Ex 4.1
EXECUTION COPY
CHASE MORTGAGE FINANCE CORPORATION,
DEPOSITOR,
JPMORGAN CHASE BANK, N.A.,
SERVICER AND CUSTODIAN,
JPMORGAN CHASE BANK, N.A.,
PAYING AGENT
AND
U.S. BANK NATIONAL ASSOCIATION,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2006
$475,001,017
Multi-Class Mortgage Pass-Through Certificates
ChaseFlex Trust Series 2006-1
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................... 1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; TRUST FUND...................... 24
Section 2.01 Conveyance of Mortgage Loans.............................. 24
Section 2.02 Acceptance by Trustee..................................... 28
Section 2.03 Trust Fund; Authentication of Certificates................ 29
Section 2.04 REMIC Elections........................................... 29
Section 2.05 Permitted Activities of Trust............................. 33
Section 2.06 Qualifying Special Purpose Entity......................... 33
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND THE
SERVICER, REPURCHASE OF MORTGAGE LOANS........................ 34
Section 3.01 Representations and Warranties of the Depositor with
respect to the Mortgage Loans............................. 34
Section 3.02 Representations and Warranties of the Servicer............ 41
Section 3.03 Option to Substitute...................................... 42
ARTICLE IV THE CERTIFICATES.............................................. 43
Section 4.01 The Certificates.......................................... 43
Section 4.02 Registration of Transfer and Exchange of Certificates..... 44
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates......... 48
Section 4.04 Persons Deemed Owners..................................... 48
Section 4.05 Appointment of Paying Agent and Certificate Registrar;
Certificate Account....................................... 48
Section 4.06 Authenticating Agents..................................... 49
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................ 50
Section 5.01 Servicer to Service Mortgage Loans........................ 50
Section 5.02 Sub-Servicing Agreements Between Servicer and
Sub-Servicers; Enforcement of Sub-Servicer's
Obligations............................................... 51
Section 5.03 Successor Sub-Servicers................................... 52
Section 5.04 Liability of the Servicer................................. 52
Section 5.05 No Contractual Relationship Between Sub-Servicer and
Trustee or Certificateholders............................. 52
Section 5.06 Termination of Sub-Servicing Agreement.................... 52
Section 5.07 Collection of Mortgage Loan Payments...................... 52
Section 5.08 Establishment of Collection Account; Deposit in
Collection Account........................................ 52
Section 5.09 Permitted Withdrawals from the Collection Account......... 54
Section 5.10 Establishment of Escrow Account; Deposits in Escrow
Account................................................... 54
Section 5.11 Permitted Withdrawals from Escrow Account................. 55
Section 5.12 Payment of Taxes, Insurance and Other Charges............. 55
Section 5.13 Transfer of Accounts...................................... 55
Section 5.14 [Reserved]................................................ 55
Section 5.15 Maintenance of the Primary Insurance Policies............. 55
Section 5.16 Maintenance of Standard Hazard Policies................... 56
Section 5.17 [Reserved]................................................ 56
Section 5.18 [Reserved]................................................ 56
Section 5.19 Fidelity Bond and Errors and Omissions Insurance.......... 56
Section 5.20 Collections under Insurance Policies; Enforcement of
Due-On-Sale Clauses; Assumption Agreements................ 57
Section 5.21 Income and Realization from Defaulted Mortgage Loans...... 57
Section 5.22 Trustee to Cooperate; Release of Mortgage Files........... 59
Section 5.23 Servicing and Other Compensation.......................... 60
Section 5.24 1934 Act Reports.......................................... 60
Section 5.25 Annual Statement as to Compliance......................... 62
Section 5.26 Assessment of Compliance and Independent Public
Accountants' Attestation; Financial Statements............ 62
Section 5.27 Access to Certain Documentation; Rights of the
Depositor in Respect of the Servicer...................... 64
Section 5.28 REMIC-Related Covenants................................... 64
Section 5.29 Reserve Fund; Yield Maintenance Agreements................ 66
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS............................ 68
Section 6.01 Distributions............................................. 68
Section 6.02 Statements to the Certificateholders...................... 71
Section 6.03 Advances by the Servicer.................................. 74
Section 6.04 Allocation of Realized Losses............................. 74
Section 6.05 Compensating Interest; Allocation of Certain Interest
Shortfalls................................................ 75
Section 6.06 Subordination............................................. 76
Section 6.07 Determination of LIBOR.................................... 76
ARTICLE VII REPORTS TO BE PREPARED BY THE SERVICER........................ 77
Section 7.01 Servicer Shall Provide Information as Reasonably
Required.................................................. 77
Section 7.02 Federal Information Returns and Reports to
Certificateholders........................................ 77
ARTICLE VIII THE DEPOSITOR AND THE SERVICER................................ 78
Section 8.01 Indemnification; Third Party Claims....................... 78
Section 8.02 Merger or Consolidation of the Depositor or the
Servicer.................................................. 78
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Section 8.03 Limitation on Liability of the Depositor, the Servicer,
the Trustee and Others.................................... 79
Section 8.04 Depositor and Servicer Not to Resign...................... 79
Section 8.05 Successor to the Servicer................................. 80
Section 8.06 Maintenance of Ratings.................................... 81
ARTICLE IX DEFAULT....................................................... 81
Section 9.01 Events of Default......................................... 81
Section 9.02 Waiver of Defaults........................................ 82
Section 9.03 Trustee to Act; Appointment of Successor.................. 82
Section 9.04 Notification to Certificateholders and the Rating
Agencies.................................................. 82
ARTICLE X CONCERNING THE TRUSTEE........................................ 83
Section 10.01 Duties of Trustee......................................... 83
Section 10.02 Certain Matters Affecting the Trustee..................... 83
Section 10.03 Trustee Not Liable for Certificates or Mortgage Loans..... 84
Section 10.05 Fees and Expenses......................................... 85
Section 10.06 Eligibility Requirements for Trustee...................... 85
Section 10.07 Resignation and Removal of the Trustee.................... 85
Section 10.08 Successor Trustee......................................... 86
Section 10.09 Merger or Consolidation of Trustee........................ 86
Section 10.10 Appointment of Co-Trustee or Separate Trustee............. 87
Section 10.11 Appointment of Office or Agency........................... 87
Section 10.12 Indemnification........................................... 87
ARTICLE XI TERMINATION................................................... 88
Section 11.01 Termination............................................... 88
ARTICLE XII MISCELLANEOUS PROVISIONS...................................... 90
Section 12.01 Severability of Provisions................................ 90
Section 12.02 Limitation on Rights of Certificateholders................ 90
Section 12.03 Amendment................................................. 90
Section 12.04 Counterparts.............................................. 91
Section 12.05 Duration of Agreement..................................... 91
Section 12.06 Governing Law............................................. 91
Section 12.07 Notices................................................... 91
Section 12.08 Further Assurances........................................ 92
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EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT B CONTENTS OF MORTGAGE FILE
EXHIBIT C FORM OF CLASS A CERTIFICATE
EXHIBIT D FORM OF CLASS M CERTIFICATE
EXHIBIT E FORM OF CLASS B CERTIFICATE
EXHIBIT E-1 FORM OF CLASS CE CERTIFICATE
EXHIBIT F FORM OF CLASS A-R CERTIFICATE
EXHIBIT G FORM OF TRUSTEE CERTIFICATION
EXHIBIT H FORM OF INVESTMENT LETTER
EXHIBIT I FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT J FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
EXHIBIT K FORM OF CLASS A-R TRANSFEREE LETTER
EXHIBIT K-1 FORM OF CLASS A-R TRANSFEROR LETTER
EXHIBIT L REQUEST FOR RELEASE OF DOCUMENTS
EXHIBIT M FORM OF TRANSFEREE ERISA REPRESENTATION LETTER
EXHIBIT N [RESERVED]
EXHIBIT O FORM OF OFFICER'S CERTIFICATE (PAYING AGENT)
EXHIBIT P LETTER OF REPRESENTATIONS
EXHIBIT Q [RESERVED]
EXHIBIT R SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
EXHIBIT S FORM OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
EXHIBIT T FORM OF ITEM 1123 CERTIFICATION OF SERVICER
EXHIBIT U FORM OF CLASS A-1-B YIELD MAINTENANCE AGREEMENT
EXHIBIT U-1 FORM OF CLASS A-2-B YIELD MAINTENANCE AGREEMENT
EXHIBIT V SCHEDULE II TO CLASS A-2-B YIELD MAINTENANCE AGREEMENT
SCHEDULE X 1934 ACT FORM 8-K REPORTING OBLIGATIONS
SCHEDULE Y 1934 ACT FORM 10-D REPORTING OBLIGATIONS
SCHEDULE Z 1934 ACT FORM 10-K REPORTING OBLIGATIONS
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This Pooling and Servicing Agreement, dated as of May 1, 2006, is executed
among Chase Mortgage Finance Corporation, as depositor (together with its
permitted successors and assigns, the "Depositor"), JPMorgan Chase Bank, N.A.
("Chase"), as servicer (together with its permitted successors and assigns, the
"Servicer") and as custodian (together with its permitted successors and
assigns, the "Custodian"), JPMorgan Chase Bank, N.A., as paying agent (in such
capacity, together with its permitted successors and assigns, the "Paying
Agent") and U.S. Bank National Association, as trustee (together with its
permitted successors and assigns, the "Trustee").
In consideration of the premises and the mutual agreements hereinafter set
forth, the Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan) is located, and
which are in accordance with FNMA servicing practices and procedures for MBS
pool mortgages (as defined in the FNMA Guides including future updates).
ACCRUAL PERIOD: With respect to any Distribution Date and the Lower-Tier
REMIC Interests and any Class of Certificates, other than the Class A-1-A, Class
A-1-B and Class A-2-B Certificates, the calendar month preceding the month in
which the Distribution Date occurs and with respect to the Class A-1-A, Class
A-1-B and Class A-2-B Certificates and the Yield Maintenance Agreements, the
period from and including the 25th day of the month immediately preceding the
related Distribution Date (or in the case of the first Distribution Date, May
31, 2006) to and including the 24th day of the month of such Distribution Date.
Interest shall accrue on all Classes of Certificates, other than the LIBOR
Certificates, and on all Lower-Tier REMIC Interests on the basis of a 360-day
year consisting of twelve 30-day months. Interest shall accrue on the LIBOR
Certificates on the basis of a 360-day year consisting of the actual number of
days in each Accrual Period.
ACCOUNTANT'S ATTESTATION: As defined in Section 5.26(b).
ADDITIONAL FORM 10-D DISCLOSURE: As defined in Section 5.24(b).
ADDITIONAL FORM 10-K DISCLOSURE: As defined in Section 5.24(d).
ADVANCE: The aggregate of the advances made by the Servicer with respect to
a particular Distribution Date pursuant to Section 6.03.
AFFILIATE: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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AGENCY & TRUST OFFICE: With respect to the Trustee, the office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this instrument is
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and, with respect
to the Paying Agent, the office of the Paying Agent at which at any particular
time its corporate trust business shall be administered, which office at the
date of execution of this instrument is located at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ALLOCATED REALIZED LOSS AMOUNT: With respect to any Class of Class A, Class
M, Class B or Class CE Certificates and any Distribution Date, an amount equal
to any Realized Loss allocated to that Class of Certificates on that
Distribution Date.
APPRAISED VALUE: The value set forth in an appraisal or recertification
document made in connection with the origination of the related Mortgage Loan as
the value of the Mortgaged Property (or the related residential dwelling unit in
the Underlying Mortgaged Property, in the case of a Co-op Loan).
ASSESSMENT OF COMPLIANCE: As defined in Section 5.26(a).
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
(or UCC-3 assignment (or equivalent instrument) with respect to each Co-op Loan)
or equivalent instrument, in recordable form (except in the case of a Co-op
Loan), sufficient under the laws of the jurisdiction where the related Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan) is
located to reflect of record the sale and assignment of the Mortgage Loan to the
Trustee, which assignment, notice of transfer or equivalent instrument may, if
permitted by law, be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county.
AUTHENTICATING AGENT: The meaning specified in Section 4.06(a).
AVAILABLE DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
total amount of all cash received by the Paying Agent on the Mortgage Loans or
otherwise for deposit into the Certificate Account in respect of such
Distribution Date, including (1) all scheduled installments of interest (net of
the related Servicing Fees) and principal collected on the Mortgage Loans and
due during the Due Period related to such Distribution Date, together with any
Advances in respect thereof, (2) all Insurance Proceeds, Liquidation Proceeds
and Subsequent Recoveries from the Mortgage Loans, in each case for such
Distribution Date, (3) all partial or full Principal Prepayments, together with
any accrued interest thereon, identified as having been received from the
related Mortgage Loans during the related Prepayment Period, (4) any amounts
received from the Servicers in respect of Interest Shortfalls with respect to
the Mortgage Loans, (5) the aggregate Purchase Price of all Defective Mortgage
Loans in such Mortgage Pool purchased from the Trust Fund during the related
Prepayment Period and (6) on the Distribution Date on which the Mortgage Pool is
to be terminated pursuant to Article XI hereof, any amounts deposited in the
Collection Account pursuant to Article XI hereof, minus:
(A) with respect to the Mortgage Loans, all related charges and other
amounts payable or reimbursable to the Servicer, the Paying Agent or the Trustee
under this Agreement;
(B) in the case of (2), (3), (4) and (5) above, any related unreimbursed
expenses incurred by the Servicer in connection with a liquidation or
foreclosure and any unreimbursed Advances or Servicing Advances due to the
Servicer;
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(C) any related unreimbursed Nonrecoverable Advances due to the Servicer;
and
(D) in the case of (1) through (4) above, any related amounts collected
which are determined to be attributable to a subsequent Due Period or Principal
Prepayment Period.
BANKRUPTCY CODE: Title 11 of the United States Code, as the same may be
amended from time to time.
BASIC PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution Date,
the excess of (i) the Principal Remittance Amount for such Distribution Date
over (ii) the Overcollateralization Release Amount, if any, for such
Distribution Date.
BASIS RISK SHORTFALL CARRYOVER AMOUNTS: For any Distribution Date and
(A) any Class of LIBOR Certificates, an amount equal to the sum of (i) in
the event that the Certificate Rate for such Class of Certificates is based upon
the Net WAC, the excess of (x) the amount of interest such Class of LIBOR
Certificates would have accrued on such Distribution Date had its Certificate
Rate for such Distribution Date been equal to the lesser of (a) LIBOR plus the
related Certificate Margin and (b) 11.50% per annum, over (y) the amount of
interest such Class of LIBOR Certificates accrued for such Distribution Date at
the Net WAC and (ii) the unpaid portion of any Basis Risk Shortfall Carryover
Amount for such Class of LIBOR Certificates from prior Distribution Dates
together with interest accrued on such unpaid portion for the most recently
ended Accrual Period at the lesser of (a) LIBOR plus the Certificate Margin for
such Class of LIBOR Certificates for the related Accrual Period and (b) 11.50%
per annum; and
(B) any Class of Fixed Rate Certificates, an amount equal to the sum of (i)
in the event that the Certificate Rate for such Class of Certificates is based
upon the Net WAC, the excess of (x) the amount of interest such Class of Fixed
Rate Certificates would have accrued on such Distribution Date had its
Certificate Rate for such Distribution Date been equal to the Certificate Rate
(calculated without giving effect to any limitation on the Certificate Rate
based upon Net WAC) for such Class of Fixed Rate Certificates, over (y) the
amount of interest such Class of Fixed Rate Certificates accrued for such
Distribution Date at the Net WAC and (ii) the unpaid portion of any Basis Risk
Shortfall Carryover Amount for such Class of Fixed Rate Certificates from prior
Distribution Dates together with interest accrued on such unpaid portion for the
most recently ended Accrual Period at the Certificate Rate (calculated without
giving effect to any limitation on the Certificate Rate based upon Net WAC) for
such Class of Fixed Rate Certificates.
BENEFICIAL HOLDER: A Person holding a beneficial interest in any Book-Entry
Certificate through a Participant or an Indirect Participant or a Person holding
a beneficial interest in any Definitive Certificate.
BOOK-ENTRY CERTIFICATES: The Class A Certificates (other than the Class A-R
Certificates), Class M Certificates and Class B Certificates, referred to
collectively.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, (b) a legal
holiday in the States of New York , Minnesota and Illinois or (c) a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to be closed.
CAP STRIKE RATE: With respect to the Class A-2-B Yield Maintenance
Agreement and the applicable Distribution Date, the rate specified in Schedule I
to Exhibit U-1 under the heading "Strike" for that Distribution Date.
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CASH LIQUIDATION: Recovery of all cash proceeds by the Servicer with
respect to the liquidation of any Mortgage Loan, including Insurance Proceeds
and other payments or recoveries (whether made at one time or over a period of
time) which the Servicer deems to be finally recoverable, in connection with the
sale, assignment or satisfaction of such Mortgage Loan, trustee's sale,
foreclosure sale or otherwise, but only if title to the related Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
was not acquired by foreclosure or deed in lieu of foreclosure by the Servicer
pursuant to Section 5.21.
CERTIFICATE: Any Class A, Class M, Class B or Class CE Certificate.
CERTIFICATE ACCOUNT: The account created and maintained pursuant to Section
4.05.
CERTIFICATEHOLDER or HOLDER: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Depositor, the Servicer, any
Sub-Servicer, or any of their respective Affiliates shall be disregarded and the
undivided Percentage Interest evidenced thereby shall not be taken into account
in determining whether the requisite amount of Percentage Interests necessary to
effect any such consent, waiver, request or demand has been obtained. The
Trustee and the Paying Agent shall be entitled to conclusively rely upon the
certificate of the Depositor or the Servicer as to the determination of which
Certificates are registered in the name of such Affiliates.
CERTIFICATE MARGIN: With respect to the Class A-1-B and Class A-2-B
Certificates, 0.06% and 0.15%, respectively.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a Book-Entry
Certificate registered in the name of the Depository or its nominee.
CERTIFICATE RATE: The per annum rate of interest borne by each Class of
Certificates, which rate shall equal (i) the lesser of (a) 5.535% per annum and
(b) the Net WAC with respect to the Class A-1-A Certificates; (ii) the least of
(a) One-Month LIBOR plus the related Certificate Margin, (b) the Net WAC and (c)
11.50% per annum with respect to the Class A-1-B Certificates; (iii) the lesser
of (a) 5.935% per annum and (b) the Net WAC with respect to the Class A-2-A
Certificates; (iv) the least of (a) One-Month LIBOR plus the related Certificate
Margin, (b) the Net WAC and (c) 11.50% per annum with respect to the Class A-2-B
Certificates; (v) the lesser of (a) 6.295% per annum and (b) the Net WAC with
respect to the Class A-3 Certificates; (vi) the lesser of (a) 6.300% per annum
and (b) the Net WAC with respect to the Class A-4 Certificates; (vii) the lesser
of (a) 6.160% per annum and (b) the Net WAC with respect to the Class A-5
Certificates; (viii) the lesser of (a) 6.290% per annum and (b) the Net WAC with
respect to the Class A-6 Certificates; and (ix) the lesser of (a) 6.300% per
annum and (b) the Net WAC with respect to the Class M-1, Class M-2, Class B-1
and Class B-2 Certificates. The Class A-R Certificates bear no interest.
CERTIFICATE REGISTER: The register maintained pursuant to Section 4.02.
CERTIFICATE REGISTRAR: The Person appointed by the Trustee as Certificate
Registrar pursuant to Section 4.05.
CHASE: JPMorgan Chase Bank, N.A., a national banking association, or its
successor in interest.
CHF: Chase Home Finance LLC, a Delaware limited liability company, or its
successor in interest.
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CLASS: Pertaining to the Class A-1-A, Class A-1-B, Class A-2-A, Class
A-2-B, Class A-3, Class A-4, Class A-5, Class A-6, Class A-R, Class M-1, Class
M-2, Class B-1, Class B-2, Class CE Certificates and any Lower-Tier REMIC
Interest, as the case may be.
CLASS A, CLASS M OR CLASS B: Pertaining to Class A Certificates, Class M
Certificates or Class B Certificates, as the case may be.
CLASS A CERTIFICATES: The Class A-1-A, Class A-1-B, Class A-2-A, Class
A-2-B, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-R Certificates,
referred to collectively.
CLASS A PERCENTAGE: With respect to any Distribution Date, the percentage
of principal and interest payments that are allocable to the Class A
Certificates pursuant to Section 6.01.
CLASS A-1-A CERTIFICATE: Any one of the Class A-1-A Certificates, executed
by the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-1-B CERTIFICATE: Any one of the Class A-1-B Certificates, executed
by the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-1-B YIELD MAINTENANCE AGREEMENT: The Yield Maintenance Agreement
set forth on Exhibit U hereto.
CLASS A-2-A CERTIFICATE: Any one of the Class A-2-A Certificates, executed
by the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-2-B CERTIFICATE: Any one of the Class A-2-B Certificates, executed
by the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-2-B SCHEDULE I SCHEDULED NOTIONAL AMOUNT: With respect to any
Distribution Date set forth in Schedule I to Exhibit U-1 hereto, the amount set
forth with respect to such Distribution Date in Schedule I to Exhibit U-1 under
the heading "Notional."
CLASS A-2-B SCHEDULE II SCHEDULED NOTIONAL AMOUNT: With respect to any
Distribution Date set forth in Exhibit V hereto, the amount set forth with
respect to such Distribution Date in Exhibit V under the heading "Scheduled
Notional Amount."
CLASS A-2-B YIELD MAINTENANCE AGREEMENT: The Yield Maintenance Agreement
set forth on Exhibit U-1 hereto.
CLASS A-3 CERTIFICATE: Any one of the Class A-3 Certificates, executed by
the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-4 CERTIFICATE: Any one of the Class A-4 Certificates, executed by
the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-5 CERTIFICATE: Any one of the Class A-5 Certificates, executed by
the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
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CLASS A-5 AND CLASS A-6 PRIORITY AMOUNT: With respect to the Class A-5 and
Class A-6 Certificates and any Distribution Date, the product of (a) the Class
A-5 and Class A-6 Priority Percentage, (b) the Class A-5 and Class A-6 Shift
Percentage and (c) either (i) on any Distribution Date prior to the Step-Down
Date or on which a Trigger Event is in effect, the Principal Distribution Amount
for such Distribution Date or (ii) on any Distribution Date on and after the
Step-Down Date and on which a Trigger Event is not in effect, the Senior
Principal Distribution Amount for such Distribution Date.
CLASS A-5 AND CLASS A-6 PRIORITY PERCENTAGE: With respect to any
Distribution Date, the aggregate Outstanding Certificate Principal Balance of
the Class A-5 and Class A-6 Certificates divided by the aggregate Outstanding
Certificate Principal Balance of the Class A Certificates (excluding the Class
A-R Certificate), in each case immediately prior to any distributions on that
Distribution Date.
CLASS A-5 AND CLASS A-6 SHIFT PERCENTAGE: With respect to any Distribution
Date, the percentage indicated below:
DISTRIBUTION DATE OCCURRING IN SHIFT PERCENTAGE
------------------------------ ----------------
June 2006 through May 2009 0%
June 2009 through May 2011 45%
June 2011 through May 2012 80%
June 2012 through May 2013 100%
June 2013 and thereafter 300%
CLASS A-6 CERTIFICATE: Any one of the Class A-6 Certificates, executed by
the Depositor and authenticated by the Trustee, senior in right of payment to
the Class M and Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit C hereto.
CLASS A-R CERTIFICATE: The Class A-R Certificate executed by the Depositor
and authenticated by the Trustee, substantially in the form of the Class A-R
Certificate set forth in Exhibit F hereto.
CLASS B CERTIFICATES: The Class B-1and Class B-2 Certificates, referred to
collectively.
CLASS B PERCENTAGE: With respect to any Distribution Date, the percentage
of principal and interest payments that are allocable to the Class B
Certificates pursuant to Section 6.01.
CLASS B-1 CERTIFICATE: Any one of the Class B-1 Certificates executed by
the Depositor and authenticated by the Trustee, subordinated in right of payment
to the Class A and Class M Certificates, substantially in the form of the Class
B Certificate set forth in Exhibit E hereto.
CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the excess of (x) the sum of (1) the aggregate Outstanding Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Senior Principal Distribution Amount on such Distribution Date),
(2) the Outstanding Certificate Principal Balance of the Class M-1 Certificates
(after taking into account the payment of the Class M-1 Principal Distribution
Amount on such Distribution Date), (3) the Outstanding Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date) and (4)
the Outstanding Certificate Principal Balance of the Class B-1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (1) 96.80% and (2) the aggregate Stated
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Principal Balance of the Mortgage Loans as of the last day of the related Due
Period and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period minus the Overcollateralization Floor.
CLASS B-2 CERTIFICATE: Any one of the Class B-2 Certificates executed by
the Depositor and authenticated by the Trustee, subordinated in right of payment
to the Class A, Class M and Class B-1 Certificates, substantially in the form of
the Class B Certificate set forth in Exhibit E hereto.
CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the excess of (x) the sum of (1) the aggregate Outstanding Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Senior Principal Distribution Amount on such Distribution Date),
(2) the Outstanding Certificate Principal Balance of the Class M-1 Certificates
(after taking into account the payment of the Class M-1 Principal Distribution
Amount on such Distribution Date), (3) the Outstanding Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (4) the
Outstanding Certificate Principal Balance of the Class B-1 Certificates (after
taking into account the payment of the Class B-1 Principal Distribution Amount
on such Distribution Date) and (5) the Outstanding Certificate Principal Balance
of the Class B-2 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (1) 97.80% and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period minus the Overcollateralization Floor.
CLASS CE CERTIFICATE: Any one of the Class CE Certificates executed by the
Depositor and authenticated by the Trustee, subordinated in right of payment to
the Class A, Class M and Class B Certificates, substantially in the form of the
Class CE Certificate set forth in Exhibit E-1 hereto.
CLASS CE DISTRIBUTABLE INTEREST RATE: The excess, if any, of (a) the
weighted average of the interest rates on the Lower-Tier REMIC Regular Interests
over (b) two times the weighted average of the interest rates on the Lower-Tier
REMIC Regular Interests (treating for purposes of this clause (b) the interest
rate of each of the Lower-Tier REMIC Marker Classes as being capped at the
interest rate of its Related Certificates (as adjusted , in the case of the
LIBOR Certificates, to reflect accruals on the basis of a year consisting of
twelve 30-day months) and treating the Class LTX Interest as being capped at
zero). The averages described in the preceding sentence shall be weighted on the
basis of the respective principal balances of the Lower-Tier REMIC Regular
Interests immediately before any date of determination.
CLASS CE INTEREST DISTRIBUTION AMOUNT: With respect to any Distribution
Date one-twelfth of the product of (x) a notional amount, equal to the aggregate
Stated Principal Balance of the Mortgage Loans as of the first day of the month
immediately preceeding the month of such Distribution Date (after giving effect
to Monthly Payments of principal due on such date), and (y) the Class CE
Distributable Interest Rate for such Distribution Date.
CLASS CE INTEREST SHORTFALL: As to any Distribution Date, the amount by
which (i) the Class CE Interest Distribution Amount on all prior Distribution
Dates exceeds (ii) amounts distributed in respect thereof to the Class CE
Certificates on prior Distribution Dates or added to the aggregate Outstanding
Certificate Principal Balance of the Class CE Certificates in respect of any
Overcollateralization Increase Amount.
CLASS CE PERCENTAGE: With respect to any Distribution Date, the percentage
of principal and interest payments that are allocable to the Class CE
Certificates pursuant to Section 6.01.
7
CLASS LT-R INTEREST: The sole residual interest in the Lower-Tier REMIC.
CLASS LTX INTEREST: The Lower-Tier REMIC Regular Interest designated as the
Class LTX Interest as described in Section 2.04.
CLASS M PERCENTAGE: With respect to any Distribution Date, the percentage
of principal and interest payments that are allocable to the Class M
Certificates pursuant to Section 6.01.
CLASS M-1 CERTIFICATE: Any one of the Class M-1 Certificates executed by
the Depositor and authenticated by the Trustee, subordinated in right of payment
to the Class A Certificates, substantially in the form of the Class M
Certificate set forth in Exhibit D hereto.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the excess of (x) the sum of (1) the aggregate Outstanding Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Senior Principal Distribution Amount on such Distribution Date)
and (2) the Outstanding Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (1) 92.50% and (2) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period minus the Overcollateralization Floor.
CLASS M-2 CERTIFICATE: Any one of the Class M-2 Certificates executed by
the Depositor and authenticated by the Trustee, subordinated in right of payment
to the Class A Certificates, substantially in the form of the Class M
Certificate set forth in Exhibit D hereto.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the excess of (x) the sum of (1) the aggregate Outstanding Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Senior Principal Distribution Amount on such Distribution Date),
(2) the Outstanding Certificate Principal Balance of the Class M-1 Certificates
(after taking into account the payment of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (3) the Outstanding Certificate Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (1) 95.50% and (2) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period and (B) the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period minus the Overcollateralization
Floor.
CLOSING DATE: May 24, 2006.
CODE: The Internal Revenue Code of 1986, as amended from time to time, and
any successor statutes thereto, and applicable U.S. Department of Treasury
temporary or final regulations promulgated thereunder.
COLLECTION ACCOUNT: The account created and maintained pursuant to Section
5.08.
COMMISSION: The United States Securities and Exchange Commission.
COMPENSATING INTEREST: The meaning specified in Section 6.05(a).
COMPENSATING INTEREST SHORTFALL: The meaning specified in Section 6.05(b).
CO-OP LEASE: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.
8
CO-OP LOAN: A Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative housing corporation and a collateral
assignment of the related Co-op Lease.
COUNTERPARTY: JPMorgan Chase Bank, National Association, in its capacity
as cap counterparty under the Yield Maintenance Agreements.
CUSTODIAN: JPMorgan Chase Bank, N.A.
CUT-OFF DATE: May 1, 2006.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, other than such a
reduction resulting from a Deficient Valuation.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of the
related Mortgaged Property (or stock allocated to a dwelling unit, in the case
of a Co-op Loan) by a court of competent jurisdiction in an amount less than the
then outstanding Principal Balance of the Mortgage Loan, which valuation results
from a proceeding initiated under the Bankruptcy Code.
DEFINITIVE CERTIFICATES: The Certificates referred to in Section 4.01(c).
DEPOSITOR: Chase Mortgage Finance Corporation, a Delaware corporation, or
its successor in interest or any successor under this Agreement appointed as
herein provided.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede &
Co.
DEPOSITORY AGREEMENT: The agreement referred to in Section 4.01(b).
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: The sixteenth day of the month in which the related
Distribution Date occurs (or, if such sixteenth day is not a Business Day, the
preceding Business Day).
DISQUALIFIED ORGANIZATION: An organization referred to in Section
860E(e)(5) of the Code.
DISTRIBUTION DATE: The 25th day of any month, or if such 25th day is not a
Business Day, the first Business Day immediately following, beginning with June
26, 2006.
DUE DATE: The first day of each month, being the day of the month on which
each Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to any Distribution Date, the period from the
second day of the month preceding the month in which such Distribution Date
occurs through the first day of the month in which such Distribution Date
occurs.
ELIGIBLE ACCOUNT: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a national bank or banking corporation
which (a) has a rating of at least Baa3 or P-3 by Moody's and (b) is either
Chase or is the corporate trust department of a national bank or banking
corporation which has a rating of at least F1 by Fitch Ratings, or (iii) an
account or accounts the deposits in which are fully insured by the FDIC, or (iv)
an account or accounts in a depository institution in which such accounts are
insured by the FDIC (to the limit established by the FDIC), the uninsured
deposits in which accounts are otherwise secured such that,
9
as evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee
and each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account and a perfected first security interest against any
collateral (which shall be limited to Eligible Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, provided, however,
that such uninsured deposits do not result in the reduction of the ratings
assigned to the Certificates by the Rating Agencies as evidenced by a letter
from each Rating Agency or (v) otherwise acceptable to each Rating Agency
without reduction or withdrawal of the rating of any Class of Certificates, as
evidenced by a letter from each Rating Agency.
ELIGIBLE INVESTMENTS: One or more of the following:
(i) obligations of, or guaranteed as to principal and interest by, the
United States or obligations of any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
provided that any such obligation held as a "cash flow investment" within the
meaning of section 860G(a)(6) of the Code shall mature before the next
Distribution Date;
(ii) repurchase agreements on obligations specified in clause (i) maturing
not more than two months from the date of acquisition thereof, provided that the
long-term unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating Agency with its highest rating
and the short-term debt obligations of the party agreeing to repurchase are
rated with one of the two highest ratings by Moody's and A-1+ by S & P;
(iii) federal funds, certificates of deposit, time deposits and bankers'
acceptances (other than bankers' acceptances issued by Chase or any of its
Affiliates) (which shall each have an original maturity of not more than 60 days
and, in the case of bankers' acceptances, shall in no event have an original
maturity of more than 365 days) of any United States depository institution or
trust company incorporated under the laws of the United States or any state,
provided that the long-term unsecured debt obligations of such depository
institution or trust company at the date of acquisition thereof have been rated
by each Rating Agency with its highest rating and the short-term obligations of
such depository institution or trust company are rated A-1+ by S&P and P-1 by
Moody's;
(iv) commercial paper (other than commercial paper issued by Chase or any
of its Affiliates) (having original maturities of not more than 365 days) of any
corporation incorporated under the laws of the United States or any state
thereof which on the date of acquisition has been rated by each Rating Agency in
its highest short-term unsecured commercial paper rating category; provided that
such commercial paper shall have a remaining maturity of not more than 45 days;
(v) units of taxable money market funds (including those for which the
Trustee or the Servicer or any Affiliate thereof acts as sponsor, administrator
or the like and receives compensation with respect to such investment) which may
be 12b-1 funds, as contemplated under the rules promulgated by the Commission
under the Investment Company Act of 1940, as amended, and which funds have been
rated by each Rating Agency in its highest rating category or which have been
designated in writing by each Rating Agency as Eligible Investments with respect
to this definition; or
(vi) other obligations or securities (other than investments or obligations
of Chase or any of its Affiliates) acceptable to each Rating Agency rating the
Certificates as an Eligible Investment hereunder and will not result in a
reduction or withdrawal in the then current rating of any Class of Certificates,
as evidenced by a letter to such effect from each Rating Agency;
Provided that no such instrument shall be an Eligible Investment if such
instrument evidences either (a) a right to receive only interest payments with
respect to the obligations underlying such instrument, or (b) both principal and
interest payments derived from obligations underlying such instrument where the
10
interest and principal payments with respect to such instrument provide a yield
to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations; and provided further that no such instrument shall be
purchased above par; and provided further that each Eligible Investment must be
a "permitted investment" within the meaning of Section 860G(a)(5) of the Code.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from
time to time, and any successor statutes thereto, and applicable U.S. Department
of Labor temporary or final regulations promulgated thereunder.
ERISA QUALIFYING UNDERWRITING: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 2002-19, 67 Fed. Reg. 14797 (March 28, 2002),
as amended, or any substantially similar administrative exemption granted by the
U.S. Department of Labor to Chase, except, in relevant part, for the requirement
that the certificates have received a rating at the time of acquisition that is
in one of the three (or four, in the case of a "designated transaction") highest
generic rating categories by at least one of the Rating Agencies.
ERISA RESTRICTED CERTIFICATE: Any Class CE Certificate and any other
Certificate, as long as the acquisition and holding of such Certificate is not
covered by and exempt under Prohibited Transaction Exemption 2002-19, 67 Fed.
Reg. 14797 (March 28, 2002), as amended, or any substantially similar
administrative exemption granted by the U.S. Department of Labor to Chase.
ESCROW ACCOUNT: The account or accounts created and maintained pursuant to
Section 5.10.
ESCROW PAYMENTS: The amounts constituting applicable ground rents, taxes,
assessments, water rates, Standard Hazard Policy premiums and other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to a
Mortgage Loan.
EVENT OF DEFAULT: Any of the events specified in Section 9.01.
EXCEPTION REPORT: The report of the Custodian or Trustee, as applicable,
referred to in Section 2.02.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation or any successor
organization.
FHLMC: The Federal Home Loan Mortgage Corporation or any successor
organization.
FIDELITY BOND: The fidelity bond and errors and omissions insurance to be
maintained by the Servicer pursuant to Section 5.19.
FINAL SCHEDULED DISTRIBUTION DATE: The Distribution Date in June 2036.
FITCH RATINGS: Fitch, Inc. or its successor in interest.
FIXED RATE CERTIFICATES: The Class A-1-A, Class A-2-A, Class A-3, Class
A-4, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-1, Class M-2, Class B-1 and Class B-2
Certificates.
FNMA: The Federal National Mortgage Association, or any successor
organization.
FNMA GUIDES: The FNMA Sellers' Guide and the FNMA Servicers' Guide, and all
amendments or additions thereto.
11
INDIRECT PARTICIPANT: A broker, dealer, bank or other financial institution
or other Person that clears through or maintains a custodial relationship with a
Depository Participant, either directly or indirectly.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any insurance
policy covering a Mortgage Loan, net of costs of collecting such proceeds and
net of amounts released to the Mortgagor or applied to the restoration of the
Mortgaged Property (or in the underlying Mortgaged Property, in the case of a
Co-op Loan).
INSURED EXPENSES: Expenses covered by any insurance policy.
INTEREST DISTRIBUTION AMOUNT: With respect to each Distribution Date and
each Class of Certificates entitled to distributions of interest, an amount
equal to the amount of interest accrued during the related Accrual Period at the
related Certificate Rate on the Outstanding Certificate Principal Balance of
such Class of Certificates for such Distribution Date, in each case, reduced by
any Net Interest Shortfalls allocated to such Class of Certificates as such
shortfalls are allocated.
INTEREST REMITTANCE AMOUNT: The portion of the Available Distribution
Amount not consisting of the Principal Remittance Amount.
INTEREST SHORTFALL: As to any Class of Certificates and any Distribution
Date, (i) the amount by which the Interest Distribution Amount for such Class on
all prior Distribution Dates exceeds (ii) amounts distributed in respect thereof
to such Class on prior Distribution Dates.
LATE COLLECTIONS: With respect to any Mortgage Loan, all amounts received
during any Due Period, whether as late payments of Monthly Payments or as
Liquidation Proceeds, condemnation proceeds, Insurance Proceeds, Subsequent
Recoveries or with respect to a disposition of a Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan) which has been
acquired by foreclosure or deed in lieu of foreclosure or otherwise, which
represent late payments or collections of Monthly Payments due but delinquent
for a previous Due Period and not previously recovered.
LIBOR: With respect to any Distribution Date and the Certificate Rates on
the LIBOR Certificates, LIBOR as determined in accordance with Section 6.07.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the city of London, England are required or
authorized by law to be closed.
LIBOR CERTIFICATES: The Class A-1-B and Class A-2-B Certificates.
LIQUIDATED MORTGAGE LOAN: Any Mortgage Loan (a) as to which the Servicer
has determined that all amounts which it expects to recover from or on account
of such Mortgage Loan or property acquired in respect thereof have been
recovered, (b) as to which a Cash Liquidation has taken place or (c) with
respect to which the Mortgaged Property (or stock allocated to a dwelling unit,
in the case of a Co-op Loan) has been acquired by foreclosure or deed in lieu of
foreclosure and a disposition (the term disposition shall include, for purposes
of a repurchase pursuant to Section 11.01, any repurchase of a Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
pursuant to such Section) of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) has occurred.
LIQUIDATION EXPENSES: Expenses which are incurred by the Servicer or any
Sub-Servicer in connection with the liquidation of any defaulted Mortgage Loan
or property acquired in respect thereof including, without limitation, legal
fees and expenses, any unreimbursed amount expended by the
12
Servicer pursuant to Sections 5.16 and 5.21 respecting the related Mortgage Loan
and any related and unreimbursed expenditures for real estate property taxes or
for property restoration or preservation.
LIQUIDATION PROCEEDS: Cash (including Insurance Proceeds) received by the
Servicer in connection with the liquidation of any Mortgage Loan or Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
acquired in respect thereof, whether through the sale or assignment of such
Mortgage Loan (other than pursuant to Section 5.21), trustee's sale, foreclosure
sale or otherwise, or the sale of the Mortgaged Property (or stock allocated to
a dwelling unit, in the case of a Co-op Loan) if the Mortgaged Property (or
stock allocated to a dwelling unit, in the case of a Co-op Loan) is acquired in
satisfaction of the Mortgage Loan other than amounts required to be paid to the
Mortgagor pursuant to law or the terms of the applicable Mortgage Note.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the numerator
of which is the principal amount of the related Mortgage Loan at the time of
origination (or, (i) for purposes of Section 5.15, at the time of determination
and (ii) for purposes of a Mortgage Loan with respect to which a conversion from
adjustable rate to fixed rate has occurred, at the time of initial origination)
and the denominator of which is the Appraised Value of the related Mortgaged
Property (or applicable dwelling unit, in the case of a Co-op Loan) at the time
of origination or, in the case of a Mortgage Loan financing the acquisition of
the Mortgaged Property (or applicable dwelling unit, in the case of a Co-op
Loan), the sales price of the Mortgaged Property (or applicable dwelling unit,
in the case of a Co-op Loan), if such sales price is less than such appraised
value.
LOWER-TIER REMIC: The Lower-Tier REMIC as described in Section 2.04.
LOWER-TIER REMIC INTEREST: Any one of the Classes of Lower-Tier REMIC
Interests described in Section 2.04.
LOWER-TIER REMIC MARKER CLASS: Any one of the Classes of Lower-Tier REMIC
Regular Interests other than the Class LTX Interest.
LOWER-TIER REMIC REGULAR INTEREST: Any one of the Lower-Tier REMIC
Interests other than the Class LT-R Interest.
MAXIMUM YIELD MAINTENANCE AGREEMENT AMOUNT: The amount described in Section
5.29(e).
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS MORTGAGE LOAN: Any Mortgage Loan as to which the related Mortgage, or
an Assignment of Mortgage, has been or will be recorded in the name of MERS or
otherwise assigned to MERS, as agent for the holder from time to time of the
Mortgage Note.
MODIFIED MORTGAGE LOAN: Any Mortgage Loan which the Servicer has modified
pursuant to Section 5.01.
MONTHLY PAYMENT: The minimum required monthly payment of principal and
interest due on a Mortgage Loan as specified in the Mortgage Note for any Due
Date (before any adjustment to such scheduled amount by reason of any bankruptcy
or similar proceeding or any moratorium or similar waiver or grace period).
Monthly Payments shall be deemed due on an Outstanding Mortgage Loan until such
time as it becomes a Liquidated Mortgage Loan.
13
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MORTGAGE: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument creating a first lien or a first
priority ownership interest in an estate in fee simple in real property securing
a Mortgage Note. With respect to a Co-op Loan, the security agreement creating a
security interest in the stock allocated to a dwelling unit in a residential
cooperative housing corporation and pledged to secure such Co-op Loan and the
related Co-op Lease.
MORTGAGE FILE: As to each Mortgage Loan, the items referred to in Exhibit B
annexed hereto.
MORTGAGE LOAN: An individual mortgage loan and all rights with respect
thereto, evidenced by a Mortgage and a Mortgage Note, sold and assigned by the
Depositor to the Trustee and which is subject to this Agreement and included in
the Trust Fund. The Mortgage Loans originally sold and subject to this Agreement
are identified on the Mortgage Loan Schedule.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans attached hereto as
Exhibit A as it may be amended in accordance with Section 3.03, setting forth
the following information as to each Mortgage Loan: (i) the Mortgage Loan
identifying number; (ii) the city, state and zip code of the Mortgaged Property
(or Underlying Mortgaged Property, in the case of a Co-op Loan); (iii) an
indication of whether the Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property, in the case of a Co-op Loan)
is owner-occupied; (iv) the property type of the Mortgaged Property (or the
related residential dwelling unit in the Underlying Mortgaged Property, in the
case of a Co-op Loan); (v) the original number of months to stated maturity;
(vi) the number of months remaining to stated maturity from the Cut-off Date;
(vii) the original Loan-to-Value Ratio; (viii) the original principal balance of
the Mortgage Loan; (ix) the unpaid principal balance of the Mortgage Loan as of
the close of business on the Cut-off Date; (x) the Mortgage Rate; and (xi) the
amount of the current Monthly Payment.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
MORTGAGE POOL: The pool of Mortgage Loans held in the Trust Fund.
MORTGAGE POOL PRINCIPAL BALANCE: As of any date of determination, the
aggregate of the Principal Balances of each Outstanding Mortgage Loan on such
date of determination less the principal portion of any Monthly Payment due but
not paid with respect to which an Advance has not been made, initially
$475,001,016.69.
MORTGAGED PROPERTY: The property securing a Mortgage Note.
MORTGAGE RATE: With respect to each Mortgage Loan, the per annum rate of
interest borne by the Mortgage Loan, as specified in the Mortgage Note. The
Mortgage Rate for any Mortgage Loan shall be zero with respect to the period
prior to the period during which interest accrues with respect to such Mortgage
Loan's first Monthly Payment.
MORTGAGOR: The obligor on a Mortgage Note.
NET INTEREST SHORTFALL: With respect to any Distribution Date, an amount
equal to the sum of: (i) any Compensating Interest Shortfalls for that
Distribution Date, and (ii) Relief Act Reductions for such Distribution Date.
14
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan, Liquidation
Proceeds net of Liquidation Expenses.
NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution Date, the sum
of (a) any Overcollateralization Release Amount and (b) the excess of (x) the
Available Distribution Amount for such Distribution Date over (y) the sum for
such Distribution Date of (A) the aggregate of the Interest Distribution Amounts
for the Certificates, (B) the Interest Shortfall for the Class A Certificates
and (C) the Principal Remittance Amount.
NET MORTGAGE RATE: With respect to each Mortgage Loan, a per annum rate of
interest for the applicable period equal to the Mortgage Rate less (i) the
Servicing Fee Rate and (ii) in the case of a substitute Mortgage Loan, any
excess of the Mortgage Rate on the substitute Mortgage Loan over the Mortgage
Rate on the removed Mortgage Loan.
NET WAC: As of any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the first day of the calendar month
immediately preceding the calendar month of such Distribution Date, weighted on
the basis of their Stated Principal Balances as of that date multiplied, in the
case of the Class A-1-B Certificates and the Class A-2-B Certificates, by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days in the related Accrual Period for such Class.
NON-MERS MORTGAGE LOAN: Any Mortgage Loan other than a MERS Mortgage Loan.
NONRECOVERABLE ADVANCE: Any Advance previously made or proposed to be made
in respect of a Mortgage Loan by the Servicer pursuant to Section 6.03 which, in
the good faith judgment of the Servicer, will not or, in the case of a proposed
Advance, would not, ultimately be recoverable by the Servicer from Late
Collections or otherwise. The determination by the Servicer that it has made, or
would be making, a Nonrecoverable Advance shall be evidenced by a certificate of
a Servicing Officer of the Servicer delivered to the Trustee, any co-trustee and
the Depositor and detailing the reasons for such determination.
OFFICERS' CERTIFICATE: A certificate signed by two of the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President, the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries or any other duly authorized officer of the Depositor or the
Servicer, and delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer and who is reasonably acceptable to the Trustee.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Class of
Certificates, the amount specified for such Class in Section 4.01(d).
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE: With respect to any Class of
Certificates and any Distribution Date, the Original Certificate Principal
Balance of such Class minus the sum of (i) any distributions of principal made
on such Class prior to such Distribution Date and (ii) any Realized Losses
allocated to such Class prior to such Distribution Date; provided, however, that
on each Distribution Date, after all distributions of principal on such
Distribution Date, an amount equal to the Overcollateralization Increase Amount
for such Distribution Date will be added to the aggregate Outstanding
Certificate Principal Balance of the Class CE Certificates (on a pro rata
basis); provided, further, however that on any Distribution Date on which a
Subsequent Recovery is distributed, the Outstanding Certificate Principal
Balance of any Class of Certificates then outstanding for which any Realized
Loss has been applied will be increased, in order of seniority (with the Class
A-6 Certificates
15
being deemed to be more junior than the other Class A Certificates), by an
amount equal to the lesser of (i) the amount the Class of Certificates has been
reduced by any Realized Losses which have not been previously offset by any
Subsequent Recovery pursuant to this proviso and (ii) the total amount of any
Subsequent Recovery distributed on such date to Certificateholders (as reduced
(x) by increases in the Outstanding Certificate Principal Balance of more senior
Classes of Certificates on such Distribution Date and (y) to reflect a
proportionate amount of what would (but for this clause (y)) have been the
increases in the Outstanding Certificate Principal Balance of Classes of
Certificates of equal seniority on such Distribution Date).
OUTSTANDING MORTGAGE LOAN: As to any Distribution Date, a Mortgage Loan
which was not paid in full during the related or any previous Principal
Prepayment Period, which did not become a Liquidated Mortgage Loan during the
related or any previous Principal Prepayment Period and which was not
repurchased under Section 2.02, 3.01, 5.01, 5.21 or 11.01 during the related or
any previous Principal Prepayment Period.
OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any Distribution
Date, the amount, if any, by which the Overcollateralization Target Amount
exceeds the Overcollateralized Amount on such Distribution Date (after giving
effect to distributions in respect of the Principal Remittance Amount on such
Distribution Date).
OVERCOLLATERALIZATION FLOOR: With respect to any Distribution Date, an
amount equal to the product of (i) 0.50% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date.
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any Distribution
Date, the lesser of (x) the Net Monthly Excess Cashflow for such Distribution
Date and (y) the Overcollateralization Deficiency Amount for such Distribution
Date.
OVERCOLLATERALIZATION RELEASE AMOUNT: With respect to any Distribution
Date, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the excess, if any, of (1) the Overcollateralized Amount for such
Distribution Date over (2) the Overcollateralization Target Amount for such
Distribution Date.
OVERCOLLATERALIZATION TARGET AMOUNT: With respect to any Distribution Date,
(1) prior to the Step-Down Date, 1.10% of the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date, (2) on or after the Step-Down
Date, provided a Trigger Event is not in effect, the greater of (x) 2.20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period and (y) the Overcollateralization Floor, and (3) on or
after the Step-Down Date, if a Trigger Event is in effect, the
Overcollateralization Target Amount for the immediately preceding Distribution
Date.
OVERCOLLATERALIZED AMOUNT: With respect to any Distribution Date, the
amount, if any, by which (x) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period exceeds (y) the sum
of the aggregate Outstanding Certificate Principal Balance of the Certificates
as of such Distribution Date (assuming that 100% of the Principal Remittance
Amount is applied as a principal payment on such Distribution Date). Initially,
the Overcollateralized Amount will be $5,225,290.69.
PASS-THRU ENTITY: A "Pass-Thru Entity" as defined in Section 860E(e)(6) of
the Code.
PAYING AGENT: JPMorgan Chase Bank, N.A., in the capacity to which it is
appointed by the Trustee pursuant to Section 4.05.
16
PERCENTAGE INTEREST: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made hereunder, such
percentage interest being equal, with respect to any Class, to the percentage
obtained by dividing the Outstanding Certificate Principal Balance of such
Certificate by the aggregate of the Outstanding Certificate Principal Balances
of all the Certificates of such Class and with respect to all Certificates, the
percentage obtained by dividing the Outstanding Certificate Principal Balance of
such Certificate by the aggregate of the Outstanding Certificate Principal
Balances of all the Certificates.
PERMITTED ACTIVITIES: The primary activities of the Trust created pursuant
to this Agreement which shall be: (i) holding Mortgage Loans transferred from
the Depositor and other assets of the Trust Fund, including any credit
enhancement and passive derivative financial instruments that pertain to
beneficial interests issued or sold to parties other than the Depositor, its
Affiliates, or its agents; (ii) issuing certificates and other interests in the
assets of the Trust Fund; (iii) receiving collections on the Mortgage Loans and
making payments on such certificates and interests in accordance with the terms
of this Agreement; and (iv) engaging in other activities that are necessary or
incidental to accomplish these limited purposes, which activities cannot be
contrary to the status of the Trust Fund as a qualified special purpose entity
under existing accounting literature.
PERSON: Any individual, corporation, partnership, limited liability
company, limited liability partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
PLAN: As defined in Section 4.02(d)(i).
PRIMARY INSURANCE POLICY: Each primary policy of mortgage guaranty
insurance or any replacement policy therefor referred to in Section 5.15 hereof.
PRINCIPAL BALANCE: 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 principal payments due on or before the Cut-off
Date whether or not paid) (or, in the case of a substitute Mortgage Loan
included in the Trust Fund pursuant to Section 3.03, the close of business as of
the date of substitution) reduced by all amounts previously distributed to
Certificateholders that are allocable to payments of principal on such Mortgage
Loan (including the principal portion of Advances of the Servicer made pursuant
to Section 6.03).
PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
sum of (i) the Basic Principal Distribution Amount for such Distribution Date
and (ii) the Overcollateralization Increase Amount for such Distribution Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan (other than Late Collections) which is received other than as part
of a monthly payment; provided, however, that the term Principal Prepayment does
not include Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries,
condemnation awards or other cash proceeds from a source other than the
applicable Mortgagor.
PRINCIPAL PREPAYMENT PERIOD: With respect to any Distribution Date, the
period beginning on the first day of the month preceding the month in which such
Distribution Date occurs and ending on the last day of such month.
PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date, the
portion of the Available Distribution Amount equal to the sum of (i) all
scheduled payments of principal collected or advanced on the Mortgage Loans by
the Servicer that were due during the related Due Period, (ii) the
17
principal portion of each full and partial principal prepayment made by a
borrower on a Mortgage Loan during the related Principal Prepayment Period,
(iii) each other unscheduled collection, including insurance proceeds and net
liquidation proceeds representing or allocable to recoveries of principal of the
Mortgage Loans received during the related Prepayment Period, including any
Subsequent Recoveries on the Mortgage Loans, (iv) the principal portion of the
purchase price of each Mortgage Loan repurchased by the Seller due to a defect
in documentation or a material breach of a representation and warranty with
respect to such Mortgage Loan or, in the case of a permitted substitution of a
defective Mortgage Loan, the amount representing any principal adjustment in
connection with any such replaced Mortgage Loan with respect to the related
Principal Prepayment Period and (v) in connection with any optional purchase of
the Mortgage Loans, the principal portion of the Purchase Price, up to the
principal portion of such Purchase Price.
PTCE: As defined in Section 4.02(d)(i).
PURCHASE PRICE: With respect to any Mortgage Loan required to be purchased
on any date pursuant to Section 2.02, 3.01, 5.01, 5.21 or 11.01, an amount equal
to the sum of (a) 100% of the Principal Balance thereof, (b) unpaid accrued
interest at the Mortgage Rate thereon from the Due Date on which interest was
last paid by the Mortgagor or Advanced by the Servicer to the Due Date next
following the date of repurchase, (c) the aggregate of any unreimbursed Advances
and any unreimbursed Servicing Advances and (d) any unreimbursed costs,
penalties and/or damages incurred by the Trust Fund and/or the Trustee in
connection with any violation relating to such Mortgage Loan of any predatory or
abusive lending law.
QUALIFIED INSURER: An insurance company duly qualified as such under the
laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by FNMA and
FHLMC and whose claims-paying ability is rated in the two highest rating
categories by S&P and ▇▇▇▇▇'▇ with respect to primary mortgage insurance and in
the two highest rating categories for general policyholder rating and financial
performance index rating by A.M. Best Company or its successor in interest with
respect to hazard and flood insurance.
RATE ADJUSTMENT DATE: The second LIBOR Business Day prior to the first day
of each Accrual Period after the initial Accrual Period.
RATE CAP CEILING: With respect to the Class A-2-B Yield Maintenance
Agreement and the applicable Distribution Date, the rate specified in Schedule I
to Exhibit U-1 under the heading "Ceiling" for that Distribution Date.
RATING AGENCY: Any nationally recognized statistical rating organization,
or its successor, that rated one or more Classes of Certificates at the request
of the Depositor at the time of the initial issuance of the Certificates. If
such organization or a successor is no longer in existence, "Rating Agency"
shall be such nationally recognized statistical rating organization, or other
comparable Person, designated by the Depositor, notice of which designation
shall be given to the Trustee and the Servicer. References herein to the two
highest long-term debt rating categories of a Rating Agency shall mean AA or
better in the case of S&P and Fitch Ratings and Aa or better in the case of
▇▇▇▇▇'▇.
REALIZED LOSS: With respect to (i) a Liquidated Mortgage Loan, the amount,
if any, by which the unpaid Principal Balance and accrued interest thereon at a
rate equal to the Net Mortgage Rate exceeds the amount actually recovered by the
Servicer with respect thereto (net of reimbursement of Advances and Servicing
Advances) at the time such Mortgage Loan became a Liquidated Mortgage Loan or
(ii) with respect to a Mortgage Loan which is not a Liquidated Mortgage Loan,
any amount of principal
18
that the Mortgagor is no longer legally required to pay (except for the
extinguishment of debt that results from the exercise of remedies due to default
by the Mortgagor).
REALIZED LOSS INTEREST SHORTFALL: The meaning specified in Section 6.05(c).
RECORD DATE: With respect to the Classes of Certificates, other than the
Class A-1-A, Class A-1-B and Class A-2-B Certificates, the close of business of
the last Business Day of the month preceding the month of the related
Distribution Date and, with respect to the Class A-1-A, Class A-1-B and Class
A-2-B Certificates, the close of business on the Business Day immediately
preceding the Distribution Date.
REFERENCE BANK RATE: As of 11:00 A.M. London time, on the day that is two
LIBOR Business Days prior to the immediately preceding Distribution Date, the
rate at which deposits are offered in U.S. Dollars by the reference banks (which
shall be three major banks engaged in transactions in the London interbank
market, selected by the Servicer) to prime banks in the London interbank market
for a period of one month in amounts approximately equal to the aggregate of the
Outstanding Certificate Principal Balance of the Class A-1-B Certificates and
the Class A-2-B Certificates in accordance with the following procedures. The
Servicer will request the principal London office of each of the reference banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate will be the arithmetic mean of the quotations. If on such
date fewer than two quotations are provided as requested, the rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Servicer as of 11:00 A.M., New York City time, on such date for
loans in U.S. Dollars to leading European banks for a period of one month in
amounts approximately equal to the aggregate of the Outstanding Certificate
Principal Balance of the Class A-1-B Certificates and the Class A-2-B
Certificates. In the event no such quotations can be obtained, the rate will be
LIBOR for the prior Distribution Date, or in the case of the first Rate
Adjustment Date, 5.08%.
REGULATION AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
RELEVANT MORTGAGE LOAN: The meaning specified in Section 5.01.
RELATED CERTIFICATES: With respect to each Class of Lower-Tier REMIC Marker
Classes, the related Certificates set forth in the table in Section 2.04(a).
RELIEF ACT: The Servicemembers Civil Relief Act or the California Military
and Veterans Code, as amended, or any other similar state or local law.
RELIEF ACT REDUCTIONS: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month is
less than (ii) interest accrued thereon for such month pursuant to the Mortgage
Note.
REMIC: A "real estate mortgage investment conduit," as such term is defined
in Section 860D of the Code. References herein to "a REMIC" or "the REMICs"
shall mean one or all, as the context requires, of the REMICs created hereunder.
19
REMIC POOL: Each of the Lower-Tier REMIC and the Upper-Tier REMIC.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
REMICs which appear at Sections 860A through 860G of Part IV of Subchapter M of
Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department
of the Treasury temporary, proposed or final regulations and rulings promulgated
thereunder, as the foregoing are in effect (or with respect to proposed
regulations, are proposed to be in effect) from time to time.
REMIC REGULAR INTEREST: (i) Any of the rights under any of the Certificates
(other than the Class A-R Certificates and the Class CE Certificates) other than
the rights in interest rate cap contracts described in Section 2.04 and (ii) the
Uncertificated Class CE Interest.
REMIC REPORTING AGENT: As defined in Section 7.02(b).
REPURCHASE PROCEEDS: All proceeds of any Mortgage Loan or property acquired
in respect thereof repurchased pursuant to Section 2.02, 3.01, 5.01, 5.21 or
11.01.
RESERVE FUND: The Eligible Account established pursuant to Section 5.29.
RESIDUAL INTEREST: The interest represented by (i) amounts, if any,
remaining in the Collection Account following termination of the Trust Fund
after payments to the Class A Certificateholders (other than the Class A-R
Certificateholders), the Class M Certificateholders, the Class B
Certificateholders and the Class CE Certificateholders and (ii) amounts paid in
respect of principal and accrued interest on the Class A-R Certificates, other
than, in the case of both (i) and (ii), amounts attributable to the Class LT-R
Interest.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any senior vice
president, any vice president, any assistant vice president, any senior trust
officer, any trust officer or any other officer of the Trustee in its Agency &
Trust Office customarily performing functions similar to those performed by any
of the above designated officers.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or
its successor in interest.
SALE AGREEMENT: The Mortgage Loan Sale Agreement dated as of May 1, 2006
between the Depositor and CHF.
▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION: The meaning specified in Section 5.24(f).
SECTION 302 REQUIREMENTS: Any rules or regulations promulgated pursuant to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be amended from time to time).
SECURITIES ACT: The Securities Act of 1933, as amended.
SELLER: CHF.
SENIOR ENHANCEMENT PERCENTAGE: For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Outstanding Certificate
Principal Balance of the Class M and Class B Certificates (after giving effect
to the distribution of the Principal Distribution Amount on such Distribution
Date) and (ii) the Overcollateralized Amount (after giving effect to the
distribution of the Principal Distribution Amount on such Distribution Date) by
(y) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period.
20
SENIOR PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, an amount
equal to the excess of (x) the aggregate Outstanding Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of (1) 88.20% and (2) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period and (B) the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period minus the Overcollateralization
Floor.
SERVICER: Chase or any successor under this Agreement as herein provided.
SERVICING ADVANCES: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations and which are "unanticipated expenses" (within the meaning of
Treasury regulations section 1.860G-1(b)(3)(ii)) including, but not limited to,
the cost of (i) the preservation, restoration and protection of the Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan), (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) if the Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan) is acquired in
satisfaction of the Mortgage, (iv) taxes and assessments on the Mortgaged
Properties subject to the Mortgage Loans and (v) compliance with the obligations
under Section 5.21.
SERVICING CRITERIA: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
SERVICING FEE: The amount of the monthly fee paid for the servicing of the
Mortgage Loans, equal to, as of any Distribution Date, with respect to each
Mortgage Loan, one-twelfth of the Servicing Fee Rate of the Principal Balance
thereof as of the Determination Date in the preceding month, subject to
adjustment as provided in Section 6.05. The Servicing Fee shall be payable only
at the time of and with respect to those Mortgage Loans for which payment is in
fact made of the entire amount of the Monthly Payments that shall have come due
and only at the time such Monthly Payment shall be made. The right to receive
the Servicing Fee is limited to, and the Servicing Fee is payable solely from,
the interest portion of such Monthly Payments (or the interest portion of any
Principal Prepayment in full) collected by the Servicer, or as otherwise
provided under Section 5.09 or 5.23.
SERVICING FEE RATE: 0.2660% per annum.
SERVICING OFFICER: Any officer of the Servicer or any Sub-Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name appears on a written certificate listing servicing officers furnished
to the Trustee by the Servicer on or prior to the Closing Date, and signed on
behalf of the Servicer or any Sub-Servicer by its President, any Vice President
or its Treasurer, as such certificate may from time to time be amended.
SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
SIMILAR LAW: The meaning specified in Section 4.02(d).
SINGLE CERTIFICATE: A Certificate of any Class that evidences the smallest
permissible original denomination for such Class of Certificates as specified in
Section 4.01(d).
STANDARD HAZARD POLICY: Each standard hazard insurance policy or
replacement therefor referred to in Section 5.16.
21
STARTUP DAY: The meaning specified in Section 2.04(a).
STATED PRINCIPAL BALANCE: For any Mortgage Loan at any Due Date, the unpaid
principal balance of such Mortgage Loan as of such Due Date as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous principal prepayments and
liquidation proceeds allocable to principal and to the payment of principal due
on such Due Date and irrespective of any delinquency in payment by the related
mortgagor.
STEP-DOWN DATE: The earlier to occur of (1) the Distribution Date on which
the aggregate Outstanding Certificate Principal Balance of the Class A
Certificates has been reduced to zero and (2) the later to occur of (x) the
Distribution Date occurring in June 2009 and (y) the first Distribution Date on
which the Senior Enhancement Percentage is greater than or equal to 11.80% (for
the purpose of this definition only, the Senior Enhancement Percentage shall be
calculated prior to the distribution of the Principal Distribution Amount to the
Class M and Class B Certificates).
SUBCONTRACTOR: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans as determined by and under the direction or
authority of the Servicer or a Sub-Servicer.
SUB-SERVICER: Any Person that services Mortgage Loans on behalf of the
Servicer or any Sub-Servicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement that are identified in Item 1122(d) of Regulation AB. Any
Sub-Servicer shall meet the qualifications set forth in Section 5.02.
SUB-SERVICING AGREEMENT: Any agreement between the Servicer and any
Sub-Servicer, relating to servicing or administration of certain Mortgage Loans
as provided in Section 5.02, in such form as has been approved by the Servicer
and the Depositor.
SUBSEQUENT RECOVERY: The amount, if any, recovered by the Servicer with
respect to a Liquidated Mortgage Loan with respect to which a Realized Loss has
been incurred after liquidation and disposition of such Mortgage Loan.
SUBSTITUTE EXCESS INTEREST: As defined in Section 3.03.
TELERATE SCREEN PAGE 3750: The display designated as page 3750 on the Dow
▇▇▇▇▇ Telerate Service or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks.
TRIGGER EVENT: A Trigger Event is in effect with respect to any
Distribution Date on or after the Step-Down Date if either (i) the percentage
obtained by dividing (x) the aggregate Stated Principal Balance of the Mortgage
Loans that are 60 days or more delinquent (including, for this purpose, Mortgage
Loans in REO, foreclosure or bankruptcy status) as of the last day of the prior
calendar month by (y) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the prior calendar month exceeds 50.00% of the
Senior Enhancement Percentage for such Distribution Date or (ii) the cumulative
Realized Losses on the Mortgage Loans (after reduction for all Subsequent
Recoveries received from the Cut-off Date through the last day of the related
Due Period) as a percentage of the original aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date is greater than the percentage set
forth in the following table:
22
RANGE OF DISTRIBUTION DATES PERCENTAGE
--------------------------- ----------
June 2008 - May 2009 0.20%*
June 2009 - May 2010 0.45%*
June 2010 - May 2011 0.80%*
June 2011 - May 2012 1.15%*
June 2012 and thereafter 1.35%
----------
* The percentages indicated are the percentages applicable for the first
Distribution Date in the corresponding range of Distribution Dates. The
percentage for each succeeding Distribution Date in a range shall increase
incrementally by 1/12th of the positive difference between the percentage
applicable to the first Distribution Date in that range and the percentage
applicable to the first Distribution Date in the succeeding range.
TRUST: The Trust created pursuant to this Agreement.
TRUST FUND: The corpus of the Trust consisting of (i) the Mortgage Loans,
(ii) such assets as shall from time to time be identified as deposited in the
Collection Account, the Certificate Account and the Reserve Fund, (iii) the
Trust's rights under the Yield Maintenance Agreements, (iv) property which
secured a Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure, (v) Standard Hazard Policies and any other insurance
policies, and the proceeds thereof and (vi) any proceeds of any of the
foregoing.
TRUSTEE: U.S. Bank National Association, a national banking association and
its successors and any corporation resulting from or surviving any consolidation
or merger to which it or its successors may be a party, and any successor
trustee at the time serving as successor trustee hereunder, appointed as herein
provided.
UNCERTIFICATED CLASS CE INTEREST: An uncertificated interest with an
initial principal amount equal to the the excess of (x) the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date over (y) the
aggregate Original Certificate Principal Balance of the Certificates (exclusive
of the Class CE Certificates) and having (i) the same rights to payments as the
Class CE Certificates and (ii) the right to payments treated as distributed to
the Class CE Certificates pursuant to Section 2.04(b) hereof; provided, however,
that such interest shall have no right to receive payments under the Yield
Maintenance Agreements or from the Reserve Fund and shall have no obligation to
make any payments treated as paid by the Class CE Certificates pursuant to
interest rate cap contracts under Section 2.04(b).
UNPAID REALIZED LOSS AMOUNT: For any Class of Class A, Class M, Class B or
Class CE Certificates and any Distribution Date, the unpaid portion of the
aggregate Allocated Realized Loss Amount allocated to that Class, as reduced by
an amount equal to any increase in the related Outstanding Certificate Principal
Balance due to the receipt of Subsequent Recoveries.
UPPER-TIER REMIC: The Upper-Tier REMIC as described in Section 2.04.
U.S. PERSON: A "United States Person" as defined in Section 7701(a)(30) of
the Code.
YIELD MAINTENANCE AGREEMENTS: The yield maintenance agreements described in
Section 5.29 and set forth in Exhibit U and Exhibit U-1 hereto.
[END OF ARTICLE I]
23
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
Section 2.01 Conveyance of Mortgage Loans. The Depositor, concurrently with
the execution and delivery hereof, does hereby sell, transfer, assign, set over
and convey to the Trustee without recourse all the right, title and interest of
the Depositor in and to the Mortgage Loans, including all interest and principal
received on or with respect to the Mortgage Loans on or after the Cut-off Date
(other than Monthly Payments due on the Mortgage Loans on or before the Cut-off
Date).
In connection with such assignment, the Depositor does hereby deliver to,
and deposit with, the Custodian on behalf of the Trustee the following documents
or instruments with respect to each Mortgage Loan so assigned:
(i) With respect to each Mortgage Loan which is not a Co-op Loan:
(A) Original Mortgage Note (or a lost note affidavit (including a copy of
the original Mortgage Note)) or (II) original consolidation, extension and
modification agreement (or a lost note affidavit (including a copy of the
original consolidation, extension and modification agreement)), in either case
endorsed "Pay to the order of U.S. Bank National Association, as trustee,
without recourse".
(B) The original Mortgage (including all riders thereto) with evidence of
recording thereon, or a copy thereof certified by the public recording office in
which such Mortgage has been recorded or, if the original Mortgage has not been
returned from the applicable public recording office, a true certified copy,
certified by the Seller, of the original Mortgage together with a certificate of
the Seller certifying that the original Mortgage has been delivered for
recording in the appropriate public recording office of the jurisdiction in
which the Mortgaged Property is located.
(ii) With respect to each Non-MERS Mortgage Loan which is not a Co-op Loan:
(A) The original Assignment of Mortgage to "U.S. Bank National Association,
as trustee (Chase Mortgage Finance Corporation)," which assignment shall be in
form and substance acceptable for recording, or a copy certified by the Seller
as a true and correct copy of the original Assignment of Mortgage which has been
sent for recordation. Subject to the foregoing, such assignments may, if
permitted by law, be by blanket assignments for Mortgage Loans covering
Mortgaged Properties situated within the same county. If the Assignment of
Mortgage is in blanket form, a copy of the Assignment of Mortgage shall be
included in the related individual Mortgage File.
(B) The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a written
commitment or interim binder or preliminary report of title issued by the title
insurance or escrow company.
(C) Originals of all recorded intervening Assignments of Mortgage, or
copies thereof, certified by the public recording office in which such
Assignments or Mortgage have been recorded showing a complete chain of title
from the originator to the Depositor, with evidence of recording, thereon, or a
copy thereof certified by the public recording office in which such Assignment
of Mortgage has been recorded or, if the original Assignment of Mortgage has not
been returned from the applicable public recording office, a true certified
copy, certified by the Seller of the original Assignment of Mortgage together
with a certificate of the Seller certifying that the original Assignment of
Mortgage has been delivered for recording in the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is located.
24
(D) Originals, or copies thereof certified by the public recording office
in which such documents have been recorded, of each assumption, extension,
modification, written assurance or substitution agreements, if applicable, or if
the original of such document has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of such
original document together with certificate of Seller certifying the original of
such document has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located.
(E) If the Mortgage Note or Mortgage or any other material document or
instrument relating to the Mortgage Loan has been signed by a Person on behalf
of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such Person to sign bearing evidence that such
instrument has been recorded, if so required in the appropriate jurisdiction
where the Mortgaged Property is located (or, in lieu thereof, a duplicate or
conformed copy of such instrument, together with a certificate of receipt from
the recording office, certifying that such copy represents a true and complete
copy of the original and that such original has been or is currently submitted
to be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the original power
of attorney or other such instrument has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located.
(iii) With respect to each Co-op Loan:
(A) (I) The original Mortgage Note (or a lost note affidavit (including a
copy of the original Mortgage Note)) or (II) original consolidation,
extension and modification agreement (or a lost note affidavit
(including a copy of the original consolidation, extension and
modification agreement)), in either case endorsed "Pay to the order of
U.S. Bank National Association, as trustee, without recourse."
(B) The original Mortgage entered into by the Mortgagor with respect to
such Co-Op Loan.
(C) The original Assignment of Mortgage to "U.S. Bank National Association
as trustee (Chase Mortgage Finance Corporation)".
(D) Original assignments of Mortgage showing a complete chain of
assignment from the originator of the related Co-Op Loan to the
Seller.
(E) Original Form UCC-1 and any continuation statements with evidence of
filing thereon entered into by the Mortgagor with respect to such
Co-Op Loan.
(F) Form UCC-3 (or copy thereof) by the applicable Mortgage Loan Seller or
its agent assigning the security interest covered by such Form UCC-1
to "U.S. Bank National Association as trustee", together with all
Forms UCC-3 (or copies thereof) showing a complete chain of assignment
from the originator of the related Co-op Loan to the Seller, with
evidence of recording thereon.
(G) Stock certificate representing the stock allocated to the related
dwelling unit in the related residential cooperative housing
corporation and pledged by the related Mortgagor to the originator of
such Co-op Loan with a stock power in blank attached.
(H) Original proprietary lease.
(I) Original assignment of proprietary lease, to the Trustee, and all
intervening assignments thereof.
25
(J) Original recognition agreement of the interests of the mortgagee with
respect to the Co-op Loan by the residential cooperative housing
corporation, the stock of which was pledged by the related Mortgagor
to the originator of such Co-op Loan.
(K) Originals of any assumption, consolidation or modification agreements
relating to any of the items specified in (A) through (F) above with
respect to such Co-op Loan.
If in connection with any Mortgage Loan which is not a Co-op Loan the
Depositor cannot deliver the Mortgage, Assignments of Mortgage, or assumption,
consolidation or modification agreement, as the case may be, with evidence of
recording thereon concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage, Assignments of Mortgage, or assumption, consolidation or modification
agreement, as the case may be, has been delivered for recordation, the Depositor
shall deliver or cause to be delivered to the Trustee written notice stating
that such Mortgage, Assignments of Mortgage, or assumption, consolidation or
modification agreement, as the case may be, has been delivered to the
appropriate public recording office for recordation. Thereafter, the Depositor
shall deliver or cause to be delivered to the Trustee such Mortgage, Assignments
of Mortgage, or assumption, consolidation or modification agreement, as the case
may be, with evidence of recording indicated thereon upon receipt thereof from
the public recording office.
With respect to any Non-MERS Mortgage Loans which are not Co-op Loans, and
as to which the related Mortgaged Property is located in Florida, the Servicer
shall cause to be recorded in the appropriate public recording office for real
property records each Assignment of Mortgage referred to in this Section 2.01 as
soon as practicable. With respect to any Non-MERS Mortgage Loans which are not
Co-op Loans as to which the related Mortgaged Property is located outside of
Florida, the Servicer shall not be obligated to cause to be recorded the
Assignment of Mortgage referred to in this Section 2.01. With respect to Co-op
Loans as to which the related dwelling unit is located in Florida, the Servicer
shall cause to be filed in the appropriate filing office the Form UCC-3 referred
to in this Section 2.01 as soon as practicable. With respect to any Co-op Loans
as to which the related dwelling unit is located outside Florida, the Servicer
shall not be obligated to cause to be filed the Form UCC-3 referred to in this
Section 2.01. While each such Assignment of Mortgage or Form UCC-3 is being
recorded or filed, as applicable, the Servicer shall deliver to the Trustee a
photocopy of such document. If any such Assignment of Mortgage or Form UCC-3 is
returned unrecorded or unfiled to the Servicer because of any defect therein,
the Servicer shall cause such defect to be cured and such document to be
recorded or filed in accordance with this paragraph. The Depositor shall deliver
or cause to be delivered each such original recorded or filed Assignment of
Mortgage and intermediate assignment or Form UCC-3 to the Trustee within 270
days of the Closing Date or shall deliver to the Trustee on or before such date
an Officer's Certificate stating that such document has been delivered to the
appropriate public recording or filing office for recording or filing, but has
not been returned solely because of a delay caused by such recording or filing
office. In any event, the Depositor shall use all reasonable efforts to cause
each such document with evidence of recording or filing thereon to be delivered
to the Trustee within 300 days of the Closing Date.
With respect to each MERS Mortgage Loan, the Trustee, at the expense of the
Depositor and at the direction and with the cooperation of the Servicer, shall
cause to be taken such actions as are necessary to cause the Trustee to be
clearly identified as the owner of each such Mortgage Loan on the records of
MERS for purposes of the system of recording transfers of beneficial ownership
of mortgages maintained by MERS.
The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee. Neither the Depositor nor the
Servicer shall take any action inconsistent
26
with such ownership and shall not claim any ownership interest therein. The
Depositor and the Servicer shall respond to any third party inquiries with
respect to ownership of the Mortgage Loans by stating that such ownership is
held by the Trustee on behalf of the Certificateholders. Mortgage documents
relating to the Mortgage Loans not delivered to the Trustee are and shall be
held in trust by the Servicer or any Sub-Servicer, for the benefit of the
Trustee as the owner thereof, and the Servicer's or such Sub-Servicer's
possession of the contents of each Mortgage File so retained is for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Servicer or such Sub-Servicer is in a custodial capacity only.
The Depositor agrees to take no action inconsistent with the Trustee's ownership
of the Mortgage Loans, to promptly indicate to all inquiring parties that the
Mortgage Loans have been sold and to claim no ownership interest in the Mortgage
Loans. Each Mortgage File and the mortgage documents relating to the Mortgage
Loans contain proprietary business information of the Servicer and its
customers. The Trustee and the Depositor agree that they will not use such
information for business purposes without the express written consent of the
Servicer and that all such information shall be kept strictly confidential.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee all
of its right, title and interest in that portion of the Trust Fund described in
items (ii), (iii), (iv) and (v) of the definition thereof and further assigns to
the Trustee for the benefit of the Certificateholders those representations and
warranties of the Seller contained in the Sale Agreement and described in
Section 3.01 hereof and the benefit of the repurchase obligations of the Seller
described in Sections 2.02 and 3.01 hereof and the obligations of the Seller
contained in the Sale Agreement to take, at the request of the Depositor or the
Trustee, all action on its part which is reasonably necessary to ensure the
enforceability of a Mortgage Loan.
The parties hereto agree and understand that it is not intended that any
mortgage loan be included in the Trust that is any of (i) a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act effective November 27,
2003, (ii) a "High-Cost Home Loan" as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004, (iii) a "High-Cost Home Mortgage Loan"
as defined in the Massachusetts Predatory Home Loan Practices Act effective
November 7, 2004 or (iv) a "High-Cost Home Loan" as defined by the Indiana High
Cost Home Loan Law effective January 1, 2005.
27
Section 2.02 Acceptance by Trustee. Except as set forth in the Exception
Report delivered contemporaneously herewith (the "Exception Report"), the
Trustee acknowledges receipt by the Custodian on the Trustee's behalf of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that the
Custodian holds and will hold on the Trustee's behalf such documents and any
other documents constituting a part of the Mortgage Files delivered to it in
trust for the use and benefit of all present and future Certificateholders. The
Depositor will cause the Seller to repurchase any Mortgage Loans to which an
exception was taken in the Exception Report unless such exception is cured to
the satisfaction of the Trustee within 45 Business Days of the Closing Date. The
Trustee may accept delivery of such Mortgage Files by the Custodian on its
behalf. The Custodian will deliver a copy of the Exception Report to the
Depositor.
The Custodian, on the Trustee's behalf, agrees, for the benefit of
Certificateholders, to review each Mortgage File delivered to it within 270 days
after the Closing Date to ascertain that all documents required by Section 2.01
have been executed and received, and that such documents relate to the Mortgage
Loans identified in Exhibit A that have been conveyed to it. If the Custodian on
the Trustee's behalf finds any document or documents constituting a part of a
Mortgage File to be missing or defective (that is, mutilated, damaged, defaced
or unexecuted) in any material respect, the Custodian on the Trustee's behalf
shall promptly (and in any event within no more than five Business Days) after
such finding so notify the Servicer, the Seller and the Depositor. In addition,
the Custodian on the Trustee's behalf shall also notify the Servicer, the Seller
and the Depositor, if (a) in examining the Mortgage Files, the documentation
shows on its face (i) any adverse claim, lien or encumbrance, (ii) that any
Mortgage Note was overdue or had been dishonored, (iii) any evidence on the face
of any Mortgage Note or Mortgage of any security interest or other right or
interest therein, or (iv) any defense against or claim to the Mortgage Note by
any party or (b) the original Mortgage with evidence of recording thereon with
respect to a Mortgage Loan is not received within 270 days of the Closing Date;
provided, however, that if the Depositor cannot deliver the original Mortgage
with evidence of recording thereon because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation, the
Depositor shall deliver or cause to be delivered to the Custodian and the
Trustee written notice stating that such Mortgage has been delivered to the
appropriate public recording officer for recordation and thereafter the
Depositor shall deliver or cause to be delivered such Mortgage with evidence of
recording thereon upon receipt thereof from the public recording office. The
Depositor shall request that the Seller correct or cure such omission, defect or
other irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 3.03, within 60 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission or
defect within such period, that the Seller purchase such Mortgage Loan from the
Trustee within 90 days from the date the Depositor notified the Seller and the
Trustee of such omission, defect or other irregularity at the Purchase Price of
such Mortgage Loan. The Purchase Price for any Mortgage Loan purchased pursuant
to this Section 2.02 shall be paid to the Servicer and deposited by the Servicer
in the Collection Account promptly upon receipt, and, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be necessary to vest in the Seller or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Seller to purchase,
cure or substitute any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders. The Trustee shall be under no duty or obligation to inspect,
review and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable or appropriate to the represented
purpose, or that they have actually been recorded, or that they are other than
what they purport to be on their face. The
28
Trustee shall keep confidential the name of each Mortgagor and shall not solicit
any such Mortgagor for the purpose of refinancing the related Mortgage Loan.
Within 280 days of the Closing Date, the Trustee based solely on
information provided to it by the Custodian shall deliver to the Depositor and
the Servicer the Trustee's Certification, substantially in the form of Exhibit G
attached hereto, setting forth the status of the Mortgage Files as of such date.
Section 2.03 Trust Fund; Authentication of Certificates. The Trustee
acknowledges and accepts the assignment to it of the Trust Fund created pursuant
to this Agreement in trust for the use and benefit of all present and future
Certificateholders. The Trustee acknowledges the assignment to it for the
benefit of the Trust Fund of the Mortgage Loans and has caused to be
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Mortgage Loans, Certificates duly authenticated by the Trustee or, if an
Authenticating Agent has been appointed pursuant to Section 4.06, the
Authenticating Agent in authorized denominations evidencing ownership of the
entire Trust Fund.
Section 2.04 REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Paying Agent to make
appropriate elections to treat the Trust Fund as comprising two REMICs (the
Lower-Tier REMIC and the Upper-Tier REMIC). This Agreement shall be construed so
as to carry out the intention of the parties that each REMIC created hereunder
be treated as a REMIC at all times prior to the date on which the Trust Fund is
terminated. The Closing Date is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
The Trust Fund, for federal income tax purposes will consist of (i) the REMIC
Pools, (ii) the grantor trust described in Section 2.04(c), (iii) the Yield
Maintenance Agreements and (iv) the Reserve Fund. The Lower-Tier REMIC shall
hold as assets all property of the Trust Fund, other than the Lower-Tier REMIC
Interests and the assets described in clauses (ii), (iii) and (iv) above. Each
of the Lower-Tier REMIC Regular Interests is hereby designated a "regular
interest" (within the meaning of Section 860G(a)(1) of the Code) in the
Lower-Tier REMIC. The Upper-Tier REMIC shall hold as assets the several classes
of uncertificated Lower-Tier REMIC Regular Interests. Each of the REMIC Regular
Interests is hereby designated as a "regular interest" (within the meaning of
Section 860G(a)(1) of the Code) in the Upper-Tier REMIC. The Class LT-R Interest
is hereby designated as the sole residual interest (within the meaning of
Section 860G(a)(2) of the Code) in the Lower-Tier REMIC. The Residual Interest
is hereby designated as the sole residual interest (within the meaning of
Section 860G(a)(2) of the Code) in the Upper-Tier REMIC. The Class A-R
Certificate evidences ownership of the Class LT-R Interest and the Residual
Interest. All interests described in this Section 2.04(a) shall be designated as
such on the Startup Day.
29
LOWER-TIER REMIC
The Lower-Tier REMIC shall issue the Lower-Tier REMIC Interests as
designated below. The following table specifies the class designation,
pass-through rate, initial principal amount and Related Certificates (as
applicable) for each class of Lower-Tier REMIC Interest.
Lower-Tier Initial
REMIC Interest Principal Amount Pass-Through Rate Related Certificates
-------------- ---------------- ----------------- --------------------
LTA-R (1) (3) A-R
LTA-1-A (1) (3) A-1-A
LTA-1-B (1) (3) A-1-B
LTA-2-A (1) (3) A-2-A
LTA-2-B (1) (3) A-2-B
LTA-3 (1) (3) A-3
LTA-4 (1) (3) A-4
LTA-5 (1) (3) A-5
LTA-6 (1) (3) A-6
LTM-1 (1) (3) M-1
LTM-2 (1) (3) M-2
LTB-1 (1) (3) B-1
LTB-2 (1) (3) B-2
LTX (2) (3) (5)
LT-R (4) (4) (5)
(1) The initial principal amount of each of these Lower-Tier REMIC Interests is
equal to 50% of the initial principal amount of the Related Certificates.
(2) The initial principal amount of the Class LTX Interest is equal to the
excess of the (i) the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date over (ii) the aggregate initial principal balance of the
Lower-Tier REMIC Marker Classes.
(3) The pass-through rate on each of these interest is equal to the Net WAC
(without regard to any adjustment in the definition thereof for the Class A-1-B
or Class A-2-B Certificates).
(4) The Class LT-R Interest has no principal amount and bears no interest. The
Class LT-R Interest is the sole class of residual interest of the Lower-Tier
REMIC and is represented by the Class A-R Certificate.
(5) The Class LTX Interest and the Class LT-R Interest have no Related
Certificates.
All payments of principal and interest at the Net Mortgage Rate on each of the
Mortgage Loans shall be paid to the Lower-Tier REMIC Regular Interests until the
principal balance of all such interests have been reduced to zero and any losses
allocated to such interests have been reimbursed. Any excess amounts shall be
distributed to the Class LT-R Interest. On each Distribution Date, an amount
equal to 50% of the increase in the Overcollateralized Amount shall be payable
as a reduction of the principal amounts of the Lower-Tier REMIC Marker Classes
(with such amount allocated among the Lower-Tier REMIC Marker Classes so that
each Lower-Tier REMIC Marker Class will have its principal reduced by an amount
equal to 50% of any increase in the Overcollateralized Amount that results in a
reduction in the principal balance of its Related Certificates) and will be
accrued and added to the principal balance of the Class
30
LTX Interest. All payments of scheduled principal and prepayments of principal
on the Mortgage Loans shall be allocated 50% to the Class LTX Interest and 50%
to the Lower-Tier REMIC Marker Classes (with principal payments allocated to
each of the Lower-Tier REMIC Marker Classes in an amount equal to 50% of the
principal amounts distributed to the Related Certificates in reduction of their
principal amounts). Notwithstanding the preceding sentence, an amount equal to
the principal payments that result in a reduction in the Overcollateralized
Amount shall be treated as payable entirely to the Class LTX Interest. Realized
Losses that are allocated to the Certificates shall be applied to the Lower-Tier
REMIC Marker Classes and the Class LTX Interest so that after all distributions
have been made on each Distribution Date (i) the principal balance of each of
the Lower-Tier REMIC Marker Classes is equal to 50% of the principal balance of
the Related Certificates and (ii) the principal balance of the Class LTX
Interest is equal to the sum of (x) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50% of the Overcollateralized Amount. Each
Lower-Tier REMIC Marker Class shall be entitled to receive an amount equal to
50% of all amounts distributed to the Related Certificates in respect of
unreimbursed amounts of Realized Losses. The Class LTX Interest shall be
entitled to receive all other amounts distributed to the Certificates in respect
of unreimbursed amounts of Realized Losses.
If on any Distribution Date the Outstanding Certificate Principal Balance of any
Class of Certificates is increased due to Subsequent Recoveries pursuant to the
definition of "Outstanding Certificate Principal Balance", then there shall be
an equivalent increase in the principal amounts of the Lower-Tier REMIC Regular
Interests, with such increase allocated (before the making of distributions and
the allocation of losses on the Lower-Tier REMIC Regular Interests on such
Distribution Date) among the Lower-Tier REMIC Regular Interests so that (i) each
of the Lower-Tier Marker Classes has a principal balance equal to 50% of the
principal balance of the Related Certificates, (ii) the Class LTX Interest has a
principal balance equal to the sum of (x) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50% of the Overcollateralized Amount.
UPPER-TIER REMIC
The assets of the Upper-Tier REMIC shall be the Lower-Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper-Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper-Tier REMIC.
The beneficial ownership of the Class LT-R Interest and the Residual
Interest shall be represented by the Class A-R Certificate.
(b) It is intended that the rights of each Class of the Class A (other than
the Class A-R), Class M and Class B Certificates to receive payments in respect
of Basis Risk Shortfall Carryover Amounts shall be treated as a right in
interest rate cap contracts written by the Class CE Certificateholders in favor
of the Holders of each Class of the Class A (other than the Class A-R), Class M
and Class B Certificates and such shall be accounted for as property held
separate and apart from the regular interests in the Upper-Tier REMIC held by
the Holders of the Class A (other than the Class A-R), Class M and Class B
Certificates. For information reporting requirements, the rights of the Class A
(other than the Class A-R), Class M and Class B Certificates to receive payments
in respect of Basis Risk Shortfall Caryover Amounts shall be assumed to have
zero value or a de minimis value. This provision is intended to satisfy the
requirements of Treasury Regulations Section 1.860G-2(i) for the treatment of
property rights coupled with REMIC interests to be separately respected and
shall be interpreted consistently with such regulation. On each Distribution
Date, to the extent that any of the Class A (other than the Class A-R), Class M
and Class B Certificates receive payments of Basis Risk Shortfall Carryover
Amounts, such amounts, to the extent not derived from payments on the Yield
Maintenance Agreements, will be treated as distributed to the Class CE
Certificates pro rata in payment of the amounts specified in Section 6.01(c)(18)
and then paid to the relevant Class of Certificates pursuant to the related
interest rate cap
31
agreement.
(c) The parties intend that the portion of the Trust Fund consisting of the
Uncertificated Class CE Interest, the Yield Maintenance Agreements, the Reserve
Fund and the obligation of the Holders of the Class CE Certificates to pay
amounts in respect of Basis Risk Shortfall Carryover Amounts to the Holders of
the Class A-1-A Certificates, Class A-1-B Certificates, Class A-2-A
Certificates, Class A-2-B Certificates, Class A-3 Certificates, Class-A-4
Certificates, Class A-5 Certificates, Class A-6 Certificates, Class M-1
Certificates, Class M-2 Certificates, Class B-1 Certificates and Class B-2
Certificates shall be treated as a "grantor trust" under the Code, for the
benefit of the Holders of the Class CE Certificates, and the provisions hereof
shall be interpreted consistently with this intention. In furtherance of such
intention, the Trustee shall (i) furnish or cause to be furnished to the Holders
of the Class CE Certificates information regarding their allocable share, if
any, of the income with respect to such grantor trust, (ii) file or cause to be
filed with the Internal Revenue Service Form 1041 (together with any necessary
attachments) and such other forms as may be applicable and (iii) comply with
such information reporting obligations with respect to payments from such
grantor trust to the Holders of the Class A-1-A Certificates, Class A-1-B
Certificates, Class A-2-A Certificates, Class A-2-B Certificates, Class A-3
Certificates, Class-A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class M-1 Certificates, Class M-2 Certificates, Class B-1
Certificates, Class B-2 Certificates and Class CE Certificates as may be
applicable under the Code.
(d) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations, the "latest possible maturity date" of each "regular interest" in
each REMIC created hereunder is the Distribution Date immediately following the
latest scheduled maturity of any Mortgage Loan.
(e) The "tax matters person" with respect to each REMIC created hereunder
for purposes of the REMIC Provisions shall be the beneficial owner of the Class
A-R Certificate having the largest Percentage Interest of such Class; provided,
however, that such largest beneficial owner and, to the extent relevant, each
other Holder of a Class A-R Certificate, by its acceptance thereof, irrevocably
appoints the Servicer as its agent and attorney-in-fact to act as "tax matters
person" with respect to each REMIC created hereunder for purposes of the REMIC
provisions.
(f) It is intended that each REMIC created hereunder shall constitute, and
that the affairs of the Trust Fund shall be conducted so as to qualify each
REMIC created hereunder as, a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Servicer covenants and agrees that it shall act as agent (and the
Servicer is hereby appointed to act as agent) on behalf of the Trust Fund, each
REMIC created hereunder and the Holder of the Class A-R Certificate and that in
such capacity it shall:
(i) prepare and file, or cause to be prepared and filed, in a timely
manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return
(Form 1066) for each REMIC created hereunder and prepare and file or cause
to be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for each
taxable year with respect to each REMIC created hereunder, using the
calendar year as the taxable year and the accrual method of accounting,
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
shall furnish or cause to be furnished to Certificateholders the schedules,
statements or information at such times and in such manner as may be
required thereby;
(ii) within thirty days of the Closing Date, shall furnish or cause to
be furnished to the Internal Revenue Service, on Form 8811 or as otherwise
may be required by the Code, the name, title, address, and telephone number
of the person that the Holders of the Certificates may
32
contact for tax information relating thereto (and the Servicer shall act as
the representative of the Trust Fund for this purpose), together with such
additional information as may be required by such Form, and shall update
such information at the time or times in the manner required by the Code;
(iii) make or cause to be made an election, on behalf of each REMIC
created hereunder, to be treated as a REMIC, and make the appropriate
designations, if applicable, in accordance with this Section 2.04 on the
federal tax return of each REMIC hereunder for its first taxable year (and,
if necessary, under applicable state law);
(iv) prepare and forward, or cause to be prepared and forwarded, to
the Certificateholders and to the Internal Revenue Service and, if
necessary, state tax authorities, all information returns or reports, or
furnish or cause to be furnished by telephone, mail, publication or other
appropriate method such information, as and when required to be provided to
them in accordance with the REMIC Provisions, including without limitation,
the calculation of any original issue discount;
(v) provide information necessary for the computation of tax imposed
on the transfer of the Class A-R Certificate to a Disqualified
Organization, or an agent (including a broker, nominee or other middleman)
of a Disqualified Organization, or a pass-through entity in which a
Disqualified Organization is the record holder of an interest (the
reasonable cost of computing and furnishing such information may be charged
to the Person liable for such tax);
(vi) ensure that federal, state or local income tax or information
returns shall be signed by the Trustee or such other Person as may be
required to sign such returns by the Code or state or local laws,
regulations or rules; and
(vii) maintain such records relating to each REMIC created hereunder
as may be required by the Code and as may be necessary to prepare the
foregoing returns, schedules, statements or information.
(g) Pursuant to Section 6.02(b), the Servicer, with the consent of the
Trustee, hereby appoints the Institution Trust Services Department of Chase to
perform the duties enumerated in (d) above.
Section 2.05 Permitted Activities of Trust. The Trust is created for the
object and purpose of engaging in the Permitted Activities.
Section 2.06 Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.05 of this Agreement
shall be limited in accordance with paragraph 35 thereof.
[END OF ARTICLE II]
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND
THE SERVICER; REPURCHASE OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor with respect
to the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee for the benefit
of the Certificateholders that on the Closing Date it has entered into the Sale
Agreement with the Seller, that the Seller has made the following
representations and warranties with respect to each Mortgage Loan in the Sale
Agreement as of the Closing Date, which representations and warranties run to
and are for the benefit of the Depositor and the Trustee for the benefit of the
Certificateholders, and as to which the Depositor has assigned to the Trustee
for the benefit of the Certificateholders, pursuant to Section 2.01 hereof, the
right to cause the Seller to repurchase a Mortgage Loan as to which there has
occurred an uncured breach of representations and warranties in accordance with
the provisions of the Sale Agreement.
(a) The information set forth in the Mortgage Loan Schedule is complete,
true and correct in all material respects;
(b) With respect to a Mortgage Loan which is not a Co-op Loan, the Mortgage
creates a first lien or a first priority ownership interest in an estate in fee
simple in real property securing the related Mortgage Note. With respect to a
Co-op Loan, the related Mortgage is a valid, enforceable and subsisting first
security interest on the related cooperative shares securing the related
Mortgage Note, subject only to (a) liens of the related residential cooperative
housing corporation for unpaid assessments representing the Mortgagor's pro rata
share of the related residential cooperative housing corporation'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 related security agreement. There are no liens
against or security interest in the cooperative shares relating to each Co-op
Loan (except for unpaid maintenance, assessments and other amounts owed to the
related cooperative which individually or in the aggregate will not have a
material adverse effect on such Co-op Loan), which have priority over the
Trustee's security interest in such cooperative shares;
(c) All payments due prior to the Cut-off Date for such Mortgage Loan have
been made as of the Closing Date, the Mortgage Loan is not delinquent in payment
more than 30 days and has not been dishonored; to the best of the Seller's
knowledge, there are no material defaults under the terms of the Mortgage Loan;
the Seller has not advanced funds, or induced, solicited or knowingly received
any advance of funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage (or, with respect to a Co-op Loan, the related
Mortgagor), directly or indirectly, for the payment of any amount required by
the Mortgage Loan; there has been no more than one delinquency in excess of 30
days during the preceding twelve-month period;
(d) To the best of the Seller's knowledge, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or escrow funds have been established in an amount sufficient to pay for every
such escrowed item which remains unpaid and which has been assessed but is not
yet due and payable;
34
(e) The terms of the Mortgage Note and the Mortgage have not been impaired,
waived, altered or modified in any respect, except by written instruments. No
Mortgagor has been released, in whole or in part, from the terms thereof except
in connection with an assumption agreement and which assumption agreement is
part of the Mortgage File and the terms of which are reflected in the Mortgage
Loan Schedule;
(f) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or Mortgage, or the exercise of any right thereunder, render the Mortgage
Note or Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto, and the Mortgagor was not a debtor in any state
or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(g) With respect to a Mortgage Loan which is not a Co-op Loan, all
buildings or other customarily insured improvements upon the Mortgaged Property
are insured by an insurer acceptable under the FNMA Guides against loss by fire,
hazards of extended coverage and such other hazards as are provided for in the
FNMA Guides or by FHLMC. All such standard hazard policies are in full force and
effect and on the date of origination contained a standard mortgagee clause
naming the Seller and its successors in interest and assigns as loss payee and
such clause is still in effect and all premiums due thereon have been paid. If
required by the Flood Disaster Protection Act of 1973, as amended, the Mortgaged
Property is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration which policy conforms
to FNMA and FHLMC requirements. The Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(h) Any and all requirements of any federal, state or local laws and all
applicable predatory and abusive lending laws, including, without limitation,
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with in all material respects;
(i) The Mortgage has not been satisfied, canceled or subordinated, in whole
or in part, or rescinded, and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission;
(j) With respect to a Mortgage Loan which is not a Co-op Loan, the Mortgage
is a valid, subsisting, enforceable and perfected first lien on the Mortgaged
Property, including, all buildings on the Mortgaged Property. The Mortgage and
the Mortgage Note do not contain any evidence of any security interest or other
interest or right thereto. Such lien is free and clear of all adverse claims,
liens and encumbrances having priority over the first lien of the Mortgage
subject only to (1) the lien of non-delinquent current real property taxes and
assessments not yet due and payable, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording which are acceptable to mortgage lending institutions generally and
either (A) which are referred to or otherwise considered in the appraisal made
for the originator of the Mortgage Loan, or (B) which do not adversely affect
the Appraised Value of the Mortgaged Property as set forth in such appraisal,
and (3) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
35
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting, enforceable and perfected first
lien and first priority security interest on the property described therein, and
the Depositor has the full right to sell and assign the same to the Trustee for
the benefit of the Certificateholders;
(k) The Mortgage Note and the related Mortgage are original and genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors and the Depositor has taken all action necessary to transfer such
rights of enforceability to the Trustee for the benefit of the
Certificateholders. All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage. The Mortgage Note and the Mortgage have been
duly and property executed by such parties. The proceeds of the Mortgage Loan
have been fully disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds therefor have
been complied with;
(l) The Seller is the sole owner and holder of the Mortgage Loan and the
indebtedness evidenced by the Mortgage Note, except for the Assignments of
Mortgage which have been sent for recording, and upon recordation the Seller
will be the owner of record of the Mortgage and the indebtedness evidenced by
the Mortgage Note, and upon the sale of the Mortgage Loan to the Trust for the
benefit of the Certificateholders, the Seller will retain the Mortgage File or
any part thereof with respect thereto not delivered to the Trust for the benefit
of the Certificateholders or its designee in trust only for the purpose of
servicing and supervising the servicing of the Mortgage Loan. Immediately prior
to the transfer and assignment to the Trust for the benefit of the
Certificateholders, the Mortgage Loan, including the Mortgage Note and the
Mortgage, were not subject to an assignment or pledge, and the Depositor had
good and marketable title to and was the sole owner thereof and had full right
to transfer and sell the Mortgage Loan to the Trustee for the benefit of the
Certificateholders free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest and has the full right and authority subject
to no interest or participation of, or agreement with, any other party, to sell
and assign the Mortgage Loan pursuant to this Agreement and following the sale
of the Mortgage Loan, the Trustee for the benefit of the Certificateholders will
own such Mortgage Loan free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest;
(m) With respect to a Mortgage Loan which is not a Co-op Loan, the Mortgage
Loan is covered by an ALTA lender's title insurance policy or other generally
acceptable form of policy or insurance acceptable to FNMA or FHLMC, issued by a
title insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in (j) (1), (2) and (3) above) the Seller, its successors
and assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan. Such lender's title insurance policy
insures ingress and egress by or upon the Mortgaged Property or any interest
therein. Where required by state law or regulation, the Mortgagor has been given
the opportunity to choose the carrier of the required mortgage title insurance.
The Seller, its successors and assigns, are the sole insureds of such lender's
title insurance policy, and such lender's title insurance policy is in full
force and effect and will be in full force and effect upon the consummation of
the transactions contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy;
(n) There is no default, breach, violation or event of acceleration
existent, under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event
36
permitting acceleration; and neither the Seller nor any prior mortgagee has
waived any default, breach, violation or event permitting acceleration;
(o) There are no mechanics', or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property (or the
related residential dwelling unit in the Underlying Mortgage Property, in the
case of a Co-op Loan) which are or may be liens prior to or equal to the lien of
the related Mortgage;
(p) With respect to a Mortgage Loan which is not a Co-op Loan, all
improvements subject to the Mortgage which were considered in determining the
Appraised Value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property (and wholly within the
project with respect to a condominium unit) and no improvements on adjoining
properties encroach upon the Mortgaged Property except those which are insured
against by the title insurance policy referred to in clause (m) above and all
improvements on the property comply with all applicable zoning and subdivision
laws and ordinances; the Mortgaged Property is lawfully occupied under
applicable law;
(q) The Mortgage Loan complies in all material respects with all the terms,
conditions and requirements of the Seller's underwriting standards in effect at
the time of origination of such Mortgage Loan. The Mortgage Notes and Mortgages
(exclusive of any riders) are on forms generally acceptable to FNMA or FHLMC.
Monthly Payments under the Mortgage Note are due and payable on the first day of
each month. The Mortgage contains the usual and enforceable provisions of the
originator at the time of origination for the acceleration of the payment of the
unpaid principal amount of the Mortgage Loan if the related Mortgaged Property
is sold without the prior consent of the mortgagee thereunder;
(r) The Mortgaged Property (or Underlying Mortgaged Property, in the case
of a Co-op Loan), is not subject to any material damage by waste, fire,
earthquake, windstorm, flood or other casualty. To the best of the Seller's
knowledge, at origination of the Mortgage Loan there was, and there currently
is, no proceeding pending for the total or partial condemnation of the Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan);
(s) The related Mortgage contains customary and enforceable provisions such
as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (l) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage subject to applicable federal and state laws and
judicial precedent with respect to bankruptcy and right of redemption or similar
law;
(t) If the Mortgage constitutes a deed of trust, a trustee, authorized and
duly qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses, except as may be required by local law, are or will become
payable by the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale or attempted sale after default by the
Mortgagor;
(u) The Mortgage File contains an appraisal or a recertification document
(in the case of a Mortgage Loan originated under the Seller's Streamlined
Refinance Program) of the related Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property, in the case of a Co-op
Loan), signed prior to the final approval of the mortgage loan application by an
appraiser approved by the Seller who had no interest, direct or indirect, in the
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan), or in any loan made on the security thereof, and whose
37
compensation is not affected by the approval or disapproval of the Mortgage
Loan. The appraisal is in a form acceptable to FNMA or FHLMC;
(v) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) (A) in substantial compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property (or Underlying Mortgaged Property, in the case of
a Co-op Loan), is located, and (B) (1) organized under the laws of such state,
or (2) qualified to do business in such state, or (3) federal savings and loan
associations or national banks or a Federal Home Loan Bank or savings bank
having principal offices in such state, or (4) not doing business in such state;
(w) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security interest of any applicable agreement or
chattel mortgage referred to above and such collateral does not serve as
security for any other obligation;
(x) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of such mortgage loans;
(y) The Mortgage Loan does not contain "graduated payment" features;
(z) The Mortgagor is not in bankruptcy and, to the best of the Seller's
knowledge, the Mortgagor is not insolvent;
(aa) The Mortgage Loans are fixed rate mortgage loans. Each Mortgage Loan
has an original term to maturity of not more than thirty (30) years with
interest payable in arrears on the first day of each month. Each Mortgage Note
is payable in equal monthly installments of principal and interest which are
sufficient to amortize the Mortgage Loan fully by the stated maturity date. No
Mortgage Loan contains terms or provisions which would result in negative
amortization;
(bb) Each Mortgage Note, each Mortgage, each Assignment of Mortgage and any
other documents required pursuant to this Agreement to be delivered to the
Trustee on behalf of the Certificateholders or its designee, or its assignee for
each Mortgage Loan, have been, on or before the Closing Date, delivered to the
Trustee on behalf of the Certificateholders or its designee, or its assignee;
(cc) All escrow payments have been collected in full compliance with state
and federal law and the provisions of the related Mortgage Note and Mortgage. As
to any Mortgage Loan that is the subject of an escrow, escrow of funds is not
prohibited by applicable law and has been established in an amount sufficient to
pay for every escrowed item that remains unpaid and has been assessed but is not
yet due and payable. No escrow deposits or other charges or payments due under
the Mortgage Note have been capitalized under any Mortgage or the related
Mortgage Note. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;
(dd) [Reserved];
(ee) In the event that at origination the Mortgage Loan has a Loan-to-Value
Ratio greater than 80%, the excess of the principal balance of the Mortgage Loan
over 75% of the Appraised Value of the Mortgaged Property, with respect to a
refinanced Mortgage Loan, or the lesser of the Appraised Value or the purchase
price of the Mortgaged Property (or Underlying Mortgaged Property, in the case
of a Co-op Loan), with respect to a purchase money Mortgage Loan, is and will be
insured as to payment defaults by a Primary Insurance Policy issued by a
Qualified Insurer, except where the primary mortgage insurance
38
was (i) impermissible at origination at applicable law, in which case such
Mortgage Loan was originated in accordance with applicable law, (ii) cancelled
at the request of the Mortgagor pursuant to the cancellation requirements of
FNMA, FHLMC, state law or, as applicable the Home Owner and Equity Protection
Act of 1994, as amended, or (iii) automatically terminated in accordance with
the termination requirements of FNMA, FHLMC, state law or, as applicable the
Home Owner and Equity Protection Act of 1994, as amended. All provisions of such
Primary Insurance Policy have been and are being complied with, such policy is
in full force and effect, and all premiums due thereunder have been paid. No
action, inaction, or event has occurred and no state of facts exists that has,
or will result in the exclusion from, denial of, or defense to coverage. Any
Mortgage Loan subject to a Primary Insurance Policy obligates the Mortgagor
thereunder to maintain the Primary Insurance Policy and to pay all premiums and
charges in connection therewith. The Mortgage Rate for the Mortgage Loan as set
forth on the Mortgage Loan Schedule is net of any such insurance premium;
(ff) The Assignment of Mortgage is in recordable form and is acceptable for
recording (or, in the case of a Co-op Loan, is in a form acceptable for filing)
under the laws of the jurisdiction in which the Mortgaged Property (or
underlying Mortgaged Property, in the case of a Co-op Loan) is located;
(gg) As to Mortgage Loans that are not secured by an interest in a
leasehold estate, the Mortgaged Property (or Underlying Mortgaged Property, in
the case of a Co-op Loan), is located in the state identified in the Mortgage
Loan Schedule and consists of a single parcel of real property with a detached
single family residence erected thereon, or a two-to four-family dwelling, or an
individual condominium unit in a condominium project, or a dwelling unit in a
residential cooperative housing corporation or an individual unit in an attached
planned unit development or a detached planned unit development, provided,
however, that no residence or dwelling is a single parcel of real property with
a mobile home thereon. As of the date of origination, no portion of the
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan), was used for commercial purposes, and since the date of origination, to
the best of the Seller's knowledge, no portion of the Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan), is used for
commercial purposes;
(hh) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development), as of the date
of origination of the related Mortgage Loan, such condominium or planned unit
development project met the Seller's eligibility requirements, as set forth in
the Seller's underwriting guidelines as of such date; in the case of each Co-op
Loan, the related residential cooperative housing corporation complied in all
material respects with the Seller's requirements as set forth in the Seller's
underwriting guidelines as of such date;
(ii) To the best of the Seller's knowledge, there is no pending action or
proceeding directly involving the Mortgaged Property (or Underlying Mortgaged
Property, in the case of a Co-op Loan), in which compliance with any
environmental law, rule or regulation is an issue;
(jj) As of the Cut-off Date, the Seller has not granted any interest rate
relief to the Mortgagor under the Relief Act;
(kk) No Mortgage Loan was made in connection with the construction or
rehabilitation of a Mortgaged Property (or Underlying Mortgaged Property, in the
case of a Co-op Loan), or facilitating the trade-in or exchange of a Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan);
(ll) No action has been taken or failed to be taken by Depositor, on or
prior to the Closing Date, which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any Primary Insurance Policy
(including, without limitation, any exclusions, denials or defenses which would
39
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of the Depositor, or
for any other reason under such coverage;
(mm) The Mortgage Loan was originated by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of
the National Housing Act, as amended, a savings and loan association, a savings
bank, a commercial bank, credit union, insurance company or similar institution
which is supervised and examined by a federal or state authority;
(nn) Principal payments on the Mortgage Loan commenced no more than sixty
(60) days after funds were disbursed in connection with the Mortgage Loan. The
Mortgage Note is payable on the first day of each month in equal monthly
installments of principal and interest, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity
date, over an original term of not more than thirty years from commencement of
amortization;
(oo) As of the Closing Date, the Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code (without regard to Treasury
Regulations Section 1.860G-2(f) or any similar rule that provides that a
defective obligation is a qualified mortgage for a temporary period);
(pp) With respect to a Mortgage Loan that is a Co-op Loan, the stock that
is pledged as security for the Mortgage 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);
(qq) As of the Closing Date, the Mortgage Loan is not the subject of
pending or final foreclosure proceedings and the Seller would not, based on the
delinquency status of the Mortgage Loan, institute foreclosure proceedings with
respect to the Mortgage Loan prior to the next scheduled payment for the
Mortgage Loan;
(rr) As of the Closing Date, the Mortgage Loan does not provide for
interest other than at either (i) a single fixed rate in effect throughout the
term of the Mortgage Loan or (ii) a "variable rate" (within the meaning of
Treasury Regulation Section 1.860G-1(a)(3)) in effect throughout the term of the
Mortgage Loan;
(ss) No Mortgage Loan is a "covered loan" within the meaning of the Georgia
Fair Lending Act of 2002, as amended;
(tt) None of the Mortgage Loans are (a) covered by the Home Ownership and
Equity Protection Act of 1994 or (b) classified as a "high cost" loan or
similarly classified using different terminology under any federal, state or
local law imposing heightened regulatory scrutiny or additional legal liability
for residential mortgage loans having high interest rates, points and/or fees
such as predatory lending laws; None of the Mortgage Loans are "high cost" loans
as defined by the applicable federal, state or local predatory and abusive
lending laws nor is any Mortgage Loan a "High Cost Loan" or "Covered Loan," as
applicable (as such terms are defined in the current Standard & Poor's LEVELS(R)
Glossary which is now version 5.6 revised, appendix E) and no Mortgage Loan
originated on or after October 1, 2002 through March 6, 2003 is governed by the
Georgia Fair Lending Act of 2002, as amended; and
(uu) As to each Mortgage Loan that is secured by an interest in a leasehold
estate, (i) the use of a leasehold estate for residential properties is an
accepted practice in the area where the related Mortgaged Property is located,
(ii) residential property consisting of leasehold estates is marketable in the
area where the related Mortgaged Property is located, (iii) the related lease
has been recorded in the
40
applicable land records, (iv) the lease is valid and in good standing and is not
subject to any prior lien by which the lease could be terminated or subject to
any charge or penalty, and (v) the remaining term of the lease does not
terminate less than five years after the maturity date of such Mortgage Loan.
Upon discovery by any of the Depositor, the Servicer or the Trustee of a
breach of any of the foregoing representations and warranties which materially
and adversely affects the value of a Mortgage Loan or the interest of the
Certificateholders (or which materially and adversely affects the interests of
the Certificateholders in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other parties
and to the Seller, which notice shall specify the date of discovery. Pursuant to
the Sale Agreement, the Seller shall within 90 days from the earlier of (i) the
date of receipt of notice of such breach or (ii) the date the Seller otherwise
discovers such breach, cure such breach, substitute a Mortgage Loan pursuant to
the provisions of Section 3.03 or, if the breach relates to a particular
Mortgage Loan, purchase such Mortgage Loan from the Trustee at the Purchase
Price. The Purchase Price for the purchased Mortgage Loan shall be paid to the
Servicer and shall be deposited by the Servicer in the Collection Account
promptly upon receipt, and, upon receipt by the Trustee of written notification
of such deposit signed by a Servicing Officer, the Trustee shall promptly
release to the Seller the related Mortgage File, and the Trustee shall execute
and deliver such instruments of transfer or assignment as may be provided to it
by the Servicer, without recourse, as shall be necessary to vest in the Seller
or its designee, as the case may be, any Mortgage Loan released pursuant hereto,
and the Trustee shall have no further responsibility with regard to such
Mortgage Loan. It is understood and agreed that the obligation of the Seller to
cure, substitute or purchase any Mortgage Loan as to which such a breach has
occurred shall constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholder.
Section 3.02 Representations and Warranties of the Servicer. The Servicer
represents and warrants to, and covenants with, the Trustee for the benefit of
the Certificateholders that as of the Closing Date:
(a) The Servicer is a limited liability company duly chartered and validly
existing in good standing under the laws of the State of Delaware, and the
Servicer is duly qualified or registered as a foreign corporation in good
standing in each jurisdiction in which the ownership or lease or its properties
or the conduct of its business requires such qualification;
(b) The execution and delivery of this Agreement by the Servicer and its
performance and compliance with the terms of this Agreement will not violate the
Servicer's certificate of formation or by-laws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Servicer is a party or which may be applicable to the
Servicer or any of its assets;
(c) This Agreement, assuming due authorization, execution and delivery by
the Trustee and the Depositor, constitutes a valid, legal and binding obligation
of the Servicer, enforceable against it in accordance with the terms hereof
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(d) The Servicer is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would materially
and adversely affect the condition (financial or other) or
41
operations of the Servicer or its properties or might have consequences that
would affect its performance hereunder; and
(e) No litigation is pending or, to the best of the Servicer's knowledge,
threatened against the Servicer which would prohibit its entering into this
Agreement or performing its obligations under this Agreement. It is understood
and agreed that the representations and warranties set forth in this Section
3.02 shall survive the issuance and delivery of the Certificates and shall be
continuing as long as any Certificate shall be outstanding or this Agreement has
been terminated.
Section 3.03 Option to Substitute. If the Seller is required to repurchase
any Mortgage Loan pursuant to Section 2.02 or 3.01, the Seller may, at its
option, within two years from the Closing Date, remove such defective Mortgage
Loan from the terms of this Agreement and substitute another mortgage loan for
such defective Mortgage Loan, in lieu of repurchasing such defective Mortgage
Loan. Any substitute Mortgage Loan shall (a) have a Principal Balance at the
time of substitution not in excess of the Principal Balance of the removed
Mortgage Loan (the amount of any difference, plus one month's interest thereon
at the Mortgage Rate borne by the removed Mortgage Loan, being paid by the
Seller and deemed to be a Principal Prepayment to be deposited by the Servicer
in the Collection Account), (b) have a Mortgage Rate not less than, and not more
than one percentage point greater than, the Mortgage Rate of the removed
Mortgage Loan (provided, however, that if the Mortgage Rate on the substitute
Mortgage Loan exceeds the Mortgage Rate on the removed Mortgage Loan, the amount
of that excess interest (the "Substitute Excess Interest") shall be payable to
the Class A-R Certificate), (c) have a remaining term to stated maturity not
later than, and not more than one year less than, the remaining term to stated
maturity of the removed Mortgage Loan, (d) be, in the reasonable determination
of the Servicer, of the same type, quality and character (including location of
the Mortgaged Property (or underlying Mortgaged Property, in the case of a Co-op
Loan)) as the removed Mortgage Loan as if the breach had not occurred, (e) have
a Loan-to-Value Ratio at origination no greater than that of the removed
Mortgage Loan and (f) be, in the reasonable determination of the Seller, in
material compliance with the representations and warranties contained in the
Sale Agreement and described in Section 3.01, as of the date of substitution.
The Seller shall amend the Mortgage Loan Schedule to reflect the withdrawal
of the removed Mortgage Loan from this Agreement and the substitution of such
substitute Mortgage Loan therefor and shall send a copy of such amended Mortgage
Loan Schedule to the Servicer and the Trustee. The Sale Agreement provides that
upon such amendment the Seller shall be deemed to have made as to such
substitute Mortgage Loan the representations and warranties set forth in Section
3.01 as of the date of such substitution, which shall be continuing as long as
any Certificate shall be outstanding or this Agreement has not been terminated,
and the remedies for breach of any such representation or warranty shall be as
set forth in Section 3.01. Upon such amendment, the Custodian on behalf of the
Trustee shall review the Mortgage File delivered to it relating to the
substitute Mortgage Loan, within the time and in the manner and with the
remedies specified in Section 2.02, except that for purposes of this Section
3.03 (other than the two-year period specified in the first sentence of this
Section), such time shall be measured from the date of the applicable
substitution. In the event of such a substitution, accrued interest on the
substitute Mortgage Loan for the month in which the substitution occurs and any
Principal Prepayments made thereon during such month shall be the property of
the Trust Fund, and accrued interest for such month on the Mortgage Loan for
which the substitution is made and any Principal Prepayments made thereon during
such month shall be the property of the Seller. The principal payment on a
substitute Mortgage Loan due on the Due Date in the month of substitution shall
be the property of the Seller, and the principal payment on the Mortgage Loan
for which the substitution is made due on such date shall be the property of the
Trust Fund.
[END OF ARTICLE III]
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ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
(a) The Class A, Class M, Class B and Class CE Certificates shall be
substantially in the forms thereof included within Exhibits C, D, E, E-1 and F
and shall, on original issue, be executed by the Depositor and authenticated by
the Trustee (or, if an Authenticating Agent has been appointed pursuant to
Section 4.06, the Authenticating Agent) upon receipt by the Trustee of the
documents specified in Section 2.01, delivered to or upon the order of the
Depositor.
(b) The Depository and the Trustee have entered into a Depository Agreement
dated as of May 24, 2006 (the "Depository Agreement"). Except as provided in
paragraph (c) below, the Book-Entry Certificates shall at all times remain
registered in the name of the Depository or its nominee and at all times: (i)
registration of the Book-Entry Certificates may not be transferred as provided
in Section 4.02 except to a successor to the Depository; (ii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iii) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (iv) the Paying Agent and the Trustee
shall deal with the Depository, Depository Participants and Indirect
Participants as representatives of the Certificate Owners of the Book-Entry
Certificates for purposes of exercising the rights of such Holders under this
Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (v) the Paying Agent and the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to Indirect Participants and persons shown
on the books of such Indirect Participants as direct or indirect Certificate
Owners. The Depository Agreement provides that the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Certificates.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(c) If (i)(A) the Depository advises the Depositor, the Paying Agent or the
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository and (B) the Trustee, the Paying
Agent or the Depositor are unable after exercise of their reasonable best
efforts to locate a qualified successor or (ii) the Depositor at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee or, if a Paying Agent has been appointed
under Section 4.05, the Paying Agent, shall notify all Certificate Owners,
through the Depository, of the occurrence of any such event and of the
availability of definitive, fully registered Certificates (the "Definitive
Certificates") to Certificate Owners requesting the same. Upon surrender to the
Trustee or, if a Paying Agent has been appointed under Section 4.05, the Paying
Agent, of the Book-Entry Certificates by the Depository for registration and
receipt by the Trustee or, if a Paying Agent has been appointed under Section
4.05, the Paying Agent, of an adequate supply of certificates from the
Depositor, the Trustee or if the Paying Agent is appointed under Section 4.05,
the Paying Agent shall issue the Definitive Certificates based on information
received from the Depository. Neither the Depositor, the Servicer, the Paying
Agent 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.
43
(d) The Certificates (other than the Class A-R Certificate and the Class CE
Certificate) shall be issuable in the minimum original dollar denominations (and
integral multiples of $1,000.00 in excess of such amount) and aggregate original
dollar denominations per Class as set forth in the following table (except that,
if necessary, in order to aggregate the Original Certificate Principal Balance
of a Class, one Certificate of such Class will be issued in a different
denomination). A single Class A-R Certificate and a single Class CE Certificate
will be issued in definitive form.
Aggregate Original
Certificate Principal
Minimum Balance of all
Original Certificates of the CUSIP
Class Denomination Indicated Class Number
--------------- ------------ --------------------- -----------
Class A-1-A ... $ 100,000.00 $ 113,030,000 16165L AA 8
Class A-1-B ... $ 100,000.00 $ 49,287,000 16165L AB 6
Class A-2-A ... $ 100,000.00 $ 70,232,000 16165L AC 4
Class A-2-B ... $ 100,000.00 $ 50,000,000 16165L AD 2
Class A-3 ..... $ 100,000.00 $ 29,037,000 16165L AE 0
Class A-4 ..... $ 100,000.00 $ 64,321,000 16165L AF 7
Class A-5 ..... $ 100,000.00 $ 44,698,000 16165L AG 5
Class A-6 ..... $ 100,000.00 $ 26,371,000 16165L AH 3
Class A-R(1) .. $ 100.00 $ 100 16165L AJ 9
Class M-1 ..... $ 100,000.00 $ 10,212,000 16165L AK 6
Class M-2 ..... $ 100,000.00 $ 7,125,000 16165L AL 4
Class B-1 ..... $ 100,000.00 $ 3,088,000 16165L AM 2
Class B-2 ..... $ 100,000.00 $ 2,374,626 16165L AN 0
Class CE ...... N/A $5,225,290.69 16165L AP 5
----------
(1) The Class A-R Certificate represents the residual interest in each of the
REMIC Pools.
The Certificates shall be signed by manual or facsimile signature on behalf
of the Depositor by an officer of the Depositor. Certificates bearing the manual
or facsimile signatures of individuals who were at the time of signature
officers of the Depositor shall bind the Depositor, notwithstanding that such
individuals or any of them have ceased to be an officer prior to the
authentication and delivery of such Certificate 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 manual authentication by an officer of the Trustee (or if an
Authenticating Agent has been appointed pursuant to Section 4.06, the
Authenticating Agent) and such authentication upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
Section 4.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee or, if a Paying Agent has been appointed under Section
4.05, the Paying Agent, shall cause to be kept a Certificate Register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Trustee or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
(b) Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee, or if a Paying Agent has been appointed
hereunder pursuant to Section 4.05, the Paying Agent maintained for such
purpose, the Depositor shall execute and the Trustee or if an Authenticating
44
Agent is appointed under Section 4.06, the Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like Class and aggregate Percentage Interest and
dated the date of authentication by the Authenticating Agent.
(c) No transfer of a Class CE Certificate shall be made unless such
transfer is made pursuant to an effective registration statement or otherwise in
accordance with the requirements under the Securities Act. If such a transfer is
to be made in reliance upon an exemption from said Act, (i) the Depositor may
require (except with respect to the initial transfer of a Class CE Certificate
from ▇.▇. ▇▇▇▇▇▇ Securities Inc. and except if the transferee executes a
certificate substantially in the form of Exhibit H hereto) a written opinion of
independent counsel acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and laws,
which opinion of counsel shall not be an expense of the Trust Fund, the Trustee,
the Depositor or the Servicer, and (ii) the Depositor shall require the
transferee to execute a certification substantially in the form of Exhibit H or
Exhibit I.
(d) (i) No transfer of an ERISA Restricted Certificate or a Class A-R
Certificate shall be made unless the prospective transferee provides the
Depositor and the Trustee with (I) a representation as set forth in Exhibit K
for Class A-R Certificates or in Exhibit M for ERISA Restricted Certificates to
the effect that such transferee is not an employee benefit plan subject to Title
I of ERISA, a plan subject to Section 4975 of the Code or a plan or arrangement
subject to any provisions under any federal, state, local, non-U.S. or other
laws or regulations that are substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") (collectively, a "Plan"), and is not
directly or indirectly acquiring the Certificate for, on behalf of or with any
assets of any such Plan, or (II) solely in the case of an ERISA Restricted
Certificate, (A) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, a representation as set forth in Exhibit M that such transferee is
an insurance company that is acquiring the ERISA-Restricted Certificate with
assets contained in an "insurance company general account," as defined in
Section V(E) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (B) solely in the case of a Definitive Certificate,
an Opinion of Counsel reasonably satisfactory to the Depositor and the Trustee
to the effect that the acquisition and holding of such Certificate will not
constitute or result in a nonexempt prohibited transaction under ERISA or the
Code, or a violation of Similar Law, and will not subject the Depositor, the
Servicer or the Trustee to any obligation in addition to those expressly
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Depositor, the Servicer or the Trustee.
(ii) Except in the case of a Definitive Certificate, the
representations set forth in paragraph (i) of this Subsection 4.02(d), other
than subparagraph (i)(II)(B), shall be deemed to have been made to the Depositor
and the Trustee by the transferee's acceptance of an ERISA Restricted
Certificate or a Class A-R Certificate (or the acceptance by a Certificate Owner
of the beneficial interest in any Class of ERISA Restricted Certificates or a
Class A-R Certificate). Notwithstanding any other provision herein to the
contrary, any purported transfer of an ERISA Restricted Certificate or a Class
A-R Certificate to or on behalf of a Plan without the delivery to the Depositor
of a representation or an Opinion of Counsel reasonably satisfactory to the
Depositor and the Trustee as described above shall be void and of no effect.
None of the Depositor, the Servicer or the Trustee shall be under any liability
to any Person for any registration or transfer of any ERISA Restricted
Certificate or Class A-R Certificate that is in fact not permitted by this
Section 4.02(d) nor shall the Paying Agent be under any liability for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered in accordance with the foregoing
requirements. The Depositor, Servicer, Paying Agent and/or Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted
Certificate or Class A-R Certificate
45
that was in fact a Plan and that held such Certificate in violation of this
Section 4.02(d) all payments made on such ERISA Restricted Certificate or Class
A-R Certificate at and after the time it commenced such holding. Any such
payments so recovered shall be paid and delivered to the last preceding Holder
of such Certificate that is not a Plan.
(e) At the option of a Certificateholder, a Certificate may be exchanged
for another Certificate or Certificates of authorized denominations of a like
Class, upon surrender of the Certificate to be exchanged at any office or agency
of the Trustee, or if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, maintained for such purpose. Whenever the Certificate is so
surrendered for exchange, the Depositor shall execute and the Authenticating
Agent shall authenticate and deliver, the Certificate which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Authenticating Agent duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to the Holder for any transfer or
exchange of a Certificate, but the Servicer may require payment by the
Certificateholders of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of such
Certificate.
(g) All Certificates surrendered for transfer or exchange shall be
destroyed by the Trustee or if a Paying Agent has been appointed under Section
4.05, the Paying Agent, in accordance with the Trustee's or, if a Paying Agent
has been appointed under Section 4.05, the Paying Agent's, standard procedures.
(h) [Reserved].
(i) A Disqualified Organization is prohibited from acquiring beneficial
ownership of a Class A-R Certificate. Notwithstanding anything to the contrary
contained herein, (i) unless and until the Servicer and the Trustee shall have
received an Opinion of Counsel, satisfactory to it in form and substance, to the
effect that the absence of the conditions contained in this Section 4.02(i)
would not result in the imposition of federal tax upon any REMIC created
hereunder or cause any REMIC created hereunder to fail to qualify as a REMIC, no
transfer, sale or other disposition of the Class A-R Certificate (including for
purposes of this section any beneficial interest therein) may be made without
the express written consent of the Certificate Registrar or, if no Certificate
Registrar is appointed, the Trustee, which consent is to be granted by the
Certificate Registrar or, if no Certificate Registrar is appointed, the Trustee
only upon compliance with the requirements of this Section and (ii) no transfer,
sale or other disposition of the Class A-R Certificate (or any beneficial
interest therein) may be made to a Person who is not a U.S. Person unless such
Person furnishes the transferor, the Certificate Registrar and the Trustee, with
a duly completed and effective Form W-8ECI (or any successor thereto) or an
Opinion of Counsel to the effect that such transfer is in accordance with the
requirements of the Code and that the transfer will not be disregarded for
federal income tax purposes. As a condition to granting its consent to a
transfer of a Class A-R Certificate, the Certificate Registrar or, if no
Certificate Registrar is appointed, the Trustee, shall require the proposed
transferee of such Certificate (including, in the case of the initial issuance
of the Class A-R Certificate, the initial Holder thereof) to execute a letter
and affidavit substantially in the form attached hereto as Exhibit K and shall
require the proposed transferor (other than in the case of the transfer to the
initial holder) of such Certificate to execute a letter substantially in the
form attached hereto as Exhibit K-1. In the absence of a contrary instruction
from the transferor of such Certificate, declaration (11) in the affidavit in
Exhibit K may be left blank. If the transferor requests by written notice to the
Certificate Registrar or, if no Certificate Registrar is appointed, the Trustee,
prior to the date of the proposed transfer that one of the two other forms of
declaration (11) of such affidavit be used, then the
46
Certificate Registrar or, if no Certificate Registrar is appointed, the Trustee,
shall require that such form of declaration (11) be included in such affidavit.
As a condition to the granting of the consent referred to in this Section
4.02(i), prior to the transfer, sale, pledge, hypothecation or other disposition
of the Class A-R Certificate or any interest therein, the Certificate Registrar
or, if no Certificate Registrar is appointed, the Trustee shall require that (1)
the proposed transferee deliver to the Trustee or Certificate Registrar, as
applicable, its taxpayer identification number and state, under penalties of
perjury that such number is the social security or employer identification
number, as the case may be, of the transferee or provide an affidavit under
penalties of perjury stating that as of the date of such transfer such
transferee is not and has no intention of becoming a Disqualified Organization;
(2) the proposed transferee deliver to the Trustee or Certificate Registrar, as
applicable, an affidavit stating (i) that such transferee is not acquiring such
Class A-R Certificate as an agent, broker, nominee, or middleman for a
Disqualified Organization, (ii) if the Class A-R Certificate is a "non-economic
residual interest" within the meaning of Treas. Reg. Section 1.860E-1(c)(2), (X)
that no purpose of the acquisition of the Class A-R Certificate is to avoid or
impede the assessment or collection of tax, (Y) that such transferee has
historically paid its debts as they came due and will continue to pay its debts
as they come due, and (Z) that such transferee represents that it understands
that, as the holder of the non-economic residual interest, the transferee may
incur tax liabilities in excess of any cash flows generated by the interest and
that the transferee intends to pay taxes associated with holding the residual
interest, and (iii) unless the Certificate Registrar or, if no Certificate
Registrar is appointed, the Trustee consents to the transfer of the Class A-R
Certificate to a Person who is not a U.S. Person and who has furnished either a
duly completed and effective Form W-8ECI (or any successor thereto) or an
Opinion of Counsel to the effect that the transfer will not be disregarded for
federal income tax purposes, that it is a U.S. Person; (3) if so requested by
the transferor in written notice provided to the Certificate Registrar or, if no
Certificate Registrar is appointed, the Trustee, prior to the date of the
proposed transfer, the proposed transferee deliver to the Trustee or Certificate
Registrar, as applicable, an affidavit that includes a declaration made in the
form of declaration (11) in the affidavit set forth in Exhibit K requested by
the transferor; and (4) the transferor deliver to the Certificate Registrar or,
if no Certificate Registrar is appointed, the Trustee a written certification
that as of the date of such transfer it has no knowledge and no reason to know
that the affirmations described in clauses (1), (2) and (3) were false. The
Certificate Registrar or, if no Certificate Registrar is appointed, the Trustee
shall not grant the consent referred to in this Section 4.02(i) if it has actual
knowledge that any statement made in the affidavit issued pursuant to the
preceding sentence is not true. Notwithstanding any purported transfer, sale or
other disposition of the Class A-R Certificate to a Disqualified Organization or
in violation of the provisions of this Section 4.02(i), such transfer, sale or
other disposition shall be deemed to be of no legal force or effect whatsoever
and such Disqualified Organization shall not be deemed to be a Class A-R
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class A-R Certificate. If any purported
transfer shall be in violation of the provisions of this Section 4.02(i) then
the prior Holder of the Class A-R Certificate shall, upon discovery that the
transfer of such Class A-R Certificate was not in fact permitted by this Section
4.02(i), be restored to all rights and obligations as a Holder thereof
retroactive to the date of the purported transfer of such Class A-R Certificate.
The Trustee, the Servicer and the Certificate Registrar shall be under no
liability to any Person for any registration or transfer of a Class A-R
Certificate that is not permitted by this Section 4.02(i) or for making payments
due on such Class A-R Certificate to the purported Holder thereof or taking any
other action with respect to such purported Holder under the provisions of this
Agreement so long as the transfer was not registered under the written
certification of the Certificate Registrar or, if no Certificate Registrar is
appointed, the Trustee as described in this Section 4.02(i). The prior Holder
shall be entitled to recover from any purported Holder of a Class A-R
Certificate that was in fact not a permitted purported transferee under this
Section 4.02(i) at the time it became a purported Holder all payments made to
such purported Holder on such Class A-R Certificate; provided that the Servicer
shall not be responsible for such recovery. Each Class A-R Certificateholder, by
the acceptance of the Class A-R Certificate, shall be
47
deemed for all purposes to have consented to the provisions of this Section
4.02(i) and to any amendment to this Agreement deemed necessary by counsel of
the Trustee or the Servicer to ensure that the Class A-R Certificate is not
transferred to a Disqualified Organization and that any transfer of such Class
A-R Certificate will not cause the imposition of a tax upon any REMIC created
hereunder or cause any REMIC created hereunder to fail to qualify as a REMIC.
The restrictions on transfer of the Class A-R Certificate will cease to apply
and be void upon receipt by the Certificate Registrar or, if no Certificate
Registrar is appointed, the Trustee of an Opinion of Counsel to the effect that
such restrictions on transfer are no longer necessary to avoid the risk of
material federal taxation to any REMIC created hereunder or prevent any REMIC
created hereunder from qualifying as a REMIC.
(j) The Servicer shall make available upon written request to each Holder
and each proposed transferee of a Class B-3, Class B-4 or Class B-5 Certificate
such information as may be required to permit the proposed transfer to be
effected pursuant to Rule 144A under the Securities Act.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate is surrendered to the Trustee or, if a Paying Agent has
been appointed under Section 4.05, the Paying Agent, or the Trustee or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee or, if a Paying Agent has
been appointed under Section 4.05, the Paying Agent, such security or indemnity
as may be required by it to save it harmless, then, in the absence of notice to
the Trustee or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, that such Certificate has been acquired by a bona fide purchaser,
the Trustee or, if a Paying Agent has been appointed under Section 4.05, the
Paying 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
tenor and Class. Upon the issuance of any new Certificate under this Section,
the Trustee or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, may require of the Certificateholder 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 connected therewith. Any replacement
Certificate of any Class issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership of the Percentage Interest in
the distributions to which the Certificateholders of such Class are entitled, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time, and such mutilated, destroyed, lost or
stolen Certificate shall be of no force or effect under this Agreement, to the
extent permitted by law.
Section 4.04 Persons Deemed Owners. Prior to due presentation of a
Certificate of any Class for registration of transfer, the Depositor, the
Servicer, the Paying Agent and the Trustee may treat the Person in whose name
any Certificate is registered on the Record Date as the owner of such
Certificate and the Percentage Interest in the distributions to which the
Certificateholders of such Class are entitled on the relevant date as the Holder
of such Certificate and the Percentage Interest represented by such Certificate
for the purpose of receiving remittances pursuant to Section 6.01 and for all
other purposes whatsoever, and neither the Depositor, the Servicer, the Paying
Agent nor the Trustee shall be affected by notice to the contrary.
Section 4.05 Appointment of Paying Agent and Certificate Registrar;
Certificate Account. The Trustee shall appoint a Paying Agent and a Certificate
Registrar (the "Certificate Registrar") hereunder, provided such Paying Agent
and such Certificate Registrar shall not be the Depositor, the Seller, or an
Affiliate of the Depositor or the Seller unless such Paying Agent or such
Certificate Registrar is the World Securities Services Department of Chase. No
later than two Business Days prior to each Distribution Date, the Servicer shall
deposit or cause to be deposited with the Paying Agent from funds on deposit in
the Collection Account a sum up to the Available Distribution Amount, such sum
to be held in trust for the benefit of Certificateholders in a segregated
account (the "Certificate Account") which
48
shall be an Eligible Account in the name of "U.S. Bank National Association, as
Trustee, in trust for and for the benefit of the Certificateholders of
Multi-Class Mortgage Pass-Through Certificates, ChaseFlex Trust, Series 2006-1 -
Certificate Account". The Paying Agent shall establish such Certificate Account
with a commercial bank, a savings bank or a savings and loan association. The
Paying Agent may invest moneys in the Certificate Account in Eligible
Investments, which shall mature not later than a date sufficient to make payment
on the Distribution Date next following the date of such investment and shall
not be sold or disposed of prior to maturity. All income and gain realized from
any such investment shall be for the benefit of the Paying Agent as additional
compensation and shall be subject to its withdrawal or order from time to time.
The amount of any losses incurred in respect of any such investments (to the
extent not offset by income from other such investments) shall be deposited in
the Certificate Account by the Paying Agent out of its own funds immediately as
realized. The Servicer shall cause the Paying Agent to perform each of the
obligations of the Paying Agent set forth herein and shall be liable to the
Trustee and the Certificateholders for failure of the Paying Agent to perform
such obligations. So long as the Paying Agent is a party other than the Trustee,
the Trustee shall have no liability in connection with the performance or
failure of performance of the Paying Agent. The Trustee designates the World
Securities Services Department of Chase as the initial Paying Agent and initial
Certificate Registrar. Only the Trustee may remove the Paying Agent and
Certificate Registrar and may do so at will, provided that the Trustee gives 20
days' prior written notice of such removal to the Paying Agent and Certificate
Registrar and the Rating Agencies. Notwithstanding anything to the contrary
contained herein, no approvals or consent shall be required for the subsequent
appointment of The Bank of New York as Paying Agent.
The Paying Agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders.
Section 4.06 Authenticating Agents.
(a) The Trustee may appoint one or more Authenticating Agents (each, an
"Authenticating Agent") which shall be authorized to act on behalf of the
Trustee in authenticating the 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 an entity organized and
doing business under the laws of the United States of America or of any state,
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. So long as the Authenticating Agent is a party
other than the Trustee, the Trustee shall have no liability in connection with
the performance or failure of performance of the Authenticating Agent. The
Trustee hereby appoints the Paying Agent as the initial Authenticating Agent.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any
49
time any Authenticating Agent shall cease to be eligible in accordance within
the provisions of this Section 4.06, the Trustee may appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Depositor and shall mail notice of such appointment to all Holders of
Certificates. 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. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 4.06. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Each of the Authenticating Agent,
Certificate Registrar and Paying Agent shall be afforded the same rights,
protections and indemnities as the Trustee as set forth under Article VIII
hereunder.
[END OF ARTICLE IV]
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Servicer to Service Mortgage Loans. The Servicer shall service
and administer the Mortgage Loans and shall have full power and authority,
acting alone or through Sub-Servicers as provided in Section 5.02, to do any and
all things which it may deem necessary or desirable in connection with such
servicing and administration, all in accordance with Accepted Servicing
Practices. Without limiting the generality of the foregoing, the Servicer in its
own name or in the name of a Sub-Servicer shall, pursuant to a power of attorney
granted hereby by the Trustee for such purposes, when the Servicer or the
Sub-Servicer, as the case may be, believes it appropriate in its best judgment,
to execute and deliver, on behalf of the Certificateholders and the Trustee or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the related Mortgaged
Properties; provided, however, that subject to the provisions of this paragraph,
the Servicer may allow a modification with respect to a Mortgage Loan if the
Servicer would take such action in the ordinary course of its business if it
were the owner of the Mortgage Loan. The Servicer will indemnify the Trustee for
any misuse of such power of attorney provided hereunder. The Servicer may agree
to a modification of any Mortgage Loan (the "Relevant Mortgage Loan") upon the
request of the related Mortgagor, provided that (i) the modification is in lieu
of a refinancing and the Mortgage Rate on the Relevant Mortgage Loan, as
modified, is approximately a prevailing market rate of newly-originated mortgage
loans having similar terms, (ii) the aggregate of the adjusted bases of all
Modified Mortgage Loans (including the Relevant Mortgage Loans) plus the
aggregate adjusted bases of any assets that are not qualified mortgages or
permitted investments under Section 860G(a) of the Code that are assets of the
Trust Fund established hereunder at all times on any day is less than one
percent of the aggregate of the adjusted bases of all assets of the Trust Fund
(including such Modified Mortgage Loans) on such day, and (iii) the Servicer
purchases the Relevant Mortgage Loan from the Trust Fund as described below.
Effective immediately after such modification, and, in any event, on the same
Business Day on which the modification occurs, all right, title and interest of
the Trustee in and to the Modified Mortgage Loan shall automatically be deemed
transferred and assigned to the Servicer and all benefits and burdens of
ownership thereof, including without limitation the right to accrued interest
thereon from and including the date of modification and the risk of default
thereon, shall pass to the Servicer. To confirm such transfer and assignment,
the Servicer, as servicer hereunder, as soon as practicable shall execute an
instrument of assignment of the Modified Mortgage Loan without recourse in
customary form to the Servicer in its individual capacity. The Servicer shall
deposit the Purchase Price for any Modified Mortgage Loan in the Collection
Account pursuant to Section 5.08. Upon receipt by the Trustee of written
notification of any such deposit signed by a Servicing Officer, the Trustee
shall release to the Servicer the related Mortgage
50
File and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, as shall be necessary more fully to vest in the
Servicer any Modified Mortgage Loan previously transferred and assigned pursuant
thereto. Notwithstanding anything herein to the contrary, the Servicer shall not
make or permit any modification of a Mortgage Loan that would cause any REMIC
Pool to fail to qualify as a REMIC for federal income tax purposes or that would
result in the imposition of any material tax under Section 860F(a) or Section
860G(d) of the Code.
The Servicer shall furnish to the Trustee for execution and redelivery to
the Servicer or, at the request of the Servicer, a Sub-Servicer, such documents
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans and the Trustee shall not be responsible for the Servicer's
application thereof. The Servicer agrees to remain eligible as either a FNMA or
FHLMC seller/servicer, or both, for so long as it is Servicer.
All Servicing Advances made by the Servicer in effecting the timely payment
of taxes, insurance and assessments on the properties subject to the Mortgage
Loans shall not, for the purpose of calculating monthly distributions to
Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loan so permit, and such
Servicing Advances shall be recoverable by the Servicer to the extent permitted
by Sections 5.09 and 5.23.
Section 5.02 Sub-Servicing Agreements Between Servicer and Sub-Servicers;
Enforcement of Sub-Servicer's Obligations.
(a) The Servicer may enter into Sub-Servicing Agreements with Sub-Servicers
for the servicing and administration of all or part of the Mortgage Loans.
References in this Agreement to actions taken or to be taken by the Servicer in
servicing the Mortgage Loans serviced by it include actions taken or to be taken
by a Sub-Servicer on behalf of the Servicer. Each Sub-Servicing Agreement will
be upon such terms and conditions as are not inconsistent with this Agreement
and as the Servicer and the Sub-Servicer have agreed. The Servicer hereby agrees
to notify the Trustee in writing promptly upon the appointment of any
Sub-Servicer. For purposes of this Agreement, the receipt by the Sub-Servicer of
any amount with respect to a Mortgage Loan (other than amounts representing
servicing compensation or reimbursement for an advance) shall be treated as the
receipt by the Servicer of such amount. The Sub-Servicer shall deposit all such
funds in an Eligible Account.
(b) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee and the Certificateholders, shall enforce the obligations
of each Sub-Servicer under the related Sub-Servicing Agreement. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements as appropriate, and the pursuit of other
remedies, shall be in such form and carried out to such an extent and at such
time as the Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Servicer shall pay the costs of
such enforcement at its own expense but shall be reimbursed therefor only (i)
from a general recovery resulting from such enforcement only to the extent, if
any, that such recovery exceeds all amounts due in respect of the related
Mortgage Loans or (ii) from a specific recovery of costs, expenses or attorneys'
fees against the party against whom such enforcement is directed.
(c) The Servicer shall not permit a Sub-Servicer to perform any servicing
responsibilities hereunder with respect to the Mortgage Loans unless that
Sub-Servicer first agrees in writing with the Servicer to deliver an Assessment
of Compliance and an Accountant's Attestation in such manner and at such times
that permits the Servicer to comply with Section 5.25 of this Agreement.
51
Section 5.03 Successor Sub-Servicers. The Servicer shall be entitled to
terminate any Sub-Servicing Agreement that may exist in accordance with the
terms and conditions of such Sub-Servicing Agreement and without any limitation
by virtue of this Agreement.
Section 5.04 Liability of the Servicer. Notwithstanding any Sub-Servicing
Agreement, any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a Sub-Servicer or reference to actions
taken through a Sub-Servicer or otherwise, the Servicer shall remain obligated
and liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with a Sub-Servicer
for indemnification of the Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
Section 5.05 No Contractual Relationship Between Sub-Servicer and Trustee
or Certificateholders. Any Sub-Servicing Agreement that may be entered into and
any other transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such and not as an originator shall be deemed to
be between the Sub-Servicer and the Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer.
Section 5.06 Termination of Sub-Servicing Agreement. If the Servicer shall
for any reason no longer be the Servicer hereunder (including by reason of any
Event of Default), the Servicer shall thereupon terminate each Sub-Servicing
Agreement that may have been entered into, and the Trustee, its designee or the
successor servicer and the Trustee shall not be deemed to have assumed any of
the Servicer's interest therein or to have replaced the Servicer as a party to
any such Sub-Servicing Agreement.
Section 5.07 Collection of Mortgage Loan Payments. Continuously from the
date hereof until the principal and interest on all Mortgage Loans are paid in
full, the Servicer will proceed diligently to collect all payments due under
each of the Mortgage Loans when the same shall become due and payable; provided,
however, that the Servicer may elect, to the extent consistent with Accepted
Servicing Practices, to waive any late payment charge and shall, to the extent
such procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to conventional mortgage loans held in its
own portfolio. Any such arrangements shall not diminish or otherwise affect the
Servicer's obligation to make Advances pursuant to Section 6.03.
Section 5.08 Establishment of Collection Account; Deposit in Collection
Account. With respect to all of the Mortgage Loans, the Servicer shall segregate
and hold all funds collected and received pursuant to a Mortgage Loan separate
and apart from any of its own funds and general assets and shall establish and
maintain one or more Collection Accounts for the benefit of the
Certificateholders (collectively, the "Collection Account") which are Eligible
Accounts, in the form of a trust account, in the name of "U.S. Bank National
Association, as Trustee, in trust for and for the benefit of the
Certificateholders of Multi-Class Mortgage Pass-Through Certificates, JPMorgan
Chase Bank, N.A. as Servicer, ChaseFlex Trust, Series 2006-1 - Collection
Account." Such Collection Account shall be established with a commercial bank, a
savings bank or a savings and loan association. The Servicer may invest, or
cause the institution maintaining the Collection Account to invest, moneys in
the Collection Account in Eligible Investments, which shall mature not later
than two Business Days preceding the Distribution Date next following the date
of such investment and shall not be sold or disposed of prior to its maturity.
All income and gain realized from any such investment shall be for the benefit
of the
52
Servicer as additional compensation and shall be subject to its withdrawal or
order from time to time. The amount of any losses incurred in respect of any
such investments (to the extent not offset by income from other such
investments) shall be deposited in the Collection Account by the Servicer out of
its own funds immediately as realized; provided, however, that if the Trustee
becomes the Servicer, the Trustee shall not be required to deposit the amount of
any loss incurred prior to it becoming the Servicer.
The Servicer shall deposit or cause to be deposited in the Collection
Account on a daily basis (and not later than the second Business Day following
receipt), and retain therein:
(i) All payments which were received after the Cut-off Date on
account of principal of the Mortgage Loans (other than the principal
portion of Monthly Payments due on or before the Cut-off Date), and all
Principal Prepayments collected on or after the Cut-off Date;
(ii) All payments which were received after the Cut-off Date on
account of interest on the Mortgage Loans (net of the Servicing Fee)(other
than the interest portion of Monthly Payments due on or before the Cut-off
Date);
(iii) Any Subsequent Recovery or Net Liquidation Proceeds;
(iv) All Insurance Proceeds received by the Servicer under any
title, hazard or other insurance policy, including amounts required to be
deposited pursuant to Sections 5.16 and 5.20, other than proceeds to be
held in the Escrow Account or applied to the restoration or repair of the
Mortgaged Property (or Underlying Mortgaged Property, in the case of a
Co-op Loan) or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures or otherwise applied or held as required by
applicable law;
(v) All awards or settlements in respect of condemnation
proceedings affecting any Mortgaged Property (or Underlying Mortgaged
Property, in the case of a Co-op Loan), which are not released to the
Mortgagor in accordance with the Servicer's normal servicing procedures;
(vi) All Repurchase Proceeds;
(vii) All Advances made by the Servicer pursuant to Section 6.03;
(viii) All amounts representing revenues under the insurance
provided pursuant to Section 5.19 to the extent of any losses borne by any
Certificateholder;
(ix) All revenues from any Mortgaged Property (or Underlying
Mortgaged Property in the case of a Co-op Loan) acquired by the Servicer by
foreclosure or deed in lieu of foreclosure net of any Servicing Advances
with respect to such Mortgaged Property (or Underlying Mortgaged Property
in the case of a Co-op Loan); and
(x) Any other amounts required to be deposited therein pursuant
to this Agreement.
The Servicer shall maintain accounting records on a Mortgage Loan by
Mortgage Loan basis with respect to the Collection Account. The Servicer shall
give notice to the Trustee, any Paying Agent, the Depositor and each Rating
Agency of any change in the location of the Collection Account, prior to the use
thereof. Notwithstanding anything to the contrary herein, no Monthly Payment or
any portion thereof shall be permitted to remain in the Collection Account for
more than 12 months. Any Monthly Payment or any portion thereof that has
remained in the Collection Account for 12 months shall be deemed a
53
Principal Prepayment and distributed to Certificateholders pursuant to the
provisions of this Agreement on the Distribution Date immediately following the
end of such 12 month period.
Section 5.09 Permitted Withdrawals from the Collection Account. The
Servicer may, from time to time, withdraw funds from the Collection Account for
the following purposes:
(a) to reimburse itself for Advances made pursuant to Section 6.03
(including amounts to reimburse the related Sub-Servicer for advances made
pursuant to the applicable Sub-Servicing Agreement), the Servicer's and the
related Sub-Servicer's right to receive reimbursement pursuant to this subclause
(i) being limited to amounts received on particular Mortgage Loans which
represent Late Collections (net of the Servicing Fees) with respect to those
particular Mortgage Loans;
(b) to pay itself the Servicing Fee;
(c) to reimburse itself for unreimbursed Servicing Advances, or to pay the
related Sub-Servicer any unreimbursed Servicing Advances, the Servicer's right
to receive reimbursement or make payments to the Sub-Servicer pursuant to this
subclause (c) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Insurance Proceeds, Subsequent Recoveries and condemnation
awards;
(d) to reimburse itself (or the related Sub-Servicer) or the Depositor for
expenses incurred by and recoverable by or reimbursable to it pursuant to
Section 5.01 or 5.16;
(e) to reimburse itself (or the related Sub-Servicer) for any
Nonrecoverable Advances;
(f) to pay to itself (or the related Sub-Servicer) income earned on the
investment of funds deposited in the Collection Account;
(g) to make deposits into the Certificate Account in the amounts and in the
manner provided for herein;
(h) to make payments to itself or others pursuant to any provision of this
Agreement, and to clear and terminate the Collection Account upon the
termination of this Agreement; and
(i) to withdraw amounts deposited in error.
Section 5.10 Establishment of Escrow Account; Deposits in Escrow Account.
With respect to those Mortgage Loans on which the Servicer or any Sub-Servicer
collects Escrow Payments, if any, the Servicer shall, and shall cause any
Sub-Servicer to, segregate and hold all funds collected and received pursuant to
each such Mortgage Loan which constitute Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of trust accounts. Such Escrow Accounts shall
be established with a commercial bank, a mutual savings bank or a savings and
loan association the deposits of which are insured by the FDIC in a manner which
shall provide maximum available insurance thereunder, and which may be drawn on
by the Servicer. The Servicer shall, if requested by the Trustee, give notice to
the Trustee of the location of any Escrow Account. Nothing in this paragraph
shall be deemed to require the Servicer to collect Escrow Payments in the
absence of a provision in the related Mortgage requiring such collection.
The Servicer shall deposit, or cause to be deposited, in any Escrow Account
or Accounts on a daily basis, and retain therein, (i) all Escrow Payments
collected on account of any Mortgage Loans serviced by the Servicer, for the
purpose of effecting timely payment of any such items as required under
54
the terms of this Agreement and (ii) all amounts representing proceeds of any
hazard insurance policy which are to be applied to the restoration or repair of
any Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan). The Servicer shall make withdrawals therefrom only to effect such
payments as are required under this Agreement, and for such other purposes as
are set forth in Section 5.11. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
the related Mortgagor and, to the extent required by law, the Servicer shall pay
interest on escrowed funds to the related Mortgagor notwithstanding that the
Escrow Account is non-interest-bearing or that interest paid thereon is
insufficient for such purposes.
Section 5.11 Permitted Withdrawals from Escrow Account. Withdrawals from
any Escrow Account or Accounts may be made by a Servicer only (i) to effect
timely payments of ground rents, taxes, assessments, water rates, Standard
Hazard Policy premiums, or other items constituting Escrow Payments for the
related Mortgage, (ii) to reimburse the Servicer for any Servicing Advance made
by the Servicer, with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, (iii) to refund to any Mortgagor any
funds found to be in excess of the amounts required under the terms of the
related Mortgage Loan or under applicable law, (iv) for application to
restoration or repair of the property subject to the related Mortgage, (v) to
pay to the Servicer, or to the Mortgagor to the extent required by law, any
interest paid on the funds deposited in the Escrow Account, (vi) to clear and
terminate the Escrow Account on the termination of this Agreement or (vii) to
withdraw amounts deposited in error.
Section 5.12 Payment of Taxes, Insurance and Other Charges. With respect to
each Mortgage Loan, the Servicer shall maintain, or cause to be maintained,
accurate records reflecting any delinquencies or nonpayments with regard to
taxes, assessments and Standard Hazard Policy premiums. The Servicer assumes
full responsibility for ensuring the payment of all such bills and shall effect
payments of all such bills irrespective of each Mortgagor's faithful performance
in the payment of same or the making of the Escrow Payments and shall make
advances from its own funds to effect such payments.
Section 5.13 Transfer of Accounts. The Servicer may transfer the Collection
Account or Escrow Account to an Eligible Account maintained with a different
depository institution from time to time and shall notify the Trustee and the
Paying Agent of any such transfer.
Section 5.14 [Reserved].
Section 5.15 Maintenance of the Primary Insurance Policies. The Servicer
shall not take, or permit any related Sub-Servicer to take, any action which
would result in non-coverage under any applicable Primary Insurance Policy of
any loss which, but for the actions of the Servicer or Sub-Servicer, would have
been covered thereunder. Except as otherwise required by applicable law, to the
extent coverage is available and until the Loan-to-Value Ratio of the related
Mortgage Loan is reduced to 80%, the Servicer shall keep or cause to be kept in
full force and effect each such Primary Insurance Policy in an amount equal to
the amount by which the unpaid principal balance of the related Mortgage Loan
exceeds 75% of the value (as described in the definition of Loan-to-Value Ratio)
of the related Mortgaged Property (or Underlying Mortgaged Property, in the case
of a Co-op Loan). The Servicer shall not cancel or refuse to renew any such
Primary Insurance Policy or consent to any related Sub-Servicer canceling or
refusing to renew any such Primary Insurance Policy applicable to a Mortgage
Loan subserviced by it, that is in effect at the date of the initial issuance of
the Certificates and is required to be kept in force hereunder unless the
replacement Primary Insurance Policy for such canceled or non-renewed policy is
maintained with an insurer whose claims-paying ability is rated at least as high
as the original insurer or is acceptable to each Rating Agency as confirmed in
writing by each such Rating Agency, unless otherwise required by law.
55
Section 5.16 Maintenance of Standard Hazard Policies.
(a) The Servicer shall cause to be maintained for each Mortgage Loan (other
than a Co-op Loan) a Standard Hazard Policy with extended coverage as is prudent
in the area where the Mortgaged Property is located in an amount which is equal
to the greater of (i) the lesser of (A) 100% of the maximum insurable value of
the improvements securing such Mortgage Loan or (B) the principal balance owing
on such Mortgage Loan, or (ii) such amount required to prevent the Mortgagor or
mortgagee from becoming a co-insurer. If the Mortgaged Property is in an area
identified at the time of origination in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available) the Servicer will cause to be maintained a
flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable insurance carrier,
in an amount representing coverage not less than the least of (i) the
outstanding Principal Balance of the Mortgage Loan, (ii) the full insurable
value or (iii) the maximum amount of insurance which is available under the
Flood Disaster Protection Act of 1973, as amended. The Servicer shall also
maintain on property acquired upon foreclosure, or by deed in lieu of
foreclosure, of any Mortgage Loan, fire and hazard insurance with extended
coverage in an amount which is not less than the lesser of (i) the outstanding
Principal Balance of the Mortgage Loan or (ii) the maximum insurable value of
the improvements which are a part of such property, liability insurance, and, to
the extent available, flood insurance in an amount as provided above. Any
amounts collected by the Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the property subject to the related
Mortgage or property acquired in liquidation of the Mortgage Loan, or released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited, subject to applicable law, in the Collection Account. It is
understood and agreed that no earthquake or other additional insurance need be
required by the Servicer of any Mortgagor or maintained on property acquired in
respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All such Standard Hazard Policies and other policies shall
be endorsed with standard mortgagee clauses with loss payable to the Servicer or
its designee. Any such Standard Hazard Policies or other policies may be in the
form of blanket policies; provided, however, that in the event of any claim
arising in connection with a hazard loss the Servicer shall be obligated, in the
case of blanket insurance policies, to deposit in the Collection Account any
amount not payable under such blanket policy because of a deductible clause in
such policy and not otherwise payable under an individual policy. The Servicer
shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent; provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies are acceptable insurers in the discretion of the Servicer.
(b) Any cost incurred by the Servicer in maintaining any of the foregoing
insurance shall not, for the purpose of calculating monthly distributions to
Certificateholders, be added to the amount owing under the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs (other
than the costs of maintaining a blanket hazard insurance policy not attributable
to a specific Mortgaged Property) shall be recoverable by the Servicer from the
Mortgagor or out of Insurance Proceeds, Subsequent Recoveries or Liquidation
Proceeds or to the extent permitted by Section 5.09.
Section 5.17 [Reserved].
Section 5.18 [Reserved].
Section 5.19 Fidelity Bond and Errors and Omissions Insurance. The Servicer
shall maintain, at its own expense, a blanket fidelity bond and an errors and
omissions insurance policy, with broad coverage with responsible companies on
all officers, employees or other persons acting on behalf of the Servicer in any
capacity with regard to the Mortgage Loans to handle funds, money, documents and
56
papers relating to the Mortgage Loans. Any such fidelity bond and errors and
omissions insurance shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons and shall be maintained at a level acceptable to
FNMA. No provision of this Section 5.19 requiring such fidelity bond and errors
and omissions insurance shall diminish or relieve the Servicer from its duties
and obligations as set forth in this Agreement. Upon request of the Trustee, the
Servicer shall cause to be delivered to the Trustee a certification evidencing
coverage under such fidelity bond and insurance policy. Promptly upon receipt of
any notice from the surety or the insurer that such fidelity bond or insurance
policy has been terminated or modified in a materially adverse manner, the
Servicer shall notify the Trustee and each Rating Agency of any such termination
or modification.
Section 5.20 Collections under Insurance Policies; Enforcement of
Due-On-Sale Clauses; Assumption Agreements.
(a) In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to present, on behalf of itself, the Trustee
and the Certificateholders, claims to the insurer under any Standard Hazard
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any insurance policies. Pursuant to Section
5.08, the Servicer shall deposit Insurance Proceeds in the Collection Account.
(b) When any Mortgaged Property (or stock allocated to a dwelling unit, in
the case of a Co-op Loan) is conveyed by the Mortgagor, the Servicer shall
enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to
the extent permitted by such Mortgage Note or Mortgage, applicable law and
governmental regulations. Subject to the foregoing, the Servicer is authorized
to take or enter into an assumption or substitution agreement from or with the
Person to whom such property has been or is about to be conveyed. In connection
with such assumption or substitution, the Servicer shall apply such underwriting
standards and follow such practices and procedures as shall be normal and usual
and as it applies to mortgage loans owned solely by it.
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 conveyance by the
Mortgagor of the Mortgaged Property (or stock allocated to a dwelling unit, in
the case of a Co-op Loan) or any assumption of a Mortgage Loan by operation of
law which the Servicer in good faith determines it may be restricted by law from
preventing, for any reason whatsoever.
(c) Subject to the Servicer's duty to enforce any due-on-sale clause to the
effect set forth in Section 5.20(b), in any case in which a Mortgaged Property
(or stock allocated to a dwelling unit, in the case of a Co-op Loan) is to be
conveyed to a Person by a Mortgagor, and such Person is to enter into an
assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage, the Servicer shall so notify the Trustee by forwarding to the
Trustee the original copy of such assumption or substitution agreement, which
copy shall be added by the Trustee to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. In connection
with any such assumption, modification agreement or substitution agreement, the
interest rate of the related Mortgage Note shall not be changed, the principal
amount of the Mortgage Note shall not be increased or decreased and the maturity
of the Mortgage Note shall not be extended, nor shall it be shortened by more
than one year. Any fee collected by the Servicer for entering into an assumption
or substitution of liability agreement with respect to such Mortgage Loan shall
be retained by the Servicer as additional servicing compensation.
Section 5.21 Income and Realization from Defaulted Mortgage Loans. The
Servicer, on behalf of the Trustee, shall foreclose upon or otherwise comparably
convert the ownership of Mortgaged
57
Properties (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 5.07, shall manage, conserve, protect and operate
such Mortgaged Properties (or stock allocated to a dwelling unit, in the case of
a Co-op Loan) for the purposes of their prompt disposition and sale, and shall
dispose of such Mortgaged Properties (or stock allocated to a dwelling unit, in
the case of a Co-op Loan) on such terms and conditions as it deems in the best
interests of the Certificateholders. The Servicer shall sell such property prior
to the close of the third calendar year beginning after the year in which such
foreclosure or conversion occurs or such longer period as would not prevent such
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) from constituting "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code. The Servicer will ensure that no Mortgaged
Property shall be held, rented or otherwise used in such a manner or pursuant to
any terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
(ii) subject any REMIC Pool to the imposition of any federal income taxes on the
income earned on such Mortgaged Property, including any taxes imposed by reason
of Section 860F or 860G(c) of the Code. In connection with such activities, the
Servicer shall follow such practices and procedures as it shall deem necessary
or advisable, as shall be normal and usual in its general mortgage servicing
activities, including its management of foreclosed properties for a temporary
period as contemplated herein. The foregoing is subject to the provisions of
Section 5.28 of this Agreement and to the proviso that the Servicer shall not be
required to expend its own funds in connection with any management, foreclosure
or towards the restoration of any property unless it shall determine that such
management, restoration or foreclosure will increase any Subsequent Recoveries
or Liquidation Proceeds of the Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 5.09). The Servicer shall be permitted to earn income with respect to
any Mortgaged Properties (or stock allocated to a dwelling unit, in the case of
a Co-op Loan), provided such income does not constitute "net income from
foreclosure property" within the meaning of Section 860G(c) of the Code. The
income earned from the management of such Mortgaged Properties (or stock
allocated to a dwelling unit, in the case of a Co-op Loan), net of reimbursement
to the Servicer for expenses (including any taxes) incurred in connection with
such management, shall be applied to the payment of principal of and interest on
the related defaulted Mortgage Loans (with interest accruing and principal
amortizing as though such Mortgage Loans were still current) and all such income
shall be deemed, for all purposes in this Agreement, to be payments on account
of principal and interest on the related Mortgage Notes and shall be deposited
into the Collection Account. To the extent the income received is in excess of
the amount attributable to amortizing principal and accrued interest at the Net
Mortgage Rate on the related Mortgage Loan, such excess shall be deposited in
the Collection Account.
The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, as amended,
the Resources Conservation and Recovery Act of 1976, as amended, or other
federal, state or local environmental legislation, on a Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan) in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
property. To the extent that the Servicer has actual knowledge of any such
substance or waste, it shall consult with the Trustee regarding the appropriate
course of action. The Servicer shall not institute foreclosure actions with
respect to a property containing substance or waste as described above if it
reasonably believes that such action would not be consistent with its servicing
standards, and in no event shall the Servicer manage, operate or take any other
action with respect thereto which the Servicer in good faith believes will
result in "clean-up" or other liability under applicable law. The net income
from the rental or sale of a REO Property shall be deposited in the Collection
Account within two (2) Business Days after receipt thereof by the Servicer.
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The Servicer may enter into a special servicing agreement with an
unaffiliated holder of 100% Percentage Interest of the Class of Class B
Certificates then outstanding having the highest numerical class designation or
a holder of a class of securities representing interests in such Class B
Certificate and/or other subordinate mortgage pass-through certificates, such
agreement to be (i) substantially in the form of Exhibit J hereto or (ii)
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 holder
may instruct the Servicer to commence or delay foreclosure proceedings with
respect to delinquent Mortgage Loans and will contain provisions for the deposit
of cash by the holder that would be available for distribution to
Certificateholders if Liquidation Proceeds are less than they otherwise may have
been had the Servicer acted in accordance with its normal procedures.
Section 5.22 Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or
upon the receipt by the Servicer of a notification that payment in full will be
made in a manner customary for such purposes, the Servicer shall immediately
notify the Custodian with a copy to the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 5.08 have been or will
be so deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, within five
Business Days the Custodian on behalf of the Trustee shall release the related
Mortgage File to the Servicer and the Trustee will execute and deliver to the
Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such other instruments releasing the lien of the
Mortgage as have been provided by the Servicer to the Trustee, together with the
Mortgage Note with written evidence of cancellation thereon, and the Trustee
shall have no further responsibility with respect to said Mortgage File. Upon
any such payment in full, or the receipt of such notification, the Servicer is
authorized to procure from the Trustee under the deed of trust which secured the
Mortgage Note, if any, a deed of full reconveyance covering the property
encumbered by such deed of trust, which assignment of deed of trust, except as
otherwise provided by any applicable law, shall be recorded by the Servicer in
the appropriate land records in the jurisdiction in which the assignment of deed
of trust is recorded, or, as the case may be, to procure from the Trustee an
instrument of satisfaction or, if the Mortgagor so requests, an assignment
without recourse, which deed of reconveyance, instrument of satisfaction or
assignment shall be delivered by the Servicer to the Person or Persons entitled
thereto. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Collection Account or to the
Trustee.
(b) From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Servicer shall deliver to the Custodian a certificate of
a Servicing Officer requesting that possession of the Mortgage File be released
to the Servicer and certifying as to the reason for such release and that such
release will not invalidate any insurance coverage provided in respect of the
Mortgage Loan under any of the insurance policies required by this Agreement.
With such certificate, the Servicer shall require that the Custodian on behalf
of the Trustee release the Mortgage File, and, within five Business Days, the
Custodian shall deliver the Mortgage File or any document therein to the
Servicer. The Servicer shall cause each Mortgage File so released to be returned
to the Trustee when the need therefor by the Servicer no longer exists, unless
(i) the Mortgage Loan has been liquidated and the Net Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account or
(ii) the Mortgage File has been delivered to an attorney, or to a public trustee
or other public official as required by law, for purposes of initiating or
pursuing legal action or other proceedings for the foreclosure of the Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
either judicially or
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non-judicially, and the Servicer has delivered to the Custodian on behalf of the
Trustee a certificate of a Servicing Officer in the form of Exhibit L hereto
certifying as to the name and address of the Person to which such Mortgage File
was delivered and the purpose or purposes of such delivery.
(c) Upon written request of the Servicer, the Trustee shall execute and
deliver to the Servicer any court pleadings, requests for trustee's sale or
other documents prepared by and delivered by the Servicer to the Trustee
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan) or
to any legal action brought to obtain judgment against any Mortgagor on the
Mortgage Note or Mortgage or to obtain a deficiency judgment, or to enforce any
other remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Together with such documents or pleadings, the
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
requesting that such pleadings or documents be executed by the Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Trustee will not invalidate any
insurance coverage under the insurance policies required under this Agreement or
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
The Trustee may rely on such certificate without further inquiry.
Section 5.23 Servicing and Other Compensation. The Servicer, as
compensation for its activities hereunder, shall be entitled to receive, on or
prior to each Distribution Date, the amounts provided for as the Servicing Fee
and as reimbursement for Nonrecoverable Advances, Servicing Advances and
reimbursement for Advances, all as specified by Section 5.09. The amount of
compensation or reimbursement provided for shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis.
Additional servicing compensation in the form of assumption fees,
prepayment fees and late payment charges shall be retained by the Servicer, to
the extent permitted by applicable law. The Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder (including the fees, expenses and indemnities of the Trustee and any
Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 5.09 and 5.21.
Section 5.24 1934 Act Reports.
(a) As set forth on Schedule X hereto, for so long as the Trust is subject
to the Exchange Act reporting requirements, no later than the end of business on
the 2nd Business Day after the occurrence of an event requiring disclosure on
Form 8-K (a "reportable event") (i) the Depositor, the Seller, the Trustee and
the Paying Agent shall notify the Servicer of any item reportable on a Form 8-K
of which each such party has knowledge (unless such item is specific to the
Servicer, in which case the Servicer will be deemed to have notice) and (ii)
shall deliver to the Servicer at least two Business Days prior to the filing
deadline for such Form 8-K, all information, data, and exhibits (unless such
information, data, and exhibits are specific to the Servicer) required to be
provided or filed with such Form 8-K. After preparing the Form 8-K on behalf of
the Depositor, the Servicer shall execute and promptly file such Form 8-K.
(b) For so long as the Trust is subject to the Exchange Act, within 15 days
after each Distribution Date, the Servicer shall, on behalf of the Trust and in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System (▇▇▇▇▇), a Form 10-D with (1) a copy of the
report to the Certificateholders for such Distribution Date as an exhibit
thereto and (2) any other information known to the Servicer or provided to the
Servicer to be included at its discretion in Form 10-D ("Additional Form 10-D
Disclosure") as set forth in the next paragraph.
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(c) For so long as the Trust is subject to the Exchange Act, as set forth
in Schedule Y hereto, within 5 calendar days after the related Distribution Date
(i) the parties hereto, as applicable, will be required to provide to the
Servicer, to the extent known to such party, any Additional Form 10-D Disclosure
(including any breaches of pool asset representations and warranties or
transaction covenants of which the party has written notice and which has not
been included on the monthly distribution report for the period), if applicable,
and (ii) the Servicer, to the extent it deems necessary, shall incorporate such
Additional Form 10-D Disclosure into the Form 10-D and shall file such Form 10-D
by the 8th calendar day after the Distribution Date.
(d) For so long as the Trust is subject to the Exchange Act, prior to the
90th calendar day after the end of the fiscal year for the trust, the Servicer
shall, on behalf of the Trust and in accordance with industry standards, prepare
and file with the Commission via ▇▇▇▇▇ a Form 10-K with respect to the Trust
Fund. Such Form 10-K shall include the following items: (i) an annual compliance
statement for the Servicer and each Subservicer, as described in Section 5.25 of
the Agreement, (ii)(A) the annual reports on assessment of compliance with
servicing criteria for the Paying Agent, each Servicer, Subservicer and
Subcontractor (unless the Servicer has determined that such compliance statement
is not required by Regulation AB), as described in Section 5.25 of the
Agreement, and (B) if any Reporting Servicer's report on assessment of
compliance with servicing criteria described in Section 5.25 identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any report on assessment of compliance with servicing
criteria described in Section 5.25 of the Agreement is not included as an
exhibit to such Form 10-K, disclosure that such report is not included and an
explanation why such report is not included, (iii)(A) the registered public
accounting firm attestation report for the Paying Agent, the Servicer and each
Subservicer, as described in Section 5.26 of the Agreement, and (B) if any
registered public accounting firm attestation report described in the Section
5.26 of the Agreement identifies any material instance of noncompliance,
disclosure identifying such instance of noncompliance, or if any such registered
public accounting firm attestation report is not included as an exhibit to such
Form 10-K, disclosure that such report is not included and an explanation why
such report is not included, and (iv) a ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification in the form
attached hereto as Exhibit S, executed by the senior officer in charge of
securitizations of the Servicer. Any disclosure or information in addition to
(i) through (iv) above that is required to be included on Form 10-K ("Additional
Form 10-K Disclosure") shall be determined and prepared by and at the direction
of the Servicer pursuant to the following paragraph.
(e) As set forth in Schedule Z hereto, no later than March 12 of each year
that the Trust is subject to the Exchange Act reporting requirements, commencing
in 2007, (i) the parties identified on Schedule Z shall be required to provide
to the Depositor and the Servicer, to the extent known, any Additional Form 10-K
Disclosure, if applicable, and (ii) the Servicer, to the extent it deems
necessary, shall incorporate such Additional Form 10-K Disclosure into the Form
10-K and shall file such Form 10-K by the 85th calendar day after the end of the
fiscal year for the Trust.
(f) Each Form 10-K shall include a certification (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification") which shall be in the form attached hereto as Exhibit S. The
Depositor will cause its senior officer in charge of securitization to execute
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification required pursuant to Rule 13a-14 under the
Securities Exchange Act of 1934, as amended, by March 15 of each year in which
the Trust is subject to the reporting requirements of the Exchange Act. In
connection therewith, the Paying Agent shall sign a certification (in the form
attached hereto as Exhibit O) for the benefit of the Servicer and its officers,
directors and affiliates regarding certain aspects of the Form 10-K
Certification.
(g) Following the first date legally permissible under applicable
regulations and interpretations of the Commission, the Servicer shall, on behalf
of the Trust and in accordance with
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industry standards, file with the Commission via ▇▇▇▇▇ a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable.
(h) The Servicer shall have no responsibility to file any items with the
Commission other than those specified in this section and the Servicer shall
execute any and all form 8-Ks and 10-Ds required hereunder. The Depositor shall
execute each form 10-K.
(i) If the Commission issues additional interpretative guidance or
promulgates additional rules or regulations with respect to Regulation AB or
otherwise, or if other changes in applicable law occur, that would require the
reporting arrangements, or the allocation of responsibilities with respect
thereto, described in this Section 5.24, to be conducted differently than as
described, the Depositor, the Servicer, the Paying Agent and the Trustee shall
comply with reasonable requests made by the Seller, the Servicer or the
Depositor to amend the provisions of this Section 5.24 in order to comply with
such amended reporting requirements and to deliver additional or different
information as the Seller or the Depositor may determine in good faith is
necessary to comply with the provisions of Regulation AB, provided that such
information is available to such party without unreasonable effort or expense or
is reimbursed by the requesting party and within such timeframe as may be
reasonably requested. Any such supplementation or modification shall be made
without the consent of the Certificateholders, and may result in a change in the
reports filed by the Servicer on behalf of the Trust under the Exchange Act.
(j) The Depositor, the Servicer, the Trustee and the Paying Agent agree to
use their good faith efforts to cooperate in complying with the requirements of
this Sections 5.24.
Section 5.25 Annual Statement as to Compliance. Not later than (a) March 15
of each calendar year (other than the calendar year during which the Closing
Date occurs) or (b) with respect to any calendar year during which an annual
report on Form 10-K is not required to be filed pursuant to Section 5.24 on
behalf of the Trust, by April 15 of each calendar year (or if such day is not a
Business Day, the immediately succeeding Business Day), the Servicer shall
deliver to the Depositor, an Officers' Certificate in the form attached hereto
as Exhibit T stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding calendar year and of the
performance of the Servicer under this Agreement has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement in all material respects throughout such year or a portion thereof,
or, if there has been a failure to fulfill any such obligation in any material
respect, specifying each such failure known to such officer and the nature and
status thereof. With respect to any Subservicer that meets the criteria of Item
1108(a)(2)(i) through (iii) of Regulation AB in the sole determination of the
Servicer, the Servicer shall request from such Subservicer, the Officer's
Certificate set forth in this Section 5.25 as and when required with respect to
such Subservicer.
Section 5.26 Assessment of Compliance and Independent Public Accountants'
Attestation; Financial Statements.
(a) Not later than (i) March 15 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 5.24 on behalf of the Trust, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer, at its own expense, shall deliver to the Trustee
and the Depositor an officer's assessment of its compliance with the Servicing
Criteria during the preceding calendar year as required by Rules 13a-18 and
15d-18 of the Exchange Act and Item 1122 of Regulation AB (the "Assessment of
Compliance"), which addresses the items set forth in Exhibit R hereto.
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(b) Not later than (i) March 15 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 5.24 on behalf of the Trust, April 15 of each calendar
year (or if such day is not a Business Day, the immediately succeeding Business
Day), the Servicer, at its own expense, shall cause a nationally or regionally
recognized firm of independent registered public accountants (who may also
render other services to any Servicer, the Seller or any affiliate thereof)
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Trustee, the Paying Agent and the Depositor that
attests to and reports on the assessment of compliance provided by such Servicer
pursuant to Section 5.26(a) (the "Accountant's Attestation"). Such Accountant's
Attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act.
(c) The Servicer shall request that any Subservicer and each Subcontractor
(to the extent determined by the Servicer to be required under Regulation AB)
not later than March 15 of each calendar year (other than the calendar year
during which the Closing Date occurs) with respect to any calendar year during
which the Trust's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, provide an Assessment of Compliance, which addresses the items set
forth in Exhibit R hereto. The Servicer shall request that any Subservicer
(other than the calendar year during which the Closing Date occurs) with respect
to any calendar year during which the Trust's annual report on Form 10-K is not
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, by April 15 of each calendar year (or, in each
case, if such day is not a Business Day, the immediately succeeding Business
Day) provide an Assessment of Compliance, which addresses the items set forth in
Exhibit R hereto.
(d) Not later than March 15 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Trust's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer shall request that each Subservicer and each
Subcontractor (to the extent determined by the Servicer to be required by
Regulation AB) provide an Accountant's Attestation by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
pursuant to Section 5.26(c) above. Other than the calendar year during which the
Closing Date occurs, with respect to any calendar year during which the Trust's
annual report on Form 10-K is not required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, not later than
April 15 of each calendar year (or, in each case, if such day is not a Business
Day, the immediately succeeding Business Day), the Servicer shall request that
each Subservicer provide an Accountant's Attestation by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
pursuant to Section 5.26(c) above.
(e) Not later than, with respect to any calendar year during which the
Trust's annual report on Form 10K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, March 15 (or, in
each case, if such day is not a Business Day, the immediately preceding Business
Day), the Paying Agent shall deliver to the Depositor and the Servicer an
Assessment of Compliance with regard to the Servicing Criteria applicable to the
Paying Agent during the preceding calendar year, which addresses the items set
forth in Exhibit R hereto.
(f) Not later than, with respect to any calendar year during which the
Trust's annual report on Form 10-K is required to be filed in accordance with
the Exchange Act and the rules and regulations of the Commission, March 15 (or,
in each case, if such day is not a Business Day, the immediately preceding
Business Day), the Paying Agent shall deliver to the Depositor and the Servicer
an Accountant's Attestation by a registered public accounting firm that attests
to, and reports on, the Assessment of Compliance pursuant to Section 5.26(e)
above.
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(g) Not later than, with respect to any calendar year during which the
Trust's annual report on Form 10-K is required to be filed in accordance with
the Exchange Act and the rules and regulations of the Commission, 15 calendar
days before the date on which the Trust's annual report on Form 10-K is required
to be filed in accordance with the Exchange Act and the rules and regulations of
the Commission (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), the Servicer shall request that each
custodian, including the Custodian, deliver to the Servicer an Assessment of
Compliance with regard to the Servicing Criteria applicable to such custodian
during the preceding calendar year, which addresses the items set forth in
Exhibit R hereto.
(h) Not later than March 12 (or, in each case, if such day is not a
Business Day, the immediately succeeding Business Day), of any calendar year
(other than the calendar year during which the Closing Date occurs) during which
the Trust's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the
Servicer shall request that each Custodian deliver to the Servicer an
Accountant's Attestation by a registered public accounting firm that attests to,
and reports on, the Assessment of Compliance pursuant to Section 5.26(g) above.
(i) Each of the parties hereto acknowledges and agrees that the purpose of
this Section 5.26 is to facilitate compliance by the Seller, the Servicer and
the Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that the
parties' obligations hereunder will be supplemented and modified as necessary to
be consistent with any such amendments, interpretive advice or guidance,
convention or consensus among active participants in the asset-backed securities
markets, advice of counsel, or otherwise in respect of the requirements of
Regulation AB and the parties shall comply with reasonable requests made by the
Seller, the Servicer or the Depositor for delivery of additional or different
information as the Seller or the Depositor may determine in good faith is
necessary to comply with the provisions of Regulation AB, provided that such
information is available to such party without unreasonable effort or expense or
is reimbursed by the requesting party and within such timeframe as may be
reasonably requested. Any such supplementation or modification shall be made
without the consent of the Certificateholders, and may result in a change in the
reports filed by the Servicer on behalf of the Trust under the Exchange Act.
Section 5.27 Access to Certain Documentation; Rights of the Depositor in
Respect of the Servicer. The Servicer shall provide access to the Trustee and
Certificateholders which are savings and loan associations, banks or insurance
companies or examiners of any federal or state banking or insurance regulatory
authority to the documentation regarding the Mortgage Loans if so required by
applicable regulations of any regulatory authority, such access to be afforded
subject to reimbursement for expenses without charge but only upon reasonable
request and during normal business hours at the offices of the Servicer
designated by it. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer under this Agreement. The Depositor shall not assume
any responsibility or liability for any action or failure to take action by the
Servicer and is not obligated to supervise the performance of the Servicer under
this Agreement or otherwise.
Section 5.28 REMIC-Related Covenants. For as long as the Trust Fund shall
exist, the Servicer, the Paying Agent and the Trustee shall act in accordance
herewith to assure continuing treatment of each REMIC created hereunder as a
REMIC. In particular:
(a) The Servicer shall not create, or permit the creation of, any
"interests" in any REMIC created hereunder within the meaning of Section 860G(a)
of the Code other than the "regular interests" in each such REMIC designated as
such in Section 2.04(a) and the "residual interest" in each such REMIC
designated as such in Section 2.04(a);
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(b) As of all times as may be required by the Code, the Servicer will
ensure that substantially all of the assets of each REMIC created hereunder will
consist of "qualified mortgages" as defined in Section 860G(a)(3) of the Code
and "permitted investments" as defined in Section 860G(a)(5) of the Code. The
Paying Agent will maintain records that are sufficient to indicate the
compliance of each REMIC created hereunder with applicable requirements of the
Code (and applicable Proposed, Temporary or final Treasury Regulations) relating
to the assets held by such REMIC. Further, the Servicer shall not permit and the
Trustee shall not accept the transfer or substitution of any Mortgage Loan other
than pursuant to Section 3.03, 5.01 or 5.21 of this Agreement, and the Servicer
shall, in any case, not permit substitution unless the Servicer and the Trustee
have received an Opinion of Counsel, which will not be an expense of any REMIC
created hereunder, that such transfer or substitution would not adversely affect
the REMIC status of any REMIC created hereunder or would not otherwise be
prohibited by this Agreement;
(c) The Servicer shall ensure that no REMIC created hereunder receives a
fee or other compensation for services and that no REMIC created hereunder
receives any income from assets other than "qualified mortgages" within the
meaning of Section 860G(a)(3) of the Code or "permitted investments" within the
meaning of Section 860G(a)(5) of the Code, and shall take whatever action it
deems necessary to avoid any material tax imposed by the Code on any REMIC
created hereunder;
(d) None of the Depositor, the Servicer, the Paying Agent or the Trustee
shall sell or permit the sale of all or any portion of the Mortgage Loans or of
any Eligible Investment unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received an Opinion
of Counsel, which will not be an expense of any REMIC created hereunder or the
Trustee, to the effect that such sale (i) is pursuant to a "qualified
liquidation" as defined in Section 860F(a)(4) of the Code and as described in
Section 11.01 hereof, or (ii) would not be treated as a "prohibited transaction"
within the meaning of Section 860F(a)(2) of the Code that results in the
realization of a material amount of gain or loss for federal income tax
purposes;
(e) The Trustee shall not accept any contribution to any REMIC created
hereunder after the Startup Day without an Opinion of Counsel (which shall not
be an expense of the Trustee) that such contribution is included within the
exceptions provided in Section 860G(d)(2) of the Code and, therefore, will not
be subject to the tax imposed by Section 860G(d)(1) of the Code; and
(f) Notwithstanding anything to the contrary in this Agreement, the
Servicer and the Trustee, at the direction of the Servicer, shall take any other
action or refuse to take any action otherwise required (including adjusting the
Purchase Price for any Mortgage Loan) where the Servicer deems such action or
inaction reasonably necessary to ensure the REMIC status of each REMIC created
hereunder under the Code and applicable regulations or to avoid the imposition
of any material tax liability on any REMIC created hereunder that will affect
amounts distributable to the Certificateholders.
(g) In the event that any applicable federal, state or local tax, including
interest, penalties or assessments, additional amounts or additions to tax, is
imposed on any REMIC created hereunder, such tax shall be treated in the same
manner as a Realized Loss and shall be charged against amounts otherwise
distributable to the Holders of the Certificates, except as provided in the last
sentence of this Section 5.28 (g). The Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent shall withdraw from the
Collection Account sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is estimated to be legally owed by (but such
authorization shall not prevent the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent from contesting, at the expense
of the Trust Fund (other than as a consequence of a breach of its obligations
under this Agreement), any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The Trustee or, if a Paying Agent has been appointed
65
under Section 4.05, the Paying Agent is hereby authorized to and shall
segregate, into a separate non-interest bearing account, the net income from any
"prohibited transaction" under Code Section 860F(a), the amount of any taxable
contribution to any REMIC created hereunder after the Startup Day that is
subject to tax under Code Section 860G(d), and 35% of any estimated "net income
from foreclosure property" under Section 860G(c) and use such income or amount,
to the extent necessary, to pay such tax. To the extent that any such tax is
paid to the Internal Revenue Service or applicable state or local tax
authorities, the Trustee or a Paying Agent has been appointed under Section
4.05, the Paying Agent shall retain an equal amount from future amounts
otherwise distributable to the Holder of the Class A-R Certificate and shall
distribute such retained amounts to the Holders of the other Classes of
Certificates, to the extent they remain outstanding, until they are fully
reimbursed for any amount of such taxes previously charged to the then Holder of
the Class A-R Certificate. Neither the Trustee nor the Servicer shall be
responsible for any taxes imposed on any REMIC created hereunder except to the
extent such taxes arise as a consequence of a breach of their respective
obligations under this Agreement. The Trustee shall not be liable hereunder for
any taxes imposed on any REMIC hereunder as the result of any direction taken
hereunder from the Servicer or any action of the Servicer or Paying Agent
hereunder.
Section 5.29 Reserve Fund; Yield Maintenance Agreements.
(a) On the Closing Date, the Paying Agent shall establish an account (the
"Reserve Fund"), which shall be an Eligible Account. The Reserve Fund shall be
entitled "Reserve Fund, U.S. Bank, as Trustee for the benefit of the Holders of
the ChaseFlex 2006-1 LIBOR Certificates." On each Distribution Date, the Paying
Agent is hereby directed to, and shall therefore, deposit into the Reserve Fund
all amounts received under each Yield Maintenance Agreement. For federal and
state income tax purposes, the Class CE Certificateholders will be deemed to be
the owners of the Reserve Fund and all amounts deposited into the Reserve Fund
and shall be taxable on any income earned thereon. The Reserve Fund shall be an
"outside reserve fund" for federal income tax purposes and not an asset of any
REMIC. Amounts held in the Reserve Fund and not previously distributed on a
Distribution Date shall be distributed to the Class CE Certificateholders on
each Distribution Date. Amounts held in the Reserve Fund shall remain
uninvested. The Reserve Fund will be part of the Trust Fund but not part of any
REMIC and any payments to the LIBOR Certificates of Basis Risk Shortfall
Carryover Amounts with respect to the LIBOR Certificates will not be payments
with respect to a "regular interest" in a REMIC within the meaning of Code
Section 860G(a)(1).
(b) The Depositor hereby directs the Paying Agent, to execute and deliver
on behalf of the Trust each of the Yield Maintenance Agreements and authorizes
the Paying Agent to perform its obligations thereunder on behalf of the Trust in
accordance with the terms of each Yield Maintenance Agreement. Each Yield
Maintenance Agreement will provide for the payment of Basis Risk Shortfall
Carryover Amounts for one Class of LIBOR Certificates to the extent provided in
Section 5.29(b)(i). On or before the Closing Date, the Paying Agent shall enter
into the Yield Maintenance Agreements on behalf of the Trust, with the
Counterparty. The Yield Maintenance Agreements shall be part of the Trust Fund
but not part of any REMIC. The Paying Agent shall distribute all amounts on
deposit in the Reserve Fund received under a Yield Maintenance Agreement as
follows.
(i) from amounts received with respect to the Class A-1-B Yield
Maintenance Agreement, first, to the Class A-1-B Certificates, up to the
Basis Risk Shortfall Carryover Amount for the Class A-1-B Certificates and,
second, to the Class A-2-B Certificates, up to the Basis Risk Shortfall
Carryover Amount for the Class A-2-B Certificates;
(ii) from amounts received with respect to the Class A-2-B Yield
Maintenance Agreement, first, to the Class A-2-B Certificates, up to the
Basis Risk Shortfall Carryover Amount for the Class A-2-B Certificates and,
second, to the
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Class A-1-B Certificates, up to the Basis Risk Shortfall Carryover Amount
for the Class A-1-B Certificates;
(iii) to the Class A, Class M and Class B Certificates, in the order
of priority set forth in Section 6.01(b) hereto, any applicable Unpaid
Realized Loss Amounts, prior to giving effect to amounts available to be
paid in respect of Unpaid Realized Loss Amounts pursuant to Subsections
(2), (4), (6), (8) and (10) of Section 6.01(c); and
(iv) to the Class CE Certificates, any remaining amounts.
(c) On the Distribution Date on which each of the LIBOR Certificates and
Fixed Rate Certificates have been paid in full, all amounts remaining in the
Reserve Fund, after giving effect to withdrawals on such Distribution Date to be
paid in accordance with Section 5.29(b), shall be paid to the Class CE
Certificates.
(d) The Seller, the Depositor and the Certificateholders by acceptance of
their Certificates acknowledge and agree that the Paying Agent shall execute,
deliver and perform its obligations under the Yield Maintenance Agreements and
shall do so solely in its capacity as Paying Agent of the Trust Fund and not in
its individual capacity. The Paying Agent is hereby directed to represent and
warrant to the Counterparty under the Yield Maintenance Agreements that the
beneficial owner for United States federal income tax purposes of payments made
under the Yield Maintenance Agreements is a "U.S. person" (as that term is used
in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations (the
"Regulations")) for United States federal income tax purposes. Every provision
of this Agreement relating to the conduct of affecting the liability of or
affording protection to the Paying Agent shall apply to the Paying Agent's
execution of the Yield Maintenance Agreements and the performance of its duties
and satisfaction of its obligations thereunder.
(e) On 20th calendar day of each month, the Paying Agent shall calculate
the Maximum Yield Maintenance Agreement Amount and notify the Counterparty of
such amount. On each Distribution Date, the "Maximum Yield Maintenance Agreement
Amount" shall be an amount equal to the greater of:
(i) the product of:
(A) the excess, if any, of LIBOR (as calculated under the Class
A-2-B Yield Maintenance Agreement subject to the Rate Cap Ceiling)
over the related Cap Strike Rate for that Distribution Date;
(B) the related Class A-2-B Schedule II Scheduled Notional Amount
for that Distribution Date; and
(C) a fraction, the numerator of which is the actual number of
days in the Accrual Period related to such Distribution Date and the
denominator of which is 360;
and
(ii) the lesser of:
(A) the related Basis Risk Shortfall Carryover Amount related to
the Class A-2-B Certificates; and
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(B) the product of:
(1) the excess, if any, of LIBOR (as calculated under the
Class A-2-B Yield Maintenance Agreement subject to the Rate Cap Ceiling) over
the related Cap Strike Rate for that Distribution Date;
(2) the Class A-2-B Schedule I Scheduled Notional Amount for
that Distribution Date; and
(3) a fraction, the numerator of which is the actual number
of days in the Accrual Period related to such Distribution Date and the
denominator of which is 360.
[END OF ARTICLE V]
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Distributions.
(a) On each Distribution Date, the Paying Agent shall make the following
disbursements and transfers in the following order of priority in each case, to
the extent of the Interest Remittance Amount remaining for such Distribution
Date:
(i) first, concurrently to the Holders of each Class of Class A
Certificates (excluding the Class A-R Certificate), the related Interest
Distribution Amount, on a pro rata basis based on such Interest
Distribution Amount and second, concurrently to each Class of Class A
Certificates, the related unpaid Interest Shortfall, if any, for each such
Class for such Distribution Date on a pro rata basis based on such unpaid
Interest Shortfall;
(ii) to the Holders of the Class M-1 Certificates, the related Interest
Distribution Amount for such Class of Certificates;
(iii) to the Holders of the Class M-2 Certificates, the related Interest
Distribution Amount for such Class of Certificates;
(iv) to the Holders of the Class B-1 Certificates, the related Interest
Distribution Amount for such Class of Certificates; and
(v) to the Holders of the Class B-2 Certificates, the related Interest
Distribution Amount for such Class of Certificates;
Any Interest Remittance Amount remaining undistributed after giving effect to
subclause (i) through (v) above shall be used in determining the amount of Net
Monthly Excess Cashflow, if any, for such Distribution Date.
(b) On each Distribution Date, the Paying Agent shall make the following
disbursements and transfers in the following order of priority in each case, to
the extent of the Principal Distribution Amount:
(i) On each Distribution Date (a) prior to the Step-Down Date or (b) on
which a Trigger Event is in effect, the Paying Agent will withdraw from the
Certificate Account that portion of the Available Distribution Amount equal
to the Principal Distribution Amount for such Distribution Date, and make
the following disbursements and transfers in the order of priority
described below, in each case to the extent of the Principal Distribution
Amount remaining for
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such Distribution Date:
(1) To the Class A Certificates, sequentially, as follows:
(A) to the Class A-R Certificate, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(B) to the Class A-5 and Class A-6 Certificates up to the Class A-5
and Class A-6 Priority Amount, pro rata based upon their Outstanding
Certificate Principal Balances, until the Outstanding Certificate
Principal Balance of each such Class has been reduced to zero;
(C) to the Class A-1-A and Class A-1-B Certificates, pro rata based
upon their Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each such Class has been
reduced to zero;
(D) to the Class A-2-A and Class A-2-B Certificates, pro rata based
upon their Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each such Class has been
reduced to zero;
(E) to the Class A-3 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(F) to the Class A-4 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero; and
(G) to the Class A-5 and Class A-6 Certificates, pro rata based upon
their Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each such Class has been
reduced to zero;
(2) to the Class M-1 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(3) to the Class M-2 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(4) to the Class B-1 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero; and
(5) to the Class B-2 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero.
(ii) On each Distribution Date (a) on or after the Step-Down Date and (b)
on which a Trigger Event is not in effect, the Paying Agent will withdraw
from the Distribution Account that portion of the Available Distribution
Amount equal to the Principal Distribution Amount for such Distribution
Date, and make the following disbursements and transfers in the order of
priority described below:
(1) To the Class A Certificates, the Senior Principal Distribution Amount
for such Distribution Date, sequentially, as follows:
(A) to the Class A-5 and Class A-6 Certificates up to the Class A-5
and Class A-6 Priority Amount, pro rata based upon their Outstanding
Certificate Principal Balances, until the Outstanding Certificate
Principal Balance of each such Class has been reduced to zero;
(B) to the Class A-1-A and Class A-1-B Certificates, pro rata based
upon their Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each such Class has been
reduced to zero;
69
(C) to the Class A-2-A and Class A-2-B Certificates, pro rata based
upon their Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each such Class has been
reduced to zero;
(D) to the Class A-3 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(E) to the Class A-4 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero; and
(F) to the Class A-5 and Class A-6 Certificates, pro rata based upon
their Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each such Class has been
reduced to zero;
(2) to the Class M-1 Certificates, the Class M-1 Principal Distribution
Amount for such Distribution Date, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(3) to the Class M-2 Certificates, the Class M-2 Principal Distribution
Amount for such Distribution Date, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
(4) to the Class B-1 Certificates, the Class B-1 Principal Distribution
Amount for such Distribution Date, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero; and
(5) to the Class B-2 Certificates, the Class B-2 Principal Distribution
Amount for such Distribution Date, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero.
Any Principal Distribution Amount remaining undistributed after giving effect to
clauses (i) (1)-(5) and (ii) (1)-(5) above shall be used in determining the
amount of Net Monthly Excess Cashflow, if any, for such Distribution Date.
(c) On each Distribution Date, the Net Monthly Excess Cashflow shall be
distributed as follows (after giving effect to distributions from proceeds of
the Yield Maintenance Agreements pursuant to Section 5.29 hereof):
(1) to the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount equal to any
Overcollateralization Increase Amount, payable to such Holders under clause
(b) above as part of the Principal Distribution Amount, and applied in the
same order of priority as payments of principal would otherwise be applied
on such Distribution Date to reduce the Outstanding Certificate Principal
Balance of such Certificates until the aggregate Outstanding Certificate
Principal Balance of such Classes of Certificates is reduced to zero;
(2) to the Class A Certificates (excluding the Class A-R Certificate), pro
rata based on amounts due, in an amount equal to the Unpaid Realized Loss
Amount allocable to each such Class;
(3) to the Class M-1 Certificates, any unpaid Interest Shortfall allocable
to such Class of Certificates;
(4) to the Class M-1 Certificates, any Unpaid Realized Loss Amount
allocable to such Class of Certificates;
(5) to the Class M-2 Certificates, any unpaid Interest Shortfall allocable
to such Class of Certificates;
70
(6) to the Class M-2 Certificates, any Unpaid Realized Loss Amount
allocable to such Class of Certificates;
(7) to the Class B-1 Certificates, any unpaid Interest Shortfall allocable
to such Class of Certificates;
(8) to the Class B-1 Certificates, any Unpaid Realized Loss Amount
allocable to such Class of Certificates;
(9) to the Class B-2 Certificates, any unpaid Interest Shortfall allocable
to such Class of Certificates;
(10) to the Class B-2 Certificates, any Unpaid Realized Loss Amount
allocable to such Class of Certificates;
(11) concurrently, each Class of Class A Certificates (other than the Class
A-R Certificate), pro rata, in an amount equal to each such Class'
previously allocated and not reimbursed share of any Net Interest
Shortfalls allocated to each such Certificates;
(12) to the Class M-1 Certificates, in an amount equal to such Class'
previously allocated and not reimbursed share of any Net Interest
Shortfalls allocated to such Certificates;
(13) to the Class M-2 Certificates, in an amount equal to such Class'
previously allocated and not reimbursed share of any Net Interest
Shortfalls allocated to such Certificates;
(14) to the Class B-1 Certificates, in an amount equal to such Class'
previously allocated and not reimbursed share of any Net Interest
Shortfalls allocated to such Certificates;
(15) to the Class B-2 Certificates, in an amount equal to such Class'
previously allocated and not reimbursed share of any Net Interest
Shortfalls allocated to such Certificates;
(16) to the Fixed-Rate Certificates and the LIBOR Certificates, an amount
equal to any Basis Risk Shortfall Carryover Amounts for the Fixed-Rate
Certificates and the LIBOR Certificates for such Distribution Date pro rata
based upon the outstanding Basis Risk Shortfall Carryover Amounts for each
such Class (with respect to the LIBOR Certificates, after giving effect to
any amounts paid pursuant to Section 5.29 under the Yield Maintenance
Agreements that are available to pay any Basis Risk Shortfall Carryover
Amounts on such Distribution Date);
(17) to the Paying Agent, the Custodian or the Trustee in respect of any
unreimbursed expenses and indemnifications owing thereto permitted pursuant
to this Agreement;
(18) to the Class CE Certificates in the following order of priority, (A)
the Class CE Interest Distribution Amount, (B) any unpaid Class CE Interest
Shortfall, (C) as principal on the Class CE Certificate until the
Outstanding Certificate Principal Balance of the Class CE Certificates has
been reduced to zero and (D) any Unpaid Realized Loss Amount allocable to
the Class CE Certificates; and;
(19) to the Class A-R Certificates, any remaining amount.
(d) Amounts distributed to the Class A-R Certificates pursuant to Section
6.01(c)(19) on any Distribution Date shall be allocated among the related REMIC
residual interests represented thereby such that each such interest is allocated
the excess of funds available to the related REMIC over required distributions
to the regular interests in such REMIC on such Distribution Date.
Section 6.02 Statements to the Certificateholders.
(a) Not later than the earlier of (i) three Business Days after the
Determination Date and (ii) the second Business Day prior to each Distribution
Date, the Servicer shall send to the Paying Agent and the Trustee (in such
format as may be mutually agreed) the relevant information for purposes of this
71
Section 6.02. Not later than each Distribution Date, the Paying Agent shall make
available on its website located at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇ or upon request shall
send to any Certificateholder, the Depositor, the Trustee, the Servicer, any
co-trustee, and each Rating Agency a statement setting forth the following
information, after giving effect to the distributions to be made by the Paying
Agent pursuant to Section 6.01 on or as of such Distribution Date:
(i) with respect to each Class of Certificates the amount of such
distribution to Holders of such Class allocable to principal;
(ii) with respect to each Class of Certificates the amount of such
distribution to Holders of such Class allocable to interest;
(iii) the aggregate amount of any Principal Prepayments, Repurchase
Proceeds or other unscheduled recoveries included in the distributions to
Certificateholders, in each case both in the aggregate and by Subgroup;
(iv) the aggregate amount of any Advances by the Servicer pursuant to
Section 6.03, both in the aggregate and by Subgroup;
(v) the number of Outstanding Mortgage Loans and the Mortgage Pool
Principal Balance as of the close of business as of the end of the related
Principal Prepayment Period;
(vi) the related amount of the Servicing Fees (as adjusted pursuant to
Section 6.05) retained or withdrawn from the Collection Account by the
Servicer;
(vii) the number and aggregate principal amounts of Mortgage Loans (A)
delinquent (calculated using the Mortgage Bankers Association (MBA) method)
(1) one Monthly Payment, (2) two Monthly Payments and (3) three or more
Monthly Payments, (B) in foreclosure and (C) in bankruptcy, in each case,
as of the end of the close of business on the first day of the calendar
month of such Distribution Date;
(viii) the number and the principal balance of Mortgage Loans with
respect to any real estate acquired through foreclosure or grant of a deed
in lieu of foreclosure;
(ix) the aggregate amount of all Advances recovered during the related
Due Period;
(x) with respect to the following Distribution Date, the Outstanding
Certificate Principal Balance of each Class of Certificates;
(xi) the aggregate amount of Realized Losses during the related Due
Period and the aggregate amount of Realized Losses since the Cut-off Date;
(xii) the allocation to each Class of Certificates of any Realized
Losses during the related Due Period;
(xiii) the Outstanding Certificate Principal Balance of each Class of
Certificates immediately prior to and after giving effect to the
distributions to each Class on such Distribution Date;
(xiv) with respect to each Class of Certificates, any amounts of Net
Interest Shortfalls, Compensating Interest Shortfalls and Relief Act
Reductions on such Distribution Date;
72
(xv) the number of Mortgage Loans with respect to which a reduction in
the Mortgage Rate has occurred pursuant to the Relief Act, as well as the
amount of interest not required to be paid with respect to any such
Mortgage Loans during the related Due Period as a result of such
reductions; both in the aggregate and for each Class of Certificates;
(xvi) updated pool composition information such as weighted average
coupon, weighted average life, weighted average remaining term, pool
factors and prepayment amounts;
(xvii) any material changes to methodology regarding calculations of
delinquencies and charge-offs;
(xviii) any material modifications, extensions or waivers to pool
asset terms, fees, penalties or payments during the distribution period or
that have cumulatively become material over time;
(xix) material breaches of pool asset representations or warranties or
transaction covenants;
(xx) information on ratio, coverage or other test used for determining
any early amortization, liquidation or other performance trigger and
whether the trigger was met;
(xxi) excess interest payments for each Class of Certificates;
(xxii) whether a Trigger Event has occurred and is in effect;
(xxiii) as of each Distribution Date, the amount, if any, received
pursuant to each Yield Maintenance Agreement and the amount thereof to be
paid to each Class of Certificates;
(xxiv) as of each Distribution Date, the Overcollateralized Amount and
the Overcollateralization Target Amount;
(xxv) as of each Distribution Date, the amount in the Reserve Fund;
(xxvi) if applicable, information regarding any new issuance of
asset-backed securities backed by the same asset pool, any pool asset
changes (other than in connection with a pool asset converting into cash in
accordance with its terms), such as additions or removals in connection
with a prefunding period and pool asset substitutions and repurchases (and
purchase rates, if applicable), and cash flows available for future
purchases, such as the balances of any prefunding or revolving accounts, if
applicable; and
(xxvii) if applicable, any material changes in the solicitation,
credit-granting, underwriting, origination, acquisition or pool selection
criteria or procedures, as applicable, used to originate, acquire or select
the new pool assets.
The Paying Agent's responsibility for sending the above information to the
Certificateholders is limited to the availability, timeliness and accuracy of
the information derived from the Servicer which shall be provided as required in
this Section 6.02(a).
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder which is a
savings and loan association, bank or insurance company certain reports and
access during business hours to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with
applicable regulations of
73
regulatory authorities with respect to investment in the Certificates; provided,
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for the Servicer's actual expenses incurred in providing such
reports and access.
(b) The Servicer shall cause to be prepared, and the Servicer or the
Trustee, as required by applicable law, shall file, any and all tax returns,
information statements or other filings required to be delivered to
Certificateholders and any governmental taxing authority pursuant to any
applicable law with respect to the Trust Fund and the transactions contemplated
hereby (the Servicer or the Trustee may, at its option but with the consent of
the other, which consent shall not be unreasonably withheld, appoint an
organization which regularly engages in the preparation and filing of such
documents on a continuous basis for profit and which represents itself to be
expert in such matters) and the Servicer shall maintain a record of the
information necessary for the application of Section 860E(e) of the Code and
shall make such information available as required by Section 860D(a)(6) of the
Code; provided, however, that the Servicer shall notify the Trustee of the
Trustee's obligation to make any such filings and that any fees of the
organization appointed as provided above shall be paid by the Servicer; and
provided further that if an organization is employed, as described above, to
prepare and file any such filings, neither the Trustee nor the Servicer shall be
liable for any errors by such organization.
Section 6.03 Advances by the Servicer. If, on any Determination Date, the
Servicer determines that any Monthly Payments due on the immediately preceding
Due Date have not been received, the Servicer shall, unless it determines in its
sole discretion that such amounts will not be recoverable from Late Collections,
Liquidation Proceeds or otherwise, make an Advance on or before two Business
Days prior to the related Distribution Date in an amount equal to the amount of
such delinquent Monthly Payments, after adjustment of any delinquent interest
payment for the Servicing Fee. For purposes of this Section 6.03, the delinquent
Monthly Payments referred to in the preceding sentence shall be deemed to
include an amount equal to the Monthly Payments that would have been due on
Mortgage Loans which have been foreclosed or otherwise terminated and in
connection with which the Servicer acquired and continues to own the Mortgaged
Properties on behalf of the Certificateholders. If the Servicer makes an
Advance, it shall on or prior to two Business Days prior to such Distribution
Date either (i) deposit in the Collection Account an amount equal to such
Advance, (ii) cause to be made an appropriate entry in the records of the
Collection Account that funds in such account being held for future distribution
or withdrawal have been, as permitted by this Section 6.03, used by the Servicer
to make such Advance or (iii) make Advances in the form of any combination of
clauses (i) and (ii) aggregating the amount of such Advance. Any funds being
held in the Collection Account for future distribution to Certificateholders and
so used pursuant to clause (ii) or (iii) above shall be replaced by the Servicer
from its own funds by deposit into the Collection Account on or before any
subsequent Distribution Date to the extent that funds in the Collection Account
on such Distribution Date shall be less than the amount of payments required to
be made to Certificateholders on such Distribution Date. Any such Advance shall
be included with the distribution to the Certificateholders on the related
Distribution Date. If the Servicer determines not to make a Nonrecoverable
Advance, it shall on the related Determination Date furnish to the Trustee, any
co-trustee, the Paying Agent and each Rating Agency notice of such
determination. The Servicer shall be entitled to be reimbursed from the
Collection Account for all Advances and Nonrecoverable Advances as provided in
Section 5.09.
Section 6.04 Allocation of Realized Losses.
(a) Prior to each Determination Date, the Servicer shall determine (i) the
total amount of Realized Losses, if any, incurred during the related Principal
Prepayment Period.
(b) Realized Losses shall be allocated by the Paying Agent to the Classes
of Certficicates as follows:
74
first, to the Class CE Certificates, until the Outstanding Certificate
Principal Balance of such Class is reduced to zero;
second, to the Class B-2 Certificates, until the Outstanding Certificate
Principal Balance of such Class is reduced to zero;
third, to the Class B-1 Certificates, until the Outstanding Certificate
Principal Balance of such Class is reduced to zero;
fourth, to the Class M-2 Certificates, until the Outstanding Certificate
Principal Balance of such Class is reduced to zero;
fifth, to the Class M-1 Certificates, until the Outstanding Certificate
Principal Balance of such Class is reduced to zero; and
sixth, to the Class A Certificates, pro rata based upon their respective
Outstanding Certificate Principal Balances, until the Outstanding Certificate
Principal Balance of each such Class is reduced to zero; provided, however, that
Realized Losses that would otherwise be allocated to the Class A-1-A, Class
A-1-B, Class A-2-A, Class A-2-B, Class A-3, Class A-4 and Class A-5 Certificates
will instead be allocated to the Class A-6 Certificates, until the Outstanding
Certificate Principal Balance of the Class A-6 Certificates has been reduced to
zero.
(c) In the event that a Subsequent Recovery is made with respect to any
Realized Loss, the amount of such Subsequent Recovery shall be treated as a
Principal Prepayment and deposited in the Collection Account and distributed on
the applicable Distribution Date.
Section 6.05 Compensating Interest; Allocation of Certain Interest
Shortfalls.
(a) Upon a Principal Prepayment of a Mortgage Loan, the Servicer shall
deposit into the Collection Account from its own funds, as a reduction of its
servicing compensation hereunder, an amount, if any, by which the amount of the
interest that would otherwise accrue with respect to such Mortgage Loan from the
date of prepayment to the Due Date in the related Due Period at the Net Mortgage
Rate exceeds the amount of the interest (adjusted to the Net Mortgage Rate)
collected from the Mortgagor with respect to such period (such amount,
"Compensating Interest"); provided, however, that with respect to any
Distribution Date, the Servicer's obligation to deposit any such amount is
limited to an amount equal to the product of (i) one-twelfth of 0.125% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans with respect to the
Due Date in the month immediately preceding the month of such Distribution Date.
(b) On any Distribution Date, the excess, if any, of (X) Compensating
Interest with respect to such Distribution Date over (Y) the amount deposited in
the Collection Account pursuant to (a) above for such Distribution Date shall
equal the "Compensating Interest Shortfall" with respect to such Distribution
Date. On any Distribution Date, the Compensating Interest Shortfall shall be
allocated pro rata among the outstanding Classes of Class A, Class M and Class B
Certificates based on the amount of interest to which each such Class would
otherwise be paid on such Distribution Date had there been no such Compensating
Interest Shortfall.
(c) On any Distribution Date, the interest portion of any Realized Losses
("Realized Loss Interest Shortfall") (other than the interest portion of Excess
Losses) shall be allocated to the Class of Subordinated Certificates then
outstanding having the highest numerical Class designation (for this purpose,
the Class M Certificates shall be deemed to have a lower numerical Class
designation than each
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Class of Class B Certificates) or, if no Class of Subordinated Certificates is
then outstanding, to the Class A Certificates pro rata among the outstanding
Classes of Class A Certificates based on the amount of interest to which each
such Class would otherwise be paid on such Distribution Date had there been no
such Realized Loss Interest Shortfall. On any Distribution Date, the interest
portion of any Excess Losses shall be allocated pro rata among the outstanding
Classes of Certificates based upon the amount of interest to which each such
Class would otherwise be paid on such Distribution Date had there been no such
Excess Losses allocable to interest.
(d) Any interest shortfall resulting from the Relief Act shall be allocated
pro rata among the outstanding Classes of Certificates based upon the amount of
interest to which each such Class would otherwise be paid on such Distribution
Date.
Section 6.06 Subordination. The rights of any Holder of the Class CE
Certificates to receive distributions in respect of the Class CE Certificates on
any Distribution Date shall be subordinated to the rights of the Class A, Class
M and Class B Certificateholders to receive distributions in respect of the
Class A, Class M and Class B Certificates, respectively. The rights of the Class
B Certificateholders to receive distributions in respect of the Class B
Certificates on any Distribution Date shall be subordinated to the rights of the
Class A and Class M Certificateholders to receive distributions in respect of
the Class A and Class M Certificates. The rights of the Class M
Certificateholders to receive distributions in respect of the Class M
Certificates on any Distribution Date shall be subordinated to the rights of the
Class A Certificateholders to receive distributions in respect of the Class A
Certificates. The rights of the Class B-1 Certificateholders to receive
distributions in respect of the Class B-1 Certificates on any Distribution Date
shall be subordinate to the rights of the Class A and Class M Certificateholders
to receive distributions in respect of such Class A and Class M Certificates.
Each Class of Class B Certificates (other than the Class B-1 Certificates) is
subordinated to the Class A Certificates, the Class M Certificates and each
Class of Class B Certificates having a lower numerical Class designation than
such Class of Class B Certificates. The rights of the Class M-1
Certificateholders to receive distributions in respect of the Class M-1
Certificates on any Distribution Date shall be subordinate to the rights of the
Class A Certificateholders to receive distributions in respect of such Class A
Certificates. Each Class of Class M Certificates (other than the Class M-1
Certificates) is subordinated to the Class A Certificates and each Class of
Class M Certificates having a lower numerical Class designation than such Class
of Class M Certificates. The rights of the Servicer, as servicer, to receive
funds from the Collection Account, pursuant to Section 5.09, on account of the
Servicing Fee (except as provided in Section 6.05) in respect of each Mortgage
Loan, assumption fees, late payment charges and other mortgagor charges,
reimbursement of Advances and expenses or otherwise, shall not be subordinated
to the rights of the Class A, Class M or Class B Certificateholders. Amounts
held by the Servicer or the Paying Agent for future distribution to the Class M
or Class B Certificateholders, including, without limitation, in the Collection
Account, shall not be distributed in respect of the Class M or Class B
Certificates except in accordance with the terms of this Agreement. The Class B
Certificateholders are deemed to have granted a security interest in such
amounts to the Class A and Class M Certificateholders to secure the rights of
the Class A and Class M Certificateholders to receive distributions in priority
over the Class B Certificateholders. The Class M Certificateholders are deemed
to have granted a security interest in such amounts to the Class A
Certificateholders to secure the rights of the Class A Certificateholders to
receive distributions in priority over the Class A Certificateholders.
Section 6.07 Determination of LIBOR. The meaning of LIBOR applicable to the
calculation of the Certificate Rates on the Class A-1-B and Class A-2-B
Certificates for any Accrual Period (other than the initial Accrual Period) will
be determined by the Servicer on each Rate Adjustment Date as follows:
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For any Accrual Period other than the first Accrual Period, the rate for
United States dollar deposits for one month which appears on the Telerate Screen
Page 3750 as of 11:00 A.M., London, England time, on the second LIBOR Business
Day prior to the first day of such Accrual Period. For the first Accrual Period,
LIBOR shall equal 5.08% with respect to the Class A-1-B and Class A-2-B
Certificates. If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Servicer), the rate will be the Reference Bank Rate. If no such
quotations can be obtained and no Reference Bank Rate is available, LIBOR will
be LIBOR applicable to the preceding Distribution Date.
[END OF ARTICLE VI]
ARTICLE VII
REPORTS TO BE PREPARED BY THE SERVICER
Section 7.01 Servicer Shall Provide Information as Reasonably Required. The
Servicer shall furnish to the Trustee or, if a Paying Agent has been appointed
pursuant to Section 4.05, the Paying Agent, during the term of this Agreement,
such periodic, special, or other reports or information, whether or not provided
for herein, as shall be necessary, reasonable, or appropriate in respect to the
Trustee or, if a Paying Agent has been appointed pursuant to Section 4.05, the
Paying Agent, or otherwise in respect to the purposes of this Agreement, all
such reports or information to be as provided by and in accordance with such
applicable instructions and directions as the Trustee or, if a Paying Agent has
been appointed pursuant to Section 4.05, the Paying Agent may reasonably
require.
Section 7.02 Federal Information Returns and Reports to Certificateholders.
(a) For federal income tax purposes, the taxable year of each REMIC Pool
shall be a calendar year and the Servicer shall maintain or cause the
maintenance of the books of each REMIC Pool on the accrual method of accounting.
(b) The Servicer or anyone acting on its behalf pursuant to Section 2.04(g)
shall prepare and file or cause to be filed with the Internal Revenue Service
federal tax or information returns with respect to the Trust Fund, each REMIC
Pool and the Certificates containing such information and at the times and in
the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Certificateholder at any time during the calendar year
for which such returns or reports are made such statements or information at the
times and in the manner as may be required thereby. Without limitation on any
other requirement of this Section 7.02, the Servicer shall make available the
information necessary for the application of Section 860E(e) of the Code within
60 days of such request. With respect to the Class A-R Certificate, the Servicer
shall provide such information or cause such information to be provided to (i)
the Internal Revenue Service, (ii) the transferor of a Class A-R Certificate to
a Disqualified Organization and (iii) a Pass-Thru Entity that holds a Class A-R
Certificate with one or more record holders that are Disqualified Organizations.
The Servicer also shall provide or cause to be provided promptly the above
described computation and information relating to the tax on transfers to
Disqualified Organizations or holdings by Pass-Thru Entities within sixty (60)
days after becoming aware of the transfer to a Disqualified Organization or
Pass-Thru Entity with one or more Disqualified Organization owners, as the case
may be. In addition, except as may be provided in Treasury Regulations, any
Person holding an interest in a Pass-Thru Entity as a nominee for another will,
with respect to such interest, be treated as a Pass-Thru Entity. In connection
with the foregoing, the Servicer shall provide the name, address and telephone
number of the person who can be contacted to obtain information required to be
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reported to the holders of regular interests in any REMIC created hereunder (the
"REMIC Reporting Agent") as required by IRS Form 8811. The Trustee hereby
designates the Servicer to serve as the REMIC Reporting Agent. The Servicer
shall indicate the elections to treat each of the Lower-Tier REMIC and the
Upper-Tier REMIC as a REMIC (which elections shall apply to the taxable period
ending December 31, 2005 and each calendar year thereafter) in such manner as
the Code or applicable Treasury regulations may prescribe. The Trustee shall
sign all tax and information returns filed pursuant to this Section 7.02 and any
other returns as may be required by the Code, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Servicer. The Servicer is hereby designated as the
agent of the Holder of the Class A-R Certificate who shall be the "tax matters
person" (within the meaning of Treas. Reg. Section 1.860F-4(d)) for each REMIC
Pool. Any Holder of a Class A-R Certificate will by acceptance thereof so
appoint the Servicer as agent and attorney-in-fact for the purpose of acting as
tax matters person. In the event that the Code or applicable Treasury
regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Servicer from acting as tax matters person (as an agent
or otherwise), the Trustee or the Servicer, as the case may be, shall take
whatever action that in its sole good faith judgment is necessary for the proper
filing of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Class A-R Certificate to sign such
returns or act as tax matters person. Each Holder of a Class A-R Certificate
shall be bound by this Section 7.02 by virtue of its acceptance of a Class A-R
Certificate.
[END OF ARTICLE VII]
ARTICLE VIII
THE DEPOSITOR AND THE SERVICER
Section 8.01 Indemnification; Third Party Claims. The Servicer agrees to
indemnify the Depositor and the Trustee and hold the Depositor and the Trustee,
their officers, directors, employees and agents harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Depositor or the
Trustee, or their officers, directors, employees or agents may sustain in any
way related to failure of the Servicer to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement; provided that no
such indemnification shall be required with respect to acts of a prior Servicer.
The Servicer shall immediately notify the Depositor and the Trustee if a claim
is made by a third party with respect to this Agreement or the Mortgage Loans,
assume (with the consent of the Depositor and the Trustee) the defense of any
such claim and pay all expenses in connection therewith, including counsel fees,
and promptly pay, discharge and satisfy any judgment or decree which may be
entered against it, the Depositor or the Trustee, their officers, directors,
employees or agents in respect of such claim. This right to indemnification
shall survive the termination of this Agreement.
Section 8.02 Merger or Consolidation of the Depositor or the Servicer. The
Depositor and the Servicer will each keep in full effect its existence, rights
and franchises as a corporation, and will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its duties under this Agreement. The Servicer will not sell all
or substantially all of its assets without the prior written consent of the
Depositor and the Trustee which shall not be unreasonably withheld or delayed.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or to whom the Depositor or the Servicer has sold substantially
all of its assets, or any corporation resulting from any
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merger, conversion or consolidation to which the Depositor or the Servicer shall
be a party, or any Person succeeding to the business of the Depositor or the
Servicer, shall be the successor of the Depositor or the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Servicer shall
satisfy the requirements of Section 8.05 with respect to the qualifications of a
successor to the Servicer.
Notwithstanding anything else in this Section 8.02 and Section 8.04 to the
contrary, the Servicer may assign its rights and delegate its duties and
obligations under this Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is approved in advance in writing by
the Trustee and the Depositor, is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement, in form and
substance reasonably satisfactory to the Depositor and the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer under this Agreement; provided further that each Rating Agency's rating
of any of the Classes of Certificates that have been rated in effect immediately
prior to such assignment and delegation will not be qualified or reduced or
withdrawn as a result of such assignment and delegation. In the case of any such
assignment and delegation, the Servicer shall be released from its obligations
as Servicer under this Agreement, except that the Servicer shall remain liable
for all liabilities and obligations incurred by it as Servicer hereunder prior
to the satisfaction of the conditions to such assignment and delegation set
forth in the next preceding sentence.
Section 8.03 Limitation on Liability of the Depositor, the Servicer, the
Trustee and Others. Neither the Depositor, the Servicer nor any of the
directors, officers, employees or agents of the Depositor or the Servicer shall
be under any liability to the Trustee or the Certificateholders for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor or the Servicer against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with this Agreement, or any liability which would otherwise
be imposed by reason of any breach of the terms and conditions of this
Agreement. The Depositor, the Servicer, the Trustee, and any director, officer,
employee or agent of the Depositor, the Servicer or the Trustee may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. Neither the Depositor, the
Servicer nor the Trustee shall be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its respective duties to
service the Mortgage Loans in accordance with this Agreement and which in its
opinion may cause it to incur any expenses or liability; provided, however, that
the Depositor, the Servicer or the Trustee may in its discretion (and, in the
case of the Depositor or the Servicer, with the consent of the Trustee, which
consent shall not be unreasonably withheld) undertake any such action which it
may deem necessary or desirable with respect to this Agreement and the rights
and duties of the parties hereto. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities payable from the Collection Account and the Depositor, the Servicer
or the Trustee shall be entitled to be reimbursed therefor out of the Collection
Account as provided by Section 5.09; provided that no such right of
reimbursement shall exist with respect to the Servicer when such claim relates
to the failure of the Servicer to service the Mortgage Loans in strict
compliance with the terms of this Agreement or to a breach of a representation
or warranty made by the Servicer hereunder.
Section 8.04 Depositor and Servicer Not to Resign. Except as described in
Section 8.02, neither the Depositor nor the Servicer shall assign this Agreement
or resign from the obligations and duties hereby imposed on it except by mutual
consent of the Depositor, the Servicer and all of the Certificateholders unless
the determination is made that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Depositor or the
Servicer. Any such
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determination permitting the resignation of the Depositor or the Servicer shall
be evidenced by an opinion of independent counsel to such effect delivered to
the Trustee which opinion of counsel shall be in form and substance acceptable
to the Trustee. Upon any such assignment or resignation, the Depositor or the
Servicer, as appropriate, shall send notice to all Certificateholders of the
effect of such assignment or resignation upon the then current rating of the
Class of Certificates by each Rating Agency whose rating on such Class is then
in effect. No such resignation shall become effective until a successor shall
have assumed the Depositor's or the Servicer's responsibilities and obligations
hereunder in the manner provided in Section 8.05. Any purported assignment or
resignation which does not comply with the requirements of this Section shall be
of no effect.
Section 8.05 Successor to the Servicer. In connection with the termination
of the Servicer's responsibilities and duties under this Agreement pursuant to
Section 8.04 or 9.01, the Trustee shall succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations as Servicer (but not
in any other capacity) under this Agreement (except that the Trustee shall not
be obligated to make Advances if prohibited by applicable law nor to effectuate
repurchases or substitutions of Mortgage Loans pursuant to Section 2.02 and
except that the Trustee makes no representations and warranties pursuant to
Sections 3.01 and 3.02). Prior to the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement, the Trustee may
appoint a successor having a net worth of not less than $15,000,000 and which is
a FNMA or FHLMC approved seller/servicer in good standing and which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement, except as aforesaid, if the
Trustee receives a letter from each Rating Agency that such appointment would
not result in a reduction or withdrawal of the current rating of any Class of
Certificates that is rated by a Rating Agency. Any co-trustee appointed pursuant
to Section 10.10 for purposes of this Section 8.05 shall have an obligation to
make Advances pursuant to Section 6.03 during such time as the Trustee is the
Servicer, which obligation shall be joint and several with that of the Trustee
as Servicer. If the Trustee has become the successor to the Servicer in
accordance with this Section or Section 9.03, then 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 $15,000,000 and which is a FNMA or FHLMC approved seller/servicer in
good standing as the successor to the Servicer hereunder in the assumption of
all of the responsibilities, duties or liabilities of the Servicer hereunder. In
connection with any 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 or such court shall determine;
provided, however, that no such compensation shall be in excess of that
permitted under this Agreement without the consent of all of the
Certificateholders. If the Trustee is acting as Servicer, the Trustee shall be
entitled to all compensation of the Servicer hereunder, and all such
compensation due to the Trustee as Servicer shall be in addition to all
compensation it is entitled to as Trustee under this Agreement. If the
Servicer's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to Section 8.02, 8.04 or 9.01, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor or the Trust Fund.
The resignation or removal of the Servicer pursuant to Section 8.02, 8.04 or
9.01 shall not become effective until a successor shall be appointed pursuant to
this Section and shall in no event relieve the Servicer of liability for breach
of the representations and warranties made pursuant to Section 3.02.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Trustee an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement
and the Certificates. Any
80
termination or resignation of the Servicer or this Agreement pursuant to Section
8.02, 8.04, 9.01 or 11.01 shall not affect any claims that the Trustee may have
against the Servicer for events or actions taken or not taken by the Servicer
arising prior to any such termination or resignation.
The Servicer shall timely deliver to the successor the funds that were, or
were required to be, in the Collection Account and the Escrow Account, if any,
and all Mortgage Files and related documents, statements and recordkeeping held
by it hereunder and the Servicer shall account for all funds and shall execute
and deliver such instruments and do such other things as may reasonably be
required to more fully and definitely vest and confirm in the successor all such
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer.
Upon a successor's acceptance of appointment as such, the Servicer shall
notify, in writing, the Trustee, the Certificateholders and each Rating Agency
of such appointment.
Section 8.06 Maintenance of Ratings. The Servicer shall cooperate with the
Depositor and take any action that may be reasonably necessary to maintain the
current rating or ratings on the Certificates.
[END OF ARTICLE VIII]
ARTICLE IX
DEFAULT
Section 9.01 Events of Default. If one or more of the following Events of
Default shall occur and be continuing, that is to say:
(a) any failure by the Servicer to remit any payment required to be made or
distributed under the terms of this Agreement which continues unremedied for a
period of three (3) 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, the Paying Agent or the Depositor or to the Servicer,
the Trustee, the Paying Agent and the Depositor by the Holders of Certificates
of any Class evidencing, as to such Class, Percentage Interests aggregating not
less than 25%; or
(b) a breach by the Servicer in a material respect of any representation or
warranty set forth in Section 3.02, or failure on the part of the Servicer duly
to observe or perform in any material respect any other of the covenants or
agreements on the part of the Servicer set forth in this Agreement, which
continues unremedied for a period of 60 days after the date on which written
notice of such breach or 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 Trustee and the Depositor by the Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests aggregating not less than
25%; or
(c) the Servicer shall notify the Trustee and any Paying Agent appointed
pursuant to Section 4.05 in writing that it is unable to make an Advance
required to be made in accordance with Section 6.03; or;
(d) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, 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
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(e) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of the Servicer's property; or
(f) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, upon receiving notice or knowledge of such event, the
Trustee shall notify the Certificateholders and each Rating Agency of such Event
of Default. The Trustee may, and at the written direction of the Holders of
Certificates evidencing Percentage Interests aggregating more than 50%, shall,
by notice in writing to the Servicer, terminate all the rights and obligations
of the Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof. 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 Mortgage Loans or otherwise, shall pass to and be vested in
the successor appointed pursuant to Section 8.05. Upon written request from the
Trustee, the Servicer shall prepare, execute and deliver, any and all documents
and other instruments, place in such successor's possession all Mortgage Files,
and 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, at the Servicer's sole expense. The Servicer agrees to cooperate with
the Trustee and any co-trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited or should have been credited by the Servicer to
the Collection Account or Escrow Account or thereafter received with respect to
the Mortgage Loans. The Trustee will have no obligation to take any action or
institute, conduct or defend any litigation under this Agreement at the request,
order or direction of any of the Holders of Certificates unless such
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which the Trustee may incur. The
Paying Agent shall provide information regarding the Certificateholders
available to the Paying Agent in order to allow the Trustee to comply with the
provisions above.
Section 9.02 Waiver of Defaults. The Trustee may waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except that a default in the making of any required distribution on any of the
Certificates may only be waived by the holders of a majority of the Percentage
Interests of the affected Certificateholders. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
Section 9.03 Trustee to Act; Appointment of Successor. On and after the
time the Servicer receives a notice of termination pursuant to Section 9.01, the
Trustee or a successor servicer appointed by it shall be the successor in all
respects to the Servicer to the extent provided in Section 8.05.
Section 9.04 Notification to Certificateholders and the Rating Agencies.
(a) Upon any such termination pursuant to Section 9.01, the Trustee shall
give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to each Rating Agency.
(b) Within sixty (60) days of a Responsible Officer of the Trustee having
received written notice of the occurrence of any Event of Default, the Trustee
shall transmit by mail to all Holders of
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Certificates notice of each such Event of Default hereunder known to the
Trustee, unless such Event of Default shall have been cured or waived.
[END OF ARTICLE IX]
ARTICLE X
CONCERNING THE TRUSTEE
Section 10.01 Duties of Trustee. 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, and is empowered to, perform such duties and only such
duties as are specifically set forth in this Agreement. Any permissive right of
the Trustee as enumerated in this Agreement shall not be construed as a duty;
provided that in case an Event of Default has occurred (which has not been
cured), the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of such
man's own affairs.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) 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, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of Certificateholders of any Class holding Certificates
which evidence, as to such Class, Percentage Interests aggregating not less
than 25% as to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement.
(iv) The Trustee shall execute the Letter of Representations, a form
of which is attached hereto as Exhibit P, on behalf of the Depositor.
Section 10.02 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 10.01:
(a) The Trustee may rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement, instrument,
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opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) The Trustee may consult with counsel, and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the trusts
or powers vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of
any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby;
(d) Neither the Trustee nor any of its directors, officers, employees or
agents shall be personally liable for any action taken, suffered or omitted by
it in good faith and believed by it or any of them to be authorized or within
the discretion or rights or powers conferred upon the Trustee by this Agreement;
(e) Prior to the occurrence of an Event of Default hereunder and after the
curing of all Events of Default which may have occurred, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests aggregating not less than 25%
(in the case of conflicting requests by two or more 25% or greater Percentage
Interests, the Trustee shall act in accordance with the first such request);
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such expense or liability
as a condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Servicer, if an Event of Default shall have
occurred and is continuing, and otherwise by the Certificateholder requesting
the investigation;
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
subcontractors or attorneys; and
(g) Nothing in this Agreement shall be construed to require the Trustee
(except as might otherwise be required in its capacity as successor Servicer) to
expend its own funds.
Section 10.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein shall be taken as the statements of the Depositor or
the Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates, of any
Mortgage Loan or related document or the Trust Estate. The Trustee shall not be
accountable for the use or application by the Depositor or the Servicer of any
of the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Depositor or the Servicer or the Certificate Account by the Paying Agent. The
Trustee shall have no responsibility for the timeliness or the amount of
payments made by the Paying Agent to the Certificateholders.
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Section 10.04 Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights it would have if it were not Trustee.
Section 10.05 Fees and Expenses. The Paying Agent, from moneys received
from the Servicer, covenants and agrees to pay to the Trustee and its agents a
monthly fee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) equal to the product of (a) the
Aggregate Principal Balance of the Mortgage Loans as of the Determination Date
in the preceding month and (b) one-twelfth of 0.000010, and the Servicer will
pay or reimburse the Trustee, or its agents upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or its
agents in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ, and the expenses incurred by the
Trustee in connection with the appointment of an office or agency pursuant to
Section 10.11) and the Servicer shall indemnify and hold harmless the Trustee
its officers, directors, employees and agents from and against any and all
claims, liabilities, losses or expenses (including but not limited to reasonable
attorneys fees) incurred in connection with the administration of this Trust and
the performance of its duties hereunder provided that the Servicer shall not be
required to reimburse any such expense or indemnify against any such loss or
liability incurred by the Trustee through the Trustee's own negligence or bad
faith. Notwithstanding anything to the contrary in this Agreement, this Section
shall survive the termination of this Agreement.
Section 10.06 Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be an entity having its principal office in a state and city
acceptable to the Depositor and organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
authority. The Trustee shall not be an Affiliate of either Seller or the
Depositor. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, 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. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 10.07.
Section 10.07 Resignation and Removal of the Trustee. The Trustee, and any
co-trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Depositor, the Servicer and each
Rating Agency. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor trustee or co-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; provided that such appointment
does not result in a reduction or withdrawal of the rating of any of the Classes
of Certificates that have been rated. If no successor trustee shall have been so
appointed and have accepted appointment within thirty (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 shall cease to be eligible in accordance with
the provisions of Section 10.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor may remove
the Trustee and appoint a successor trustee by written instrument, in duplicate,
one
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copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
The Holders of Certificates evidencing in the aggregate more than 50% of
Percentage Interest may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, 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 any resignation of any
co-trustee and appointment of a successor trustee or co-trustee pursuant to any
of the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 10.08, or upon
acceptance of appointment by a co-trustee, as applicable, unless with respect to
a co-trustee, the Trustee receives written notice from each Rating Agency that
the failure to appoint a successor co-trustee would not result in a withdrawal
or reduction of the rating of any of the Classes of Certificates that have been
rated, in which case the resignation of any co-trustee shall be effective upon
receipt of such written notice. Any co-trustee may not be removed unless the
Depositor and the Trustee each receive written notice from each Rating Agency
that such removal would not result in a withdrawal or reduction of the rating of
any of the Classes of Certificates that have been rated, in which case the
removal of any co-trustee shall be effective upon receipt of such written
notice.
Section 10.08 Successor Trustee. Any successor trustee appointed as
provided in Section 10.07 shall execute, acknowledge and deliver to the
Depositor 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 shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Depositor, 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
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 10.06. Prior to the appointment of any successor
trustee becoming effective, the Depositor shall have received from each Rating
Agency written confirmation that such appointment would not result in a
reduction of the rating of the Class A or Class M Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register, to the Servicer, any Sub-Servicer and to each Rating
Agency. If the Depositor fails to mail such notice within ten (10) days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Depositor.
Section 10.09 Merger or Consolidation of Trustee. Any entity into which the
Trustee may be merged or converted or with which it may be consolidated or any
entity resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any entity succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible
86
under the provisions of Section 10.06, 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 10.10 Appointment of Co-Trustee or Separate Trustee. At any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing the same may at the time be
located, the Depositor and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, of any part of the Trust Fund, and to vest in such Person or Persons,
in such capacity, such title to the Trust Fund, or any part thereof, and,
subject to the other provisions of this Section 10.10, such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider
necessary or desirable. If the Depositor shall not have joined in such
appointment within fifteen (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 alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.06, hereunder, and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 10.08 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 10.10, all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly and
severally, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Every instrument appointing any separate trustee or co-trustee shall refer
to this Agreement and the conditions of this Article X. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name.
Section 10.11 Appointment of Office or Agency. The Trustee may appoint an
office or agency in The City of New York where Certificates may be surrendered
for registration of transfer or exchange. The Trustee will maintain an office at
the address stated in Section 12.07 hereof where notices and demands to or upon
the Trustee in respect of the Certificates may be served.
Section 10.12 Indemnification.
(a) The Paying Agent shall indemnify and hold harmless the Trustee, the
Depositor, the Servicer and their respective officers, directors, agents and
Affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a failure of the Paying Agent to deliver when
required any Assessment of Compliance required of it pursuant to Section 5.26 or
any material misstatement or
87
omission contained in any Assessment of Compliance provided on its behalf
pursuant to Section 5.26. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the indemnified parties, then the
Paying Agent agrees that it shall contribute to the amount paid or payable by
the indemnified parties as a result of the losses, claims, damages or
liabilities of the indemnified parties in such proportion as is appropriate to
reflect the relative fault of the Paying Agent on the one hand and of the
indemnified parties on the other.
(b) The Servicer shall indemnify and hold harmless the Trustee, the Paying
Agent and the Depositor and their respective officers, directors, agents and
Affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach by the Servicer or any of its officers,
directors, agents or Affiliates of its obligations under Sections 5.24, 5.25,
and 5.26, any material misstatement or omission in any documents prepared
thereunder (to the extent the Servicer is responsible for providing information
or calculating amounts included in such information), the failure of the
Servicer to deliver when required any Assessment of Compliance or Accountant's
Attestation required of it pursuant to Section 5.26 or Annual Statement of
Compliance required pursuant to Section 5.25, as applicable, or any material
misstatement or omission contained in any Assessment of Compliance, Accountant's
Attestation or Annual Statement of Compliance provided on its behalf pursuant to
Section 5.25 or 5.26, as applicable, or the negligence, bad faith or willful
misconduct of the Servicer in connection therewith. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the
indemnified parties, then the Servicer agrees that it shall contribute to the
amount paid or payable by the indemnified parties as a result of the losses,
claims, damages or liabilities of the indemnified parties in such proportion as
is appropriate to reflect the relative fault of the Servicer on the one hand and
of the indemnified parties on the other.
[END OF ARTICLE X]
ARTICLE XI
TERMINATION
Section 11.01 Termination. The respective obligations and responsibilities
of the Depositor, the Servicer (except the duty to pay the Trustee's fees and
expenses and indemnification hereunder) and the Trustee shall terminate upon (i)
the later of the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan or the disposition of all property acquired
upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due hereunder; or (ii) at the option of the Servicer, on
any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the Collection Account during the Principal Prepayment Period related to such
Distribution Date (and provides notice to the Trustee with a copy to the Paying
Agent appointed pursuant to Section 4.05 of its intention to so deposit on or
before 20th day of such Principal Prepayment Period) an amount equal to the
Purchase Price for each Outstanding Mortgage Loan, less any unreimbursed
Advances made with respect to any Mortgage Loan (which amount shall offset
completely any unreimbursed Advances for which the Servicer is otherwise
entitled to reimbursement), and, with respect to all property acquired in
respect of any Mortgage Loan remaining in the Trust Fund, an amount equal to the
fair market value of such property, as determined by an appraisal to be
conducted by an appraiser selected by the Trustee, less unreimbursed Advances
made with respect to any Mortgage Loan with respect to which property has been
acquired; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last
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survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
Notwithstanding the foregoing, a termination may be effected by the making of
such optional repurchases only if the termination of the Trust Fund satisfies
the requirement for a "qualified liquidation" of the Trust Fund within the
meaning of Section 860F(a)(4) of the Code and the purchases of the Outstanding
Mortgage Loans pursuant to this Section 11.01 will not constitute "prohibited
transactions" within the meaning of Section 860F(a)(2) of the Code.
Notice of any termination, specifying the Distribution Date upon which all
Certificateholders may surrender their Certificates to the Trustee or, if a
Paying Agent has been appointed pursuant to Section 4.05, the Paying Agent for
payment and cancellation, shall be given promptly by the Trustee or, if a Paying
Agent has been appointed under Section 4.05, the Paying Agent, (upon direction
by the Depositor ten (10) days prior to the date such notice is to be mailed) by
signed letter to Certificateholders and each Rating Agency mailed no later than
the 25th day of the month preceding the month of such final distribution
specifying (i) the Distribution Date upon which final payment on the
Certificates will be made upon presentation and surrender of Certificates at the
office or agency of the Trustee or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, therein designated and (ii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office or
agency of the Trustee or, if a Paying Agent has been appointed under Section
4.05, the Paying Agent, therein specified. The Servicer shall indicate the date
of adoption of the plan of qualified liquidation in a statement attached to the
final federal income tax return of each REMIC Pool. After giving such notice,
the Trustee or if a Paying Agent has been appointed under Section 4.05, the
Paying Agent shall not register the transfer or exchange of any Certificates. If
such notice is given in connection with the Servicer's election to purchase the
Outstanding Mortgage Loans, the Servicer shall deposit in the Collection Account
after adoption of the plan during the applicable Principal Prepayment Period an
amount equal to the purchase price as determined as provided in clause (ii) of
the preceding paragraph and on the Distribution Date on which such termination
is to occur, Certificateholders will be entitled to the amount of such purchase
price but not amounts in excess thereof, all as provided herein. Upon
presentation and surrender of the Certificates, the Trustee, or if a Paying
Agent has been appointed under Section 4.05, the Paying Agent shall notify the
Servicer and the Servicer shall cause to be distributed to Certificateholders an
amount equal to (a) the amount otherwise distributable on such Distribution
Date, if not in connection with a purchase; or (b) if the Servicer elected to so
purchase, the purchase price determined as provided in clause (ii) of the
preceding paragraph. Following such final deposit the Trustee shall promptly
release to the Servicer the Mortgage Files for the remaining Mortgage Loans, and
the Trustee shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer and shall have no further responsibility
with regard to said Mortgage Files.
If all of the Certificateholders shall not surrender their Certificates for
cancellation within three (3) months after the time specified in the
above-mentioned written notice, at the close of the 90 day period beginning
after the written notice is given, each remaining Certificateholder will be
credited with an amount that would have been otherwise distributed to such
Certificateholder, and the Trustee or, if a Paying Agent has been appointed
under Section 4.05, the Paying Agent, shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within three (3)
months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, shall appoint an agent to take
appropriate and reasonable 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 the Trust Fund hereunder.
[END OF ARTICLE XI]
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 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.
Section 12.02 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
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 Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth, or contained in the terms of the Certificates, be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third Person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue 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 the Holders of Certificates
of any Class evidencing in the aggregate not less than 25% of the Percentage
Interests of such Class shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
(in the case of conflicting requests by two or more 25% or greater Percentage
Interests, the Trustee shall act in accordance with the first such request) 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 sixty (60) days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of Certificateholders of such Class
or all Classes, as the case may be. For the protection and enforcement of the
provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 12.03 Amendment. This Agreement may be amended from time to time by
the Depositor, the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, to
ensure continuing treatment of each REMIC created hereunder as a REMIC to avoid
or minimize the risk of imposition of any tax on any REMIC created hereunder
pursuant to the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be materially
inconsistent with the provisions of this Agreement, provided that such actions
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any
90
Certificateholder of a Class having an Outstanding Certificate Principal Balance
of greater than zero or cause any REMIC created hereunder to fail to qualify as
a REMIC.
This Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interest of
each Class of Certificates having an Outstanding Certificate Principal Balance
greater than zero and affected thereby for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01, without the consent of the Holders
of all Certificates of such Class then outstanding.
Notwithstanding anything to the contrary in this Agreement, this Agreement
may be amended from time to time by the Depositor, the Servicer and the Trustee
with the consent of Certificateholders evidencing not less than 66-2/3% of the
interests held by parties other than the Depositor, its Affiliates or its
agents, for the purposes of significantly changing the Permitted Activities of
the Trust.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section 12.03 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. In connection with any amendment
pursuant to this Section 12.03 the Trustee, Paying Agent and Depositor shall be
entitled to receive an Opinion of Counsel to the effect that such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution of such amendment in accordance with this Section 12.03 have been
met.
Section 12.04 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
Section 12.05 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 12.06 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 12.07 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 first class or registered mail, postage prepaid, to
(i) in the case of the Depositor, Chase Mortgage Finance Corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Lake, New Jersey 07675, Attention:
Structured Finance, (ii) in the case of JPMorgan Chase Bank, N.A., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (iii) in the case of the Trustee, U.S. Bank
National Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (iv) in
the case of Moody's, ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (v) in the case of Standard and Poor's, a
division of the McGraw Hill Companies, 55 Water
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Street, New York, NY, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ and (vi) in the case of any of the
foregoing persons, such other addresses as may hereafter be furnished by any
such persons to the other parties to this Agreement.
Section 12.08 Further Assurances. The Seller and the Servicer agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the Trustee more fully
to effect the purposes of this Agreement, including, without limitation, the
execution of any financing statements and the preparation for execution by the
Trustee of any continuation statements relating to the Co-op Loans for filing
under the provisions of the Uniform Commercial Code as in effect in the
jurisdiction in which the Underlying Mortgaged Property related to the affected
Co-op Loan is located. The Trustee agrees that it shall promptly execute and
redeliver to the Seller or the Servicer for filing any such continuation
statement so prepared by the Seller relating to the Co-op Loans.
[END OF ARTICLE XII]
92
IN WITNESS WHEREOF, the Depositor, the Servicer, the Paying Agent and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
CHASE MORTGAGE FINANCE CORPORATION,
as Depositor
By:
------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
as Servicer and as Custodian
By:
------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
as Paying Agent
By:
------------------------------------
Name:
Title:
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B
CONTENTS OF MORTGAGE FILE
(i) With respect to each Mortgage Loan which is not a Co-op Loan:
(A) (I) Original Mortgage Note (or a lost note affidavit (including a copy
of the original Mortgage Note)) or (II) original consolidation, extension and
modification agreement (or a lost note affidavit (including a copy of the
original consolidation, extension and modification agreement), in either case
endorsed, "Pay to the order of U.S. Bank National Association, as trustee,
without recourse."
(B) The original Mortgage (including all riders thereto) with evidence of
recording thereon, or a copy thereof certified by the public recording office in
which such Mortgage has been recorded or, if the original Mortgage has not been
returned from the applicable public recording office, a true certified copy,
certified by the Seller, of the original Mortgage together with a certificate of
the Seller certifying that the original Mortgage has been delivered for
recording in the appropriate public recording office of the jurisdiction in
which the Mortgaged Property is located.
(C) With respect to each Non-MERS Mortgage Loan which is not a Co-op Loan,
the original Assignment of Mortgage to "U.S. Bank National Association, as
trustee (Chase Mortgage Finance Corporation)," which assignment shall be in form
and substance acceptable for recording, or a copy certified by the Seller as a
true and correct copy of the original Assignment of Mortgage which has been sent
for recordation. Subject to the foregoing, such assignments may, if permitted by
law, be by blanket assignments for Mortgage Loans covering Mortgaged Properties
situated within the same county. If the Assignment of Mortgage is in blanket
form, a copy of the Assignment of Mortgage shall be included in the related
individual Mortgage File.
(D) The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a written
commitment or interim binder or preliminary report of title issued by the title
insurance or escrow company.
(E) Originals of all recorded intervening Assignments of Mortgage, or
copies thereof, certified by the public recording office in which such
Assignments or Mortgage have been recorded showing a complete chain of title
from the originator to the Depositor, with evidence of recording, thereon, or a
copy thereof certified by the public recording office in which such Assignment
of Mortgage has been recorded or, if the original Assignment of Mortgage has not
been returned from the applicable public recording office, a true certified
copy, certified by the Seller of the original Assignment of Mortgage together
with a certificate of the Seller certifying that the original Assignment of
Mortgage has been delivered for recording in the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is located.
(F) Originals, or copies thereof certified by the public recording office
in which such documents have been recorded, of each assumption, extension,
modification, written assurance or substitution agreements, if applicable, or if
the original of such document has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of such
original document together with certificate of Seller certifying the original of
such document has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located.
B-1
(G) If the Mortgage Note or Mortgage or any other material document or
instrument relating to the Mortgage Loan has been signed by a Person on behalf
of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such Person to sign bearing evidence that such
instrument has been recorded, if so required in the appropriate jurisdiction
where the Mortgaged Property is located (or, in lieu thereof, a duplicate or
conformed copy of such instrument, together with a certificate of receipt from
the recording office, certifying that such copy represents a true and complete
copy of the original and that such original has been or is currently submitted
to be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the original power
of attorney or other such instrument has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located.
(ii) With respect to each Co-op Loan:
(A)(I) The original Mortgage Note (or a lost note affidavit (including
a copy of the original Mortgage Note)) or (II) original consolidation,
extension and modification agreement (or a lost note affidavit (including a
copy of the original consolidation, extension and modification agreement)),
in either case endorsed "Pay to the order of U.S. Bank National
Association, as trustee, without recourse."
(B) The original Mortgage entered into by the Mortgagor with respect
to such Co-op Loan.
(C) The original Assignment of Mortgage to "U.S. Bank National
Association as trustee (Chase Mortgage Finance Corporation)."
(D) Original assignments of Mortgage showing a complete chain of
assignment from the originator of the related Co-op Loan to the Seller.
(E) Original Form UCC-1 and any continuation statements with evidence
of filing thereon entered into by the Mortgagor with respect to such Co-op
Loan.
(F) Form UCC-3 (or copy thereof) by the applicable Mortgage Loan
Seller or its agent assigning the security interest covered by such Form
UCC-1 to "U.S. Bank National Association as trustee," together with all
Forms UCC-3 (or copies thereof) showing a complete chain of assignment from
the originator of the related Co-op Loan to the Seller, with evidence of
recording thereon.
(G) Stock certificate representing the stock allocated to the related
dwelling unit in the related residential cooperative housing corporation
and pledged by the related Mortgagor to the originator of such Co-op Loan
with a stock power in blank attached.
(H) Original proprietary lease.
(I) Original assignment of proprietary lease, to the Trustee, and all
intervening assignments thereof.
(J) Original recognition agreement of the interests of the mortgagee
with respect to the Co-op Loan by the residential cooperative housing
corporation, the stock of which was pledged by the related Mortgagor to the
originator of such Co-op Loan.
(K) Originals of any assumption, consolidation or modification
agreements relating to any of the items specified in (A) through (F) above
with respect to such Co-op Loan.
B-2
EXHIBIT C
FORM OF CLASS A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), JPMORGAN CHASE BANK, N.A. (THE
"SERVICER") OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER
THIS CERTIFICATE, THE REMIC REGULAR INTEREST REPRESENTED HEREBY NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY CMFC, THE SERVICER, THE
TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS A-___ CERTIFICATE
Number: 06-1-A-___ Original Denomination:
$
Cut-off Date: May 1, 2006 Final Scheduled
Distribution Date: June 25, 2036
First Distribution Date: Aggregate Original Principal
June 26, 2006 Balance of all Class A-___
Certificates: $
Certificate Rate: CUSIP:
C-1
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 2006-1
evidencing an ownership interest in distributions allocable to the Class A-___
Certificates with respect to a pool of conventional one- to four-family mortgage
loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Paying Agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest
herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Original
Denomination of all Class A-___ Certificates) in certain distributions with
respect to a pool of conventional one- to four-family first lien mortgage loans
(the "Mortgage Loans") formed and sold by Chase Mortgage Finance Corporation
(hereinafter called the "Depositor"), and certain other property held in trust
for the benefit of Certificateholders (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by JPMorgan Chase Bank, N.A. (the "Servicer") and
are secured by first mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of May 1, 2006 among the Depositor, the Servicer and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, Class A-___ (the "Class A-___ Certificates") and is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which Agreement such Holder is bound. Also issued under
the Agreement are Certificates designated as ChaseFlex Trust, Multi-Class
Mortgage Pass-Through Certificates, Series 2006-1, Class M Certificates, Class B
Certificates and Class CE Certificates. The Class A Certificates, the Class M
Certificates, the Class B Certificates and the Class CE Certificates are
collectively referred to herein as the "Certificates."
Pursuant to the terms of the Agreement, the Paying Agent has been appointed
under Section 4.05 of the Agreement thereof, the Paying Agent, will distribute
from funds in the Certificate Account the amount as described on the reverse
hereof on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
June 26, 2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made.
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in
C-2
writing at least 10 Business Days prior to the first Distribution Date for which
distribution by wire transfer is to be made, and such Holder's Certificates
evidence an aggregate Original Denomination of not less than $5,000,000 or such
Holder holds a 100% Percentage Interest of such Class. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice
by the Paying Agent, of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office of the Paying
Agent, for the purpose and specified in such notice of final distribution.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, or at the office of its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Paying Agent, maintained for such
purpose, the Paying Agent will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Paying Agent of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Paying Agent, for that purpose and
specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-3
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed.
Dated: [__________] CHASE MORTGAGE FINANCE CORPORATION
By:
------------------------------------
Authorized Officer
C-4
Dated: [__________] CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.
as Authenticating Agent
By:
------------------------------------
Authorized Signatory
C-5
REVERSE OF CERTIFICATE
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2006-1
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, issued in one or more Classes of Class A, Class M, Class B and
Class CE Certificates. The Class A Certificates evidence in the aggregate the
Class A Percentage of distributions relating to repayments of principal and
interest on the Mortgage Loans. The Class M Certificates evidence in the
aggregate the Class M Percentage of distributions relating to repayments of
principal and interest on the Mortgage Loans. The Class B Certificates evidence
in the aggregate the Class B Percentage of distributions relating to repayments
of principal and interest on the Mortgage Loans.
Following the initial issuance of the Certificates, the Principal Balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current Principal
Balance by inquiry of the Paying Agent.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that neither the Trustee nor the Paying Agent is
liable to the Holders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee and the Paying Agent.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Paying Agent will provide for the
registration of Certificates and of transfers and exchanges of Certificates.
Upon surrender for registration of transfer of any Certificate at any office or
agency of the Paying Agent, the Paying Agent will, subject to the limitations
set forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and dated
the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Paying Agent may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer, the
Paying Agent and the Trustee may treat the Person in whose name any Certificate
is registered as the owner of such Certificate and the Percentage Interest in
the Trust Fund evidenced thereby for the purpose of receiving distributions
pursuant to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer, the Paying Agent nor the Trustee will be affected by
notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC (as hereinafter defined) included in the Trust Fund as a
REMIC, or to make any other provisions with respect to matters or questions
arising under the Agreement which are
C-6
not materially inconsistent with the provisions of the Agreement, provided that
such action does not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder or cause any REMIC
included in the Trust Fund to fail to qualify as a REMIC.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The Agreement provides that the Trust Fund will elect to be treated as one
or more "real estate mortgage investment conduits" for federal income tax
purposes (each, a "REMIC"). The Class A Certificates (other than the Class A-R
Certificate), the Class M Certificates, the Class B Certificates and the Class
CE Certificates will represent "regular interests" in a REMIC. The Class A-R
Certificate will represent the sole class of "residual interest" in each of the
REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer (except the duty to pay the Trustee's fees and expenses and
indemnification hereunder) and the Trustee shall terminate upon (i) the later of
the final payment or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due hereunder; or (ii) at the option of the Servicer on
any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the applicable Collection Account during the Principal Prepayment Period
related to such Distribution Date (and provides notice to the Trustee of its
intention to so deposit on or before the 20th day of such Principal Prepayment
Period) an amount equal to the Purchase Price for each Outstanding Mortgage
Loan, less any unreimbursed Advances made with respect to any Mortgage Loan
(which amount shall offset completely any unreimbursed Advances for which the
Servicer is otherwise entitled to reimbursement), and, with respect to all
property acquired in respect of any Mortgage Loan remaining in the Trust Fund,
an amount equal to the fair market value of such property, as determined by an
appraisal to be conducted by an appraiser selected by the Trustee, less
unreimbursed Advances made with respect to any Mortgage Loan with respect to
which property has been acquired; provided, however, that in no event shall the
trust created by the Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
C-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
_______________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty) ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
C-8
EXHIBIT D
FORM OF CLASS M CERTIFICATE
THIS CLASS M CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), JPMORGAN CHASE BANK, N.A. (THE
"SERVICER") OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER
THIS CERTIFICATE, THE REMIC REGULAR INTEREST REPRESENTED HEREBY NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY CMFC, THE SERVICER, THE
TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS M CERTIFICATE
Number: 06-1-M-1 Original Denomination:
$
Cut-off Date: May 1, 2006 Final Scheduled
Distribution Date: June 25, 2036
First Distribution Date: Aggregate Original Principal
June 26, 2006 Balance of all Class M
Certificates: $
Certificate Rate: CUSIP:
D-1
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 2006-1
evidencing an ownership interest in distributions allocable to the Class M
Certificates with respect to a pool of conventional one- to four-family mortgage
loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Paying Agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest
herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Original
Denomination of all Class M Certificates) in certain distributions with respect
to a pool of conventional one-to four-family first lien mortgage loans (the
"Mortgage Loans") formed and sold by Chase Mortgage Finance Corporation
(hereinafter called the "Depositor"), and certain other property held in trust
for the benefit of Certificateholders (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by JPMorgan Chase Bank, N.A. (the "Servicer") and
are secured by first mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of May 1, 2006 among the Depositor, the Servicer and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, Class M (the "Class M Certificates") and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which Agreement such Holder is bound. Also issued under the
Agreement are Certificates designated as ChaseFlex Trust, Multi-Class Mortgage
Pass-Through Certificates, Series 2006-1, Class A Certificates, Class B
Certificates and Class CE Certificates. The Class A Certificates are senior to,
and the Class B Certificates and Class CE Certificates are subordinate to, the
Class M Certificates in right of payment to the extent described herein and in
the Agreement. The Class A Certificates, Class M Certificates, Class B
Certificates and Class CE Certificates are collectively referred to herein as
the "Certificates." Amounts properly distributed to the Class M
Certificateholders pursuant to the Agreement will be deemed released from the
Trust Fund, and the Class M Certificateholders will not in any event be required
to refund any such distributed amounts.
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Certificate Account the amount as described on the reverse
hereof on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
June 26, 2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made.
D-2
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in writing at least 10 Business Days prior to the
first Distribution Date for which distribution by wire transfer is to be made,
and such Holder's Certificates evidence an aggregate Original Denomination of
not less than $5,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Paying Agent of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Paying Agent for the purpose and specified in such notice of final
distribution.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, or at the office of its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Paying Agent, maintained for such
purpose, the Paying Agent will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Paying Agent of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Paying Agent, for that purpose and
specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-3
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed.
Dated: [__________] CHASE MORTGAGE FINANCE CORPORATION
By:
------------------------------------
Authorized Officer
D-4
Dated:[__________] CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.
as Authenticating Agent
By:
------------------------------------
Authorized Signatory
D-5
REVERSE OF CERTIFICATE
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2006-1
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, issued in one or more Classes of Class A, Class M, Class B and
Class CE Certificates. The Class A Certificates evidence in the aggregate the
Class A Percentage of distributions relating to repayments of principal and
interest on the Mortgage Loans. The Class M Certificates evidence in the
aggregate the Class M Percentage of distributions relating to repayments of
principal and interest on the Mortgage Loans. The Class B Certificates evidence
in the aggregate the Class B Percentage of distributions relating to repayments
of principal and interest on the Mortgage Loans.
Following the initial issuance of the Certificates, the Principal Balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current Principal
Balance by inquiry of the Paying Agent.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that neither the Trustee nor the Paying Agent is
liable to the Holders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee and the Paying Agent.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Paying Agent will provide for the
registration of Certificates and of transfers and exchanges of Certificates.
Upon surrender for registration of transfer of any Certificate at any office or
agency of the Paying Agent, the Paying Agent will, subject to the limitations
set forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and dated
the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Paying Agent may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer, the
Paying Agent and the Trustee may treat the Person in whose name any Certificate
is registered as the owner of such Certificate and the Percentage Interest in
the Trust Fund evidenced thereby for the purpose of receiving distributions
pursuant to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer, the Paying Agent nor the Trustee will be affected by
notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC (as hereinafter defined) included in the Trust Fund as a
REMIC, or to make any other provisions with respect to matters or questions
arising under the Agreement which are
D-6
not materially inconsistent with the provisions of the Agreement, provided that
such action does not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder or cause any REMIC
included in the Trust Fund to fail to qualify as a REMIC.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The Agreement provides that the Trust Fund will elect to be treated as one
or more "real estate mortgage investment conduits" for federal income tax
purposes (each, a "REMIC"). The Class A Certificates (other than the Class A-R
Certificate), the Class M Certificates, the Class B Certificates and the Class
CE Certificates will represent "regular interests" in a REMIC. The Class A-R
Certificate will represent the sole class of "residual interest" in each of the
REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer (except the duty to pay the Trustee's fees and expenses and
indemnification hereunder) and the Trustee shall terminate upon (i) the later of
the final payment or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due hereunder; or (ii) at the option of the Servicer, on
any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the applicable Collection Account during the Principal Prepayment Period
related to such Distribution Date (and provides notice to the Trustee of its
intention to so deposit on or before the 20th day of such Principal Prepayment
Period) an amount equal to the Purchase Price for each Outstanding Mortgage
Loan, less any unreimbursed Advances made with respect to any Mortgage Loan
(which amount shall offset completely any unreimbursed Advances for which the
Servicer is otherwise entitled to reimbursement), and, with respect to all
property acquired in respect of any Mortgage Loan remaining in the Trust Fund,
an amount equal to the fair market value of such property, as determined by an
appraisal to be conducted by an appraiser selected by the Trustee, less
unreimbursed Advances made with respect to any Mortgage Loan with respect to
which property has been acquired; provided, however, that in no event shall the
trust created by the Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
D-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
____________________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty) ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
D-8
EXHIBIT E
FORM OF CLASS B CERTIFICATE
THIS CLASS B-___ CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND THE CLASS M CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), JPMORGAN CHASE BANK, N.A. (THE
"SERVICER") OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER
THIS CERTIFICATE, THE REMIC REGULAR INTEREST REPRESENTED HEREBY NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY CMFC, THE SERVICER, THE
TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS B-___ CERTIFICATE
Number: 06-1-B-__-1 Original Denomination:
$
Cut-off Date: May 1, 2006 Final Scheduled
Distribution Date: June 25, 2036
First Distribution Date: Aggregate Original Principal
June 26, 2006 Balance of all Class B-___
Certificates: $
Certificate Rate: CUSIP:
E-1
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 2006-1
evidencing an ownership interest in distributions allocable to the Class B-___
Certificates with respect to a pool of conventional one-to four-family mortgage
loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Paying Agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest
herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Original
Denomination of all Class B-___ Certificates) in certain distributions with
respect to a pool of conventional one- to four-family first lien mortgage loans
(the "Mortgage Loans") formed and sold by Chase Mortgage Finance Corporation
(hereinafter called the "Depositor"), and certain other property held in trust
for the benefit of Certificateholders (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by JPMorgan Chase Bank, N.A. (the "Servicer") and
are secured by first mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of May 1, 2006 among the Depositor, the Servicer and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, Class B-___ (the "Class B-___ Certificates") and is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which Agreement such Holder is bound. Also issued under
the Agreement are Certificates designated as ChaseFlex Trust, Multi-Class
Mortgage Pass-Through Certificates, Series 2006-1, Class A Certificates, Class M
Certificates and Class CE Certificates. The rights of the Class B-___
Certificateholders to receive distributions in respect of the Class B
Certificates on any Distribution Date are subordinated to the rights of the
Class A and Class M Certificateholders to receive distributions in respect of
the Class A and Class M Certificates to the extent, and only to the extent, set
forth in the Agreement. The Class A Certificates, the Class M Certificates, the
Class B Certificates and the Class CE Certificates are collectively referred to
herein as the "Certificates." Amounts properly distributed to the Class B
Certificateholders pursuant to the Agreement will be deemed released from the
Trust Fund, and the Class B Certificateholders will not in any event be required
to refund any such distributed amounts.
Pursuant to the terms of the Agreement, the Paying Agent has been appointed
under Section 4.05 of the Agreement thereof, the Paying Agent, will distribute
from funds in the Certificate Account the amount as described on the reverse
hereof on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
June 26, 2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the
E-2
close of business on the last Business Day of the month preceding the month in
which such payment is made.
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in writing at least 10 Business Days prior to the
first Distribution Date for which distribution by wire transfer is to be made,
and such Holder's Certificates evidence an aggregate original denomination of
not less than $5,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Paying Agent, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Paying Agent, for the purpose and specified in such notice of
final distribution.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, or at the office of its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Paying Agent, maintained for such
purpose, the Paying Agent will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Paying Agent, of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Paying Agent, for that purpose and
specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
E-3
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed.
Dated: [__________] CHASE MORTGAGE FINANCE CORPORATION
By:
------------------------------------
Authorized Officer
E-4
Dated: [__________] CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.
as Authenticating Agent
By:
------------------------------------
Authorized Signatory
E-5
REVERSE OF CERTIFICATE
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2006-1
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, issued in one or more Classes of Class A, Class M, Class B and
Class CE Certificates. The Class A Certificates evidence in the aggregate the
Class A Percentage of distributions relating to repayments of principal and
interest on the Mortgage Loans. The Class M Certificates evidence in the
aggregate the Class M Percentage of distributions relating to repayments of
principal and interest on the Mortgage Loans. The Class B Certificates evidence
in the aggregate the Class B Percentage of distributions relating to repayments
of principal and interest on the Mortgage Loans.
Following the initial issuance of the Certificates, the Principal Balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current Principal
Balance by inquiry of the Paying Agent.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that neither the Trustee nor the Paying Agent is
liable to the Holders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee and the Paying Agent.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Paying Agent will provide for the
registration of Certificates and of transfers and exchanges of Certificates.
Upon surrender for registration of transfer of any Certificate at any office or
agency of the Paying Agent, the Paying Agent will, subject to the limitations
set forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and dated
the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Paying Agent may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer, the
Paying Agent and the Trustee may treat the Person in whose name any Certificate
is registered as the owner of such Certificate and the Percentage Interest in
the Trust Fund evidenced thereby for the purpose of receiving distributions
pursuant to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer, the Paying Agent nor the Trustee will be affected by
notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC (as hereinafter defined) included in the Trust Fund as a
REMIC, or to make any other provisions with respect to matters or questions
arising under the Agreement which are
E-6
not materially inconsistent with the provisions of the Agreement, provided that
such action does not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder or cause any REMIC
included in the Trust Fund to fail to qualify as a REMIC.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The Agreement provides that the Trust Fund will elect to be treated as one
or more "real estate mortgage investment conduits" for federal income tax
purposes (each, a "REMIC"). The Class A Certificates (other than the Class A-R
Certificate), the Class M Certificates, the Class B Certificates and the Class
CE Certificates will represent "regular interests" in a REMIC. The Class A-R
Certificate will represent the sole class of "residual interest" in each of the
REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer (except the duty to pay the Trustee's fees and expenses and
indemnification hereunder) and the Trustee shall terminate upon (i) the later of
the final payment or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due hereunder; or (ii) at the option of the Servicer, on
any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the applicable Collection Account during the Principal Prepayment Period
related to such Distribution Date (and provides notice to the Trustee of its
intention to so deposit on or before the 20th day of such Principal Prepayment
Period) an amount equal to the Purchase Price for each Outstanding Mortgage
Loan, less any unreimbursed Advances made with respect to any Mortgage Loan
(which amount shall offset completely any unreimbursed Advances for which the
Servicers are otherwise entitled to reimbursement), and, with respect to all
property acquired in respect of any Mortgage Loan remaining in the Trust Fund,
an amount equal to the fair market value of such property, as determined by an
appraisal to be conducted by an appraiser selected by the Trustee, less
unreimbursed Advances made with respect to any Mortgage Loan with respect to
which property has been acquired; provided, however, that in no event shall the
trust created by the Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
E-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
_________________________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty) ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
E-8
EXHIBIT E-1
FORM OF CLASS CE CERTIFICATE
THIS CLASS CE CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND THE CLASS M CERTIFICATES AND THE CLASS B CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CLASS CE CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR TRANSFERRED IN TRANSACTIONS
WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), JPMORGAN CHASE BANK, N.A. (THE
"SERVICER") OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER
THIS CERTIFICATE, THE REMIC REGULAR INTEREST REPRESENTED HEREBY NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY CMFC, THE SERVICER, THE
TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED (a) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS CERTIFICATE TO
THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO ANY PROVISIONS
UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE
SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR
LAW") (COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF, OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE
CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING
THE CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED
IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND THE
ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS
I AND III OF PTCE 95-60 OR (C) SOLELY IN THE CASE OF A DEFINITIVE CERTIFICATE,
AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON
WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE ACQUISITION AND HOLDING OF THIS CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED TRANSACTION
UNDER ERISA OR THE CODE OR A VIOLATION OF SIMILAR LAW AND WILL NOT SUBJECT THE
TRUSTEE, THE DEPOSITOR OR
E-9
THE SERVICER TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES
IN THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE DEPOSITOR OR THE SERVICER.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
CLASS CE CERTIFICATE
Number: 06-1-CE-1
Cut-off Date: May 1, 2006
First Distribution Date:
June 26, 2006
Original Denomination:
$
Final Scheduled
Distribution Date: June 25, 2036
Aggregate Original Principal
Balance of all Class CE
Certificates: $
CUSIP:
E-10
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 2006-1
evidencing an ownership interest in distributions allocable to the Class CE
Certificates with respect to a pool of conventional one- to four-family mortgage
loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
This certifies that ▇.▇. ▇▇▇▇▇▇ SECURITIES INC. is the registered owner of
the ownership interest (the "Ownership Interest") evidenced by this Certificate
(obtained by dividing the Original Denomination of this Certificate by the
aggregate Original Denomination of all Class CE Certificates) in certain
distributions with respect to a pool of conventional one- to four-family first
lien mortgage loans (the "Mortgage Loans") formed and sold by Chase Mortgage
Finance Corporation (hereinafter called the "Depositor"), and certain other
property held in trust for the benefit of Certificateholders (collectively, the
"Trust Fund"). The Mortgage Loans are serviced by JPMorgan Chase Bank, N.A. (the
"Servicer" ) and are secured by first mortgages on Mortgaged Properties. The
Trust Fund was created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of April 1, 2006 among the Depositor, the Servicer and
U.S. Bank National Association, as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, Class CE (the "Class CE Certificates") and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which Agreement such Holder is bound. Also issued under the
Agreement are Certificates designated as ChaseFlex Trust, Multi-Class Mortgage
Pass-Through Certificates, Series 2006-1, Class A Certificates, Class M
Certificates and Class B Certificates. The rights of the Class CE
Certificateholders to receive distributions in respect of the Class CE
Certificates on any Distribution Date are subordinated to the rights of the
Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders to receive distributions in respect of the Class A, Class M
and Class B Certificates to the extent, and only to the extent, set forth in the
Agreement. The Class A Certificates, Class M Certificates, Class B Certificates
and the Class CE Certificates are collectively referred to herein as the
"Certificates." Amounts properly distributed to the Class CE Certificateholders
pursuant to the Agreement will be deemed released from the Trust Fund, and the
Class CE Certificateholders will not in any event be required to refund any such
distributed amounts.
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Certificate Account the amount as described on the reverse
hereof on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
June 26, 2006. Such distributions will be made to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made.
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in writing at least 10 Business Days prior to the
first Distribution Date for which distribution by wire transfer is to be made,
and such Holder's Certificates evidence an aggregate Original Denomination of
not
E-11
less than $5,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Paying Agent, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Paying Agent, for the purpose and specified in such notice of
final distribution.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, or at the office of its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Paying Agent, maintained for such
purpose, the Paying Agent, will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Paying Agent of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Paying Agent, for that purpose and
specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
E-12
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed.
Dated: [__________], 2006 CHASE MORTGAGE FINANCE
CORPORATION
By:
------------------------------------
Authorized Officer
E-13
Dated: [__________], 2006 CERTIFICATE OF AUTHENTICATION
This is one of the
Certificates
referred to in the
within-mentioned
Agreement.
JPMORGAN CHASE BANK, N.A.
as Authenticating Agent
By:
------------------------------------
Authorized Signatory
E-14
REVERSE OF CERTIFICATE
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2006-1
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, issued in one or more Classes of Class A, Class M, Class B and
Class CE Certificates. The Class A Certificates evidence in the aggregate the
Class A Percentage of distributions relating to repayments of principal and
interest on the Mortgage Loans. The Class M Certificates evidence in the
aggregate the Class M Percentage of distributions relating to repayments of
principal and interest on the Mortgage Loans. The Class B Certificates evidence
in the aggregate the Class B Percentage of distributions relating to repayments
of principal and interest on the Mortgage Loans. The Class CE Certificates
evidence in the aggregate the Class CE Percentage of distributions relating to
repayments of principal and interest on the Mortgage Loans.
Following the initial issuance of the Certificates, the Principal Balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current Principal
Balance by inquiry of the Paying Agent.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that neither the Trustee nor the Paying Agent is
liable to the Holders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee and the Paying Agent.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Paying Agent will provide for the
registration of Certificates and of transfers and exchanges of Certificates.
Upon surrender for registration of transfer of any Certificate at any office or
agency of the Paying Agent, the Paying Agent will, subject to the limitations
set forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and dated
the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Paying Agent may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer, the
Paying Agent and the Trustee may treat the Person in whose name any Certificate
is registered as the owner of such Certificate and the Percentage Interest in
the Trust Fund evidenced thereby for the purpose of receiving distributions
pursuant to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer, the Paying Agent nor the Trustee will be affected by
notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure
E-15
continuing treatment of each REMIC (as hereinafter defined) included in the
Trust Fund as a REMIC, or to make any other provisions with respect to matters
or questions arising under the Agreement which are not materially inconsistent
with the provisions of the Agreement, provided that such action does not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder or cause any REMIC included in the Trust Fund
to fail to qualify as a REMIC.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The Agreement provides that the Trust Fund will elect to be treated as one
or more "real estate mortgage investment conduits" for federal income tax
purposes (each, a "REMIC"). The Class A Certificates (other than the Class A-R
Certificate), the Class M Certificates, the Class B Certificates and the Class
CE Certificates will represent "regular interests" in a REMIC. The Class A-R
Certificate will represent the sole class of "residual interest" in each of the
REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer (except the duty to pay the Trustee's fees and expenses and
indemnification hereunder) and the Trustee shall terminate upon (i) the later of
the final payment or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due hereunder; or (ii) at the option of the Servicer, on
any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the applicable Collection Account during the Principal Prepayment Period
related to such Distribution Date (and provides notice to the Trustee of its
intention to so deposit on or before the 20th day of such Principal Prepayment
Period) an amount equal to the Purchase Price for each Outstanding Mortgage
Loan, less any unreimbursed Advances made with respect to any Mortgage Loan
(which amount shall offset completely any unreimbursed Advances for which the
Servicer is otherwise entitled to reimbursement), and, with respect to all
property acquired in respect of any Mortgage Loan remaining in the Trust Fund,
an amount equal to the fair market value of such property, as determined by an
appraisal to be conducted by an appraiser selected by the Trustee, less
unreimbursed Advances made with respect to any Mortgage Loan with respect to
which property has been acquired; provided, however, that in no event shall the
trust created by the Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
E-16
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
_________________________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty) ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
E-17
EXHIBIT F
FORM OF CLASS A-R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A "RESIDUAL
INTEREST" IN MULTIPLE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), JPMORGAN CHASE BANK, N.A. (THE
"SERVICER") OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER
THIS CERTIFICATE, THE REMIC RESIDUAL INTERESTS REPRESENTED HEREBY NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY CMFC, THE SERVICER, THE
TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS CERTIFICATE TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A
PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO ANY PROVISIONS
UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE
SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF, OR WITH ANY ASSETS OF ANY SUCH PLAN.
TRANSFERABILITY OF THIS CERTIFICATE IS RESTRICTED UNDER THE PROVISIONS OF
SECTION 4.02 OF THE AGREEMENT.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
F-1
CLASS A-R CERTIFICATE
Number: 06-1-A-R-1
Cut-off Date: May 1, 2006
First Distribution Date: June 26, 2006
Certificate Rate: N/A
Original Denomination: $
Final Scheduled Distribution Date: June 25, 2036
Aggregate Original Principal Balance of Class A-R Certificate: $
CUSIP:
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 2006-1
evidencing an ownership interest in distributions allocable to the Class A-R
Certificate with respect to a pool of conventional one-to four-family mortgage
loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
This certifies that JPMORGAN CHASE BANK, N.A. is the registered owner of
the ownership interest (the "Ownership Interest") evidenced by this Certificate
in certain distributions with respect to a pool of conventional one- to
four-family first lien mortgage loans (the "Mortgage Loans") formed and sold by
Chase Mortgage Finance Corporation (hereinafter called the "Depositor"), and
certain other property held in trust for the benefit of Certificateholders
(collectively, the "Trust Fund"). The Mortgage Loans are serviced by JPMorgan
Chase Bank, N.A. (the "Servicer") and are secured by first mortgages on
Mortgaged Properties. The Trust Fund was created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of May 1, 2006 among the
Depositor, the Servicer and U.S. Bank National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, Class A-R (the "Class A-R Certificate") and is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which Agreement such Holder is bound. Also issued under the
Agreement are Certificates designated as ChaseFlex Trust, Multi-Class Mortgage
Pass-Through Certificates, Series 2006-1, Class M Certificates, Class B
Certificates and Class CE Certificates. The Class A Certificates, the Class M
Certificates, the Class B Certificates and the Class CE Certificates are
collectively referred to herein as the "Certificates."
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Certificate Account the amount as described on the reverse
hereof on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
June 26, 2006. Such distributions will be made to the Person in whose name this
F-2
Certificate is registered at the close of business on the last Business Day of
the month preceding the month in which such payment is made.
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in writing at least 10 Business Days prior to the
first Distribution Date for which distribution by wire transfer is to be made,
and such Holder's Certificates evidence an aggregate Original Denomination of
not less than $5,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Paying Agent, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Paying Agent, for the purpose and specified in such notice of
final distribution.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, or at the office of its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Paying Agent, maintained for such
purpose, the Paying Agent will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Paying Agent of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Agreement, the Paying Agent, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
F-3
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed.
Dated: [__________] CHASE MORTGAGE FINANCE
CORPORATION
By:
------------------------------------
Authorized Officer
F-4
Dated: [__________] CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
JPMORGAN CHASE BANK, N.A.
as Authenticating Agent
By:
------------------------------------
Authorized Signatory
F-5
REVERSE OF CERTIFICATE
CHASEFLEX TRUST
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2006-1
This Certificate is one of a duly authorized issue of Certificates,
designated as ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, issued in one or more Classes of Class A, Class M, Class B and
Class CE Certificates. The Class A Certificates evidence in the aggregate the
Class A Percentage of distributions relating to repayments of principal and
interest on the Mortgage Loans. The Class M Certificates evidence in the
aggregate the Class M Percentage of distributions relating to repayments of
principal and interest on the Mortgage Loans. The Class B Certificates evidence
in the aggregate the Class B Percentage of distributions relating to repayments
of principal and interest on the Mortgage Loans.
Following the initial issuance of the Certificates, the Principal Balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current Principal
Balance by inquiry of the Paying Agent.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that neither the Trustee nor the Paying Agent is
liable to the Holders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee and the Paying Agent.
The Paying Agent will cause to be kept at its Agency & Trust Office in New
York, New York, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Paying Agent will provide for the
registration of Certificates and of transfers and exchanges of Certificates.
Upon surrender for registration of transfer of any Certificate at any office or
agency of the Paying Agent, the Paying Agent will, subject to the limitations
set forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and dated
the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Paying Agent may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer, the
Paying Agent and the Trustee may treat the Person in whose name any Certificate
is registered as the owner of such Certificate and the Percentage Interest in
the Trust Fund evidenced thereby for the purpose of receiving distributions
pursuant to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer, the Paying Agent nor the Trustee will be affected by
notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC (as hereinafter defined) included in the Trust Fund as a
REMIC, or to make any other provisions with respect to matters or questions
arising under the Agreement which are
F-6
not materially inconsistent with the provisions of the Agreement, provided that
such action does not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder or cause any REMIC
included in the Trust Fund to fail to qualify as a REMIC.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The Agreement provides that the Trust Fund will elect to be treated as one
or more "real estate mortgage investment conduits" for federal income tax
purposes (each, a "REMIC"). The Class A Certificates (other than the Class A-R
Certificate), the Class M Certificates, the Class B Certificates and the Class
CE Certificates will represent "regular interests" in a REMIC. The Class A-R
Certificate will represent the sole class of "residual interest" in each of the
REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer (except the duty to pay the Trustee's fees and expenses and
indemnification hereunder) and the Trustee shall terminate upon (i) the later of
the final payment or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due hereunder; or (ii) at the option of the Servicer, on
any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the applicable Collection Account during the Principal Prepayment Period
related to such Distribution Date (and provides notice to the Trustee of its
intention to so deposit on or before the 20th day of such Principal Prepayment
Period) an amount equal to the Purchase Price for each Outstanding Mortgage
Loan, less any unreimbursed Advances made with respect to any Mortgage Loan
(which amount shall offset completely any unreimbursed Advances for which the
Servicer is otherwise entitled to reimbursement), and, with respect to all
property acquired in respect of any Mortgage Loan remaining in the Trust Fund,
an amount equal to the fair market value of such property, as determined by an
appraisal to be conducted by an appraiser selected by the Trustee, less
unreimbursed Advances made with respect to any Mortgage Loan with respect to
which property has been acquired; provided, however, that in no event shall the
trust created by the Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
F-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
____________________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty)
----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
F-8
EXHIBIT G
FORM OF TRUSTEE CERTIFICATION
[DATE]
U.S. Bank National Association, as trustee (the "Trustee") under the
Pooling and Servicing Agreement dated as of May 1, 2006 (the "Agreement") among
Chase Mortgage Finance Corporation (the "Company"), the Trustee, and JPMorgan
Chase Bank, N.A., regarding ChaseFlex Trust, Series 2006-1, hereby certifies
that, except as noted in the Exception Report:
1. The Trustee or the Custodian on behalf of the Trustee took the Mortgage
Notes and other property in the Trust Fund in good faith for value and without
notice or knowledge (i) of any adverse claims, liens or encumbrances, (ii) that
any Mortgage Note was overdue or had been dishonored or subject to any security
interest or other right or interest therein, or (iii) of any defense against or
claim to the Mortgage Notes or other property in the Trust Fund on the part of
any entity;
2. The Trustee or the Custodian on behalf of the Trustee received actual
possession of the Mortgage Notes; and
3. The Trustee or the Custodian on behalf of the Trustee took possession of
the Mortgage Notes in the ordinary course of its business.
Capitalized words used herein shall have the respective meanings assigned
to them in the Agreement.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
G-1
IN WITNESS WHEREOF, the undersigned executed this Trustee's Certificate as
of the [___] day of May, 2006.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
G-2
EXHIBIT H
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank, N.A.
Global Trust Services
Four ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
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▇.▇. ▇▇▇▇▇▇ Securities Inc.
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U.S. Bank National Association, as trustee
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Re: ChaseFlex Trust Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, [CLASS CE]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
_________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, [CLASS CE ] (the "Certificates"), issued pursuant to a pooling
and servicing agreement, dated as of May 1, 2006 (the "Pooling and Servicing
Agreement"), among Chase Mortgage Finance Corporation (the "Depositor"),
JPMorgan Chase Bank, N.A. ("Chase"), as servicer, and U.S. Bank National
Association, as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE
TRANSFERRED CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
__________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b)
H-1
neither the Depositor nor the Trustee is required, and neither of them intends,
to so register or qualify the Certificates, (c) the Certificates cannot be
resold unless (i) they are registered and qualified under the Securities Act and
the applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CLASS CE CERTIFICATE HAS NOT AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER
APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
[THIS LEGEND WILL APPEAR ON THE CERTIFICATE ONLY IF SUCH CERTIFICATE IS AN
ERISA RESTRICTED CERTIFICATE.] NO TRANSFER OF THIS CERTIFICATE SHALL BE
MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED (A) A REPRESENTATION LETTER
FROM THE TRANSFEREE OF THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE
IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN
SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), OR A PLAN SUBJECT TO ANY PROVISIONS UNDER ANY FEDERAL, STATE,
LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIVELY SIMILAR
TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF
THE CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS AN INSURANCE
COMPANY THAT IS ACQUIRING THE CERTIFICATE WITH ASSETS OF AN "INSURANCE
COMPANY GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND THE ACQUISITION AND HOLDING
OF THE CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS I AND III OF PTCE
95-60 OR (C) SOLELY IN THE CASE OF A DEFINITIVE CERTIFICATE, AN OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON WHICH THE
TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE
ACQUISITION AND HOLDING OF THIS CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR THE CODE OR A VIOLATION OF SIMILAR LAW AND WILL NOT SUBJECT THE
TRUSTEE, THE DEPOSITOR OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT,
WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE
DEPOSITOR OR THE SERVICER.
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3. The Purchaser is acquiring the Transferred Certificates for its own
account [for investment only]*/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
4. The Purchaser (a) is a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters, and in
particular in such matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of investment in the
Certificates, (b) is able to bear the economic risks of such an investment and
(c) is an "accredited investor" within the meaning of Rule 501(a) promulgated
pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it authorize any
Person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any Person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
6. If the Purchaser is acquiring ERISA Restricted Certificates, the
Purchaser is not a Plan and is not acquiring the ERISA Restricted Certificates
for, on behalf of or with any assets of any such Plan, except as may be
permitted in accordance with Section 4.02(d) of the Pooling and Servicing
Agreement.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit I to the Pooling and Servicing Agreement.
8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
9. The Purchaser has received such information as Purchaser deems necessary
in order to make its investment decision.
Very truly yours,
[PURCHASER]
By:
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*/ Not required of a broker/dealer purchaser.
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Name:
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Title:
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EXHIBIT I
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
JPMorgan Chase Bank, N.A.
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JPMorgan Chase Bank, N.A.
Global Trust Services
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▇.▇. ▇▇▇▇▇▇ Securities Inc.
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U.S. Bank National Association, as trustee
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Re: ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, [CLASS CE ]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from _________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Multi-Class Mortgage Pass-Through Certificates, Series 2006-1,
[CLASS CE] (the "Certificates"), issued pursuant to a pooling and servicing
agreement, dated as of May 1, 2006 (the "Pooling and Servicing Agreement"),
among Chase Mortgage Finance Corporation (the "Depositor"), JPMorgan Chase Bank,
N.A. ("Chase"), as servicer (the "Servicer"), and U.S. Bank National
Association, as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER THE
TRANSFERRED CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
__________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred Certificates we
certify that (a) we understand
I-1
that the Certificates are not being registered under the Securities Act of 1933,
as amended (the "Act"), or any state securities laws and are being transferred
to us in a transaction that is exempt from the registration requirements of the
Act and any such laws, (b) we have such knowledge and experience in financial
and business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the Depositor concerning the purchase of
the Transferred Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Transferred
Certificates, (d) solely with respect to an ERISA Restricted Certificate, we (A)
are not an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or a
plan subject to any provisions under any federal, state, local, non-U.S. or
other laws or regulations that are substantively similar to the foregoing
provisions of ERISA or the Code ("Similar Law") (collectively, a "Plan"), and is
not directly or indirectly acquiring the Certificate for, on behalf of or with
any assets of any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, are an insurance company that is acquiring the
Certificate with assets of an "insurance company general account" as defined in
Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), and
the acquisition and holding of the Certificate are covered and exempt under
Sections I and III of PTCE 95-60, or (C) solely in the case of a Definitive
Certificate, will deliver herewith an Opinion of Counsel satisfactory to the
Depositor and the Trustee, and upon which the Depositor and the Trustee shall be
entitled to rely, to the effect that the acquisition and holding of this
Certificate by the prospective transferee will not constitute or result in a
nonexempt prohibited transaction under ERISA or the Code or a violation of
Similar Law and will not subject the Trustee, the Depositor or the Servicer to
any obligation in addition to those undertaken by such entities in the Pooling
and Servicing Agreement, which Opinion of Counsel shall not be an expense of the
Trustee, the Depositor or the Servicer,(e) we have not, nor has anyone acting on
our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
one of the forms of certification to that effect attached hereto as Annex 1 or
Annex 2. We are aware that the sale of the Transferred Certificates to us is
being made in reliance on Rule 144A. We are acquiring the Transferred
Certificates for our own account or for resale pursuant to Rule 144A and further
understand that such Certificates may be resold, pledged or transferred only (i)
to a person reasonably believed by us, based upon certifications of such
purchaser or information we have in our possession, to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act. We have received such
information as we deem necessary in order to make our investment decision.
I-2
We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
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Name:
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Title:
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ANNEX 1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $____________*/ in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
_____ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
_____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by Federal, State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
_____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over such institution or is a foreign savings and
loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is attached
hereto.
_____ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
----------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
I-4
_____ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of the State,
territory or the District of Columbia.
_____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
_____ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended.
_____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
_____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958, as amended.
_____ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as
I-5
provided above, the Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become available.
By:
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Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
I-6
ANNEX 2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
_____ The Buyer owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
_____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the
I-7
statements made herein because one or more sales to the Buyer will be in
reliance on Rule 144A. In addition, the Buyer will only purchase for the Buyer's
own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:
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Name:
-----------------------------------
Title:
----------------------------------
IF AN ADVISER:
----------------------------------------
Print Name of Buyer
Date:
-----------------------------------
I-8
EXHIBIT J
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement") is
made and entered into as of [DATE], between JPMorgan Chase Bank, N.A., (the
"Company") and _____________________ (the "Purchaser").
PRELIMINARY STATEMENT
__________________ (the "Owner") is the holder of the entire interest in
Chaseflex Trust Multi-Class Mortgage Pass-Through Certificates, Series 2006-1,
Class CE (the "Class CE Certificates"). The Class CE Certificates were issued
pursuant to a Pooling and Servicing Agreement dated as of May 1, 2006 (the
"Pooling and Servicing Agreement") among Chase Mortgage Finance Corporation,
(the "Company"), JPMorgan Chase Bank, N.A. as servicer thereunder (the
"Servicer") and U.S. Bank National Association, as trustee (the "Trustee").
The Owner intends to resell all of the Class CE Certificates directly to
the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Company, as Servicer, will engage in certain special servicing procedures
relating to foreclosures for benefit of the Purchaser, and that the Purchaser
will deposit funds in a collateral fund to cover any losses attributable to such
procedures as well as all advances and costs in connection therewith, as set
forth herein.
In consideration of the mutual agreements herein contained, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
agree to the following:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the State of New York are required or
authorized by law or executive order to be closed.
Collateral Fund: The fund established and maintained pursuant to Section
3.01 hereof.
Collateral Fund Permitted Investments: Either: (i) obligations of, or
obligations fully guaranteed as to principal and interest by, the United States,
or any agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States, (ii) a money market fund
rated in the highest rating category by a nationally recognized rating agency
selected by the Company, (iii) cash, (iv) mortgage pass-through certificates
issued or guaranteed by GNMA, FNMA or FHLMC, (v) commercial paper (including
both non-interest bearing discount obligations and interest bearing obligations
payable on demand or on a specified date), the issuer of which may be an
affiliate of the Company, having at the time of such investment a rating of at
least Prime-1 by Moody's Investors
J-1
Service, Inc. ("Moody's") or at least D-1 by Fitch Ratings and (vi) demand and
time deposits in, certificates of deposit of, any depository institution or
trust company (which may be an affiliate of the Company) incorporated under the
laws of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking authorities, so long
as at the time of such investment either (x) the long-term debt obligations of
such depository institution or trust company have a rating of at least Aa by
Moody's or at least AA by Fitch Ratings or (y) the certificate of deposit or
other unsecured short-term debt obligations of such depository institution or
trust company have a rating of at least A-1 by Fitch Ratings or Prime-1 by
Moody's and, for each of the preceding clauses (i), (iv), (v) and (vi), the
maturity thereof shall be not later than the earlier to occur of (A) 30 days
from the date of the related investment and (B) the next succeeding Distribution
Date.
Commencement of Foreclosure: The first official action required under local
law in order to commence foreclosure proceedings or to schedule a trustee's sale
under a deed of trust, including (i) in the case of a mortgage, any filing or
service of process necessary to commence an action to foreclose, or (ii) in the
case of a deed of trust, the posting, publishing, filing or delivery of a notice
of sale, but not including in either case (x) any notice of default, notice of
intent to foreclose or sell or any other action prerequisite to the actions
specified in (i) or (ii) above and upon the consent of the Purchaser which will
be deemed given unless expressly withheld within two Business Days of
notification, (y) the acceptance of a deed-in-lieu of foreclosure (whether in
connection with a sale of the related property or otherwise) or (z) initiation
and completion of a short pay-off.
Current Appraisal: With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, an appraisal of the related
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan), obtained by the Purchaser at its expense from an appraiser (which shall
not be an affiliate of the Purchaser) acceptable to the Company as nearly
contemporaneously as practicable to the time of the Purchaser's election,
prepared based on the Company's customary requirements for such appraisals.
Election to Delay Foreclosure: Any election by the Purchaser to delay the
Commencement of Foreclosure, made in accordance with Section 2.02(b).
Election to Foreclose: Any election by the Purchaser to proceed with the
Commencement of Foreclosure, made in accordance with Section 2.03(a).
Required Collateral Fund Balance: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be deposited
in the Collateral Fund pursuant to Section 2.02(d) (after adjustment for all
withdrawals and deposits pursuant to Section 2.02(e)) and Section 2.03(b) (after
adjustment for all withdrawals and deposits pursuant to Section 2.03(c)) and
Section 3.03 to be reduced by all withdrawals therefrom pursuant to Section
2.02(g) and Section 2.03(d).
Section 1.02. Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement shall have
the meanings assigned in the Pooling and Servicing Agreement.
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ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01 Reports and Notices.
1. In connection with the performance of its duties under the Pooling and
Servicing Agreement relating to the realization upon defaulted Mortgage Loans,
the Company, as Servicer, shall provide to the Purchaser the following notices
and reports:
(a) Within five Business Days after each Distribution Date (or
included in or with the monthly statement to Certificateholders
pursuant to the Pooling and Servicing Agreement), the Company
shall provide to the Purchaser a report indicating for the Trust
the number of Mortgage Loans that are (A) thirty days, (B) sixty
days, (C) ninety days or more delinquent or (D) in foreclosure,
and indicating for each such Mortgage Loan the outstanding
principal balance.
(b) Prior to the Commencement of Foreclosure in connection with any
Mortgage Loan, the Company shall provide the Purchaser with a
notice (sent by telecopier) of such proposed and imminent
foreclosure, stating the loan number and the aggregate amount
owing under the Mortgage Loan.
2. If requested by the Purchaser, the Company shall make its servicing
personnel available (during their normal business hours) to respond to
reasonable inquiries by the Purchaser in connection with any Mortgage Loan
identified in a report under subsection (a)(i)(B), (a)(i)(C), (a)(i)(D) or
(a)(ii) which has been given to the Purchaser; provided, that (1) the Company
shall only be required to provide information that is readily accessible to its
servicing personnel and is non-confidential and (2) the Company shall not be
required to provide any written information under this subsection.
3. In addition to the foregoing, the Company shall provide to the Purchaser
such information as the Purchaser may reasonably request concerning each
Mortgage Loan that is at least sixty days delinquent and each Mortgage Loan
which has become real estate owned, through the final liquidation thereof;
provided that the Company shall only be required to provide information that is
readily accessible to its servicing personnel and is non-confidential.
(a) With respect to all Mortgage Loans which are serviced at any time
by the Company through a Subservicer, the Company shall be
entitled to rely for all purposes hereunder, including for
purposes of fulfilling its reporting obligations under this
Section 2.01 on the accuracy and completeness of any information
provided to it by the applicable Subservicer.
Section 2.02 Purchaser's Election to Delay Foreclosure Proceedings.
1. The Purchaser directs the Company that in the event that the Company
does not receive written notice of the Purchaser's election pursuant to
subsection (b) below within 24 hours (exclusive of any intervening non-Business
Days) of transmission of the notice provided by the Company under Section
2.01(a)(ii), subject to extension as set forth in Section 2.02(b), the Company
shall proceed with the Commencement of Foreclosure in respect of such Mortgage
Loan in accordance with its normal foreclosure policies without further notice
to the Purchaser. Any foreclosure that has been initiated may be discontinued
(i) without notice to the Purchaser, if the Mortgage Loan has been brought
current or if a refinancing or prepayment occurs with respect to the Mortgage
Loan (including by means of a short payoff approved by the Company) (ii) with
notice to the Purchaser if the Company has reached the terms of a forbearance
agreement with the borrower. In such latter case the Company may complete such
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forbearance agreement unless instructed otherwise by the Purchaser within one
Business Day of notification.
2. In connection with any Mortgage Loan with respect to which a notice
under Section 2.01(a)(ii) has been given to the Purchaser, the Purchaser may
elect, for reasonable cause as determined by the Purchaser, to instruct the
Company to delay the Commencement of Foreclosure until such term as the
Purchaser determines that the Company may proceed with the Commencement of
Foreclosure. Such election must be evidenced by written notice received within
24 hours (exclusive of any intervening non-Business Days) of transmission of the
notice provided by the Company under Section 2.01(a)(ii). Such 24 hour period
shall be extended for no longer than an additional four Business Days after the
receipt of the information if the Purchaser requests additional information
related to such foreclosure; provided, however that the Purchaser will have at
least one Business Day to respond to any requested additional information. Any
such additional information shall (i) not be confidential in nature and (ii) be
obtainable by the Company from existing reports, certificates or statements or
otherwise be readily accessible to its servicing personnel. The Purchaser agrees
that it has no right to deal with the Mortgagor. If the Company's normal
foreclosure policy includes acceptance of a deed-in-lieu of foreclosure or short
payoff, the Purchaser will be notified and given one Business Day to respond.
3. With respect to any Mortgage Loan as to which the Purchaser has made an
Election to Delay Foreclosure, the Purchaser shall obtain a Current Appraisal as
soon as practicable, and shall provide the Company with a copy of such Current
Appraisal.
4. Within two Business Days of making any Election to Delay Foreclosure,
the Purchaser shall remit by wire transfer to the Company, for deposit in the
Collateral Fund, an amount, as calculated by the Company, equal to the sum of
(i) 125% of the greater of the outstanding Principal Balance of the Mortgage
Loan and the value shown in the Current Appraisal referred to in subsection (c)
above (or, if such Current Appraisal has not yet been obtained, the Company's
estimate thereof, in which case the required deposit under this subsection shall
be adjusted upon obtaining of such Current Appraisal), and (ii) three months'
interest on the Mortgage Loan at the applicable Mortgage Rate. If any Election
to Delay Foreclosure extends for a period in excess of three months (such excess
period being referred to herein as the "Excess Period"), the Purchaser shall
remit by wire transfer in advance to the Company for deposit in the Collateral
Fund the amount, as calculated by the Company, equal to interest on the Mortgage
Loan at the applicable Mortgage Rate for the Excess Period. The terms of this
Agreement shall no longer apply to the servicing of any Mortgage Loan upon the
failure of the Purchaser to deposit the above amounts relating to the Mortgage
Loan within two Business Days of the Election to Delay Foreclosure.
5. With respect to any Mortgage Loan as to which the Purchaser has made an
Election to Delay Foreclosure, the Company may withdraw from the Collateral Fund
from time to time amounts necessary to reimburse the Company for all Advances
and Liquidation Expenses thereafter made by the Company as Servicer in
accordance with the Pooling and Servicing Agreement. To the extent that the
amount of any such Liquidation Expense is determined by the Company based on
estimated costs, and the actual costs are subsequently determined to be higher,
the Company may withdraw the additional amount from the Collateral Fund. In the
event that the Mortgage Loan is brought current by the Mortgagor and the
foreclosure action is discontinued, the amounts so withdrawn from the Collateral
Fund shall be redeposited therein as and to the extent that reimbursement
therefor from amounts paid by the Mortgagor is not prohibited pursuant to the
Pooling and Servicing Agreement. Except as provided in the preceding sentence,
amounts withdrawn from the Collateral Fund to cover Advances and Liquidation
Expenses shall not be redeposited therein or otherwise reimbursed to the
Purchaser. If and when any such Mortgage Loan is brought current by the
Mortgagor, all amounts remaining in the Collateral Fund in respect of such
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Mortgage Loan (after adjustment for all withdrawals and deposits pursuant to
this subsection) shall be released to the Purchaser.
6. With respect to any Mortgage Loan as to which the Purchaser has made an
Election to Delay Foreclosure, the Company shall continue to service the
Mortgage Loan in accordance with its customary procedures (other than the delay
in Commencement of Foreclosure as provided herein). If and when the Purchaser
shall notify the Company that it believes that it is appropriate to do so, the
Company shall proceed with the Commencement of Foreclosure. In any event, if the
Mortgage Loan is not brought current by the Mortgagor by the time the loan
becomes 6 months delinquent, the Purchaser's election shall no longer be
effective and at the Purchaser's option, either (i) the Purchaser shall purchase
the Mortgage Loan from the Trust Fund at a purchase price equal to the fair
market value as shown on the Current Appraisal, to be paid by (x) applying any
balance in the Collateral Fund to such purchase price, and (y) to the extent of
any deficiency, by wire transfer of immediately available funds to the Company
or Trustee; or (ii) the Company shall proceed with the Commencement of
Foreclosure.
7. Upon the occurrence of a liquidation with respect to any Mortgage Loan
as to which the Purchaser made an Election to Delay Foreclosure and as to which
the Company proceeded with the Commencement of Foreclosure in accordance with
subsection (f) above, the Company shall calculate the amount, if any, by which
the value shown on the Current Appraisal obtained under subsection (c) exceeds
the actual sales price obtained for the related Mortgaged Property (or stock
allocated to a dwelling unit in the case of a Co-op Loan) (net of Liquidation
Expenses and accrued interest related to the extended foreclosure period), and
the Company shall withdraw the amount of such excess from the Collateral Fund,
shall remit the same to the Trust Fund and in its capacity as Servicer shall
apply such amount as additional Liquidation Proceeds pursuant to the Pooling and
Servicing Agreement. After making such withdrawal, all amounts remaining in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e)) shall be released to the
Purchaser.
Section 2.03 Purchaser's Election to Commence Foreclosure Proceedings.
1. In connection with any Mortgage Loan identified in a report under
Section 2.01(a)(i)(B), the Purchaser may elect, for reasonable cause as
determined by the Purchaser, to instruct the Company to proceed with the
Commencement of Foreclosure as soon as practicable. Such election must be
evidenced by written notice received by the Company by 5:00 p.m., New York City
time, on the third Business Day following the delivery of such report under
Section 2.01(a)(i).
2. Within two Business Days of making any Election to Foreclose, the
Purchaser shall remit to the Company, for deposit in the Collateral Fund, an
amount, as calculated by the Company, equal to 125% of the current Principal
Balance of the Mortgage Loan and three months' interest on the Mortgage Loan at
the applicable Mortgage Rate. If and when any such Mortgage Loan is brought
current by the Mortgagor, all amounts in the Collateral Fund in respect of such
Mortgage Loan shall be released to the Purchaser. The terms of this Agreement
shall no longer apply to the servicing of any Mortgage Loan upon the failure of
the Purchaser to deposit the above amounts relating to the Mortgage Loans within
two Business Days at the Election to Foreclose.
3. With respect to any Mortgage Loan as to which the Purchaser has made an
Election to Foreclose, the Company shall continue to service the Mortgage Loan
in accordance with its customary procedures (other than to proceed with the
Commencement of Foreclosure as provided herein). In connection therewith, the
Company shall have the same rights to make withdrawals for Advances and
Liquidation Expenses from the Collateral Fund as are provided under Section
2.02(e), and the Company shall make reimbursements thereto to the limited extent
provided under such subsection. The Company shall not be required to proceed
with the Commencement of Foreclosure if (i) the same is stayed as a result of
the Mortgagor's bankruptcy or is otherwise barred by applicable law, or to the
extent that all
J-5
legal conditions precedent thereto have not yet been complied with or (ii) the
Company believes there is a breach of representation or warranties by the
Company, which may result in a repurchase or substitution of such Mortgage Loan,
or (iii) the Company reasonably believes the Mortgaged Property (or Underlying
Mortgaged Property, in the case of a Co-op Loan) may be contaminated with or
affected by hazardous wastes or hazardous substances (and the Company supplies
the Purchaser with information supporting such belief). The Company will
repurchase or substitute a Mortgage Loan pursuant to the preceding clause (ii)
within the time period specified in the Pooling and Servicing Agreement. Any
foreclosure that has been initiated may be discontinued (i) without notice to
the Purchaser if the Mortgage Loan has been brought current or if a refinancing
or prepayment occurs with respect to the Mortgage Loan (including by means of a
short payoff approved by the Company), or (ii) with notice to the Purchaser if
the Company has reached the terms of a forbearance agreement unless instructed
otherwise by the Purchaser within two Business Days of notification.
4. Upon the occurrence of a liquidation with respect to any Mortgage Loan
as to which the Purchaser made an Election to Foreclose and as to which the
Company proceeded with the Commencement of Foreclosure in accordance with
subsection (c) above, the Company shall calculate the amount, if any, by which
the Principal Balance of the Mortgage Loan at the time of liquidation (plus all
unreimbursed Advances and Liquidation Expenses in connection therewith other
than those paid from the Collateral Fund) exceeds the actual sales price
obtained for the related Mortgaged Property (or stock allocated to a dwelling
unit in the case of a Co-op Loan), and the Company shall withdraw the amount of
such excess from the Collateral Fund, shall remit the same to the Trust Fund and
in its capacity as Servicer shall apply such amount as additional Liquidation
Proceeds pursuant to the Pooling and Servicing Agreement. After making such
withdrawal, all amounts remaining in the Collateral Fund (after adjustment for
all withdrawals and deposits pursuant to subsection (c)) in respect of such
Mortgage Loan shall be released to the Purchaser.
Section 2.04 Termination.
1. With respect to all Mortgage Loans included in the Trust Fund, the
Purchaser's rights to make any Election to Delay Foreclosure or any Election to
Foreclose and the Company's obligations under Section 2.01 shall terminate (i)
at such time as the Certificate Principal Balance of the Class CE Certificates
has been reduced to zero, (ii) if the greater of (x) ___% (or such lower or
higher percentages that represents the Company's actual historical loss
experience with respect to the Mortgage Loans in the related pool) of the
aggregate principal balance of all Mortgage Loans that are in foreclosure or are
more than 90 days delinquent on a contractual basis and REO properties or if the
aggregate amount that the Company estimates will be required to be withdrawn
from the Collateral Fund with respect to Mortgage Loans as to which the
Purchaser has made an Election to Delay Foreclosure or an Election to Foreclose
exceeds (z) the Outstanding Certificate Principal Balance of the Class CE
Certificates, or (iii) upon any transfer by the Purchaser of any interest (other
than the minority interest therein, but only if the transferee provides written
acknowledgment to the Company of the Purchaser's right hereunder and that such
transferee will have no rights hereunder) in the Class CE Certificates (whether
or not such transfer is registered under the Pooling and Servicing Agreement),
including any such transfer in connection with a termination of the Trust Fund.
Except as set forth above, this Agreement and the respective rights, obligations
and responsibilities of the Purchaser and the Company hereunder shall terminate
upon the later to occur of (i) the final liquidation of the last Mortgage Loan
as to which the Purchaser made any Election to Delay Foreclosure or any Election
to Foreclose and the withdrawal of all remaining amounts in the Collateral Fund
as provided herein and (ii) ten (10) Business Day's notice.
2. Purchaser's rights pursuant to Section 2.02 or 2.03 of this Agreement
shall terminate with respect to a Mortgage loan as to which the Purchaser has
exercised its rights under Section 2.02 or 2.03 hereof, upon Purchaser's failure
to deposit any amounts required pursuant to Section 2.02(d) or 2.03(b).
J-6
3. Neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
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 obligations and
duties hereunder. The Servicer and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind prima facie properly
executed and submitted by an Person respecting any matters arising hereunder.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01 Collateral Fund.
1. Upon receipt from the Purchaser of the initial amount required to be
deposited in the Collateral Fund pursuant to Article 11, the Company shall
establish and maintain with itself as a segregated account on its books and
records an account (the "Collateral Fund"), entitled "JPMorgan Chase Bank, N.A.,
as Servicer, for the benefit of registered holders of ChaseFlex Trust
Multi-Class Mortgage Pass-Through Certificates, Series 2006-1, Class CE."
Amounts in the Collateral Fund shall continue to be the property of the
Purchaser, subject to the first priority security interest granted hereunder for
the benefit of the Certificate holders, until withdrawn from the Collateral Fund
pursuant to Section 2.02 or 2.03 hereof.
2. Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund together with any investment earnings thereon.
3. The Collateral Fund shall be an "outside reserve fund" within the
meaning of the REMIC Provisions, beneficially owned by the Purchaser, who shall
report all income, gain or loss with respect thereto. Any amounts transferred
from the Trust Fund to the Collateral Fund shall be deemed to be transferred to
the Purchaser, as beneficial owner of the Collateral Fund. In no event shall the
Purchaser (i) take or cause the Trustee or the Company to take any action that
could cause any REMIC established under the Trust Agreement to fail to qualify
as a REMIC or cause the imposition on any such REMIC of any "prohibited
transaction" or "prohibited contribution" taxes or (ii) cause the Trustee or the
Company to fail to take any action necessary to maintain the status of any such
REMIC as a REMIC.
Section 3.02. Collateral Fund Permitted Investments.
1. The Company shall, at the written direction of the Purchaser invest the
funds in the Collateral Fund in Collateral Fund Permitted Investments. Such
direction shall not be changed more frequently than quarterly. In the absence of
any direction, the Company shall select such investments in accordance with the
definition of Collateral Fund Permitted Investments in its discretion.
2. All income and gain realized from any investment as well as any interest
earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be deposited by the Purchaser in the
Collateral Fund. The Company shall periodically (but not more frequently than
monthly) distribute to the Purchaser upon request an amount of cash, to the
extent cash is
J-7
available therefor in the Collateral Fund, equal to the amount by which the
balance of the Collateral Fund, after giving effect to all other distributions
to be made from the Collateral Fund on such date, exceeds the Required
Collateral Fund Balance. Any amounts so distributed shall be released from the
lien and security interest of this Agreement.
Section 3.03 Grant of Security Interest.
1. The Purchaser grants to the Company and the Trustee for the benefit of
the Certificateholders a security interest in and lien on all of the Purchaser's
right, title and interest, whether now owned or hereafter acquired, in and to:
(1) the Collateral Fund, (2) all amounts deposited in the Collateral Fund and
Collateral Fund Permitted Investments in which such amounts are invested (and
the distributions and proceeds of such investments) and (3) all cash and
non-cash proceeds of any of the foregoing, including proceeds of the voluntary
or involuntary conversion thereof (all of the foregoing collectively, the
"Collateral").
2. The Purchaser acknowledges the lien on and security interest in the
Collateral for the benefit of the Certificateholders. The Purchaser shall take
all actions requested by the Company or the Trustee as may be reasonably
necessary to perfect the security interest created under this Agreement in the
Collateral and cause it to be prior to all other security interests and liens,
including the execution and delivery to the Company for filing of appropriate
financing statements in accordance with applicable law. The Company shall file
appropriate continuation statements, or appoint an agent on its behalf to file
such statements, in accordance with applicable law.
Section 3.04 Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at any time are
insufficient to cover any withdrawals therefrom that the Company or the Trustee
is then entitled to make hereunder, the Purchaser shall be obligated to pay such
amounts to the Company or the Trustee immediately upon demand. Such obligation
shall constitute a general corporate obligation of the Purchaser.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01 Amendment.
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and the Purchaser.
Section 4.02 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Section 4.04 Notices.
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All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:
in the case of the Company,
JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
such other address as may hereafter be furnished in writing by the Company, or
in the case of the Purchaser, with respect to notices pursuant to Section 2.01,
[PURCHASER]
________________________________________
[ADDRESS]
Attn: __________________________________
Phone:__________________________________
Fax:____________________________________
with respect to all other notices pursuant to this Agreement,
________________________________________
[ADDRESS]
Attn:___________________________________
Phone:__________________________________
Fax:____________________________________
or such other address as may hereafter be furnished in writing by the Purchaser.
Section 4.05 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever, including regulatory, 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.
Section 4.06 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Certificateholders; provided,
however, that the rights under this Agreement cannot be assigned by the
Purchaser without the consent of the Company.
Section 4.07 Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
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Section 4.08 Confidentiality.
The Purchaser agrees that all information supplied by or on behalf of the
Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to hold
such information confidential and not to disclose such information.
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IN WITNESS WHEREOF, the Company and the Purchaser 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.
JPMORGAN CHASE BANK, N.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
J-11
EXHIBIT K
FORM OF CLASS A-R TRANSFEREE'S LETTER
CHASEFLEX TRUST SERIES 2006-1
[DATE]
Chase Mortgage Finance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank, N.A.
Global Trust Services
Four New York Plaza
6th Floor
New York, New York 10004
U.S. Bank National Association, as trustee
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We propose to purchase ChaseFlex Trust Multi-Class Mortgage Pass-Through
Certificates, Series 2006-1, Class A-R, described in the Prospectus Supplement,
dated May 22, 2006 and Prospectus, dated April 19, 2006.
1. We certify that (a) we are not a disqualified organization, (b) we are
not purchasing such Class A-R Certificate on behalf of a disqualified
organization and (c) we are not an entity that holds such Class A-R Certificate
as nominee to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations; for
this purpose the term "disqualified organization" means the United States, any
state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (except any entity treated as other than an instrumentality of the
foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code of
1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a
plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code") or a plan or arrangement subject to any provisions under any
federal, state, local, non-U.S. or other laws or regulations that are
substantively similar to the foregoing provisions of ERISA or the Code
(collectively, a "Plan"), and are not directly or indirectly
K-1
acquiring the Class A-R Certificate for, on behalf of or with any assets of any
such Plan.
3. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class A-R Certificate, we may incur tax liabilities in excess of
any cash flows generated by the Class A-R Certificate, (d) we intend to pay any
taxes associated with holding the Class A-R Certificate as they become due and
(e) we will not cause income from the Class A-R Certificate to be attributable
to a foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.
4. We acknowledge that we will be the beneficial owner of the Class A-R
Certificate and:*/
_____ The Class A-R Certificate will be registered in our name.
_____ The Class A-R Certificate will be held in the name of our
nominee, ____________________, which is not a disqualified
organization.
5. Unless Chase Mortgage Finance Corporation ("CMFC") has consented to the
transfer to us by executing the form of Consent affixed hereto as Appendix B, we
certify that we are a U.S. person; for this purpose the term "U.S. Person" means
a citizen or resident of the United States, a corporation or partnership
(unless, in the case of a partnership, Treasury regulations are adopted that
provide otherwise) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia, including an entity
treated as a corporation or partnership for federal income tax purposes, an
estate whose income is subject to Unites States federal income tax regardless of
its source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust, and one or more such
U.S. Persons have the authority to control all substantial decisions of such
trust, (or, to the extent provided in applicable Treasury regulations, certain
trusts in existence on August 20, 1996 which are eligible to elect to be treated
as U.S. Persons). We agree that any breach by us of this certification shall
render the transfer of any interest in the Class A-R Certificate to us
absolutely null and void and shall cause no rights in the Class A-R Certificate
to vest in us.
6. We agree that in the event that at some future time we wish to transfer
any interest in the Class A-R Certificate, we will transfer such interest in the
Class A-R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class A-R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person and (iii) has
delivered to CMFC a letter in the form of this letter (including the affidavit
appended hereto) and, if requested by CMFC, an opinion of counsel (in a form
acceptable to CMFC) that the proposed transfer will not cause the interest in
the Class A-R Certificate to be held by a disqualified organization or a person
who is not a U.S. person or (b) with the written consent of CMFC.
7. We hereby designate JPMorgan Chase Bank, N.A. as our fiduciary to act as
the tax matters person for the Series 2006-1 REMICs.
Very truly yours,
----------------------------------------
[PURCHASER]
----------
*/ Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
K-2
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted as of , 200_
----------------
CHASE MORTGAGE FINANCE CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
K-3
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4) of the Internal Revenue Code of
1986, as amended, and (ii) certain provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is
true:
(1) He or she is an officer of _________________________ (the
"Transferee"),
(2) the Transferee's Employee Identification number is __________,
(3) the Transferee is not a "disqualified organization" (as defined
below), has no plan or intention of becoming a disqualified
organization, and is not acquiring any of its interest in the
ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, Class A-R on behalf of a disqualified organization or
any other entity,
(4) unless Chase Mortgage Finance Corporation ("CMFC") has consented to
the transfer to the Transferee by executing the form of Consent
affixed as Appendix B to the Transferee's Letter to which this
Certificate is affixed as Appendix A, the Transferee is a "U.S.
Person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the assessment
or collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class A-R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class A-R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the
Class A-R Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by CMFC (upon advice of
counsel) to constitute a reasonable arrangement to ensure that the
Class A-R Certificate will not be owned directly or indirectly by a
disqualified organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
transfer is not a direct or indirect transfer of the Class A-R
Certificate to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee, and
as to each of the residual interests represented by the Class A-R
Certificate, the present value of the anticipated tax liabilities
associated with holding such residual interest does not exceed the sum
of:
the present value of any consideration given to the Transferee to
acquire such residual interest;
the present value of the expected future distributions on such
residual interest; and
the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates losses.
K-4
For purposes of this declaration, (i) the Transferee is assumed to pay
tax at a rate equal to the highest rate of tax specified in Section
11(b)(1) of the Code, but the tax rate specified in Section
55(b)(1)(B) of the Code may be used in lieu of the highest rate
specified in Section 11(b)(1) of the Code if the Transferee has been
subject to the alternative minimum tax under Section 55 of the Code in
the preceding two years and will compute its taxable income in the
current taxable year using the alternative minimum tax rate, and (ii)
present values are computed using a discount rate equal to the Federal
short-term rate prescribed by Section 1274(d) of the Code for the
month of the transfer and the compounding period used by the
Transferee;]
[Alternative (11) (A) at the time of the transfer, and at the close of each of
the Transferee's two fiscal years preceding the year of transfer, the
Transferee's gross assets for financial reporting purposes exceed $100
million and its net assets for financial reporting purposes exceed $10
million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulation Section 1.860E-1(c)(6)(i) and has agreed in writing that
any subsequent transfer of the Class A-R Certificate will be to
another eligible corporation in a transaction that satisfies Treasury
regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be a
direct or indirect transfer to a foreign permanent establishment
(within the meaning of an applicable income tax treaty) of a domestic
corporation.
For purposes of this declaration, (i) the gross assets and net assets
of the Transferee do not include any obligation of any related person
(as defined in Treasury regulation section 1.860E-1(c)(6)(ii)) or any
other asset if a principal purpose for holding or acquiring the other
asset is to permit the Transferee to make this declaration or to
satisfy the requirements of Treasury regulation section
1.860E-1(c)(5)(i);]
[Alternative (11) Intentionally left blank;]
(12) the Transferee represents that it will not cause income from the Class
A-R Certificate to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or another U.S. taxpayer;
For purpose of this affidavit, the term "disqualified organization"
means the United States, any state or political subdivision thereof,
any foreign government, any international organization, any agency or
instrumentality of any of the foregoing (except any entity treated as
other than an instrumentality of the foregoing for purposes of Section
168(h)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code")), any organization (other than a cooperative described in
Section 521 of the Code) that is exempt from taxation under the Code
(unless such organization is subject to tax on excess inclusions) and
any organization that is described in Section 1381(a)(2)(C) of the
Code and the term "U.S. Person" means a citizen or resident of the
United States, a corporation or partnership (unless, in the case of a
partnership, Treasury regulations are adopted that provide otherwise)
created or organized in or under the laws of the United States, any
state thereof or the District of Columbia, including an entity treated
as a corporation or partnership for federal income tax purposes, an
estate whose income is subject to Unites States federal income tax
regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration
of such trust, and one or more such U.S. Persons have the authority to
control all substantial decisions of
K-5
such trust, (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons).
K-6
-------------------------------------
By:
---------------------------------
-------------------------------------
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
_____________________________________
_____________________________________, Secretary
Personally appeared before me the above-named ______________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
_______ of the Investor, and acknowledged to me that he executed the same as his
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ____ day of ____________, 200_.
Notary Public
County of ___________________________
State of ____________________________
My commission expires the _____ day of ____________
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated:
-------------
K-7
APPENDIX B
CONSENT
____________________________________ (Transferee)
____________________________________
____________________________________
____________________________________
Ladies and Gentlemen:
Chase Mortgage Finance Corporation ("CMFC") hereby consents to the transfer
to, and registration in the name of, the Transferee (or, if applicable,
registration in the name of such Transferee's nominee of the Multi-Class
Mortgage Pass-Through Certificates, Series 2006-1, Class A-R described in the
Transferee's Letter to which this Consent is appended, notwithstanding CMFC's
knowledge that the Transferee is not a U.S. Person (as defined in such
Transferee's Letter).
CHASE MORTGAGE FINANCE CORPORATION
By:
------------------------------------
Dated:
-------------
K-8
EXHIBIT K-1
FORM OF CLASS A-R TRANSFEROR'S LETTER
CHASEFLEX TRUST SERIES 2006-1
[DATE]
JPMorgan Chase Bank, N.A.
Global Trust Services
Four New York Plaza
6th Floor
New York, New York 10004
U.S. Bank National Association, as trustee
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
We propose to transfer to ___________________ (the "Transferee")
ChaseFlex Trust Multi-Class Mortgage Pass-Through Certificates, Series 2006-1,
Class A-R, described in the Prospectus Supplement, dated May 22, 2006 and
Prospectus, dated April 19, 2006. We have reviewed the attached affidavit of the
Transferee, and have no actual knowledge that such affidavit is not true, and
have no reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to the Class A-R Certificate referred to in the attached
affidavit. In addition, we have conducted a reasonable investigation at the time
of the transfer and found that the Transferee has historically paid its debts as
they came due and we found no significant evidence to indicate that the
Transferee will not continue to pay its debts as they become due.
Very truly yours,
----------------------------------------
Name:
Title:
K-1-1
EXHIBIT L
REQUEST FOR RELEASE OF DOCUMENTS
To: JPMorgan Chase Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of May 1, 2006, by and
among Chase Mortgage Finance Corporation, JPMorgan Chase Bank,
N.A. and U.S. Bank National Association relating to the issuance
of the Series 2006-1 Multi-Class Mortgage Pass-Through
Certificates
In connection with the administration of the Mortgage Loans held by you, as
Custodian on behalf of the Trustee, pursuant to the above-captioned Pooling and
Servicing Agreement, we request the release, and hereby acknowledge receipt, of
the Mortgage File for the Mortgage Loan described below, for the reason
indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______ 1. Mortgage Paid in Full
_______ 2. Foreclosure
_______ 3. Substitution
_______ 4. Other Liquidation
_______ 5. Nonliquidation Reason:
----------------------------------------
By:
------------------------------------
(authorized signatory)
Issuer:
--------------------------------
Address:
-------------------------------
----------------------------------------
Date:
----------------------------------
L-1
Custodian
JPMorgan Chase Bank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
----------------------------------------
Signature Date
Documents returned to Custodian:
----------------------------------------
Custodian Date
L-2
EXHIBIT M
FORM OF TRANSFEREE ERISA REPRESENTATION LETTER
[DATE]
U.S. Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chase Mortgage Finance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1, [CLASS CE ]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
_________________________ (the "Transferor") $_______ by original principal
balance (the "Transferred Certificate") of Multi-Class Mortgage Pass-Through
Certificates, Series 2006-1, [CLASS CE__] (the "Certificates"), issued pursuant
to a pooling and servicing agreement, dated as of May 1, 2006 (the "Pooling and
Servicing Agreement"), among Chase Mortgage Finance Corporation (the
"Depositor"), JPMorgan Chase Bank, N.A. ("Chase"), as servicer (the "Servicer")
and U.S. Bank National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF
____________________, AS NOMINEE FOR __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, we hereby certify, represent and warrant to, and
covenant with, the Depositor that we:
(A) are not an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a plan
subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") or a plan subject to any provisions under any federal, state, local,
non-U.S. or other laws or regulations that are substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a
"Plan"), and is not directly or indirectly acquiring the Certificate for, on
behalf of or with any assets of any such Plan, (B) if the Certificate has been
the subject of an ERISA-Qualifying Underwriting, are an insurance company that
is acquiring the Certificate with assets of an "insurance company general
account" as defined in Section V(e) of Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60"), and the acquisition and holding of the Certificate are
covered and exempt under Sections I and III of PTCE 95-60, or (C) solely in the
case of a Definitive Certificate, will deliver herewith an Opinion of Counsel
satisfactory to the Depositor, and upon which the Depositor shall be entitled to
rely, to the effect that the acquisition and holding of this Certificate by the
prospective transferee will not constitute or result in a nonexempt prohibited
transaction under ERISA or the Code or a violation of Similar Law and will not
subject the Trustee, the Depositor or the Servicer to any obligation in addition
to those undertaken by such entities in the Pooling and Servicing Agreement,
which Opinion
M-1
of Counsel shall not be an expense of the Trustee, the Depositor or the
Servicer.
We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.
M-2
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
M-3
EXHIBIT N
[RESERVED]
N-1
EXHIBIT O
FORM OF OFFICER'S CERTIFICATE (PAYING AGENT)
[DATE]
Chase Mortgage Finance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Reference is made to each pooling and servicing agreement listed on Exhibit
A hereto (each, an "Agreement") in which JPMorgan Chase Bank, N.A. has been
appointed the paying agent (the "Paying Agent"). JPMorgan Chase Bank, N.A.,
hereby certifies to you that:
1. I have reviewed the information contained in each monthly statement to
certificateholders, any information provided by the Paying Agent with
respect to the annual report on Form 10-K for the fiscal year [2006] (the
"Annual Report"), and any information provided by the Paying Agent with
respect to all reports on Form 8-K (if any) and on Form 10-D required to be
filed in respect of the period covered by the Annual Report (collectively
with the Annual Report, the "Reports"), of the Trust;
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact required by the respective pooling and servicing
agreement to be included therein and necessary to make the statements made,
in light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by the annual reports;
and
3. Based on my knowledge, the distribution or servicing information
required to be provided to the Paying Agent by the Servicer under each
Agreement for inclusion in the reports is included in the reports.
4. In compiling the distribution information, the Paying Agent has relied
upon information furnished to it by the Servicer under each pooling and
servicing agreement. The Paying Agent shall have no responsibility or
liability for any inaccuracy in such reports resulting from information so
provided by the Servicer.
JPMORGAN CHASE BANK, N.A.
By:
------------------------------------
Name:
----------------------------------
Title:
O-1
EXHIBIT P
LETTER OF REPRESENTATIONS
P-1
EXHIBIT Q
[RESERVED]
Q-1
EXHIBIT R
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
(RMBS unless otherwise noted)
DEFINITIONS KEY:
PRIMARY SERVICER - transaction party having borrower contact X - obligation
CUSTODIAN - safe keeper of certain pool assets
TRUSTEE - fiduciary of the transaction
PAYING AGENT - agent of the Trustee
WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN THEIR MANAGEMENT ASSERTION THAT THEY ARE ATTESTING ONLY TO THE PORTION OF THE
DISTRIBUTION CHAIN THEY ARE RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.
JPMORGAN* JPMORGAN U.S. BANK
CHASE BANK, CHASE BANK, NATIONAL JPMORGAN CHASE
N.A. N.A. (PAYING ASSOCIATION BANK, N.A.
REG AB REFERENCE SERVICING CRITERIA (SERVICER) AGENT) (TRUSTEE) (CUSTODIAN)
---------------- ---------------------------------- ----------- ------------ ----------- --------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are X X
instituted to monitor any
performance or other triggers and
events of default in accordance
with the transaction agreements.
1122(d)(1)(ii) If any material servicing X IF IF APPLICABLE
activities are outsourced to third APPLICABLE FOR A
parties, policies and procedures FOR A TRANSACTION
are instituted to monitor the TRANSACTION PARTICIPANT
third party's performance and PARTICIPANT
compliance with such servicing
activities.
1122(d)(1)(iii) Any requirements in the X N/A N/A
transaction agreements to maintain
a back-up servicer for the Pool
Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and X
omissions policy is in effect on
the party participating in the
servicing function throughout the
reporting period in the amount of
coverage required by and otherwise
in accordance with the terms of
the transaction agreements.
R-1
JPMORGAN* JPMORGAN U.S. BANK
CHASE BANK, CHASE BANK, NATIONAL JPMORGAN CHASE
N.A. N.A. (PAYING ASSOCIATION BANK, N.A.
REG AB REFERENCE SERVICING CRITERIA (SERVICER) AGENT) (TRUSTEE) (CUSTODIAN)
---------------- ---------------------------------- ----------- ------------ ----------- --------------
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on pool assets are X X
deposited into the appropriate
custodial bank accounts and
related bank clearing accounts no
more than two business days
following receipt, or such other
number of days specified in the
transaction agreements.
1122(d)(2)(ii) Disbursements made via wire X X
transfer on behalf of an obligor
or to an investor are made only by
authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees X
regarding collections, cash flows
or distributions, and any interest
or other fees charged for such
advances, are made, reviewed and
approved as specified in the
transaction agreements.
1122(d)(2)(iv) The related accounts for the X X
transaction, such as cash reserve
accounts or accounts established
as a form of over
collateralization, are separately
maintained (e.g., with respect to
commingling of cash) as set forth
in the transaction agreements.
1122(d)(2)(v)** Each custodial account is X X
maintained at a federally insured
depository institution as set
forth in the transaction
agreements. For purposes of this
criterion, "federally insured
depository institution" with
respect to a foreign financial
institution means a foreign
financial institution that meets
the requirements of Rule
13k-1(b)(1) of the Securities
Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so X If
as to prevent unauthorized access. applicable
1122(d)(2)(vii) Reconciliations are prepared on a X X
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and
related bank clearing accounts.
These reconciliations are (A)
mathematically accurate; (B)
prepared within 30 calendar days
after the bank statement cutoff
date, or such other number of days
specified in the transaction
agreements; (C) reviewed and
approved by someone other than the
person who prepared the
reconciliation; and (D) contain
explanations for reconciling
items. These reconciling items are
resolved
R-2
JPMORGAN* JPMORGAN U.S. BANK
CHASE BANK, CHASE BANK, NATIONAL JPMORGAN CHASE
N.A. N.A. (PAYING ASSOCIATION BANK, N.A.
REG AB REFERENCE SERVICING CRITERIA (SERVICER) AGENT) (TRUSTEE) (CUSTODIAN)
---------------- ---------------------------------- ----------- ------------ ----------- --------------
within 90 calendar days of their
original identification, or such
other number of days specified in
the transaction agreements.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including X X
those to be filed with the (not
Commission, are maintained in including
accordance with the transaction (c))
agreements and applicable
Commission requirements.
Specifically, such reports (A) are
prepared in accordance with
timeframes and other terms set
forth in the transaction
agreements; (B) provide
information calculated in
accordance with the terms
specified in the transaction
agreements; (C) are filed with the
Commission as required by its
rules and regulations; and (D)
agree with investors' or the
trustee's records as to the total
unpaid principal balance and
number of Pool Assets serviced by
the Servicer.
1122(d)(3)(ii) Amounts due to investors are X X
allocated and remitted in
accordance with timeframes,
distribution priority and other
terms set forth in the transaction
agreements.
1122(d)(3)(iii) Disbursements made to an investor X X
are posted within two business
days to the Servicer's investor
records, or such other number of
days specified in the transaction
agreements.
1122(d)(3)(iv) Amounts remitted to investors per X X
the investor reports agree with
cancelled checks, or other form of
payment, or custodial bank
statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool X X
assets is maintained as required
by the transaction agreements or
related pool asset documents.
1122(d)(4)(ii) Pool assets and related documents X X
are safeguarded as required by the
transaction agreements
1122(d)(4)(iii) Any additions, removals or X
substitutions to the asset pool
are made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
agreements.
1122(d)(4)(iv) Payments on pool assets, including X
any payoffs, made in accordance
with the
R-3
JPMORGAN* JPMORGAN U.S. BANK
CHASE BANK, CHASE BANK, NATIONAL JPMORGAN CHASE
N.A. N.A. (PAYING ASSOCIATION BANK, N.A.
REG AB REFERENCE SERVICING CRITERIA (SERVICER) AGENT) (TRUSTEE) (CUSTODIAN)
---------------- ---------------------------------- ----------- ------------ ----------- --------------
related pool asset documents are
posted to the Servicer's obligor
records maintained no more than
two business days after receipt,
or such other number of days
specified in the transaction
agreements, and allocated to
principal, interest or other items
(e.g., escrow) in accordance with
the related pool asset documents.
1122(d)(4)(v) The Servicer's records regarding X
the pool assets agree with the
Servicer's records with respect to
an obligor's unpaid principal
balance.
1122(d)(4)(vi) Changes with respect to the terms X
or status of an obligor's pool
assets (e.g., loan modifications
or re-agings) are made, reviewed
and approved by authorized
personnel in accordance with the
transaction agreements and related
pool asset documents.
1122(d)(4)(vii) Loss mitigation or recovery X
actions (e.g., forbearance plans,
modifications and deeds in lieu of
foreclosure, foreclosures and
repossessions, as applicable) are
initiated, conducted and concluded
in accordance with the timeframes
or other requirements established
by the transaction agreements.
1122(d)(4)(viii) Records documenting collection X
efforts are maintained during the
period a pool asset is delinquent
in accordance with the transaction
agreements. Such records are
maintained on at least a monthly
basis, or such other period
specified in the transaction
agreements, and describe the
entity's activities in monitoring
delinquent pool assets including,
for example, phone calls, letters
and payment rescheduling plans in
cases where delinquency is deemed
temporary (e.g., illness or
unemployment).
1122(d)(4)(ix) Adjustments to interest rates or X
rates of return for pool assets
with variable rates are computed
based on the related pool asset
documents.
1122(d)(4)(x) Regarding any funds held in trust X
for an obligor (such as escrow
accounts): (A) such funds are
analyzed, in accordance with the
obligor's pool asset documents, on
at least an annual
R-4
JPMORGAN* JPMORGAN U.S. BANK
CHASE BANK, CHASE BANK, NATIONAL JPMORGAN CHASE
N.A. N.A. (PAYING ASSOCIATION BANK, N.A.
REG AB REFERENCE SERVICING CRITERIA (SERVICER) AGENT) (TRUSTEE) (CUSTODIAN)
---------------- ---------------------------------- ----------- ------------ ----------- --------------
basis, or such other period
specified in the transaction
agreements; (B) interest on such
funds is paid, or credited, to
obligors in accordance with
applicable pool asset documents
and state laws; and (C) such funds
are returned to the obligor within
30 calendar days of full repayment
of the related pool assets, or
such other number of days
specified in the transaction
agreements.
1122(d)(4)(xi) Payments made on behalf of an X
obligor (such as tax or insurance
payments) are made on or before
the related penalty or expiration
dates, as indicated on the
appropriate bills or notices for
such payments, provided that such
support has been received by the
servicer at least 30 calendar days
prior to these dates, or such
other number of days specified in
the transaction agreements.
1122(d)(4)(xii) Any late payment penalties in X
connection with any payment to be
made on behalf of an obligor are
paid from the Servicer's funds and
not charged to the obligor, unless
the late payment was due to the
obligor's error or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an X
obligor are posted within two
business days to the obligor's
records maintained by the
servicer, or such other number of
days specified in the transaction
agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and X
uncollectible accounts are
recognized and recorded in
accordance with the transaction
agreements.
1122(d)(4)(xv) Any external enhancement or other X
support, identified in Item
1114(a)(1) through (3) or Item
1115 of Regulation AB, is
maintained as set forth in the
transaction agreements.
* Certain obligations will be satisfied by Chase Home Finance LLC as
subservicer.
** Subject to further interpretation by the SEC.
R-5
EXHIBIT S
FORM OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇ CERTIFICATION
[DATE]
Chase Mortgage Finance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1
I, [identify the certifying individual], certify that:
I have reviewed the report on Form 10-K and all reports on Form 10-D
required to be filed in respect of the period covered by this report on Form
10-K of [identify the issuing entity] (the "Exchange Act periodic reports");
1. Based on my knowledge, the Exchange Act periodic reports, taken as a
whole, do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
2. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act periodic reports;
3. [I am responsible for reviewing the activities performed by the
servicer(s) and based on my knowledge and the compliance review(s) conducted in
preparing the servicer compliance statement(s) required in this report under
Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s); and]
4. All of the reports on assessment of compliance with servicing criteria
for ABS and their related attestation reports on assessment of compliance with
servicing criteria for asset-backed securities required to be included in this
report in accordance with Item 1122 of Regulation AB and Exchange Act Rules
13a-18 and 15d-18 have been included as an exhibit to this report, except as
otherwise disclosed in this report. Any material instances of noncompliance
described in such reports have been disclosed in this report on Form 10-K.
[In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties [name of servicer,
sub-servicer, co-servicer, depositor or trustee].]
S-1
Date:
-------------------------------
----------------------------------------
[Signature]
[Title]
S-2
EXHIBIT T
FORM OF ITEM 1123 CERTIFICATION OF SERVICER
[DATE]
Chase Mortgage Finance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: ChaseFlex Trust, Multi-Class Mortgage Pass-Through Certificates,
Series 2006-1
I, [identify name of certifying individual], [title of certifying individual] of
JPMorgan Chase Bank, N.A. (the "Servicer"), hereby certify that:
(1) A review of the activities of the Servicer during the preceding calendar
year and of the performance of the Servicer under the Agreement has been made
under my supervision; and
(2) To the best of my knowledge, based on such review, the Servicer has
fulfilled all its obligations under the Agreement in all material respects
throughout such year or a portion thereof[, or, if there has been a failure to
fulfill any such obligation in any material respect, I have specified below each
such failure known to me and the nature and status thereof].
Date:
JPMorgan Chase Bank, N.A.,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
T-1
EXHIBIT U
FORM OF CLASS A-1-B YIELD MAINTENANCE AGREEMENT
May 24, 2006
Rate Collar Transaction
ChaseFlex Trust 2006-1
Attn: [ ]
Re: Interest Rate Transaction No: [ ]
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and conditions of
the rate collar transaction (the "Interest Rate Transaction") entered into
between JPMorgan Chase Bank, N.A. (the "Derivative Provider") and JPMorgan Chase
Bank, N.A., not in its individual capacity, but solely as Paying Agent on behalf
of ChaseFlex Trust 2006-1 (the "Counterparty") on May 24, 2006. This agreement
constitutes a "Confirmation" as referred to in and supplements, forms part of,
and is subject to, the ISDA Master Agreement between the parties hereto.
The particular Interest Rate Transaction to which this Confirmation relates is a
Rate Collar Transaction, the terms of which are set forth below.
The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern. The Interest Rate Transaction relates to the Class A-1-B Certificates
issued pursuant to the Pooling and Servicing Agreement dated as of May 1, 2006
among Chase Mortgage Finance Corporation, as Depositor, U.S. Bank National
Association, as Trustee, and JPMorgan Chase Bank, N.A., as Servicer and Paying
Agent (the "Pooling and Servicing Agreement").
In consideration of the payment of the sum of USD [ ] (the "Premium") by
▇.▇. ▇▇▇▇▇▇ Securities, Inc. on behalf of Chase Home Finance, LLC to the
Derivative Provider on May 9, 2006 and in consideration of the promise by the
Derivative Provider to make payments to the Counterparty in accordance with
Section 2 hereof, the parties hereto agree as follows
1. Definitions
a. "Ceiling Rate" means, with respect to any Calculation Period, the rate
set forth as the "Ceiling Rate" on the attached Schedule I.
b. "Floor Rate" means, with respect to any Calculation Period, the rate
set forth as the "Strike Rate" on the attached Schedule I.
U-1
c. "Business Day" means any day which is both a New York Business Day and
a London Business Day.
d. "Calculation Period" means, with respect to a Payment Date, the
period, as set forth on the attached Schedule I, from and including
the Calculation Period Start Date to but excluding the Calculation
Period End Date, and including such Payment Date.
e. "Designated Maturity" means 1 month(s).
f. "Effective Date" means the first Calculation Period Start Date.
g. "Floating Rate" means, with respect to a Payment Date, the rate
determined by the Derivative Provider to be (i) the per annum rate for
deposits in U.S. dollars for a period of the Designated Maturity which
appears on the Telerate Page 3750 Screen as of 11:00 a.m., London
time, on the day that is two London Business Days prior to the Reset
Date of the Calculation Period of such Payment Date (rounded upwards,
if necessary, to the nearest 1/100,000 of 1%); (ii) if such rate does
not appear on the Telerate Page 3750 Screen, the Floating Rate shall
be the arithmetic mean (rounded as aforesaid) of the offered
quotations obtained by the Derivative Provider from the Reference
Banks for deposits in U.S. dollars to leading banks in the London
interbank market as of approximately 11:00 a.m., London time, on the
day that is two London Business Days prior to the Reset Date of the
Calculation Period of such Payment Date; or (iii) if fewer than two
Reference Banks provide the Derivative Provider with such quotations,
the Floating Rate shall be the rate per annum which the Derivative
Provider determines to be the arithmetic mean (rounded as aforesaid)
of the offered quotations which leading banks in New York City
selected by the Derivative Provider are quoting in the New York
interbank market on the Reset Date of the Calculation Period of such
Payment Date for deposits in U.S. dollars to the Reference Banks or,
if fewer than two such quotations are available, to leading European
and Canadian Banks.
h. "London Business Day" means any day on which banks are open for
business in London and on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.
i. "New York Business Day" means any day on which banks are not required
or authorized by law to close in New York City.
j. "Notional Principal Amount" means, with respect to any Calculation
Period, the notional amount set forth in the attached Schedule I.
k. "Payment Date" means the day that is two New York business days prior
to each Calculation Period End Date, provided that if such Payment
Date is not a Business Day, such Payment Date shall be the next
preceding Business Day, except that if such Payment Date would then
fall in the next calendar month, such Payment Date shall be the next
preceding Business Day.
l. "Reference Banks" means four major banks in the London interbank
market selected by the Derivative Provider.
m. "Reset Date" means the first day of each Calculation Period.
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n. "Telerate Page 3750 Screen" means the display designated as "Page
3750" on the Dow ▇▇▇▇▇ Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be
nominated by the British Bankers' Association as the information
vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rates for U.S. Dollar deposits).
o. "Termination Date" means the last Calculation Period End Date.
2. Payments
a. The Derivative Provider agrees, subject to the payment by the
Counterparty to the Derivative Provider of the Premium, to pay to the
Counterparty, on each Payment Date on which the related Floating Rate
is determined to be greater than the Floor Rate and less than the
Ceiling Rate, an amount equal to the product of (x) the amount by
which the Floating Rate exceeds the Floor Rate with respect to the
Calculation Period ending on or nearest such Payment Date, (y) the
Notional Principal Amount and (z) the actual number of days in that
Calculation Period divided by 360.
b. All payments to the Derivative Provider shall be made as follows.
[ ]
[ ]
c. All payments to the Counterparty shall be made as follows:
Wire Transfer:
[ ]
[ ]
3. Notices. Any notices hereunder 1) shall be in writing and hand-delivered or
sent by first-class mail, postage prepaid, return receipt requested, and
shall be addressed to the intended recipient at its address set forth on
the signature page hereof or at such other address as such party shall have
last specified by notice to the other party and 2) shall be effective (a)
if delivered by hand or sent by overnight courier, on the day it is
delivered, unless delivery is made after the close of business or on a day
that is not a Business Day, in which case such notice will be effective on
the next Business Day, or (b) if sent by certified or registered mail or
the equivalent (return receipt requested), three Business Days after
dispatch.
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All notices and queries to the Derivative Provider should be sent to:
[ ]
All notices and queries to the Counterparty should be sent to:
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4. Governing Law. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
5. Assignments. Neither party shall have the right to assign its rights or
obligations under this letter agreement without the prior written consent
of the other party.
6. Set-off; Counterclaim. All payments under this letter agreement will be
made without set-off or counterclaim, except that each party will have the
right to set-off, counterclaim or withhold payment in respect of any
default by the other party under this letter agreement or under any other
agreement between the parties.
7. Each Party's Reliance on its Own Judgment. Each party has entered into this
Rate Collar Transaction solely in reliance on its own judgment. Neither
party has any fiduciary obligation to the other party relating to this Rate
Collar Transaction. In addition, neither party has held itself out as
advising, or has held out any of its employees or agents as having the
authority to advise, the other party as to whether or not the other party
should enter into this Rate Collar Transaction, any subsequent actions
relating to this Rate Collar Transaction or any other matters relating to
this Rate Collar Transaction. Neither party shall have any responsibility
or liability whatsoever in respect of any advice of this nature given, or
views expressed, by it or any of such persons to the other party relating
to this Rate Collar Transaction, whether or not such advice is given or
such views are expressed at the request of the other party.
8. Waiver of Right to Trial by Jury. Each party hereby irrevocably waives any
and all rights to trial by jury with respect to any legal proceeding
arising out of or relating to this letter agreement or the Rate Collar
Transaction.
9. Limitation of Liability. It is expressly understood and agreed by the
parties hereto that (a) this Rate Collar Transaction is executed and
delivered by the Counterparty, not individually or personally but solely as
Paying Agent of the Trust, in the exercise of the powers and authority
conferred and vested in it under the Pooling and Servicing Agreement, (b)
each of the representations, undertakings and agreements herein made on the
part of the Trust is made and intended for the purpose of binding only the
Trust (c) nothing herein shall be construed as creating any liability on
the Counterparty, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any,
being expressly waived by the parties who are signatories to this letter
agreement and by any person claiming by, through or under such parties, and
(d) under no
U-4
circumstances shall the Counterparty 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 Rate Collar Transaction.
10. Reporting. Counterparty agrees to deliver, promptly upon request by the
Derivative Provider, or with respect to any particular type of report or
other document as to which the Derivative Provider has previously made
request to receive all reports or documents of that type, promptly upon
delivery or receipt of such report or document by the Counterparty, any
report or other document required to be delivered by or to the Counterparty
under the terms of the Pooling and Servicing Agreement, other than those
required to be delivered directly by the Counterparty to the Derivative
Provider thereunder.
11. Written confirmation. No later than each Reset Date, the Derivative
Provider agrees to deliver to the Counterparty a written confirmation
containing the results of the Calculations performed on each Reset Date and
the amount which is to be paid to the Counterparty on the next Payment
Date.
12. Compliance with Regulation AB.
(i) If at any time after the date hereof for so long as the Counterparty
is required to file periodic reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") with respect to the
Certificates, in the reasonable determination made in good faith of
Chase Mortgage Finance Corporation the aggregate "significance
percentage" (as defined in Regulation AB ("Regulation AB") under the
Securities Act of 1933, as amended, and the Exchange Act) of all
derivative instruments (contemplated by Item 1115 of Regulation AB)
provided by the Derivative Provider and any of its affiliates to the
Counterparty is at least 10% but less than 20%, the Derivative
Provider shall, subject to subparagraph [(iii)] below, within five
(5) Business Days following request therefor provide the financial
information required under Item 1115(b)(1) of Regulation AB for the
Derivative Provider (and for the group of affiliated entities, if
applicable) (the "Item 1115(b)(1) Information"). Any such Item
1115(b)(1) Information shall be in a form suitable for conversion to
the format required for filing by the Depositor with the Securities
and Exchange Commission via the Electronic Data Gathering and
Retrieval System (▇▇▇▇▇).
(ii) If at any time after the date hereof for so long as the Counterparty
is required to file periodic reports under the Exchange Act with
respect to the Certificates, in the reasonable determination made in
good faith of Chase Mortgage Finance Corporation, the aggregate
"significance percentage" of all derivative instruments (contemplated
by Item 1115 of Regulation AB) provided by the Derivative Provider
and any of its affiliates to the Counterparty is at least 20%, the
Derivative Provider shall, subject to subparagraph [(iii)] below,
within five (5) Business Days following request therefor provide the
financial information required under Item 1115(b)(2) of Regulation AB
for the Derivative Provider (and for the group of affiliated
entities, if applicable) (the "Item 1115(b)(2) Information", and
together with the Item 1115(b)(1) Information, the "Additional
Information"). Any such Item 1115(b)(2) Information shall be in a
form suitable for conversion to the format required for filing by the
Depositor with the Securities and Exchange Commission via the
Electronic Data Gathering and Retrieval System (▇▇▇▇▇). In addition,
any such Item 1115(b)(2) Information shall be accompanied by any
necessary auditor's consents.
(iii) If the Derivative Provider is unable to provide any such Additional
Information if, as and when required, the Derivative Provider shall,
at its option, within ten (10) Business Days following request
therefor, (1) promptly post collateral satisfactory to Chase Mortgage
Finance Corporation
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in an amount which is reasonably determined in good faith to be
sufficient to reduce the aggregate "significance percentage" to (x)
in the case of subparagraph (A) above, below 10%, and (y) in the case
of subparagraph (B) above, provided the Derivative Provider is able
to meet the requirements of subparagraph (A) above, below 20%, in
each case pursuant to a [credit support annex] or similar agreement
reasonably satisfactory to the Chase Mortgage Finance Corporation, or
(2) at the sole expense of the Derivative Provider, without any
expense or liability to the Counterparty, transfer or assign its
obligations under this Agreement to a substitute counterparty
reasonably acceptable to the Counterparty that (x) is able to provide
such Additional Information if, as and when required, and (y) enters
into an agreement similar in form to this Agreement pursuant to which
such substitute counterparty agrees to provide the Additional
Information if, as and when required.
(iv) The Derivative Provider's obligation to provide any such Additional
Information shall terminate beginning in any such year in which the
Counterparty's obligation to file periodic reports under the Exchange
Act has terminated.
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JPMorgan Chase Bank, N.A.
ChaseFlex Trust 2006-1
By:
U-7
Schedule I
CALCULATION PERIOD CALCULATION PERIOD
START DATE END DATE NOTIONAL STRIKE (%) CEILING (%)
------------------ ------------------ ------------- ---------- -----------
June 25, 2006 July 25, 2006 47,622,736.74 6.485 11.500
July 25, 2006 August 25, 2006 45,833,933.43 6.274 11.500
August 25, 2006 September 25, 2006 43,924,759.88 6.275 11.500
September 25, 2006 October 25, 2006 41,902,346.03 6.487 11.500
October 25, 2006 November 25, 2006 39,778,169.44 6.277 11.500
November 25, 2006 December 25, 2006 37,564,808.95 6.488 11.500
December 25, 2006 January 25, 2007 35,280,034.66 6.278 11.500
January 25, 2007 February 25, 2007 32,942,603.51 6.278 11.500
February 25, 2007 March 25, 2007 30,574,828.08 6.957 11.500
March 25, 2007 April 25, 2007 25,201,914.27 6.278 11.500
April 25, 2007 May 25, 2007 25,840,360.87 6.490 11.500
May 25, 2007 June 25, 2007 23,517,153.64 6.279 11.500
June 25, 2007 July 25, 2007 21,238,011.77 6.490 11.500
July 25, 2007 August 25, 2007 19,002,107.10 6.279 11.500
August 25, 2007 September 25, 2007 16,808,626.96 6.279 11.500
September 25, 2007 October 25, 2007 14,656,773.82 6.490 11.500
October 25, 2007 November 25, 2007 12,545,765.09 6.279 11.500
November 25, 2007 December 25, 2007 10,474,832.77 6.490 11.500
December 25, 2007 January 25, 2008 8,443,223.23 6.279 11.500
January 25, 2008 February 25, 2008 6,450,196.91 6.279 11.500
February 25, 2008 March 25, 2008 4,495,028.08 6.716 11.500
March 25, 2008 April 25, 2008 2,577,004.55 6.279 11.500
April 25, 2008 May 25, 2008 695,427.48 6.491 11.500
U-8
xxxx
Date:___________
----------------------------------------
[Signature]
[Title]
U-9
EXHIBIT U-1
FORM OF CLASS A-2-B YIELD MAINTENANCE AGREEMENT
May 24, 2006
Rate Collar Transaction
ChaseFlex Trust 2006-1
Attn: [ ]
Re: Interest Rate Transaction No: [ ]
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and conditions of
the rate collar transaction (the "Interest Rate Transaction") entered into
between JPMorgan Chase Bank, N.A. (the "Derivative Provider") and ▇.▇. ▇▇▇▇▇▇
▇▇▇▇▇ Bank, N.A., not in its individual capacity, but solely as Paying Agent on
behalf of ChaseFlex Trust 2006-1 (the "Counterparty") on May 24, 2006. This
agreement constitutes a "Confirmation" as referred to in and supplements, forms
part of, and is subject to, the ISDA Master Agreement between the parties
hereto.
The particular Interest Rate Transaction to which this Confirmation relates is a
Rate Collar Transaction, the terms of which are set forth below.
The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern. The Interest Rate Transaction relates to the Class A-2-B Certificates
issued pursuant to the Pooling and Servicing Agreement dated as of May 1, 2006
among Chase Mortgage Finance Corporation, as Depositor, U.S. Bank National
Association, as Trustee, and JPMorgan Chase Bank, N.A., as Servicer and Paying
Agent (the "Pooling and Servicing Agreement").
In consideration of the payment of the sum of USD [ ] (the "Premium") by
▇.▇. ▇▇▇▇▇▇ Securities, Inc. on behalf of Chase Home Finance, LLC to the
Derivative Provider on May 09, 2006 and in consideration of the promise by the
Derivative Provider to make payments to the Counterparty in accordance with
Section 2 hereof, the parties hereto agree as follows
13. Definitions
a. "Ceiling Rate" means, with respect to any Calculation Period, the rate
set forth as the "Ceiling Rate" on the attached Schedule I.
b. "Floor Rate" means, with respect to any Calculation Period, the rate
set forth as the "Strike Rate" on the attached Schedule I.
c. "Business Day" means any day which is both a New York Business Day and
a London Business Day.
U-1-1
d. "Calculation Period" means, with respect to a Payment Date, the
period, as set forth on the attached Schedule I, from the Calculation
Period Start Date to but excluding the Calculation Period End Date,
and including such Payment Date.
e. "Designated Maturity" means 1 month(s).
f. "Effective Date" means the first Calculation Period Start Date.
g. "Floating Rate" means, with respect to a Payment Date, the rate
determined by the Derivative Provider to be (i) the per annum rate for
deposits in U.S. dollars for a period of the Designated Maturity which
appears on the Telerate Page 3750 Screen as of 11:00 a.m., London
time, on the day that is two London Business Days prior to the Reset
Date of the Calculation Period of such Payment Date (rounded upwards,
if necessary, to the nearest 1/100,000 of 1%); (ii) if such rate does
not appear on the Telerate Page 3750 Screen, the Floating Rate shall
be the arithmetic mean (rounded as aforesaid) of the offered
quotations obtained by the Derivative Provider from the Reference
Banks for deposits in U.S. dollars to leading banks in the London
interbank market as of approximately 11:00 a.m., London time, on the
day that is two London Business Days prior to the Reset Date of the
Calculation Period of such Payment Date; or (iii) if fewer than two
Reference Banks provide the Derivative Provider with such quotations,
the Floating Rate shall be the rate per annum which the Derivative
Provider determines to be the arithmetic mean (rounded as aforesaid)
of the offered quotations which leading banks in New York City
selected by the Derivative Provider are quoting in the New York
interbank market on the Reset Date of the Calculation Period of such
Payment Date for deposits in U.S. dollars to the Reference Banks or,
if fewer than two such quotations are available, to leading European
and Canadian Banks.
h. "London Business Day" means any day on which banks are open for
business in London and on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.
i. "Maximum Derivative Payment Amount" means, for any Payment Date, an
amount which the Paying Agent shall calculate in accordance with the
Pooling and Servicing Agreement and provide to the Derivative Provider
no later than one Business Day prior to each Payment Date.
j. "New York Business Day" means any day on which banks are not required
or authorized by law to close in New York City.
k. "Notional Principal Amount" means, with respect to any Calculation
Period, the notional amount set forth in the attached Schedule I.
l. "Payment Date" means the day that is two New York business days prior
to each Calculation Period End Date, provided that if such Payment
Date is not a Business Day, such Payment Date shall be the next
preceding Business Day.
m. "Reference Banks" means four major banks in the London interbank
market selected by the Derivative Provider.
n. "Reset Date" means the first day of each Calculation Period.
U-1-2
o. "Telerate Page 3750 Screen" means the display designated as "Page
3750" on the Dow ▇▇▇▇▇ Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be
nominated by the British Bankers' Association as the information
vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rates for U.S. Dollar deposits).
p. "Termination Date" means the last Calculation Period End Date.
14. Payments
a. The Derivative Provider agrees, subject to the payment of the Premium,
to pay to the Counterparty, on each Payment Date on which the related
Floating Rate is determined to be greater than the Floor Rate and less
than the Ceiling Rate, an amount equal to the lesser of 1) the Maximum
Derivative Payment Amount for such Payment Date and 2) product of (x)
the amount by which the Floating Rate exceeds the Floor Rate with
respect to the Calculation Period ending on or nearest such Payment
Date, (y) the Notional Principal Amount and (z) the actual number of
days in that Calculation Period divided by 360.
b. All payments to the Derivative Provider shall be made as follows.
[ ]
[ ]
c. All payments to the Counterparty shall be made as follows:
Wire Transfer:
[ ]
[ ]
15. Notices. Any notices hereunder 1) shall be in writing and hand-delivered or
sent by first-class mail, postage prepaid, return receipt requested, and
shall be addressed to the intended recipient at its address set forth on
the signature page hereof or at such other address as such party shall have
last specified by notice to the other party and 2) shall be effective (a)
if delivered by hand or sent by overnight courier, on the day it is
delivered, unless delivery is made after the close of business or on a day
that is not a Business Day, in which case such notice will be effective on
the next Business Day, or (b) if sent by certified or registered mail or
the equivalent (return receipt requested), three Business Days after
dispatch.
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All notices and queries to the Derivative Provider should be sent to:
JPMorgan Chase Bank, N.A. Client Service Group
Telephone: (▇▇▇) ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇▇▇▇▇▇▇▇
Please quote the JPMorgan deal number(s): [ ]
All notices and queries to the Counterparty should be sent to:
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
16. Governing Law. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
17. Assignments. Neither party shall have the right to assign its rights or
obligations under this letter agreement without the prior written consent
of the other party.
18. Set-off; Counterclaim. All payments under this letter agreement will be
made without set-off or counterclaim, except that each party will have the
right to set-off, counterclaim or withhold payment in respect of any
default by the other party under this letter agreement or under any other
agreement between the parties.
19. Each Party's Reliance on its Own Judgment. Each party has entered into this
Rate Collar Transaction solely in reliance on its own judgment. Neither
party has any fiduciary obligation to the other party relating to this Rate
Collar Transaction. In addition, neither party has held itself out as
advising, or has held out any of its employees or agents as having the
authority to advise, the other party as to whether or not the other party
should enter into this Rate Collar Transaction, any subsequent actions
relating to this Rate Collar Transaction or any other matters relating to
this Rate Collar Transaction. Neither party shall have any responsibility
or liability whatsoever in respect of any advice of this nature given, or
views expressed, by it or any of such persons to the other party relating
to this Rate Collar Transaction, whether or not such advice is given or
such views are expressed at the request of the other party.
20. Waiver of Right to Trial by Jury. Each party hereby irrevocably waives any
and all rights to trial by jury with respect to any legal proceeding
arising out of or relating to this letter agreement or the Rate Collar
Transaction.
21. Limitation of Liability. It is expressly understood and agreed by the
parties hereto that (a) this Rate Collar Transaction is executed and
delivered by the Counterparty, not individually or personally but solely as
Paying Agent of the Trust, in the exercise of the powers and authority
conferred and vested in it under the Pooling and Servicing Agreement, (b)
each of the representations, undertakings and agreements herein made on the
part of the Trust is made and intended for the purpose of binding only the
Trust (c) nothing herein shall be construed as creating any liability on
the Counterparty, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any,
being expressly waived by the parties who are signatories to this letter
agreement and by any person claiming by, through or under such parties, and
(d) under no circumstances shall the Counterparty be personally liable for
the payment of any indebtedness or
U-1-4
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 Rate Collar Transaction.
22. Reporting. Counterparty agrees to deliver, promptly upon request by the
Derivative Provider, or with respect to any particular type of report or
other document as to which the Derivative Provider has previously made
request to receive all reports or documents of that type, promptly upon
delivery or receipt of such report or document by the Counterparty, any
report or other document required to be delivered by or to the Counterparty
under the terms of the Pooling and Servicing Agreement, other than those
required to be delivered directly by the Counterparty to the Derivative
Provider thereunder.
23. Written confirmation. No later than each Reset Date, the Derivative
Provider agrees to deliver to the Counterparty a written confirmation
containing the results of the Calculations performed on each Reset Date and
the amount which is to be paid to the Counterparty on the next Payment
Date.
24. Compliance with Regulation AB.
(i) If at any time after the date hereof for so long as the Counterparty
is required to file periodic reports under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") with respect to the
Certificates, in the reasonable determination made in good faith of
Chase Mortgage Finance Corporation the aggregate "significance
percentage" (as defined in Regulation AB ("Regulation AB") under the
Securities Act of 1933, as amended, and the Exchange Act) of all
derivative instruments (contemplated by Item 1115 of Regulation AB)
provided by the Derivative Provider and any of its affiliates to the
Counterparty is at least 10% but less than 20%, the Derivative
Provider shall, subject to subparagraph [(iii)] below, within five (5)
Business Days following request therefor provide the financial
information required under Item 1115(b)(1) of Regulation AB for the
Derivative Provider (and for the group of affiliated entities, if
applicable) (the "Item 1115(b)(1) Information"). Any such Item
1115(b)(1) Information shall be in a form suitable for conversion to
the format required for filing by the Depositor with the Securities
and Exchange Commission via the Electronic Data Gathering and
Retrieval System (▇▇▇▇▇).
(ii) If at any time after the date hereof for so long as the Counterparty
is required to file periodic reports under the Exchange Act with
respect to the Certificates, in the reasonable determination made in
good faith of Chase Mortgage Finance Corporation, the aggregate
"significance percentage" of all derivative instruments (contemplated
by Item 1115 of Regulation AB) provided by the Derivative Provider and
any of its affiliates to the Counterparty is at least 20%, the
Derivative Provider shall, subject to subparagraph [(iii)] below,
within five (5) Business Days following request therefor provide the
financial information required under Item 1115(b)(2) of Regulation AB
for the Derivative Provider (and for the group of affiliated entities,
if applicable) (the "Item 1115(b)(2) Information", and together with
the Item 1115(b)(1) Information, the "Additional Information"). Any
such Item 1115(b)(2) Information shall be in a form suitable for
conversion to the format required for filing by the Depositor with the
Securities and Exchange Commission via the Electronic Data Gathering
and Retrieval System (▇▇▇▇▇). In addition, any such Item 1115(b)(2)
Information shall be accompanied by any necessary auditor's consents.
(iii) If the Derivative Provider is unable to provide any such Additional
Information if, as and when required, the Derivative Provider shall,
at its option, within ten (10) Business Days following request
therefor, (1) promptly post collateral satisfactory to Chase Mortgage
Finance Corporation in an amount which is reasonably determined in
good faith to be sufficient to reduce the
U-1-5
aggregate "significance percentage" to (x) in the case of subparagraph
(A) above, below 10%, and (y) in the case of subparagraph (B) above,
provided the Derivative Provider is able to meet the requirements of
subparagraph (A) above, below 20%, in each case pursuant to a [credit
support annex] or similar agreement reasonably satisfactory to the
Chase Mortgage Finance Corporation, or (2) at the sole expense of the
Derivative Provider, without any expense or liability to the
Counterparty, transfer or assign its obligations under this Agreement
to a substitute counterparty reasonably acceptable to the Counterparty
that (x) is able to provide such Additional Information if, as and
when required, and (y) enters into an agreement similar in form to
this Agreement pursuant to which such substitute counterparty agrees
to provide the Additional Information if, as and when required.
(iv) The Derivative Provider's obligation to provide any such Additional
Information shall terminate beginning in any such year in which the
Counterparty's obligation to file periodic reports under the Exchange
Act has terminated.
U-1-6
JPMorgan Chase Bank, N.A.
ChaseFlex Trust 2006-1
By:
U-1-7
Schedule I
CALCULATION PERIOD CALCULATION
START DATE PERIOD END DATE NOTIONAL STRIKE (%) CEILING (%)
------------------ ------------------ ------------- ---------- -----------
June 25, 2006 July 25, 2006 50,000,000.00 6.395 11.500
July 25, 2006 August 25, 2006 50,000,000.00 6.184 11.500
August 25, 2006 September 25, 2006 50,000,000.00 6.185 11.500
September 25, 2006 October 25, 2006 50,000,000.00 6.397 11.500
October 25, 2006 November 25, 2006 50,000,000.00 6.187 11.500
November 25, 2006 December 25, 2006 50,000,000.00 6.398 11.500
December 25, 2006 January 25, 2007 50,000,000.00 6.188 11.500
January 25, 2007 February 25, 2007 50,000,000.00 6.188 11.500
February 25, 2007 March 25, 2007 50,000,000.00 6.867 11.500
March 25, 2007 April 25, 2007 50,000,000.00 6.188 11.500
April 25, 2007 May 25, 2007 50,000,000.00 6.400 11.500
May 25, 2007 June 25, 2007 50,000,000.00 6.189 11.500
June 25, 2007 July 25, 2007 50,000,000.00 6.400 11.500
July 25, 2007 August 25, 2007 50,000,000.00 6.189 11.500
August 25, 2007 September 25, 2007 50,000,000.00 6.189 11.500
September 25, 2007 October 25, 2007 50,000,000.00 6.400 11.500
October 25, 2007 November 25, 2007 50,000,000.00 6.189 11.500
November 25, 2007 December 25, 2007 50,000,000.00 6.400 11.500
December 25, 2007 January 25, 2008 50,000,000.00 6.189 11.500
January 25, 2008 February 25, 2008 50,000,000.00 6.189 11.500
February 25, 2008 March 25, 2008 50,000,000.00 6.626 11.500
March 25, 2008 April 25, 2008 50,000,000.00 6.189 11.500
April 25, 2008 May 25, 2008 50,000,000.00 6.401 11.500
May 25, 2008 June 25, 2008 50,000,000.00 6.189 11.500
June 25, 2008 July 25, 2008 50,000,000.00 6.401 11.500
July 25, 2008 August 25, 2008 50,000,000.00 6.189 11.500
August 25, 2008 September 25, 2008 50,000,000.00 6.189 11.500
September 25, 2008 October 25, 2008 50,000,000.00 6.401 11.500
October 25, 2008 November 25, 2008 50,000,000.00 6.190 11.500
November 25, 2008 December 25, 2008 50,000,000.00 6.401 11.500
December 25, 2008 January 25, 2009 49,675,905.78 6.190 11.500
January 25, 2009 February 25, 2009 47,810,605.87 6.190 11.500
February 25, 2009 March 25, 2009 45,971,350.39 6.869 11.500
March 25, 2009 April 25, 2009 44,157,781.46 6.190 11.500
April 25, 2009 May 25, 2009 42,369,546.08 6.401 11.500
May 25, 2009 June 25, 2009 40,606,296.02 6.190 11.500
June 25, 2009 July 25, 2009 39,079,854.07 6.401 11.500
July 25, 2009 August 25, 2009 37,576,614.71 6.190 11.500
August 25, 2009 September 25, 2009 36,096,252.59 6.190 11.500
September 25, 2009 October 25, 2009 34,638,446.86 6.402 11.500
October 25, 2009 November 25, 2009 33,202,881.17 6.190 11.500
November 25, 2009 December 25, 2009 31,789,243.56 6.402 11.500
December 25, 2009 January 25, 2010 30,397,226.44 6.191 11.500
January 25, 2010 February 25, 2010 29,026,526.51 6.191 11.500
U-1-8
February 25, 2010 March 25, 2010 27,676,844.70 6.870 11.500
March 25, 2010 April 25, 2010 26,347,886.13 6.191 11.500
April 25, 2010 May 25, 2010 25,039,360.05 6.402 11.500
May 25, 2010 June 25, 2010 23,750,979.76 6.191 11.500
June 25, 2010 July 25, 2010 22,482,462.60 6.402 11.500
July 25, 2010 August 25, 2010 21,271,454.99 6.191 11.500
August 25, 2010 September 25, 2010 20,186,878.49 6.191 11.500
September 25, 2010 October 25, 2010 19,118,904.41 6.403 11.500
October 25, 2010 November 25, 2010 18,067,295.95 6.191 11.500
November 25, 2010 December 25, 2010 17,031,819.61 6.403 11.500
December 25, 2010 January 25, 2011 16,012,245.11 6.191 11.500
January 25, 2011 February 25, 2011 15,008,345.36 6.191 11.500
February 25, 2011 March 25, 2011 14,019,896.41 6.871 11.500
March 25, 2011 April 25, 2011 13,046,677.43 6.192 11.500
April 25, 2011 May 25, 2011 12,088,470.63 6.403 11.500
May 25, 2011 June 25, 2011 11,145,061.27 6.192 11.500
June 25, 2011 July 25, 2011 10,343,753.95 6.403 11.500
July 25, 2011 August 25, 2011 9,554,565.27 6.192 11.500
August 25, 2011 September 25, 2011 8,777,318.76 6.192 11.500
September 25, 2011 October 25, 2011 8,011,840.50 6.404 11.500
October 25, 2011 November 25, 2011 7,257,959.02 6.192 11.500
November 25, 2011 December 25, 2011 6,515,505.28 6.404 11.500
December 25, 2011 January 25, 2012 5,784,312.67 6.192 11.500
January 25, 2012 February 25, 2012 5,064,216.94 6.192 11.500
February 25, 2012 March 25, 2012 4,355,056.16 6.630 11.500
March 25, 2012 April 25, 2012 3,656,670.74 6.193 11.500
April 25, 2012 May 25, 2012 2,968,903.32 6.404 11.500
May 25, 2012 June 25, 2012 2,291,598.81 6.193 11.500
June 25, 2012 July 25, 2012 1,688,291.20 6.404 11.500
July 25, 2012 August 25, 2012 1,093,496.24 6.193 11.500
August 25, 2012 September 25, 2012 507,096.30 6.193 11.500
U-1-9
EXHIBIT V
SCHEDULE II TO CLASS A-2-B YIELD MAINTENANCE AGREEMENT
CALCULATION PERIOD CALCULATION PERIOD SCHEDULED NOTIONAL CAP STRIKE RATE CAP
START DATE END DATE AMOUNT RATE (%) CEILING (%)
------------------ ------------------ ------------------ ---------- -----------
June 25, 2006 July 25, 2006 50,000,000.00 6.395 11.500
July 25, 2006 August 25, 2006 50,000,000.00 6.184 11.500
August 25, 2006 September 25, 2006 50,000,000.00 6.185 11.500
September 25, 2006 October 25, 2006 50,000,000.00 6.397 11.500
October 25, 2006 November 25, 2006 50,000,000.00 6.187 11.500
November 25, 2006 December 25, 2006 50,000,000.00 6.398 11.500
December 25, 2006 January 25, 2007 50,000,000.00 6.188 11.500
January 25, 2007 February 25, 2007 50,000,000.00 6.188 11.500
February 25, 2007 March 25, 2007 50,000,000.00 6.867 11.500
March 25, 2007 April 25, 2007 50,000,000.00 6.188 11.500
April 25, 2007 May 25, 2007 50,000,000.00 6.400 11.500
May 25, 2007 June 25, 2007 50,000,000.00 6.189 11.500
June 25, 2007 July 25, 2007 50,000,000.00 6.400 11.500
July 25, 2007 August 25, 2007 50,000,000.00 6.189 11.500
August 25, 2007 September 25, 2007 50,000,000.00 6.189 11.500
September 25, 2007 October 25, 2007 50,000,000.00 6.400 11.500
October 25, 2007 November 25, 2007 50,000,000.00 6.189 11.500
November 25, 2007 December 25, 2007 50,000,000.00 6.400 11.500
December 25, 2007 January 25, 2008 50,000,000.00 6.189 11.500
January 25, 2008 February 25, 2008 50,000,000.00 6.189 11.500
February 25, 2008 March 25, 2008 50,000,000.00 6.626 11.500
March 25, 2008 April 25, 2008 50,000,000.00 6.189 11.500
April 25, 2008 May 25, 2008 50,000,000.00 6.401 11.500
May 25, 2008 June 25, 2008 48,424,471.54 6.189 11.500
June 25, 2008 July 25, 2008 45,944,567.06 6.401 11.500
July 25, 2008 August 25, 2008 43,511,812.86 6.189 11.500
August 25, 2008 September 25, 2008 41,125,321.37 6.189 11.500
September 25, 2008 October 25, 2008 38,784,221.66 6.401 11.500
October 25, 2008 November 25, 2008 36,487,659.07 6.190 11.500
November 25, 2008 December 25, 2008 34,234,794.90 6.401 11.500
December 25, 2008 January 25, 2009 32,024,806.17 6.190 11.500
January 25, 2009 February 25, 2009 29,856,885.27 6.190 11.500
February 25, 2009 March 25, 2009 27,730,239.72 6.869 11.500
March 25, 2009 April 25, 2009 25,644,091.84 6.190 11.500
April 25, 2009 May 25, 2009 23,597,678.52 6.401 11.500
May 25, 2009 June 25, 2009 21,590,250.92 6.190 11.500
June 25, 2009 July 25, 2009 19,912,168.03 6.401 11.500
July 25, 2009 August 25, 2009 18,374,260.68 6.190 11.500
August 25, 2009 September 25, 2009 16,956,002.67 6.190 11.500
V-1
CALCULATION PERIOD CALCULATION PERIOD SCHEDULED NOTIONAL CAP STRIKE RATE CAP
START DATE END DATE AMOUNT RATE (%) CEILING (%)
------------------ ------------------ ------------------ ---------- -----------
September 25, 2009 October 25, 2009 15,567,484.79 6.402 11.500
October 25, 2009 November 25, 2009 14,208,123.82 6.190 11.500
November 25, 2009 December 25, 2009 12,877,347.65 6.402 11.500
December 25, 2009 January 25, 2010 11,574,595.06 6.191 11.500
January 25, 2010 February 25, 2010 10,299,315.52 6.191 11.500
February 25, 2010 March 25, 2010 9,050,968.99 6.870 11.500
March 25, 2010 April 25, 2010 7,829,025.74 6.191 11.500
April 25, 2010 May 25, 2010 6,632,966.10 6.402 11.500
May 25, 2010 June 25, 2010 5,462,280.37 6.191 11.500
June 25, 2010 July 25, 2010 4,316,468.51 6.402 11.500
July 25, 2010 August 25, 2010 3,195,040.06 6.191 11.500
August 25, 2010 September 25, 2010 2,097,513.92 6.191 11.500
September 25, 2010 October 25, 2010 1,023,418.17 6.403 11.500
Thereafter 0.00 N/A N/A
V-2
SCHEDULE X
ITEM ON FORM 8-K PARTY RESPONSIBLE
---------------------------------------------- -------------------------------
*Item 1.01- Entry into a Material Definitive All parties
Agreement
*Item 1.02- Termination of a Material All parties
Definitive Agreement
Item 1.03- Bankruptcy or Receivership Depositor
Item 2.04- Triggering Events that Accelerate Depositor
or Increase a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet
Arrangement
*Item 3.03- Material Modification to Rights Depositor, Servicer
of Security Holders
Item 5.03- Amendments of Articles of Depositor
Incorporation or Bylaws; Change of Fiscal Year
Item 6.01- ABS Informational and Computational Depositor
Material
*Item 6.02- Change of Servicer or Trustee Servicer, Trustee (as to change
of Trustee only), Paying Agent
(as to change of Paying Agent
only)
*Item 6.03- Change in Credit Enhancement or Depositor
External Support
*Item 6.04- Failure to Make a Required Paying Agent
Distribution
Item 6.05- Securities Act Updating Disclosure Depositor
Item 7.01- Reg FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
X-1
SCHEDULE Y
ITEM ON FORM 10-D PARTY RESPONSIBLE
---------------------------------------------- -------------------------------
Item 1: Distribution and Pool Performance Paying Agent through the Item
Information 602 statement based on
Plus any information required by Item 1121 information provided to it by
which is NOT included on the monthly the Servicer
statement to Certificateholders Servicer
Item 2: Legal Proceedings per Item 1117 of All parties to the PSA (as to
Reg AB themselves); the
depositor/trustee/paying
agent/servicer (to the extent
known) as to the issuing
entity; the depositor/servicer
as to the sponsor, 1106(b)
originator and any 1100(d)(1)
party
Item 3: Sale of Securities and Use of Proceeds Depositor
Item 4: Defaults Upon Senior Securities Servicer, Paying Agent (except
as to 9.01(b) or (d)) and
Trustee (to the extent of
knowledge thereof)
Item 5: Submission of Matters to a Vote of Depositor, Paying Agent (to the
Security Holders extent it is submitting a
matter to vote) and the Trustee
(to the extent it is submitting
a matter to vote)
Item 6: Significant Obligors of Pool Assets Depositor/Sponsor/Mortgage Loan
Seller/ Servicer
Item 7: Significant Enhancement Provider Depositor/Sponsor
Information
Item 8: Other Information Servicer, Paying Agent and any
other party responsible for
disclosure items on Form 10-D
Item 9: Exhibits Servicer
Y-1
SCHEDULE Z
Item on Form 10-K Party Responsible
---------------------------------------------- -------------------------------
Item 1B: Unresolved Staff Comments Depositor
*Item 9B: Other Information Servicer, Paying Agent and any
other party responsible for
disclosure items on Form 8-K
*Item 15: Exhibits, Financial Statement Servicer/subservicers/Depositor
Schedules
*Additional Item: All parties to the PSA (as to
themselves); the
Depositor/Trustee/Paying
Agent/Servicer (to the extent
Disclosure per Item 1117 of Reg AB known) as to the issuing
entity; the depositor/servicer
as to the sponsor, 1106(b)
originator, any 1100(d)(1)
party
*Additional Item: All parties to the PSA, the
Disclosure per Item 1119 of Reg AB sponsor, originator,
significant obligor,
enhancement or support provider
Additional Item: Depositor/Sponsor/Mortgage Loan
Disclosure per Item 1112(b) of Reg AB Seller/Servicer
Additional Item: Depositor/Sponsor
Disclosure per Items 1114(b) and 1115(b) of
Reg AB
Z-1