved.]
Section 3.20. Assumption or Termination of Selling and Servicing Contracts
by Trustee. In the event the Servicer, or any successor Servicer, shall for any
reason no longer be the Servicer (including by reason of an Event of Default),
the Trustee as trustee hereunder or its designee shall thereupon assume all of
the rights and obligations of the Servicer under the Selling and Servicing
Contracts with respect to the related Mortgage Loans unless the Trustee elects
to terminate the Selling and Servicing Contracts with respect to such Mortgage
Loans in accordance with the terms thereof. The Trustee, its designee or the
successor servicer for the Trustee shall be deemed to have assumed all of the
Servicer's interest therein with respect to the related Mortgage Loans and to
have replaced the Servicer as a party to the Selling and Servicing Contracts to
the same extent as if the rights and duties under the Selling and Servicing
Contracts relating to such Mortgage Loans had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under the Selling and
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Servicing Contracts with respect to the Servicer's duties to be performed prior
to its termination hereunder.
The Servicer at its expense shall, upon request of the Trustee, deliver to
the assuming party all documents and records relating to the Selling and
Servicing Contracts and the Mortgage Loans then being master serviced by the
Servicer and an accounting of amounts collected and held by the Servicer and
otherwise use its best efforts to effect the orderly and efficient transfer of
the rights and duties under the related Selling and Servicing Contracts relating
to such Mortgage Loans to the assuming party.
ARTICLE IV
Payments to Certificateholders; Payment of Expenses
Section 4.01. Distributions to Certificateholders; Payment of Special
Primary Insurance Premiums.
(a) On each Distribution Date, the Trustee (or any duly appointed paying
agent) shall (i) subject to Section 3.05(a)(viii), withdraw from the Certificate
Account any Special Primary Insurance Premium payable on such Distribution Date
and pay such amount to the insurer under the applicable Special Primary
Insurance Policy and (ii) withdraw from the Certificate Account the Available
Distribution Amount for such Distribution Date and distribute, from the amount
so withdrawn, to the extent of the Available Distribution Amount, the
Distribution Amount to the Certificateholders, all in accordance with the
written statement received from the Servicer pursuant to Section 4.02(b). Any
Special Primary Insurance Premiums distributed pursuant to clause (i) above
shall be distributed by any method specified in the respective Special Primary
Insurance Policy as directed by the related insurer. Amounts distributed to the
Certificateholders pursuant to clause (ii) above shall be distributed by wire
transfer in immediately available funds for the account of, or by check mailed
to, each such Certificateholder of record on the immediately preceding Record
Date (other than as provided in Section 9.01 respecting the final distribution),
as specified by each such Certificateholder and at the address of such Holder
appearing in the Certificate Register.
(b) All reductions in the Certificate Principal Balance of a Certificate
effected by distributions of principal and all allocations of Realized Losses
made on any Distribution Date shall be binding upon all Holders of such
Certificate and of any Certificate issued upon the registration of transfer or
exchange therefor or in lieu thereof, whether or not such distribution is noted
on such Certificate. The final distribution of principal of each Certificate
(and the final distribution upon the Class [_____] Certificates upon (i) the
termination of REMIC I and (ii) the payment, or making provision for payment, of
all liabilities of the Trust) shall be payable in the manner provided above only
upon presentation and surrender thereof on or after the Distribution Date
therefor at the office or agency of the Certificate Registrar specified in the
notice delivered pursuant to Section 4.01(c)(ii) and Section 9.01(b).
(c) Whenever, on the basis of Curtailments, Payoffs and Monthly Payments on
the Mortgage Loans and Insurance Proceeds and Liquidation Proceeds received and
expected to be received during the Payoff Period, the Servicer has notified the
Trustee in writing that it believes
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that the entire remaining unpaid Class Principal Balance of any Class of
Certificates will become distributable on the next Distribution Date, the
Trustee shall, no later than the 18th day of the month of such Distribution
Date, mail or cause to be mailed to each Person in whose name a Certificate to
be so retired is registered at the close of business on the Record Date and to
the Rating Agencies a notice to the effect that:
(i) it is expected that funds sufficient to make such final
distribution will be available in the Certificate Account on such
Distribution Date, and
(ii) if such funds are available, (A) such final distribution will be
payable on such Distribution Date, but only upon presentation and surrender
of such Certificate at the office or agency of the Certificate Registrar
maintained for such purpose (the address of which shall be set forth in
such notice), and (B) no interest shall accrue on such Certificate after
such Distribution Date.
Section 4.02. Advances by the Servicer; Distribution Reports to the
Trustee.
(a) To the extent described below, the Servicer is obligated to advance its
own funds to the Certificate Account to cover any shortfall between (i) payments
scheduled to be received in respect of Mortgage Loans, and (ii) the amounts
actually deposited in the Certificate Account on account of such payments. The
Servicer's obligation to make any advance or advances described in this Section
4.02 is effective only to the extent that such advance is, in the good faith
judgment of the Servicer made on or before the second Business Day prior to each
Distribution Date, reimbursable from Insurance Proceeds or Liquidation Proceeds
of the related Mortgage Loans or recoverable as late Monthly Payments with
respect to the related Mortgage Loans or otherwise.
Prior to the close of business on the second Business Day prior to each
Distribution Date, the Servicer shall determine whether or not it will make a
Monthly P&I Advance on the Business Day prior to such Distribution Date (in the
event that the applicable Servicer fails to make such advances) and shall
furnish a written statement to the Trustee, the Paying Agent, if any, and to any
Certificateholder requesting the same, setting forth the aggregate amount to be
advanced on account of principal and interest in respect of the Mortgage Loans,
stated separately.
In the event that the Servicer shall be required to make a Monthly P&I
Advance, it shall on the Business Day prior to the related Distribution Date
either (i) deposit in the Certificate Account an amount equal to such Monthly
P&I Advance, (ii) make an appropriate entry in the records of the Certificate
Account that funds in such account being held for future distribution or
withdrawal have been, as permitted by this Section 4.02, used by the Servicer to
make such Monthly P&I Advance, or (iii) make advances in the form of any
combination of (i) and (ii) aggregating the amount of such Monthly P&I Advance.
Any funds being held for future distribution to Certificateholders and so used
shall be replaced by the Servicer by deposit in the Certificate Account on the
Business Day immediately preceding any future Distribution Date to the extent
that funds in the Certificate Account on such Distribution Date with respect to
the Mortgage Loans shall be less than payments to Certificateholders required to
be made on such date with respect to the Mortgage Loans. Under each Selling and
Servicing Contract, the Servicer is entitled to receive from the Custodial
Accounts for P&I established by the related
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Servicers amounts received by the applicable Servicers on particular Mortgage
Loans as late payments of principal and interest or as Liquidation or Insurance
Proceeds and respecting which the Servicer has made an unreimbursed advance of
principal and interest. The Servicer is also entitled to receive other amounts
from the related Custodial Accounts for P&I established by the related Servicers
to reimburse itself for prior Nonrecoverable Advances respecting Mortgage Loans
serviced by such Servicers. The Servicer shall deposit these amounts in the
Investment Account prior to withdrawal pursuant to Section 3.05.
In accordance with Section 3.05, Monthly P&I Advances are reimbursable to
the Servicer from cash in the Investment Account or the Certificate Account to
the extent that the Servicer shall determine that any such advances previously
made are Nonrecoverable Advances pursuant to Section 4.03.
(b) Prior to noon New York City time two Business Days prior to each
Distribution Date, the Servicer shall provide (x) the Trustee and (y) the
Company (if the Company is no longer acting as Servicer) with a statement in
writing of (1) the amount, as applicable, of (i) interest, (ii) the interest
portion, if any, of Realized Losses, (iii) Uncompensated Interest Shortfall,
(iv) scheduled principal, (v) Principal Prepayments, (vi) Liquidation Principal,
(vii) Subsequent Recoveries, (viii) the principal portion of Realized Losses
(after giving effect to any reduction thereof by application of any Cumulative
Carry-Forward Subsequent Recoveries Amount), (ix) the Residual Distribution
Amount and (x) the Excess Liquidation Proceeds to be distributed or allocated,
as applicable, to each Class of Certificates on such Distribution Date (such
amounts to be determined in accordance with the definition of "Distribution
Amount" and Section 4.01 hereof and other related definitions set forth in
Article I hereof); (2) the applicable Class Principal Balance after giving
effect to such distributions and allocations; (3) the Cumulative Carry-Forward
Subsequent Recoveries Amount for such Distribution Date; and (4) the amount of
any Special Primary Insurance Premium payable on such Distribution Date.
Section 4.03. Nonrecoverable Advances. Any advance previously made by a
Servicer pursuant to its Selling and Servicing Contract with respect to a
Mortgage Loan or by the Servicer that the Servicer shall determine in its good
faith judgment not to be ultimately recoverable from Insurance Proceeds or
Liquidation Proceeds or otherwise with respect to such Mortgage Loan or
recoverable as late Monthly Payments with respect to such Mortgage Loan shall be
a Nonrecoverable Advance. The determination by the Servicer that it or the
applicable Servicer has made a Nonrecoverable Advance or that any advance would
constitute a Nonrecoverable Advance, shall be evidenced by an Officer's
Certificate of the Servicer delivered to the Trustee on the Determination Date
and detailing the reasons for such determination. Notwithstanding any other
provision of this Agreement, any insurance policy relating to the Mortgage
Loans, or any other agreement relating to the Mortgage Loans to which the
Company or the Servicer is a party, (a) the Servicer and each Servicer shall not
be obligated to, and shall not, make any advance that, after reasonable inquiry
and in its sole discretion, the Servicer or such Servicer shall determine would
be a Nonrecoverable Advance, and (b) the Servicer and each Servicer shall be
entitled to reimbursement for any advance as provided in Section 3.05(a)(i),
(ii) and (iv) of this Agreement.
Section 4.04. Statements to Certificateholders. With each distribution from
the Certificate Account on a Distribution Date, the Trustee shall send to each
Rating Agency and
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shall make available to each Certificateholder the statement required by Section
4.02(b). The Trustee may make available such statement and certain other
information, including, without limitation, information required to be provided
by the Trustee pursuant to Sections 3.12 and 3.13, to Certificateholders through
the Trustee's Corporate Trust home page on the world wide web. Such web page is
currently located at "▇▇▇.▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇." The location of such web page and
the procedures used therein are subject to change from time to time at the
Trustee's discretion.
Upon request by any Certificateholder or Rating Agency or the Trustee, the
Servicer shall forward to such Certificateholder or Rating Agency and the
Trustee and the Company (if the Company is no longer acting as Servicer) an
additional report which sets forth with respect to the Mortgage Loans:
(a) The number and aggregate Principal Balance of the Mortgage Loans
delinquent one, two and three months or more;
(b) The (i) number and aggregate Principal Balance of Mortgage Loans
with respect to which foreclosure proceedings have been initiated, and (ii)
the number and aggregate book value of Mortgaged Properties acquired
through foreclosure, deed in lieu of foreclosure or other exercise of
rights respecting the Trust's security interest in the Mortgage Loans; and
(c) The cumulative amount of Realized Losses allocated to the related
Certificates since the Cut-Off Date.
Upon request by any Certificateholder, the Servicer, as soon as reasonably
practicable, shall provide the requesting Certificateholder with such
information as is necessary and appropriate, in the Servicer's sole discretion,
for purposes of satisfying applicable reporting requirements under Rule 144A of
the Securities Act.
The Company may make available any reports, statements or other information
to Certificateholders through the Company's home page on the world wide web. As
of the Closing Date, such web page is located at "www.__________.com" and
information is available by clicking on "________".
ARTICLE V
The Certificates
Section 5.01. The Certificates.
(a) The Certificates shall be substantially in the forms set forth in
Exhibit A with the additional insertion from Exhibit H attached hereto, and
shall be executed by the Trustee on behalf of the Trust, authenticated by the
Trustee (or any duly appointed Authenticating Agent) and delivered (i) upon and
pursuant to the order of the Company and (ii) upon receipt by the Trustee of the
documents specified in Section 2.01. The Certificates shall be issuable in
Authorized Denominations. Certificates shall be executed by manual or facsimile
signature on behalf of the Trust by authorized officers of the Trustee.
Certificates bearing the manual or
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facsimile signatures of individuals who were at the time of execution the proper
officers of the Trustee shall bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. 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 provided
for herein executed by the Trustee or any Authenticating Agent by manual
signature, and such certificate 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.
(b) The following definitions apply for purposes of this Section 5.01:
"Disqualified Organization" means any Person which is not a Permitted
Transferee, but does not include any "Pass-Through Entity" which owns or holds a
Residual Certificate and of which a Disqualified Organization, directly or
indirectly, may be a stockholder, partner or beneficiary; "Pass-Through Entity"
means any regulated investment company, real estate investment trust, common
trust fund, partnership, trust or estate, and any organization to which Section
1381 of the Code applies; "Ownership Interest" means, with respect to any
Residual Certificate, any ownership or security interest in such Residual
Certificate, including any interest in a Residual Certificate as the Holder
thereof and any other interest therein whether direct or indirect, legal or
beneficial, as owner or as pledgee; "Transfer" means any direct or indirect
transfer or sale of, or directly or indirectly transferring or selling any
Ownership Interest in a Residual Certificate; and "Transferee" means any Person
who is acquiring by Transfer any Ownership Interest in a Residual Certificate.
(c) Restrictions on Transfers of the Residual Certificates to Disqualified
Organizations are set forth in this Section 5.01(c).
(i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions and to have irrevocably authorized the Trustee or its designee
under clause (iii)(A) below to deliver payments to a Person other than such
Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all
other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are
expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate to a U.S. Person, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Residual Certificate until its receipt of (1) an affidavit and
agreement (a "Transferee Affidavit and Agreement") attached hereto as
Exhibit J from the proposed Transferee, in form and substance
satisfactory to the Company, representing and warranting, among
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other things, that it is not a Non-U.S. Person, that such transferee
is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Residual Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for any Person who is
not a Permitted Transferee, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will endeavor to
remain a Permitted Transferee, and that it has reviewed the provisions
of this Section 5.01(c) and agrees to be bound by them, and (2) a
certificate, attached hereto as Exhibit I, from the Holder wishing to
transfer the Residual Certificate, in form and substance satisfactory
to the Company, representing and warranting, among other things, that
no purpose of the proposed Transfer is to allow such Holder to impede
the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transferee Affidavit and
Agreement by a proposed Transferee under clause (B) above, if the
Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in a
Residual Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate agrees by holding or acquiring such Ownership
Interest (i) to require a Transferee Affidavit and Agreement from any
other Person to whom such Person attempts to transfer its Ownership
Interest and to provide a certificate to the Trustee in the form
attached hereto as Exhibit J; (ii) to obtain the express written
consent of the Company prior to any transfer of such Ownership
Interest, which consent may be withheld in the Company's sole
discretion; and (iii) to provide a certificate to the Trustee in the
form attached hereto as Exhibit I.
(ii) The Trustee shall register the Transfer of any Residual
Certificate only if it shall have received the Transferee Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the form
attached hereto as Exhibit J and all of such other documents as shall have
been reasonably required by the Trustee as a condition to such
registration.
(iii) (A) If any "disqualified organization" (as defined in Section
860E(e)(5) of the Code) shall become a holder of a Residual Certificate,
then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. If any Non-U.S. Person shall become a holder of a Residual
Certificate, then the last preceding holder which is a U.S. Person shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of the Transfer to
such Non-U.S. Person of such Residual Certificate. If a transfer of a
Residual Certificate is disregarded pursuant to the provisions of Treasury
Regulations Section 1.860E-1 or Section 1.860G-3, then the last preceding
Permitted Transferee shall be restored, to the extent permitted by law, to
all rights and obligations as Holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. Neither the
Trust nor the Trustee shall be under any liability to any Person for any
registration of Transfer of a Residual Certificate that is in
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fact not permitted by this Section 5.01(c) or for making any payments due
on such Certificate to the holder thereof or for taking any other action
with respect to such holder under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section
5.01(c) and to the extent that the retroactive restoration of the
rights of the Holder of such Residual Certificate as described in
clause (iii)(A) above shall be invalid, illegal or unenforceable, then
the Company shall have the right, without notice to the Holder or any
prior Holder of such Residual Certificate, to sell such Residual
Certificate to a purchaser selected by the Company on such terms as
the Company may choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in accordance with the
instructions of the Company. Such purchaser may be the Company itself
or any affiliate of the Company. The proceeds of such sale, net of the
commissions (which may include commissions payable to the Company or
its affiliates), expenses and taxes due, if any, shall be remitted by
the Company to such purported Transferee. The terms and conditions of
any sale under this clause (iii)(B) shall be determined in the sole
discretion of the Company, and the Company shall not be liable to any
Person having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iv) The Company, on behalf of the Trustee, shall make available, upon
written request from the Trustee, all information necessary to compute any
tax imposed (A) as a result of the Transfer of an Ownership Interest in a
Residual Certificate to any Person who is not a Permitted Transferee,
including the information regarding "excess inclusions" of such Residual
Certificates required to be provided to the Internal Revenue Service and
certain Persons as described in Treasury Regulation Section 1.860D-1(b)(5),
and (B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or
organizations described in Section 1381 of the Code having as among its
record holders at any time any Person who is not a Permitted Transferee.
Reasonable compensation for providing such information may be required by
the Company from such Person.
(v) The provisions of this Section 5.01 set forth prior to this
Section (v) may be modified, added to or eliminated by the Company and the
Trustee, provided that there shall have been delivered to the Trustee the
following:
(A) written notification from each of the Rating Agencies to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agency to downgrade its
then-current Ratings of the Certificates; and
(B) an Opinion of Counsel, in form and substance satisfactory to
the Company (as evidenced by a certificate of the Company), to the
effect that such modification, addition to or absence of such
provisions will not cause REMIC I to cease to qualify as a REMIC and
will not create a risk that (1) REMIC I may be subject to an
entity-level tax caused by the Transfer of any Residual Certificate to
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a Person which is not a Permitted Transferee or (2) a
Certificateholder or another Person will be subject to a REMIC-related
tax caused by the Transfer of a Residual Certificate to a Person which
is not a Permitted Transferee.
(vi) The following legend shall appear on all Residual Certificates:
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE
ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
COMPANY AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE
TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED
IN SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (A), (B), OR (C) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO ENABLE THE
TRANSFEROR TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX. SUCH AFFIDAVIT
SHALL INCLUDE CERTAIN REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS [_____]
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THE CLASS
[_____] CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO
HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
(vii) The Tax Matters Person for REMIC I, while not a Disqualified
Organization, shall be the tax matters person for REMIC I within the
meaning of Section 6231(a)(7) of the Code and Treasury Regulation Section
1.860F-4(d).
(d) In the case of any Junior Subordinate Certificate presented for
registration in the name of any Person, the Trustee shall require (i) an
officer's certificate substantially in the form of Exhibit N attached hereto
acceptable to and in form and substance satisfactory to the Trustee and the
Company, which officer's certificate shall not be an expense of the Trust, the
Trustee, the Servicer or the Company, and (ii) only if such officer's
certificate indicates that a Benefit Plan Opinion is delivered in connection
therewith, a Benefit Plan Opinion.
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In the case of any Residual Certificate presented for registration in the
name of any Person, the Trustee shall require (i) a Transferee Affidavit and
Agreement which includes the representation set forth in paragraph 19 of the
form attached hereto as Exhibit J and (ii) only if the representation set forth
in such paragraph 19 indicates that a Benefit Plan Opinion is delivered in
connection therewith, a Benefit Plan Opinion.
(e) No transfer, sale, pledge or other disposition of a Junior Subordinate
Certificate shall be made unless such transfer, sale, pledge or other
disposition is made in accordance with this Section 5.01(e) or Section 5.01(f).
Each Person who, at any time, acquires any ownership interest in any Junior
Subordinate Certificate shall be deemed by the acceptance or acquisition of such
ownership interest to have agreed to be bound by the following provisions of
this Section 5.01(e) and Section 5.01(f), as applicable. No transfer of a Junior
Subordinate Certificate shall be deemed to be made in accordance with this
Section 5.01(e) unless such transfer is made pursuant to an effective
registration statement under the Securities Act or unless the Trustee is
provided with the certificates and an Opinion of Counsel, if required, on which
the Trustee may conclusively rely, to the effect that such transfer is exempt
from the registration requirements under the Securities Act, as follows: In the
event that a transfer is to be made in reliance upon an exemption from the
Securities Act, the Trustee shall require, in order to assure compliance with
the Securities Act, that the Certificateholder desiring to effect such transfer
certify to the Trustee in writing, in substantially the form attached hereto as
Exhibit F, the facts surrounding the transfer, with such modifications to such
Exhibit F as may be appropriate to reflect the actual facts of the proposed
transfer, and that the Certificateholder's proposed transferee certify to the
Trustee in writing, in substantially the form attached hereto as Exhibit G, the
facts surrounding the transfer, with such modifications to such Exhibit G as may
be appropriate to reflect the actual facts of the proposed transfer. If such
certificate of the proposed transferee does not contain substantially the
substance of Exhibit G, the Trustee shall require an Opinion of Counsel that
such transfer may be made without registration, which Opinion of Counsel shall
not be obtained at the expense of the Trustee, the Trust or the Company. Such
Opinion of Counsel shall allow for the forwarding, and the Trustee shall
forward, a copy thereof to the Rating Agencies. Notwithstanding the foregoing,
any Junior Subordinate Certificate may be transferred, sold, pledged or
otherwise disposed of in accordance with the requirements set forth in Section
5.01(f).
(f) To effectuate a Certificate transfer of a Junior Subordinate
Certificate in accordance with this Section 5.01(f), the proposed transferee of
such Certificate must provide the Trustee and the Company with an investment
letter substantially in the form of Exhibit L attached hereto, which investment
letter shall not be an expense of the Trust, the Trustee or the Company, and
which investment letter states that, among other things, such transferee (i) is
a "qualified institutional buyer" as defined under Rule 144A, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (ii) is aware that the proposed transferor intends to rely
on the exemption from registration requirements under the Securities Act
provided by Rule 144A. Notwithstanding the foregoing, the proposed transferee of
such Certificate shall not be required to provide the Trustee or the Company
with Annex 1 or Annex 2 to the form of Exhibit L attached hereto if the Company
so consents prior to each such transfer. Such transfers shall be deemed to have
complied with the requirements of this Section 5.01(f). The Holder of a
Certificate desiring to effect such transfer does hereby agree to
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indemnify the Trust, the Trustee, the Company, and the Certificate Registrar
against any liability that may result if transfer is not made in accordance with
this Agreement.
(g) (1) In the case of any ERISA Restricted Certificate presented for
registration in the name of any Person, the prospective transferee shall be
required to provide the Trustee and the Company (A) an officer's certificate
substantially in the form of Exhibit O attached hereto acceptable to and in form
and substance satisfactory to the Trustee and the Company, which officer's
certificate shall not be an expense of the Trust, the Trustee, the Delaware
Trustee, the Servicer or the Company, and (B) only if such officer's certificate
indicates that a Benefit Plan Opinion is delivered in connection therewith, a
Benefit Plan Opinion.
(2) Notwithstanding the foregoing, a certification (and, if
applicable, a Benefit Plan Opinion) as described in Section 5.01(g)(1)
above will not be required with respect to the transfer of any ERISA
Restricted Certificate to a Clearing Agency, or for any subsequent transfer
of any interest in a ERISA Restricted Certificate for so long as such
Certificate is a Book-Entry Certificate (each such ERISA Restricted
Certificate, a "Book-Entry ERISA Restricted Certificate"). Any transferee
of a Book-Entry ERISA Restricted Certificate will be deemed to have
represented, by virtue of its acquisition or holding of such Certificate
(or interest therein), that either (i) such transferee is not an employee
benefit or other plan subject to the prohibited transaction provisions of
ERISA or Section 4975 of the Code, or any person (including an investment
manager, a named fiduciary or a trustee of any such plan) acting, directly
or indirectly, on behalf of or purchasing such Certificate with "plan
assets" of any such plan (a "Plan Investor"), (ii) such transferee is an
insurance company, the source of funds to be used by it to acquire or hold
such Certificate is an "insurance company general account" (within the
meaning of Department of Labor Prohibited Transaction Class Exemption
("PTCE") 95-60), and the conditions in Sections I and III of PTCE 95-60
have been satisfied (each entity that satisfies this clause (ii), a
"Complying Insurance Company") or (iii) such Certificate was rated "BBB-"
or better (or its equivalent) by at least one of the Rating Agencies at the
time of such transferee's acquisition of such Certificate (or interest
therein).
(3) If any Book-Entry ERISA Restricted Certificate (or any interest
therein) is acquired or held in violation of the provisions of Section
5.01(g)(2) above, then the last preceding transferee that either (i) is not
a Plan Investor, (ii) is a Complying Insurance Company or (iii) acquired
such Certificate at a time when such Certificate was rated "BBB-" or better
(or its equivalent) by at least one of the Rating Agencies shall be
restored, to the extent permitted by law, to all rights and obligations as
Beneficial Holder thereof retroactive to the date of transfer of such
Certificate by such preceding transferee. Neither the Trust nor the Trustee
shall be under any liability to any Person for making any payments due on
such Certificate to such preceding transferee.
(4) Any purported Beneficial Holder whose acquisition or holding of
any Book-Entry ERISA Restricted Certificate (or interest therein) was
effected in violation of the restrictions in this Section 5.01(g) shall
indemnify and hold harmless the Company, the Trustee, the Delaware Trustee,
the Servicer, the Trust and the Underwriters from and against any and all
liabilities, claims, costs or expenses incurred by such parties as a result
of such acquisition or holding.
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Section 5.02. Certificates Issuable in Classes; Distributions of Principal
and Interest; Authorized Denominations. The aggregate principal amount of the
Certificates that may be authenticated and delivered under this Agreement is
limited to the aggregate Principal Balance of the Mortgage Loans as of the
Cut-Off Date, as specified in the Preliminary Statement to this Agreement,
except for Certificates authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Certificates pursuant to
Section 5.03. Such aggregate principal amount shall be allocated among one or
more Classes having designations, types of interests, initial per annum
Certificate Interest Rates, initial Class Principal Balances and Final Maturity
Dates as specified in the Preliminary Statement to this Agreement. The aggregate
Percentage Interest of each Class of Certificates of which the Class Principal
Balance equals zero as of the Cut-Off Date that may be authenticated and
delivered under this Agreement is limited to 100%. Certificates shall be issued
in Authorized Denominations.
Section 5.03. Registration of Transfer and Exchange of Certificates. The
Trustee shall cause to be maintained at one of its offices or at its designated
agent, a Certificate Register in which there shall be recorded the name and
address of each Certificateholder. Subject to such reasonable rules and
regulations as the Trustee may prescribe, the Certificate Register shall be
amended from time to time by the Trustee or its agent to reflect notice of any
changes received by the Trustee or its agent pursuant to Section 10.06. The
Trustee hereby appoints itself as the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate to the
Trustee at the Corporate Trust Office of the Trustee, or such other address or
agency as may hereafter be provided to the Servicer in writing by the Trustee,
the Trustee shall execute, and the Trustee or any Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of Authorized Denominations. At the
option of the Certificateholders, Certificates may be exchanged for other
Certificates in Authorized Denominations of like Certificate Principal Balance
or Percentage Interest, as applicable, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee on behalf of the Trust shall execute, and
the Trustee, or any Authenticating Agent, shall authenticate and deliver, the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer shall (if so
required by the Trustee or any Authenticating Agent) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee or any Authenticating Agent and duly executed by, the Holder thereof or
such Holder's attorney duly authorized in writing.
A reasonable service charge may be made for any such exchange or transfer
of Certificates, and the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
exchange or transfer of Certificates.
All Certificates surrendered for exchange or transfer shall be cancelled by
the Trustee or any Authenticating Agent.
Section 5.04. Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any
mutilated Certificate is surrendered to the Trustee or any Authenticating Agent,
or (ii) the Trustee or any
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Authenticating Agent receives evidence to their satisfaction of the destruction,
loss or theft of any Certificate, and there is delivered to the Trustee or any
Authenticating Agent such security or indemnity as may be required by them to
save each of them and the Trust harmless, then, in the absence of notice to the
Trustee or any Authenticating Agent that such Certificate has been acquired by a
protected purchaser, the Trustee shall execute and the Trustee or any
Authenticating Agent shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Certificate Principal Balance or Percentage Interest as applicable. Upon
the issuance of any new Certificate under this Section 5.04, the Trustee or any
Authenticating Agent 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 or any
Authenticating Agent) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.04 shall constitute complete and indefeasible
evidence of ownership in REMIC I (or with respect to the Class [_____]
Certificates, the residual ownership interests in REMIC I) as if originally
issued, whether or not the lost or stolen Certificate shall be found at any
time.
Section 5.05. Persons Deemed Owners. The Company, the Servicer, the Trust,
the Trustee, the Delaware Trustee and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and for all other purposes whatsoever, and neither the Company, the Servicer,
the Trust, the Trustee, the Delaware Trustee, the Certificate Registrar nor any
agent of the Company, the Servicer, the Trust, the Trustee or the Delaware
Trustee shall be affected by notice to the contrary.
Section 5.06. Temporary Certificates. Upon the initial issuance of the
Certificates, the Trustee on behalf of the Trust may execute, and the Trustee or
any Authenticating Agent shall authenticate and deliver, temporary Certificates
which are printed, lithographed, typewritten or otherwise produced, in any
Authorized Denomination, of the tenor of the definitive Certificates in lieu of
which they are issued and with such variations in form from the forms of the
Certificates set forth as Exhibits A, B and H hereto as the Trustee's officers
executing such Certificates may determine, as evidenced by their execution of
the Certificates. Notwithstanding the foregoing, the Certificates may remain in
the form of temporary Certificates.
If temporary Certificates are issued, the Trustee shall cause definitive
Certificates to be prepared within ten Business Days after the Closing Date or
as soon as practicable thereafter. After preparation of definitive Certificates,
the temporary Certificates shall be exchangeable for definitive Certificates
upon surrender of the temporary Certificates at the office or agency of the
Trustee to be maintained as provided in Section 5.10 hereof, without charge to
the holder. Any tax or governmental charge that may be imposed in connection
with any such exchange shall be borne by the Servicer. Upon surrender for
cancellation of any one or more temporary Certificates, the Trustee on behalf of
the Trust shall execute and the Trustee or any Authenticating Agent shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Certificates of Authorized Denominations. Until so exchanged, the
temporary Certificates shall in all respects be entitled to the same benefits
under this Agreement as definitive Certificates.
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Section 5.07. Book-Entry for Book-Entry Certificates. Notwithstanding the
foregoing, the Book-Entry Certificates, upon original issuance, shall be issued
in the form of one or more typewritten Certificates of Authorized Denomination
representing the Book-Entry Certificates, to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Company. The Book-Entry Certificates
shall initially be registered on the Certificate Register in the name of Cede &
Co., the nominee of DTC, as the initial Clearing Agency, and no Beneficial
Holder shall receive a definitive certificate representing such Beneficial
Holder's interest in any Class of Book-Entry Certificate, except as provided
above and in Section 5.09. Each Book-Entry Certificate shall bear the following
legend:
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company or
its agent for registration of transfer, exchange, or payment, and any
Certificate issued is registered in the name of Cede & Co. or such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
Unless and until definitive, fully registered Book-Entry Certificates (the
"Definitive Certificates") have been issued to the Beneficial Holders pursuant
to Section 5.09:
(a) the provisions of this Section 5.07 shall be in full force and
effect with respect to the Book-Entry Certificates;
(b) the Servicer and the Trustee may deal with the Clearing Agency for
all purposes with respect to the Book-Entry Certificates (including the
making of distributions on the Book-Entry Certificates) as the sole
Certificateholder;
(c) to the extent that the provisions of this Section 5.07 conflict
with any other provisions of this Agreement, the provisions of this Section
5.07 shall control; and
(d) the rights of the Beneficial Holders shall be exercised only
through the Clearing Agency and the DTC Participants and shall be limited
to those established by law and agreements between such Beneficial Holders
and the Clearing Agency and/or the DTC Participants. Pursuant to the
Depositary Agreement, unless and until Definitive Certificates are issued
pursuant to Section 5.09, the initial Clearing Agency will make book-entry
transfers among the DTC Participants and receive and transmit distributions
of principal and interest on the related Class of Book-Entry Certificates
to such DTC Participants.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of Book-Entry
Certificates evidencing a specified Percentage Interest, such direction or
consent may be given by the Clearing Agency at the direction of Beneficial
Holders owning Book-Entry Certificates evidencing the requisite Percentage
Interest represented by the Book-Entry Certificates. The Clearing Agency may
take
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conflicting actions with respect to the Book-Entry Certificates to the extent
that such actions are taken on behalf of the Beneficial Holders.
Section 5.08. Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to the related
Certificateholders pursuant to Section 5.09, the Trustee shall give all such
notices and communications specified herein to be given to Holders of the
Book-Entry Certificates to the Clearing Agency which shall give such notices and
communications to the related DTC Participants in accordance with its applicable
rules, regulations and procedures.
Section 5.09. Definitive Certificates. If (a) the Clearing Agency or the
Servicer, with the consent of the applicable DTC Participants, notifies the
Trustee in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities under the Depositary Agreement with
respect to the Book-Entry Certificates and the Trustee or the Servicer is unable
to locate a qualified successor, (b) the Servicer, at its option, advises the
Trustee in writing that it elects to terminate the book-entry system with
respect to the Book-Entry Certificates through the Clearing Agency or (c) after
the occurrence of an Event of Default, Certificateholders holding Book-Entry
Certificates evidencing Percentage Interests aggregating not less than 66% of
the aggregate Class Principal Balance of such Certificates advise the Trustee
and the Clearing Agency through DTC Participants in writing that the
continuation of a book-entry system with respect to the Book-Entry Certificates
through the Clearing Agency is no longer in the best interests of the
Certificateholders with respect to such Certificates, the Trustee shall notify
all Certificateholders of Book-Entry Certificates of the occurrence of any such
event and of the availability of Definitive Certificates. Upon surrender to the
Trustee of the Book-Entry Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the Trustee
on behalf of the Trust shall execute and the Trustee or any Authenticating Agent
shall authenticate and deliver the Definitive Certificates. Neither the Company,
the Servicer, the Trust nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates for all of the Certificates all references herein to obligations
imposed upon or to be performed by the Clearing Agency 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
Definitive Certificates as Certificateholders hereunder.
Section 5.10. Office for Transfer of Certificates. The Trustee shall
maintain in New York, New York an office or agency where Certificates may be
surrendered for registration of transfer or exchange. The Corporate Trust Office
is initially designated for said purposes.
Section 5.11. Nature of Certificates. The Certificates shall be personal
property giving only the rights specifically set forth therein and in this
Agreement. The Certificates shall have no preemptive or similar rights and when
issued and delivered to the Holders against payment of the purchase price
therefor will be fully paid and nonassessable by the Trust. The Holders of the
Certificates, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. THE RECEIPT AND ACCEPTANCE OF A CERTIFICATE OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR
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ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT,
SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL OTHERS
HAVING A BENEFICIAL INTEREST IN SUCH CERTIFICATE OF ALL THE TERMS AND PROVISIONS
OF THIS AGREEMENT, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH HOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH HOLDER AND SUCH
OTHERS.
ARTICLE VI
The Company and the Servicer
Section 6.01. Liability of the Company and the Servicer. The Company and
the Servicer shall each be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Company or the
Servicer, as applicable, herein.
Section 6.02. Merger or Consolidation of the Company or the Servicer. Any
Corporation into which either the Company or the Servicer may be merged or
consolidated, or any Corporation resulting from any merger, conversion or
consolidation to which either the Company or the Servicer shall be a party, or
any Corporation succeeding to the business of either the Company or the
Servicer, shall be the successor of the Company or the Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 6.03. Limitation on Liability of the Company, the Servicer and
Others. Neither the Company nor the Servicer nor any of the directors, officers,
employees or agents of the Company or the Servicer shall be under any liability
to the Trust or the Certificateholders for any action taken by such Person or by
any Servicer or for such Person's or such Servicer's refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Company,
the Servicer or any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of duties and
obligations hereunder. Each of the Company, the Servicer and any director,
officer, employee or agent of the Company or the Servicer may rely in good faith
on any document of any kind properly executed and submitted by any Person
respecting any matters arising hereunder. Each of the Company, the Servicer and
any director, officer, employee or agent of the Company or the Servicer shall be
indemnified by the Trust and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense relating to any
Mortgage Loan (other than as otherwise permitted in this Agreement) or 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. Each of the Company and the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to service the Mortgage Loans in accordance with
this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that either the Company or the Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with
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respect to the Mortgage Loans, this Agreement, the Certificates or the rights
and duties of the parties hereto and the interests of 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 and each of the Company and the Servicer, as the case may be, shall be
entitled to be reimbursed therefor out of the Certificate Account, as provided
by Section 3.05.
Section 6.04. The Company and the Servicer not to Resign. Each of the
Company and the Servicer shall not resign from the respective obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any successor Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the Company
or any successor Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with Section 7.02 hereof.
If the [________] is no longer acting as Servicer, then the successor
Servicer shall give prompt written notice to the Company of any information
received by such successor Servicer which affects or relates to an ongoing
obligation or right of the Company under this Agreement.
Section 6.05. Trustee Access. The Servicer shall afford the Company and the
Trustee, upon reasonable notice, during normal business hours access to all
records maintained by the Servicer, in respect of the Mortgage Loans and in
respect of its rights and obligations hereunder and access to such of its
officers as are responsible for such obligations. Upon reasonable request, the
Servicer, shall furnish the Company and the Trustee with its most recent
financial statements (or, for so long as the [__________] is the Servicer, the
most recent consolidated financial statements for the Company appearing in the
audited financial statements of Washington Mutual, Inc., or the entity with
whose financial statements the financial statements of the Company are
consolidated) and such other information as it possesses, and which it is not
prohibited by law or, to the extent applicable, binding obligations to third
parties with respect to confidentiality from disclosing, regarding its business,
affairs, property and condition, financial or otherwise.
ARTICLE VII
Default
Section 7.01. Events of Default. (a) In case one or more of the following
Events of Default by the Servicer or by a successor Servicer shall occur and be
continuing, that is to say:
(i) Any failure by the Servicer to deposit into the Certificate
Account any payment required to be deposited therein by the Servicer under
the terms of this Agreement which continues unremedied for a period of five
Business Days after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
the Trustee or the Depositor or to the Servicer, the Depositor and the
Trustee by the Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% of REMIC I; or
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(ii) Failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Servicer contained in the Certificates or in this Agreement which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee or the Depositor, or to the
Servicer, the Depositor and the Trustee by the Holders of Certificates
evidencing Percentage Interests aggregating not less than 25% of REMIC I;
or
(iii) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a trustee in
bankruptcy, conservator or receiver or liquidator in any bankruptcy,
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 Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; or
(iv) The Servicer shall consent to the appointment of a trustee in
bankruptcy, conservator or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating to all
or substantially all of its property; or
(v) The Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment
of its obligations; or
(vi) Any failure of the Servicer to make any Monthly P&I Advance
(other than a Nonrecoverable Advance) which continues unremedied at the
opening of business on the Distribution Date in respect of which such
Monthly P&I Advance was to have been made;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, either the Trustee or the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of REMIC I, by notice in
writing to the Company and the Servicer (and to the Trustee if given by the
Certificateholders, in which case such notice shall set forth evidence
reasonably satisfactory to the Trustee that such Event of Default has occurred
and shall not have been remedied) may terminate all of the rights (other than
its right to reimbursement for advances) and obligations of the Servicer,
including its right to the Servicing Fee, under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, if any. Such determination shall be
final and binding. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee pursuant to and under this Section 7.01; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Servicer agrees to
cooperate with the Trustee in effecting the
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termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee for administration by it of all
cash amounts which shall at the time be credited by the Servicer to the
Certificate Account or thereafter be received with respect to the Mortgage
Loans.
Notwithstanding the foregoing, if an Event of Default described in clause
(vi) of this Section 7.01(a) shall occur, the Trustee shall, by notice in
writing to the Servicer, which may be delivered by telecopy, immediately suspend
all of the rights and obligations of the Servicer thereafter arising under this
Agreement, but without prejudice to any rights it may have as a
Certificateholder or to reimbursement of Monthly P&I Advances and other advances
of its own funds, and the Trustee shall act as provided in Section 7.02 to carry
out the duties of the Servicer, including the obligation to make any Monthly P&I
Advance the nonpayment of which was an Event of Default described in clause (vi)
of this Section 7.01(a). Any such action taken by the Trustee must be prior to
the distribution on the relevant Distribution Date. If the Servicer shall within
two Business Days following such suspension remit to the Trustee the amount of
any Monthly P&I Advance the nonpayment of which by the Servicer was an Event of
Default described in clause (vi) of this Section 7.01(a), the Trustee, subject
to the last sentence of this paragraph, shall permit the Servicer to resume its
rights and obligations as Servicer hereunder. The Servicer agrees that it will
reimburse the Trustee for actual, necessary and reasonable costs incurred by the
Trustee because of action taken pursuant to clause (vi) of this Section 7.01(a).
The Servicer agrees that if an Event of Default as described in clause (vi) of
this Section 7.01(a) shall occur more than two times in any twelve month period,
the Trustee shall be under no obligation to permit the Servicer to resume its
rights and obligations as Servicer hereunder.
(b) In case one or more of the following Events of Default by the Company
shall occur and be continuing, that is to say:
(i) Failure on the part of the Company duly to observe or perform in
any material respect any of the covenants or agreements on the part of the
Company contained in the Certificates or in this Agreement which continues
unremedied for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Company by the Trustee, or to the Company and the Trustee by the
Holders of Certificates evidencing Percentage Interests aggregating not
less than 25% of REMIC I; or
(ii) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a trustee in
bankruptcy, conservator or receiver or liquidator in any bankruptcy,
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 Company and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; or
(iii) The Company shall consent to the appointment of a trustee in
bankruptcy, conservator or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Company or of or relating to all
or substantially all of its property; or
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(iv) The Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of creditors, or voluntarily suspend payment of
its obligations;
then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% of REMIC I, by notice in writing to the
Company and the Trustee, may direct the Trustee in accordance with Section 10.03
to institute an action, suit or proceeding in its own name as Trustee hereunder
to enforce the Company's obligations hereunder.
(c) In any circumstances in which this Agreement states that
Certificateholders owning Certificates evidencing a certain Percentage Interest
in REMIC I may take certain action, such action shall be taken by the Trustee,
but only if the requisite percentage of Certificateholders required under this
Agreement for taking like action or giving like instruction to the Trustee under
this Agreement shall have so directed the Trustee in writing.
Section 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the date on which the Servicer receives a notice of
termination pursuant to Section 7.01 or the Servicer resigns pursuant to Section
6.04, the Trustee shall be the successor in all respects to the Servicer under
this Agreement and under the Selling and Servicing Contracts with respect to the
Mortgage Loans in the Mortgage Pool and with respect to the transactions set
forth or provided for herein and shall have all the rights and powers and be
subject to all the responsibilities, duties and liabilities relating thereto
arising on or after such date of termination or resignation placed on the
Servicer by the terms and provisions hereof and thereof, and shall have the same
limitations on liability herein granted to the Servicer; provided, that the
Trustee shall not under any circumstances be responsible for any representations
and warranties or any Purchase Obligation of the Company or any liability
incurred by the Servicer prior to such date of termination or resignation and
the Trustee shall not be obligated to make a Monthly P&I Advance if it is
prohibited by law from so doing. As compensation therefor, the Trustee shall be
entitled to all funds relating to the Mortgage Loans which the Servicer would
have been entitled to retain or to withdraw from the Certificate Account if the
Servicer had continued to act hereunder, except for those amounts due to the
Servicer as reimbursement for advances previously made or amounts previously
expended and are otherwise reimbursable hereunder. Notwithstanding the above,
the Trustee may, if it shall be unwilling to so act, or shall if it is unable to
so act, appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution having a net worth of not less
than $10,000,000 as the successor to the Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Pending any such appointment, the Trustee is obligated to act in such
capacity. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall, together with the compensation to the Trustee, be in
excess of that permitted the Servicer hereunder. The Trustee and such successor
shall take such actions, consistent with this Agreement, as shall be necessary
to effectuate any such succession.
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(b) In connection with any termination or resignation of the Servicer
hereunder, in the event that any of the Mortgage Loans are MERS Loans, either
(i) the successor Servicer (including the Trustee if the Trustee is acting as
successor 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 MERS Loans, in
which case the predecessor Servicer shall cooperate with the successor Servicer
in registering the transfer of servicing of the MERS Loans to the successor
Servicer on the MERS'r' System in accordance with MERS' rules and procedures, or
(ii) if the successor Servicer is not a member of MERS, the predecessor Servicer
shall cooperate with the successor Servicer in (A) de-registering the MERS Loans
from the MERS'r' System and (B) causing MERS to execute and deliver an
assignment from MERS to the Trust of the Mortgage securing each MERS Loan in
recordable form and in the form otherwise provided under clause (X)(iii) of the
definition of "Mortgage File" herein and to execute and deliver such other
notices, documents and other instruments as may be necessary or desirable to
effect such de-registration and assignment. The predecessor Servicer shall bear
any and all fees of MERS and all fees and costs of preparing and recording any
assignments of Mortgages as required under this Section 7.02(b).
Section 7.03. Notification to Certificateholders. Upon any such termination
or appointment of a successor to the Servicer, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register.
ARTICLE VIII
Concerning the Trustees
Section 8.01. Duties of Trustees.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured or
waived) 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 its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to it which
are specifically required to be furnished to it pursuant to any provision of
this Agreement, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that the Trustee shall not be
responsible for the accuracy or content of any such certificate, statement,
opinion, report, or other order or instrument furnished by the Company or
Servicer to the Trustee pursuant to this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee or the Delaware Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided, however,
that:
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(i) Prior to the occurrence of an Event of Default and after the curing of
all such Events of Default which may have occurred, the duties and obligations
of the Trustee shall be determined solely by the express provisions of this
Agreement,
(ii) Neither the Trustee nor the Delaware Trustee shall be liable except
for the performance of such duties and obligations as are specifically set forth
in this Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee or the Delaware Trustee, and, in the absence of
bad faith on the part of the Trustee or the Delaware Trustee, such 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 such
trustee and conforming to the requirements of this Agreement; and
(iii) Neither the Trustee nor the Delaware Trustee shall be personally
liable with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Certificateholders holding
Certificates which evidence Percentage Interests aggregating not less than 25%
of REMIC I relating to the time, method and place of conducting any proceeding
for any remedy available to such trustee, or relating to the exercise of any
trust or power conferred upon such trustee under this Agreement.
(d) Within ten Business Days after the occurrence of any Event of Default
known to the Trustee, the Trustee shall transmit by mail to the Rating Agencies
notice of each Event of Default. Within 90 days after the occurrence of any
Event of Default known to the Trustee, the Trustee shall transmit by mail to all
Certificateholders (with a copy to the Rating Agencies) notice of each Event of
Default, unless such Event of Default shall have been cured or waived; provided,
however, the Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Certificateholders;
and provided, further, that in the case of any Event of Default of the character
specified in Section 7.01(i) and Section 7.01(ii) no such notice to
Certificateholders or to the Rating Agencies shall be given until at least 30
days after the occurrence thereof.
(e) The immediately following sentence shall constitute the Trustee's
notice required by the U.S. Patriot Act. In order to comply with its duties
under the U.S. Patriot Act, the Trustee shall obtain and verify certain
information and documentation from the other parties to this Agreement
including, but not limited to, each such party's name, address, and other
identifying information.
Section 8.02. Certain Matters Affecting the Trustees. Except as otherwise
provided in Section 8.01:
(i) Each of the Trustee and the Delaware 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, approval, bond or other paper or document
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believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) Each of the Trustee and the Delaware 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;
(iii) Neither the Trustee nor the Delaware Trustee shall be personally
liable for any action taken or omitted by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, neither
the Trustee nor the Delaware Trustee shall be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless requested
in writing to do so by the Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% of REMIC I; provided, however, that
if the payment within a reasonable time to the Trustee or the Delaware
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of such trustee, not
reasonably assured to such trustee by the security, if any, afforded to it
by the terms of this Agreement, such trustee may require reasonable
indemnity against such expense or liability as a condition to proceeding;
(v) Each of the Trustee and the Delaware Trustee may execute the trust
or any of the powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys selected by it with
reasonable care or (as in the case of the Initial Custodian) designated by
the Company;
(vi) Neither the Trustee nor the Delaware Trustee shall be deemed to
have knowledge or notice of any matter, including without limitation an
Event of Default, unless actually known by a Responsible Officer, or unless
written notice thereof referencing this Agreement or the Certificates is
received at the Notice Address of such trustee;
(vii) In no event shall the Trustee or the Delaware Trustee be held
liable for acts or omissions of the Servicer or the other trustee
(excepting the Trustee's own actions as Servicer). No provision of this
Agreement shall require the Trustee or the Delaware Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder (except for the giving of
required notices), or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it;
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(viii) When the Trustee is acting as Servicer pursuant to Section
7.02, and to the extent permitted under applicable law, the Trustee is
hereby authorized, in making or disposing of any investment permitted
hereunder, to deal with itself (in its individual capacity) or with any one
or more of its affiliates, whether it or its affiliate is acting as an
agent of the Trustee or of any third person or dealing as principal for its
own account.
(ix) Except as expressly provided in this Agreement, in no event shall
the Trustee be under any duty or obligation to monitor, determine,
investigate or compel compliance by the Trust with the requirements of the
Statutory Trust Statute; and
(x) In no event shall the Trustee be obligated or responsible for
preparing, executing, filing or delivering in respect of the Trust or
another party either (A) any report or filing required by the Securities
and Exchange Commission to be prepared, executed, filed or delivered in
respect of the Trust or another party or (B) any certification in respect
of a report or filing required by the Securities and Exchange Commission.
Section 8.03. Trustees Not Liable for Certificates or Mortgage Loans. The
recitals contained herein (other than those relating to the due organization,
power and authority of the Trustee and the Delaware Trustee) and in the
Certificates (other than the execution of, and certificate of authentication on,
the Certificates) shall be taken as the statements of the Company or the Trust,
as applicable, and neither the Trustee nor the Delaware Trustee assumes any
responsibility for their correctness. Neither the Trustee nor the Delaware
Trustee makes any representations as to the validity or sufficiency of this
Agreement or of the Certificates or any Mortgage Loan. Neither the Trustee nor
the Delaware Trustee shall be accountable for the use or application by the
Company or the Trust, as applicable, of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Servicer, a Servicer or the Company in respect of the Mortgage Loans or
deposited into the Custodial Accounts for P&I, any Buydown Fund Account, or the
Custodial Accounts for P&I by any Servicer or into the Investment Account, or
the Certificate Account by the Servicer or the Company.
Section 8.04. Trustees May Own Certificates. The Trustee, the Delaware
Trustee or any agent or affiliate of such trustee, in its individual or any
other capacity, may become the owner or pledgee of Certificates with the same
rights it would have if it were not trustee.
Section 8.05. The Servicer to Pay Trustees' Fees and Expenses. Subject to
separate written agreements with the Trustee and the Delaware Trustee, the
Servicer covenants and agrees to, and the Servicer shall, pay each of the
Trustee and the Delaware Trustee from time to time, and such trustee shall be
entitled to payment, for all services rendered by it in the execution of the
trust hereby created and in the exercise and performance of any of the powers
and duties hereunder of such trustee. Except as otherwise expressly provided
herein, the Servicer shall pay or reimburse each of the Trustee and the Delaware
Trustee upon such trustee's request for all reasonable expenses and
disbursements incurred or made by such trustee in accordance with any of the
provisions of this Agreement and indemnify such trustee from any loss, liability
or expense incurred by it hereunder (including the reasonable compensation and
the expenses and disbursements of its counsel and of all persons not regularly
in its employ and any expenses
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which arise out of or are imposed upon the Trustee or the Delaware Trustee in
connection with the creation, operation or termination of the Trust) except any
such expense or disbursement as may arise from its own negligence or bad faith.
Such obligation shall survive the termination of this Agreement or resignation
or removal of the Trustee or the Delaware Trustee. The Tax Matters Person shall,
at its expense, prepare or cause to be prepared all federal and state income tax
and franchise tax and information returns relating to REMIC I required to be
prepared or filed by the Trustee or the Delaware Trustee and shall indemnify the
Trustee and the Delaware Trustee for any liability of such trustees arising from
any error in such returns.
Section 8.06. Eligibility Requirements for Trustees. The Trustee hereunder
shall at all times be (i) an institution insured by the FDIC, (ii) a Corporation
organized and doing business under the laws of the United States of America or
of any state, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by federal or state authority and (iii) acceptable
to the Rating Agencies. If such Corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of any aforementioned
supervising or examining authority, then for the purposes of this Section 8.06,
the combined capital and surplus of such Corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. The Delaware Trustee hereunder shall at all times have its
principal place of business in the State of Delaware and shall satisfy the
applicable requirements under the laws of the State of Delaware authorizing it
to act as the Delaware trustee of the Trust. In case at any time the Trustee or
the Delaware Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, such trustee shall resign immediately in the
manner and with the effect specified in Section 8.07.
Section 8.07. Resignation and Removal of Trustees. Each of the Trustee and
the Delaware Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Servicer. Upon receiving
such notice of resignation, the Servicer shall promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and shall have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time the Trustee or the Delaware Trustee shall cease to be
eligible in accordance with the provisions of Section 8.06 and shall fail to
resign after written request therefor by the Servicer, or if at any time the
Trustee or the Delaware Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of such trustee or of its property
shall be appointed, or any public officer shall take charge or control of such
trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Servicer may remove such trustee and
appoint a successor trustee by written instrument, in duplicate, copies of which
instrument shall be delivered to the trustee so removed, the trustee continuing
in its capacity and the successor trustee.
The Holders of Certificates evidencing Percentage Interests aggregating
more than 50% of REMIC I may at any time remove the Trustee or the Delaware
Trustee and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or
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their attorneys in-fact duly authorized, one complete set of which instruments
shall be delivered to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor so appointed.
Any resignation or removal of the Trustee or the Delaware 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. Any expenses associated with the
resignation of the Trustee or the Delaware Trustee shall be borne by such
trustee, and any expenses associated with the removal of the Trustee or the
Delaware Trustee shall be borne by the Servicer.
Section 8.08. Successor Trustee. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor trustee 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 like effect as if originally
named as Trustee or Delaware Trustee herein. The predecessor shall deliver to
the successor trustee all Mortgage Files, related documents, statements and all
other property held by it hereunder, and the Servicer and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this Section
8.08 unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.08, the Servicer shall mail notice of the succession of such trustee
hereunder to (i) all Certificateholders at their addresses as shown in the
Certificate Register and (ii) the Rating Agencies. If the Servicer 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.
Section 8.09. Merger or Consolidation of Trustee. Any Corporation into
which the Trustee or the Delaware 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 or the Delaware Trustee shall
be a party, or any Corporation succeeding to the corporate trust business of
such trustee, shall be the successor of such trustee hereunder, provided such
resulting or successor Corporation shall be eligible under the provisions of
Section 8.06, 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.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
assets of the Trust may at the time be located, the Servicer and the Trustee or
the Delaware Trustee, as applicable, acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by such
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trustee to act as co-trustee or co-trustees, jointly with such trustee, or
separate trustee or separate trustees, of all or any part of the assets of the
Trust and to vest in such Person or Persons, in such capacity, such title to the
assets of the Trust, or any part thereof, and, subject to the other provisions
of this Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee or the Delaware Trustee, as applicable, may consider
necessary or desirable; provided, that the Trustee or the Delaware Trustee, as
applicable, shall remain liable for all of its obligations and duties under this
Agreement. If the Servicer shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, or in case an Event of
Default shall have occurred and be continuing, the Trustee or the Delaware
Trustee, as applicable, alone shall have the power to make such appointment;
provided, that such trustee shall remain liable for all of its obligations and
duties under this Agreement. No co-trustee or separate trustee hereunder shall
be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 8.10, all rights, powers, duties and obligations conferred or
imposed upon the Trustee or the Delaware Trustee, as applicable, shall be
conferred or imposed upon and exercised or performed by the Trustee or the
Delaware Trustee, as applicable, and such separate trustee or co-trustee jointly
and severally, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed by the Trustee or the
Delaware Trustee, as applicable (whether as Trustee or Delaware Trustee
hereunder or as successor to the Servicer hereunder), such 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
assets of the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee or the Delaware Trustee, as applicable.
Any notice, request or other writing given to the Trustee or the Delaware
Trustee shall be deemed to have been given to each of the then related separate
trustee(s) and co-trustee(s), as effectively as if given to each of them. Every
instrument appointing any separate trustee(s) or co-trustee(s) 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 the Delaware Trustee, as applicable, 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 or the
Delaware Trustee, as applicable. Every such instrument shall be filed with the
Trustee or the Delaware Trustee, as applicable.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
or the Delaware Trustee, as applicable, its agent or attorney-in-fact, with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and the trust shall
vest in and be exercised by the Trustee or the Delaware Trustee, as applicable,
to the extent permitted by law, without the appointment of a new or successor
trustee.
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Section 8.11. Authenticating Agents. The Trustee may appoint one or more
Authenticating Agents which shall be authorized to act on behalf of the Trustee
in authenticating Certificates. Wherever reference is made in this Agreement to
the authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Servicer and must be a
corporation, trust company or banking association organized and doing business
under the laws of the United States of America or of any state, having an office
and place of business in New York, New York, having a combined capital and
surplus of at least $15,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by federal or state
authorities.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the Authenticating Agent so
long as it shall be eligible in accordance with the provisions of the first
paragraph of this Section 8.11 without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and the Servicer. The Trustee may, upon prior written
approval of the Servicer, at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Servicer. Upon receiving a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of the first paragraph of this
Section 8.11, the Trustee may appoint, upon prior written approval of the
Servicer, a successor Authenticating Agent, shall give written notice of such
appointment to the Servicer and shall mail notice of such appointment to all
Certificateholders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. Any reasonable compensation paid to an
Authenticating Agent shall be a reimbursable expense pursuant to Section 8.05 if
paid by the Trustee.
Section 8.12. Paying Agents. The Trustee may appoint one or more Paying
Agents which shall be authorized to act on behalf of the Trustee in making
withdrawals from the Certificate Account, and distributions to
Certificateholders as provided in Section 4.01(a) and Section 9.01(b) to the
extent directed to do so by the Servicer. Wherever reference is made in this
Agreement to the withdrawal from the Certificate Account by the Trustee, such
reference shall be deemed to include such a withdrawal on behalf of the Trustee
by a Paying Agent. Whenever reference is made in this Agreement to a
distribution by the Trustee or the furnishing of a statement to
Certificateholders by the Trustee, such reference shall be deemed to include
such a distribution or furnishing on behalf of the Trustee by a Paying Agent.
Each Paying Agent shall provide to the Trustee such information concerning the
Certificate Account as the Trustee shall request from time to time. Each Paying
Agent must be reasonably acceptable to the Servicer and must be a corporation,
trust company or banking association organized and doing business under the laws
of the United States of America or of any state, having an office and
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place of business in New York, New York, having a combined capital and surplus
of at least $15,000,000, authorized under such laws to do a trust business and
subject to supervision or examination by federal or state authorities.
Any corporation into which any Paying Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which any Paying Agent shall be a party, or any
corporation succeeding to the corporate agency business of any Paying Agent,
shall continue to be the Paying Agent provided that such corporation after the
consummation of such merger, conversion, consolidation or succession meets the
eligibility requirements of this Section 8.12.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Servicer; provided, that the Paying Agent
has returned to the Certificate Account or otherwise accounted, to the
reasonable satisfaction of the Servicer, for all amounts it has withdrawn from
the Certificate Account. The Trustee may, upon prior written approval of the
Servicer, at any time terminate the agency of any Paying Agent by giving written
notice of termination to such Paying Agent and to the Servicer. Upon receiving a
notice of resignation or upon such a termination, or in case at any time any
Paying Agent shall cease to be eligible in accordance with the provisions of the
first paragraph of this Section 8.12, the Trustee may appoint, upon prior
written approval of the Servicer, a successor Paying Agent, shall give written
notice of such appointment to the Servicer and shall mail notice of such
appointment to all Certificateholders. Any successor Paying Agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Paying Agent. Any reasonable compensation paid
to any Paying Agent shall be a reimbursable expense pursuant to Section 8.05 if
paid by the Trustee.
Section 8.13. Duties of Delaware Trustee.
(a) The Delaware Trustee is appointed to serve as the trustee of the Trust
in the State of Delaware for the sole purpose of satisfying the requirement of
Section 3807(a) of the Statutory Trust Statute that the Trust have at least one
trustee with a principal place of business in Delaware. It is understood and
agreed by the parties hereto that the Delaware Trustee shall have none of the
duties or liabilities of the Trustee.
(b) The duties of the Delaware Trustee shall be limited to (i) accepting
legal process served on the Trust in the State of Delaware, (ii) the execution
of any certificates with respect to the Trust required to be filed with the
Secretary of State which the Delaware Trustee is required to execute under
Section 3811 of the Statutory Trust Statute and (iii) such other duties as are
set forth in this Article VIII. To the extent that, at law or in equity, the
Delaware Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or the Holders of the Certificates, it is hereby
understood and agreed by the parties hereto that such duties and liabilities are
replaced by the duties and liabilities of the Delaware Trustee expressly set
forth in this Agreement.
Section 8.14. Amendment to Certificate of Trust. If at any time required by
Section 3810 of the Statutory Trust Statute, the Trustee, the Delaware Trustee
and any other trustee of
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the Trust shall cause an amendment to the Certificate of Trust to be filed with
the Secretary of State in accordance with the provisions of such Section 3810.
Section 8.15. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) each of the representations, undertakings
and agreements herein made on the part of the Trust is made and intended not as
personal representations, undertakings and agreements by the Trustee but is made
and intended for the purpose of binding only the Trust and (b) under no
circumstances shall the Trustee be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement.
ARTICLE IX
Termination
Section 9.01. Termination Upon Purchase by the Servicer or Liquidation of
All Mortgage Loans.
(a) Except as otherwise set forth in this Article IX, including, without
limitation, the obligation of the Servicer to make payments to
Certificateholders as hereafter set forth, the Trust and the respective
obligations and responsibilities of the Company, the Servicer, the Trustee and
the Delaware Trustee created hereby shall terminate in accordance with Section
3808 of the Statutory Trust Statute upon (i) the purchase by the Servicer
pursuant to the following paragraph of this Section 9.01(a) of all Mortgage
Loans (other than Liquidated Mortgage Loans), all property acquired in respect
of any Mortgage Loan remaining in the Trust and all other property included in
any REMIC formed under this Agreement at a price equal, to the sum of (x) the
excess of (A) 100% of the aggregate outstanding Principal Balance of such
Mortgage Loans (other than Liquidated Mortgage Loans) plus accrued interest at
the applicable Pass-Through Rate with respect to such Mortgage Loan (other than
a Liquidated Mortgage Loan) through the last day of the month of such purchase,
over (B) with respect to any Mortgage Loan which is not a Liquidated Mortgage
Loan, the amount of the Bankruptcy Loss incurred with respect to such Mortgage
Loan as of the date of such purchase by the Servicer to the extent that the
Principal Balance of such Mortgage Loan has not been previously reduced by such
Bankruptcy Loss, and (y) without duplication, the appraised fair market value as
of the effective date of the termination of the Trust of (A) all property in the
Trust which secured a Mortgage Loan and which was acquired by foreclosure or
deed in lieu of foreclosure after the Cut-Off Date, including related Insurance
Proceeds, and (B) all other property included in the REMIC formed under this
Agreement, any such appraisal to be conducted by an appraiser mutually agreed
upon by the Servicer and the Trustee, less the sum of all unreimbursed advances
made by the Servicer pursuant to this Agreement or by a Servicer pursuant to its
Selling and Servicing Contract, other than advances made with respect to
Mortgage Loans as to which the Servicer expects at the time of such purchase, in
its sole judgment, that foreclosure is not imminent, or (ii) the later of the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure in respect of any Mortgage Loan, and the payment to
the Certificateholders of all amounts required to be paid to them hereunder;
provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of the survivor of the issue of ▇▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇, the late ambassador of the United States of America to the Court of St.
James's, living on the date hereof. Neither the Servicer nor any Servicer shall
have any further right to reimbursement by the Trust for any advance that is
used to reduce the purchase price of the Mortgage Loans pursuant to the
immediately preceding sentence.
On any Distribution Date after the first date on which the aggregate
Principal Balance of the Mortgage Loans is less than the Clean-Up Call
Percentage of the aggregate Principal Balance of the Mortgage Loans as of the
Cut-Off Date, the Servicer may purchase the outstanding Mortgage Loans (other
than Liquidated Mortgage Loans), all property acquired in respect of any
Mortgage Loan remaining in the Trust and all other property included in the
REMIC formed under this Agreement at the price stated in clause (i) of the
preceding paragraph; provided, that the Servicer may not so purchase the
outstanding Mortgage Loans (other than Liquidated Mortgage Loans), all property
acquired in respect of any Mortgage Loan remaining in the Trust and all other
property included in the REMIC formed under this Agreement if the price stated
in clause (i) of the preceding paragraph exceeds the fair market value,
determined in accordance with prudent industry practices, of all outstanding
Mortgage Loans (other than Liquidated Mortgage Loans), all property acquired in
respect of any Mortgage Loan remaining in the Trust and all other property
included in the REMIC formed under this Agreement. If such right is exercised,
the Servicer shall provide to the Trustee and to the Company the written
certification of an officer of the Servicer (which certification shall include a
statement to the effect that all amounts required to be paid in order to
purchase the Mortgage Loans have been deposited in the Certificate Account) and
the Trustee on behalf of the Trust shall promptly execute all instruments as may
be necessary to release and assign to the Servicer the Mortgage Loans (other
than Liquidated Mortgage Loans), all property acquired in respect of any
Mortgage Loan remaining in the Trust and all other property included in the
REMIC formed under this Agreement.
In no event shall the Servicer be required to expend any amounts other than
those described in the first paragraph of this Section 9.01(a) in order to
terminate the Trust or purchase the Mortgage Loans under this Section 9.01, and
in no event shall the Company be required to expend any amounts in connection
with such termination or purchase.
(b) Notice of any termination, specifying the date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
and cancellation, shall be given promptly by letter from the Trustee to
Certificateholders mailed not less than 30 days prior to such final
distribution, specifying (i) the date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office of the Certificate Registrar therein designated (the "Termination Date"),
(ii) the amount of such final payment (the "Termination Payment") and (iii) that
the Record Date otherwise applicable to the Distribution Date upon which the
Termination Date occurs is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Certificate
Registrar therein specified. Upon any such notice, the Certificate Account shall
terminate subject to the Servicer's obligation to hold all amounts payable to
Certificateholders in trust without interest pending such payment.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the Termination Date, the
Servicer shall give a second
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written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the Termination Payment with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Servicer may take appropriate
steps to contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain in trust hereunder.
Upon the completion of winding up of the Trust, including the payment or
the making reasonable provision for payment of all obligations of the Trust in
accordance with Section 3808(e) of the Statutory Trust Statute, the Delaware
Trustee shall prepare, the Trustee, the Delaware Trustee and any other trustee
hereunder shall sign, and the Delaware Trustee (upon the Trustee's consent
acting at the direction of the Servicer) shall file, a certificate of
cancellation with the Secretary of State in accordance with Section 3810 of the
Statutory Trust Statute, at which time the Trust and this Agreement shall
terminate. The Servicer shall act as the liquidator of the Trust and shall be
responsible for taking all actions in connection with winding up the Trust, in
accordance with the requirements of this Agreement (including this Section 9.01
and Section 9.02) and applicable law.
Section 9.02. Additional Termination Requirements.
(a) In the event the Servicer exercises its purchase option as provided in
Section 9.01, REMIC I shall be terminated in accordance with the following
additional requirements, unless the Servicer, at its own expense, obtains for
the Trustee an Opinion of Counsel to the effect that the failure of REMIC I to
comply with the requirements of this Section 9.02 will not (i) result in the
imposition of taxes on "prohibited transactions" of REMIC I as described in
Section 860F of the Code, or (ii) cause REMIC I to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date set forth in
the notice given by the Trustee under Section 9.01, the Tax Matters Person
shall prepare the documentation required and the Tax Matters Person and the
Trustee shall adopt a plan of complete liquidation on behalf of REMIC I
meeting the requirements of a qualified liquidation under Section 860F of
the Code and any regulations thereunder, as evidenced by an Opinion of
Counsel obtained at the expense of the Servicer, on behalf of REMIC I; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Servicer on
behalf of the Trust shall sell all of the assets of REMIC I to the Servicer
for cash in the amount specified in Section 9.01.
(b) By its acceptance of any Residual Certificate, the Holder thereof
hereby agrees to authorize the Tax Matters Person and the Trustee to adopt such
a plan of complete liquidation upon the written request of the Tax Matters
Person and the Trustee and to take such other action in connection therewith as
may be reasonably requested by the Tax Matters Person or the Trustee.
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Section 9.03. Trust Irrevocable. Except as expressly provided herein, the
trust created hereby is irrevocable.
ARTICLE X
Miscellaneous Provisions
Section 10.01. Amendment.
(a) This Agreement may be amended from time to time by the Servicer, the
Company and the Trustee, without the consent of any of the Certificateholders:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision herein which may be
defective or inconsistent with any other provisions herein;
(iii) to comply with any requirements imposed by the Code or any
regulations thereunder;
(iv) to correct the description of any property at any time included
in REMIC I, or to assure the conveyance to the Trust of any property
included in REMIC I;
(v) pursuant to Section 5.01(c)(v); and
(vi) to add any provision to, or amend any provision in, this
Agreement, provided that such amendment or addition does not adversely
affect in any material respect the interests of any Certificateholder;
provided, however, that any such amendment which modifies the rights or
obligations of the Delaware Trustee hereunder shall require the consent of the
Delaware Trustee. No such amendment (other than one entered into pursuant to
clause (iii) of the preceding sentence) shall change the powers of the Servicer.
Prior to entering into any amendment (other than one entered into pursuant to
clause (iii) of the second preceding sentence) without the consent of
Certificateholders pursuant to this paragraph, the Trustee shall require an
Opinion of Counsel addressed to the Trust and the Trustee to the effect that
such amendment is permitted under this Agreement and has no material adverse
effect on the interests of the Certificateholders; provided, however, that no
such Opinion of Counsel shall be required if the Company obtains a letter from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates. Prior to entering into any amendment pursuant to clause (iii) of
the third preceding sentence without the consent of Certificateholders pursuant
to this paragraph, the Trustee shall require an Opinion of Counsel to the effect
that such action is necessary or helpful to comply with the requirements imposed
by the Code or any regulations thereunder and shall not cause the REMIC formed
under this Agreement to fail to qualify as such under the Code.
(b) This Agreement may also be amended from time to time by the Servicer,
the Company and the Trustee with the consent of the Holders of Certificates
evidencing Percentage
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Interests aggregating not less than 66% of REMIC I 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
Certificateholders; provided, however, that no such amendment shall, without the
consent of the Holder of each Certificate affected thereby (i) reduce in any
manner the amount of, or delay the timing of, distributions of principal or
interest required to be made hereunder or reduce the Certificateholder's
Percentage Interest, the Certificate Interest Rate or the Termination Payment
with respect to any of the Certificates, (ii) reduce the percentage of
Percentage Interests specified in this Section 10.01 which are required to amend
this Agreement, (iii) create or permit the creation of any lien against any part
of REMIC I, or (iv) modify any provision in any way which would permit an
earlier retirement of the Certificates; provided, further, that any such
amendment which modifies the rights or obligations of the Delaware Trustee
hereunder shall require the consent of the Delaware Trustee.
Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to the Delaware
Trustee and each Certificateholder. Any failure to provide such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such amendment.
It shall not be necessary for the consent of Certificateholders under this
Section 10.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 10.02. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or the comparable
jurisdictions in which any Mortgaged Property is situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Company and at its expense on direction by the Trustee, but only
upon direction accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
Section 10.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding-up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote or in any manner
otherwise to control the operation and management of the Trust or the
obligations of the parties hereto (except as provided in Section 5.09, Section
7.01, Section 8.01, Section 8.02, Section 8.07, Section 10.01 and this Section
10.03), nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
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No Certificateholder shall have any right by virtue or by availing of any
provision 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 default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 25% of REMIC I shall have made written request upon 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. However, the Trustee is under no obligation to
exercise any of the extraordinary trusts or powers vested in it by this
Agreement or to make any investigation of matters arising hereunder or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Certificateholders unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby. It is understood and intended, and 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 of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such 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 equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 10.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 10.04. Access to List of Certificateholders. The Certificate
Registrar shall furnish or cause to be furnished to the Trustee, within 30 days
after receipt of a request by the Trustee in writing, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to such Certificateholders.
If three or more Certificateholders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and such application states that
the applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such list from the Certificate Registrar, afford such applicants access during
normal business hours to the most recent list of Certificateholders held by the
Trustee. If such a list is as of a date more than 90 days prior to the date of
receipt of such applicants' request, the Trustee shall promptly request from the
Certificate Registrar a current list as provided above, and shall afford such
applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding the same, agrees with the
Servicer, the Trust, the Trustee and the Delaware Trustee that none of the
Servicer, the Trust, the Trustee or the Delaware Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
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Section 10.05. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware without giving effect to its
conflict of laws provisions and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws without
giving effect to conflict of laws provisions.
Section 10.06. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered or certified mail to the applicable Notice
Address. Notices to the Rating Agencies shall also be deemed to have been duly
given if mailed by first class mail, postage prepaid, to the above listed
addresses of the Rating Agencies. Any notice required or permitted to be mailed
to a Certificateholder shall be given by first class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Section 10.07. 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 10.08. Counterpart Signatures. 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 10.09. Benefits of Agreement. Nothing in this Agreement or in any
Certificate, expressed or implied, shall give to any Person, other than the
parties hereto and their respective successors hereunder, any separate trustee
or co-trustee appointed under Section 8.10 and the Certificateholders, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 10.10. Notices and Copies to Rating Agencies.
(a) The Trustee shall notify the Rating Agencies of the occurrence of any
of the following events, in the manner provided in Section 10.06:
(i) the occurrence of an Event of Default pursuant to Section 7.01,
subject to the provisions of Section 8.01(d); and
(ii) the appointment of a successor Servicer pursuant to Section 7.02;
(b) The Servicer shall notify the Rating Agencies of the occurrence of any
of the following events, or in the case of clauses (iii), (iv), (vii) and (viii)
promptly upon receiving notice thereof, in the manner provided in Section 10.06:
(i) any amendment of this Agreement pursuant to Section 10.01;
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(ii) the appointment of a successor Trustee or successor Delaware
Trustee pursuant to Section 8.08;
(iii) the filing of any claim under or the cancellation or
modification of any fidelity bond and errors and omissions coverage
pursuant to Section 3.01 and Section 3.06 with respect to the Servicer or
any Servicer;
(iv) any change in the location of the Certificate Account, any
Custodial Account for P&I or any Custodial Account for Reserves;
(v) the purchase of any Mortgage Loan pursuant to a Purchase
Obligation or as permitted by this Agreement or the purchase of the
outstanding Mortgage Loans pursuant to Section 9.01;
(vi) the occurrence of the final Distribution Date or the termination
of the trust pursuant to Section 9.01(a)(ii);
(vii) the failure of the Servicer to make a Monthly P&I Advance
following a determination on the Determination Date that the Servicer would
make such advance pursuant to Section 4.02; and
(viii) the failure of the Servicer to make a determination on the
Determination Date regarding whether it would make a Monthly P&I Advance
when a shortfall exists between (x) payments scheduled to be received in
respect of the Mortgage Loans and (y) the amounts actually deposited in the
Certificate Account on account of such payments, pursuant to Section 4.02.
The Servicer shall provide copies of the statements pursuant to Section 4.02,
Section 4.04, Section 3.12, Section 3.13 or Section 3.15 or any other statements
or reports to the Rating Agencies in such time and manner that such statements
or determinations are required to be provided to Certificateholders. With
respect to the reports described in the second paragraph of Section 4.04, the
Servicer shall provide such reports to the Rating Agencies in respect of each
Distribution Date, without regard to whether any Certificateholder or the
Trustee or the Delaware Trustee has requested such report for such Distribution
Date.
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IN WITNESS WHEREOF, the Company, the Trustee and the Delaware Trustee have
caused their names to be signed hereto by their respective officers, thereunto
duly authorized, all as of the day and year first above written.
WAMU ASSET ACCEPTANCE CORP.,
as Depositor
By:
------------------------------------
Name:
Title:
[ ],
-----------
as Servicer
By:
------------------------------------
Name:
Title:
[ ],
-----
as Trustee
By:
------------------------------------
Name:
Title:
[ ],
-----
as Delaware Trustee
By:
------------------------------------
Name:
Title:
[Signature page to Pooling and Servicing Agreement for WaMu Series [_____]]
ACKNOWLEDGEMENT OF CORPORATION
STATE OF ________ )
) SS.
COUNTY OF _______ )
I certify that I know or have satisfactory evidence that
__________________________ is the person who appeared before me, and said person
acknowledged that he signed this instrument, on oath stated that he was
authorized to execute the instrument and acknowledged it as the
_________________________ of WaMu Asset Acceptance Corp., to be the free and
voluntary act of such party for the uses and purposes mentioned therein.
Dated this _________ day of ________, ____.
----------------------------------------
Notary Public in and for the State of ,
-----
residing at .
-------------------------------
My commission expires: .
--------------------
ACKNOWLEDGEMENT
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On this ___ day of ________ ____ before me, a Notary Public in and for said
State, personally appeared _______________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacit(ies), and that
by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
-------------------------
(SEAL)
ACKNOWLEDGEMENT
STATE OF DELAWARE )
) SS.
COUNTY OF NEWCASTLE )
On this ___ day of __________ ____ before me, a Notary Public in and for
said State, personally appeared _______________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacit(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
-------------------------
(SEAL)