ACE
Securities Corp. Home Equity Loan Trust, Series 2006-FM1
Asset
Backed Pass-Through Certificates
TABLE
OF
CONTENTS
ARTICLE
I
DEFINITIONS
11
SECTION
1.01.
Defined
Terms
11
SECTION
1.02.
Allocation
of Certain Interest Shortfalls
95
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
97
SECTION
2.01.
Conveyance
of the Mortgage Loans
97
SECTION
2.02.
Acceptance
of REMIC I by Trustee
98
SECTION
2.03.
Repurchase
or Substitution of Mortgage Loans
98
SECTION
2.04.
Representations
and Warranties of the Master Servicer
101
SECTION
2.05.
Representations,
Warranties and Covenants of the Servicer
103
SECTION
2.06.
Issuance
of the REMIC I Regular Interests and the Class R-I
Interest
105
SECTION
2.07.
Conveyance
of the REMIC I Regular Interests; Acceptance of REMIC II and REMIC
III by
the Trustee
105
SECTION
2.08.
Issuance
of the Residual Certificates
106
SECTION
2.09.
Establishment
of the Trust
106
SECTION
2.10.
Purpose
and Powers of the Trust
106
ARTICLE
III
ADMINISTRATION
AND SERVICING OF THE MORTGAGE LOANS; ACCOUNTS
108
SECTION
3.01.
The
Servicer to Act as Servicer
108
SECTION
3.02.
Sub-Servicing
Agreements Between the Servicer and Sub-Servicers
111
SECTION
3.03.
Successor
Sub-Servicers
112
SECTION
3.04.
No
Contractual Relationship Between Sub-Servicer, Subcontractor, Trustee
or
the Certificateholders
112
SECTION
3.05.
Assumption
or Termination of Sub-Servicing Agreement by Successor
Servicer
113
SECTION
3.06.
Collection
of Certain Mortgage Loan Payments
113
SECTION
3.07.
Collection
of Taxes, Assessments and Similar Items; Servicing
Accounts
114
SECTION
3.08.
Collection
Account and Distribution Account
115
SECTION
3.09.
Withdrawals
from the Collection Account and Distribution Account
117
SECTION
3.10.
Investment
of Funds in the Investment Accounts
119
SECTION
3.11.
Maintenance
of Hazard Insurance, Errors and Omissions and Fidelity Coverage and
Primary Mortgage Insurance
121
SECTION
3.12.
Enforcement
of Due-on-Sale Clauses; Assumption Agreements
123
SECTION
3.13.
Realization
Upon Defaulted Mortgage Loans
124
SECTION
3.14.
Trustee
to Cooperate; Release of Mortgage Files
126
SECTION
3.15.
Servicing
Compensation
128
SECTION
3.16.
Collection
Account Statements
128
SECTION
3.17.
Annual
Statement as to Compliance
128
SECTION
3.18.
Assessments
of Compliance and Attestation Reports
129
i
SECTION
3.19.
Annual
Certification; Additional Information
130
SECTION
3.20.
Access
to Certain Documentation
131
SECTION
3.21.
Title,
Management and Disposition of REO Property
132
SECTION
3.22.
Obligations
of the Servicer in Respect of Prepayment Interest Shortfalls; Relief
Act
Interest Shortfalls
135
SECTION
3.23.
Obligations
of the Servicer in Respect of Mortgage Rates and Monthly
Payments
135
SECTION
3.24.
Reserve
Fund
136
SECTION
3.25.
Advance
Facility
137
SECTION
3.26.
Indemnification
139
ARTICLE
IV
ADMINISTRATION
AND MASTER SERVICING OF THE MORTGAGE LOANS BY THE MASTER
SERVICER
140
SECTION
4.01.
Master
Servicer
140
SECTION
4.02.
REMIC-Related
Covenants
141
SECTION
4.03.
Monitoring
of Servicer
141
SECTION
4.04.
Fidelity
Bond
142
SECTION
4.05.
Power
to Act; Procedures
142
SECTION
4.06.
Due-on-Sale
Clauses; Assumption Agreements
143
SECTION
4.07.
Documents,
Records and Funds in Possession of Master Servicer To Be Held for
Trustee
143
SECTION
4.08.
Standard
Hazard Insurance and Flood Insurance Policies
144
SECTION
4.09.
Presentment
of Claims and Collection of Proceeds
144
SECTION
4.10.
Maintenance
of Primary Mortgage Insurance Policies
144
SECTION
4.11.
Trustee
to Retain Possession of Certain Insurance Policies and
Documents
145
SECTION
4.12.
Realization
Upon Defaulted Mortgage Loans
145
SECTION
4.13.
Compensation
for the Master Servicer
145
SECTION
4.14.
REO
Property
146
SECTION
4.15.
Master
Servicer Annual Statement of Compliance
146
SECTION
4.16.
Master
Servicer Assessments of Compliance
147
SECTION
4.17.
Master
Servicer Attestation Reports
148
SECTION
4.18.
Annual
Certification
149
SECTION
4.19.
Obligation
of the Master Servicer in Respect of Prepayment Interest
Shortfalls
150
SECTION
4.20.
Prepayment
Penalty Verification
150
ARTICLE
V
PAYMENTS
TO CERTIFICATEHOLDERS
152
SECTION
5.01.
Distributions
152
SECTION
5.02.
Statements
to Certificateholders
166
SECTION
5.03.
Servicer
Reports; P&I Advances
169
SECTION
5.04.
Allocation
of Realized Losses
171
SECTION
5.05.
Compliance
with Withholding Requirements
174
SECTION
5.06.
Reports
Filed with Securities and Exchange Commission
174
SECTION
5.07.
Supplemental
Interest Trust
179
SECTION
5.08.
Tax
Treatment of Swap Payments and Swap Termination Payments
181
ii
ARTICLE
VI
THE
CERTIFICATES
182
SECTION
6.01.
The
Certificates
182
SECTION
6.02.
Registration
of Transfer and Exchange of Certificates
184
SECTION
6.03.
Mutilated,
Destroyed, Lost or Stolen Certificates
190
SECTION
6.04.
Persons
Deemed Owners
190
SECTION
6.05.
Certain
Available Information
190
ARTICLE
VII
THE
DEPOSITOR, THE SERVICER AND THE MASTER SERVICER
191
SECTION
7.01.
Liability
of the Depositor, the Servicer and the Master Servicer
191
SECTION
7.02.
Merger
or Consolidation of the Depositor, the Servicer or the Master
Servicer
191
SECTION
7.03.
Limitation
on Liability of the Depositor, the Servicer, the Master Servicer
and
Others
191
SECTION
7.04.
Limitation
on Resignation of the Servicer
192
SECTION
7.05.
Limitation
on Resignation of the Master Servicer
193
SECTION
7.06.
Assignment
of Master Servicing
193
SECTION
7.07.
Rights
of the Depositor in Respect of the Servicer and the Master
Servicer
194
SECTION
7.08.
Duties
of the Credit Risk Manager
195
SECTION
7.09.
Limitation
Upon Liability of the Credit Risk Manager
195
SECTION
7.10.
Removal
of the Credit Risk Manager
196
ARTICLE
VIII
DEFAULT
197
SECTION
8.01.
Servicer
Events of Default
197
SECTION
8.02.
Master
Servicer to Act; Appointment of Successor
202
SECTION
8.03.
Notification
to Certificateholders
203
SECTION
8.04.
Waiver
of Servicer Events of Default
203
ARTICLE
IX
CONCERNING
THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
204
SECTION
9.01.
Duties
of Trustee and Securities Administrator
204
SECTION
9.02.
Certain
Matters Affecting Trustee and Securities Administrator
205
SECTION
9.03.
Trustee
and Securities Administrator not Liable for Certificates or Mortgage
Loans
207
SECTION
9.04.
Trustee
and Securities Administrator May Own Certificates
208
SECTION
9.05.
Fees
and Expenses of Trustee, Custodian and Securities
Administrator
208
SECTION
9.06.
Eligibility
Requirements for Trustee and Securities Administrator
209
SECTION
9.07.
Resignation
and Removal of Trustee and Securities Administrator
209
SECTION
9.08.
Successor
Trustee or Securities Administrator
210
SECTION
9.09.
Merger
or Consolidation of Trustee or Securities Administrator
211
SECTION
9.10.
Appointment
of Co-Trustee or Separate Trustee
211
SECTION
9.11.
Appointment
of Office or Agency
212
SECTION
9.12.
Representations
and Warranties
212
iii
ARTICLE
X
TERMINATION
214
SECTION
10.01.
Termination
Upon Repurchase or Liquidation of All Mortgage Loans
214
SECTION
10.02.
Additional
Termination Requirements
216
ARTICLE
XI
REMIC
PROVISIONS
217
SECTION
11.01.
REMIC
Administration
217
SECTION
11.02.
Prohibited
Transactions and Activities
219
SECTION
11.03.
Indemnification
220
ARTICLE
XII
MISCELLANEOUS
PROVISIONS
221
SECTION
12.01.
Amendment
221
SECTION
12.02.
Recordation
of Agreement; Counterparts
222
SECTION
12.03.
Limitation
on Rights of Certificateholders
222
SECTION
12.04.
Governing
Law
223
SECTION
12.05.
Notices
223
SECTION
12.06.
Severability
of Provisions
224
SECTION
12.07.
Notice
to Rating Agencies
224
SECTION
12.08.
Article
and Section References
225
SECTION
12.09.
Grant
of Security Interest
225
SECTION
12.10.
Survival
of Indemnification
226
SECTION
12.11.
Intention
of the Parties and Interpretation
226
SECTION
12.12.
Indemnification
226
SECTION
12.13.
Swap
Provider as a Third Party Beneficiary
227
iv
Exhibits
Exhibit
A-1
Form
of Class A Certificate
Exhibit
A-2
Form
of Class M-[1][2][3][4][5][6][7][8][9] Certificate
Exhibit
A-3
Form
of Class M-[10][11]
Exhibit
A-4
Form
of Class CE Certificate
Exhibit
A-5
Form
of Class P Certificate
Exhibit
A-6
Form
of Class R Certificate
Exhibit
B-1
Form
of Transferor Representation Letter and Form of Transferee Representation
Letter in Connection with Transfer of the Class M-10 Certificates,
Class
M-11 Certificates, Class P Certificates, Class CE Certificates and
Residual Certificates Pursuant to Rule 144A Under the Securities
Act
Exhibit
B-2
Form
of Transferor Representation Letter and Form of Transferee Representation
Letter in Connection with Transfer of the Class M-10 Certificates,
Class
M-11 Certificates, Class P Certificates, Class CE Certificates and
Residual Certificates Pursuant to Rule 501(a) Under the Securities
Act
Exhibit
B-3
Form
of Transfer Affidavit and Agreement and Form of Transferor Affidavit
in
Connection with Transfer of Residual Certificates
Form
10-D, Form 8-K and Form 10-K Reporting Responsibility
Exhibit
H
Additional
Disclosure Notification
Exhibit
I
Swap
Agreement
Schedule
1
Mortgage
Loan Schedule
Schedule
2
Prepayment
Charge Schedule
Schedule
3
Reserved
Schedule
4
Standard
File Layout - Delinquency Reporting and Realized Losses and
Gains
Schedule
5
Standard
File Layout - Master Servicing
Schedule
6
Data
Requirements of Servicing Advances Incurred Prior to Cut-off
Date
v
This
Pooling and Servicing Agreement, is dated and effective as of August 1, 2006,
among ACE SECURITIES CORP., as Depositor, FREMONT INVESTMENT & LOAN, as
Servicer, WELLS FARGO BANK, N.A., Master Servicer and Securities Administrator
and HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee.
PRELIMINARY
STATEMENT:
The
Depositor intends to sell pass-through certificates to be issued hereunder
in
multiple classes, which in the aggregate will evidence the entire beneficial
ownership interest of the Trust Fund created hereunder. The Trust Fund will
consist of a segregated pool of assets comprised of the Mortgage Loans and
certain other related assets subject to this Agreement.
REMIC
I
As
provided herein, the Securities Administrator will elect to treat the segregated
pool of assets consisting of the Mortgage Loans and certain other related assets
subject to this Agreement (other than the Reserve Fund and, for the avoidance
of
doubt, the Supplemental Interest Trust and the Swap Agreement) as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as “REMIC I”. The Class R-I Interest will be the sole class of
“residual interests” in REMIC I for purposes of the REMIC Provisions (as defined
herein). The following table irrevocably sets forth the designation, the REMIC
I
Remittance Rate, the initial Uncertificated Balance and, for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the “latest
possible maturity date” for each of the REMIC I Regular Interests (as defined
herein). None of the REMIC I Regular Interests will be
certificated.
(1) For
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date immediately following the maturity date for the Mortgage
Loan
with the latest maturity date has been designated as the “latest possible
maturity date” for each REMIC I Regular Interest.
(2) Calculated
in accordance with the definition of “REMIC I Remittance Rate”
herein.
8
REMIC
II
As
provided herein, the Securities Administrator will elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as “REMIC II.” The Class R-II Interest will evidence the sole class
of “residual interests” in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the REMIC II Remittance
Rate, the initial aggregate Uncertificated Balance and, for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the “latest
possible maturity date” for each of the REMIC II Regular Interests. None of the
REMIC II Regular Interests will be certificated.
For
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution Date immediately following the maturity date for
the
Mortgage Loan with the latest maturity date has been designated as
the
“latest possible maturity date” for each REMIC II Regular
Interest.
(2)
Calculated
in accordance with the definition of “REMIC II Remittance Rate”
herein.
(3)
REMIC
II Regular Interest IO will not have an Uncertificated Balance, but
will
accrue interest on its Uncertificated Notional
Amount.
(4)
REMIC
II Regular Interest P will be entitled to 100% of the Prepayment
Charges.
9
REMIC
III
As
provided herein, the Securities Administrator will elect to treat the segregated
pool of assets consisting of the REMIC II Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as “REMIC III.” The Class R-III Interest will evidence the sole class
of “residual interests” in REMIC III for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Pass-Through Rate,
the initial aggregate Certificate Principal Balance and, for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the “latest
possible maturity date” for the indicated Classes of Certificates.
For
purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
the Distribution Date immediately following the maturity date for
the
Mortgage Loan with the latest maturity date has been designated as
the
“latest possible maturity date” for each Class of
Certificates.
(2)
Calculated
in accordance with the definition of “Pass-Through Rate”
herein.
(3)
The
Class P Certificates will not accrue interest. The Class P Certificates
will be entitled to 100% of the Prepayment
Charges.
(4)
The
Class CE Certificates will accrue interest at their variable Pass-Through
Rate on the Notional Amount of the Class CE Certificates outstanding
from
time to time which shall equal the Uncertificated Balance of the
REMIC II
Regular Interests (other than REMIC II Regular Interest P). The Class
CE
Certificates will not accrue interest on their Certificate Principal
Balance.
(5)
The
Class IO Interest will not have a Pass-Through Rate or a Certificate
Principal Balance, but will be entitled to 100% of amounts distributed
on
REMIC II Regular Interest IO.
The
Mortgage Loans had an aggregate Scheduled Principal Balance as of the Cut-off
Date, after deducting all Monthly Payments due on or before the Cut-off Date,
of
$1,451,859,622.67. As of the Cut-off Date, the Group I Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $477,075,081.37 and the Group
II
Mortgage Loans had an aggregate Scheduled Principal Balance equal to
$974,784,541.30.
In
consideration of the mutual agreements herein contained, the Depositor, the
Servicer, the Master Servicer, the Securities Administrator and the Trustee
agree as follows:
10
ARTICLE
I
DEFINITIONS
SECTION
1.01. Defined
Terms.
Whenever
used in this Agreement, including, without limitation, in the Preliminary
Statement hereto, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article. Unless otherwise
specified, all calculations described herein shall be made on the basis of
a
360-day year consisting of twelve 30-day months.
“Accepted
Master Servicing Practices”: With respect to any Mortgage Loan, as applicable,
either (x) those customary mortgage master servicing practices of prudent
mortgage servicing institutions that master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located, to the extent applicable to the Master Servicer
or (y) as provided in Section 3.01 hereof, but in no event below the
standard set forth in clause (x) above.
“Accepted
Servicing Practices”: As defined in Section 3.01.
“Account”:
The Collection Account and the Distribution Account, as the context may
require.
“Accrued
Certificate Interest”: With respect to any Class A Certificate, Mezzanine
Certificate or Class CE Certificate and each Distribution Date, interest accrued
during the related Interest Accrual Period at the Pass-Through Rate for such
Certificate for such Distribution Date on the Certificate Principal Balance,
in
the case of the Class A Certificates and the Mezzanine Certificates, or on
the
Notional Amount in the case of the Class CE Certificates of such Certificate
immediately prior to such Distribution Date. The Class P Certificates are not
entitled to distributions in respect of interest and, accordingly, will not
accrue interest. All distributions of interest on the Class A Certificates
and
the Mezzanine Certificates will be calculated on the basis of a 360-day year
and
the actual number of days in the applicable Interest Accrual Period. All
distributions of interest on the Class CE Certificates will be based on a
360-day year consisting of twelve 30-day months. Accrued Certificate Interest
with respect to each Distribution Date, as to any Class A Certificate, Mezzanine
Certificate or Class CE Certificate shall be reduced by an amount equal to
the
portion allocable to such Certificate pursuant to Section 1.02 hereof, if
any, of the sum of (a) the aggregate Prepayment Interest Shortfall, if any,
for
such Distribution Date to the extent not covered by payments pursuant to
Section 3.22 or Section 4.19 of this Agreement and (b) the aggregate
amount of any Relief Act Interest Shortfall, if any, for such Distribution
Date.
In addition, Accrued Certificate Interest with respect to each Distribution
Date, as to any Class CE Certificate, shall be reduced by an amount equal to
the
portion allocable to such Class CE Certificate of Realized Losses, if any,
pursuant to Section 1.02 and Section 5.04 hereof.
“Additional
Disclosure Notification”: Has the meaning set forth in Section 5.06(a)(ii).
11
“Additional
Form 10-D Disclosure”: Has the meaning set forth in Section
5.06(a)(i).
“Additional
Form 10-K Disclosure”: Has the meaning set forth in Section
5.06(d)(i).
“Additional
Servicer”: Means each affiliate of the Servicer that Services any of the
Mortgage Loans and each Person who is not an affiliate of the Servicer. For
clarification purposes, the Master Servicer and the Securities Administrator
are
Additional Servicers.
“Adjustable
Rate Mortgage Loan”: Each of the Mortgage Loans identified in the Mortgage Loan
Schedule as having a Mortgage Rate that is subject to adjustment.
“Adjustment
Date”: With respect to each Adjustable Rate Mortgage Loan, the first day of the
month in which the Mortgage Rate of an Adjustable Rate Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following
the
Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.
“Administration
Fees: The sum of (i) the Servicing Fee, (ii) the Master Servicing Fee and (iii)
the Credit Risk Management Fee.
“Administration
Fee Rate”: The sum of (i) the Servicing Fee Rate, (ii) the Master Servicing Fee
Rate and (iii) the Credit Risk Management Fee Rate.
“Advance
Facility”: As defined in Section 3.25(a).
“Advance
Financing Person”: As defined in Section 3.25(a).
“Advance
Reimbursement Amounts”: As defined in Section 3.25(b).
“Affiliate”:
With respect to any specified Person, any other Person controlling or controlled
by or under common control with such specified Person. For the purposes of
this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or
otherwise, and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.
“Aggregate
Loss Severity Percentage”: With respect to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred on any Mortgage Loans from the Cut-off Date to the
last
day of the preceding calendar month and the denominator of which is the
aggregate principal balance of such Mortgage Loans immediately prior to the
liquidation of such Mortgage Loans.
“Agreement”:
This Pooling and Servicing Agreement, including all exhibits and schedules
hereto and all amendments hereof and supplements hereto.
“Allocated
Realized Loss Amount”: With respect to any Class of Mezzanine Certificates and
any Distribution Date, an amount equal to the sum of any Realized Loss allocated
to that Class of Certificates on the Distribution Date and any Allocated
Realized Loss Amount for that Class remaining unpaid from the previous
Distribution Date.
12
“Amounts
Held for Future Distribution”: As to any Distribution Date, the aggregate amount
held in the Collection Account at the close of business on the immediately
preceding Determination Date on account of (i) all Monthly Payments or portions
thereof received in respect of the Mortgage Loans due after the related Due
Period and (ii) Principal Prepayments and Liquidation Proceeds received in
respect of such Mortgage Loans after the last day of the related Prepayment
Period.
“Ancillary
Income”: All income derived from the Mortgage Loans, other than Servicing Fees
and Prepayment Charges, including but not limited to, late charges, fees
received with respect to checks or bank drafts returned by the related bank
for
non-sufficient funds, assumption fees, optional insurance administrative fees
and all other incidental fees and charges.
“Annual
Statement of Compliance”: As defined in Section 3.17.
“Assignment”:
An assignment of Mortgage, notice of transfer or equivalent instrument, in
recordable form, which is sufficient under the laws of the jurisdiction where
the related Mortgaged Property is located to reflect of record the sale and
assignment of the Mortgage, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
“Available
Distribution Amount”: With respect to any Distribution Date, an amount equal to
(1) the sum of (a) the aggregate of the amounts on deposit in the Collection
Account and Distribution Account as of the close of business on the Servicer
Remittance Date, (b) the aggregate of any amounts deposited in the Distribution
Account by the Servicer or the Master Servicer in respect of Prepayment Interest
Shortfalls for such Distribution Date pursuant to Section 3.22 or
Section 4.19 of this Agreement, (c) the aggregate of any P&I Advances
for such Distribution Date made by the Servicer pursuant to Section 5.03 of
this Agreement and (d) the aggregate of any P&I Advances made by a successor
Servicer (including the Master Servicer) for such Distribution Date pursuant
to
Section 8.02 of this Agreement reduced (to an amount not less than zero) by
(2) the portion of the amount described in clause (1)(a) above that represents
(i) Amounts Held for Future Distribution, (ii) Principal Prepayments on the
Mortgage Loans received after the related Prepayment Period (together with
any
interest payments received with such Principal Prepayments to the extent they
represent the payment of interest accrued on the Mortgage Loans during a period
subsequent to the related Prepayment Period), (iii) Liquidation Proceeds,
Insurance Proceeds and Subsequent Recoveries received in respect of the Mortgage
Loans after the related Prepayment Period, (iv) amounts reimbursable or payable
to the Depositor, the Servicer, the Trustee, the Master Servicer, the Securities
Administrator or the Custodian pursuant to Section 3.09 or 9.05 of this
Agreement or otherwise payable in respect of Extraordinary Trust Fund Expenses,
(v) the Credit Risk Management Fee, (vi) amounts deposited in the Collection
Account or the Distribution Account in error, (vii) the amount of any Prepayment
Charges collected by the Servicer in connection with the Principal Prepayment
of
any of the Mortgage Loans and (viii) amounts reimbursable to a successor
Servicer (including the Master Servicer) pursuant to Section 8.02 of this
Agreement.
13
“Back-up
Certification”: As defined in Section 3.19.
“Balloon
Mortgage Loan”: A Mortgage Loan that provides for the payment of the unamortized
principal balance of such Mortgage Loan in a single payment, that is
substantially greater than the preceding monthly payment at the maturity of
such
Mortgage Loan.
“Balloon
Payment”: A payment of the unamortized principal balance of a Mortgage Loan in a
single payment, that is substantially greater than the preceding Monthly Payment
at the maturity of such Mortgage Loan.
“Bankruptcy
Code”: The Bankruptcy Reform Act of 1978 (Title 11 of the United States Code),
as amended.
“Book-Entry
Certificates”: The Class A Certificates and the Mezzanine Certificates for so
long as the Certificates of such Class shall be registered in the name of the
Depository or its nominee.
“Book-Entry
Custodian”: The custodian appointed pursuant to Section 6.01.
“Business
Day”: Any day other than a Saturday, a Sunday or a day on which banking or
savings and loan institutions in the States of New York, California, Maryland
or
Minnesota or in the city in which the Corporate Trust Office of the Trustee
is
located, are authorized or obligated by law or executive order to be
closed.
“Cash-Out
Refinancing”: A Refinanced Mortgage Loan the proceeds of which are more than a
nominal amount in excess of the principal balance of any existing first mortgage
plus any subordinate mortgage on the related Mortgaged Property and related
closing costs.
“Certificate”:
Any one of ACE Securities Corp., Asset Backed Pass-Through Certificates, Series
2006-FM1, Class A-1, Class A-2A, Class A-2B, Class A-2C, Class A-2D, Class
M-1,
Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8,
Class M-9, Class M-10, Class M-11, Class P, Class CE and Class R Certificates
issued under this Agreement.
“Certificate
Factor”: With respect to any Class of Certificates (other than the Residual
Certificates) as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or Notional Amount, in the case of the Class CE Certificates)
of such Class of Certificates on such Distribution Date (after giving effect
to
any distributions of principal and allocations of Realized Losses resulting
in
reduction of the Certificate Principal Balance (or Notional Amount, in the
case
of the Class CE Certificates) of such Class of Certificates to be made on such
Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance (or Notional Amount, in the case of the Class
CE
Certificates) of such Class of Certificates as of the Closing Date.
“Certificate
Margin”: With respect to the Class A-1 Certificates and, for purposes of the
definition of “Marker Rate”, REMIC II Regular Interest A-1, 0.150% in the case
of each Distribution Date through and including the Optional Termination Date
and 0.300% in the case of each Distribution Date thereafter.
14
With
respect to the Class A-2A Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2A, 0.040% in the case of each
Distribution Date through and including the Optional Termination Date and 0.080%
in the case of each Distribution Date thereafter.
With
respect to the Class A-2B Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2B, 0.090% in the case of each
Distribution Date through and including the Optional Termination Date and 0.180%
in the case of each Distribution Date thereafter.
With
respect to the Class A-2C Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2C, 0.150% in the case of each
Distribution Date through and including the Optional Termination Date and 0.300%
in the case of each Distribution Date thereafter.
With
respect to the Class A-2D Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2D, 0.250% in the case of each
Distribution Date through and including the Optional Termination Date and 0.500%
in the case of each Distribution Date thereafter.
With
respect to the Class M-1 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-1, 0.300% in the case of each
Distribution Date through and including the Optional Termination Date and 0.450%
in the case of each Distribution Date thereafter.
With
respect to the Class M-2 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-2, 0.320% in the case of each
Distribution Date through and including the Optional Termination Date and 0.480%
in the case of each Distribution Date thereafter.
With
respect to the Class M-3 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-3, 0.330% in the case of each
Distribution Date through and including the Optional Termination Date and 0.495%
in the case of each Distribution Date thereafter.
With
respect to the Class M-4 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-4, 0.370% in the case of each
Distribution Date through and including the Optional Termination Date and 0.555%
in the case of each Distribution Date thereafter.
With
respect to the Class M-5 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-5, 0.410% in the case of each
Distribution Date through and including the Optional Termination Date and 0.615%
in the case of each Distribution Date thereafter.
15
With
respect to the Class M-6 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-6, 0.460% in the case of each
Distribution Date through and including the Optional Termination Date and 0.690%
in the case of each Distribution Date thereafter.
With
respect to the Class M-7 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-7, 0.870% in the case of each
Distribution Date through and including the Optional Termination Date and 1.305%
in the case of each Distribution Date thereafter.
With
respect to the Class M-8 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-8, 1.050% in the case of each
Distribution Date through and including the Optional Termination Date and 1.550%
in the case of each Distribution Date thereafter.
With
respect to the Class M-9 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-9, 2.000% in the case of each
Distribution Date through and including the Optional Termination Date and 2.500%
in the case of each Distribution Date thereafter.
With
respect to the Class M-10 Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest M-10, 2.500% in the case of each
Distribution Date through and including the Optional Termination Date and 3.000%
in the case of each Distribution Date thereafter.
With
respect to the Class M-11 Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest M-11, 2.500% in the case of each
Distribution Date through and including the Optional Termination Date and 3.000%
in the case of each Distribution Date thereafter.
“Certificateholder”
or “Holder”: The Person in whose name a Certificate is registered in the
Certificate Register, except that a Disqualified Organization or a Non-United
States Person shall not be a Holder of a Residual Certificate for any purposes
hereof, and solely for the purposes of giving any consent pursuant to this
Agreement, any Certificate registered in the name of or beneficially owned
by
the Depositor, the Sponsor, the Servicer, the Master Servicer, the Securities
Administrator, the Trustee or any Affiliate thereof shall be deemed not to
be
outstanding and the Voting Rights to which it is entitled shall not be taken
into account in determining whether the requisite percentage of Voting Rights
necessary to effect any such consent has been obtained, except as otherwise
provided in Section 12.01 of this Agreement. The Trustee and the Securities
Administrator may conclusively rely upon a certificate of the Depositor, the
Sponsor, the Master Servicer, the Securities Administrator or the Servicer
in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to “Holders” or “Certificateholders” shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Securities Administrator
shall be required to recognize as a “Holder” or “Certificateholder” only the
Person in whose name a Certificate is registered in the Certificate
Register.
16
“Certificate
Owner”: With respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Certificate as reflected on the books of the Depository
or on the books of a Depository Participant or on the books of an indirect
participating brokerage firm for which a Depository Participant acts as
agent.
“Certificate
Principal Balance”: With respect to each Class A Certificate, Mezzanine
Certificate or Class P Certificate as of any date of determination, the
Certificate Principal Balance of such Certificate on the Distribution Date
immediately prior to such date of determination plus any Subsequent Recoveries
added to the Certificate Principal Balance of such Certificate pursuant to
Section 5.04 of this Agreement, minus (i) all distributions allocable to
principal made thereon and (ii) Realized Losses allocated thereto, if any,
on
such immediately prior Distribution Date (or, in the case of any date of
determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC II Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates then outstanding. The aggregate
initial Certificate Principal Balance of each Class of Regular Certificates
is
set forth in the Preliminary Statement hereto.
“Certificate
Register”: The register maintained pursuant to Section 6.02 of this
Agreement.
“Certification
Parties”: Has the meaning set forth in Section 3.19 and Section 4.18 of this
Agreement.
“Certifying
Person”: Has the meaning set forth in Section 3.19 and Section 4.18 of this
Agreement.
“Class”:
Collectively, all of the Certificates bearing the same class
designation.
“Class
A
Certificate”: Any Class A-1, Class A-2A, Class A-2B, Class A-2C or Class A-2D
Certificate.
“Class
A
Principal Distribution Amount”: The Class A Principal Distribution Amount is an
amount equal to the sum of: (i) the Class A-1 Principal Distribution Amount
and
(ii) the Class A-2 Principal Distribution Amount.
“Class
A-1 Allocation Percentage”: With respect to any Distribution Date is the
percentage equivalent of a fraction, the numerator of which is (x) the Group
I
Principal Remittance Amount for such Distribution Date and the denominator
of
which is (y) the Principal Remittance Amount for such Distribution
Date.
“Class
A-1 Certificate”: Any one of the Class A-1 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-1
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
17
“Class
A-1 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the Certificate Principal Balance of the Class A-1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 59.20% and (ii) the aggregate Stated Principal Balance of the
Group I Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group I Mortgage Loans as of the last day of
the
related Due Period (after giving effect to scheduled payments of principal
due
during the related Due Period, to the extent received or advanced and
unscheduled collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Group I Mortgage Loans as of the Cut-off Date.
“Class
A-2 Allocation Percentage”: With respect to any Distribution Date is the
percentage equivalent of a fraction, the numerator of which is (x) the Group
II
Principal Remittance Amount for such Distribution Date and the denominator
of
which is (y) the Principal Remittance Amount for such Distribution
Date.
“Class
A-2 Certificate”: Any Class A-2A, Class A-2B, Class A-2C or Class A-2D
Certificate.
“Class
A-2 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of the Certificate Principal Balances of the Class A-2A,
Class A-2B, Class A-2C and Class A-2D Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 59.20% and
(ii)
the aggregate Stated Principal Balance of the Group II Mortgage Loans as of
the
last day of the related Due Period (after giving effect to scheduled payments
of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced and unscheduled collections of principal received during
the related Prepayment Period) minus the product of (i) 0.50% and (ii) the
aggregate principal balance of the Group II Mortgage Loans as of the Cut-off
Date.
“Class
A-2A Certificate”: Any one of the Class A-2A Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-1
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
A-2B Certificate”: Any one of the Class A-2B Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-1
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
18
“Class
A-2C Certificate”: Any one of the Class A-2C Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-1
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
A-2D Certificate”: Any one of the Class A-2D Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-1
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
CE
Certificate”: Any one of the Class CE Certificates executed and authenticated by
the Securities Administrator and delivered by the Trustee, substantially in
the
form annexed hereto as Exhibit
A-4
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
IO
Distribution Amount”: As defined in Section 5.07(e) hereof. For
purposes of clarity, the Class IO Distribution Amount for any Distribution
Date
shall equal the amount payable to the Supplemental Interest Trust on such
Distribution Date in excess of the amount payable on the Class IO Interest
on
such Distribution Date, all as further provided in Section 5.07(e)
hereof.
“Class
IO
Interest”: An uncertificated interest in the Trust Fund held by the Trustee,
evidencing a REMIC Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-1 Certificate”: Any one of the Class M-1 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-1 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates after taking into account the payment of the Class A
Principal Distribution Amount on the Distribution Date and (ii) the Certificate
Principal Balance of the Class M-1 Certificates immediately prior to the
Distribution Date over (y) the lesser of (A) the product of (i) 67.80% and
(ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans
as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
19
“Class
M-2 Certificate”: Any one of the Class M-2 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-2 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates after taking into account the payment of the Class A
Principal Distribution Amount on the Distribution Date, (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date
and (iii) the Certificate Principal Balance of the Class M-2 Certificates
immediately prior to the Distribution Date over (y) the lesser of (A) the
product of (i) 75.00% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections
of
principal received during the related Prepayment Period) minus the product
of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as
of
the Cut-off Date.
“Class
M-3 Certificate”: Any one of the Class M-3 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-3 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates after taking into account the payment of the Class A
Principal Distribution Amount on the Distribution Date, (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date and (iv) the Certificate Principal Balance of the
Class
M-3 Certificates immediately prior to the Distribution Date over (y) the lesser
of (A) the product of (i) 78.60% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period,
to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the product of (i) 0.50% and (ii) the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
20
“Class
M-4 Certificate”: Any one of the Class M-4 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-4 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date and (v) the Certificate
Principal Balance of the Class M-4 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 82.00% and
(ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans
as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment Period) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
“Class
M-5 Certificate”: Any one of the Class M-5 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-5 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date) and (vi) the Certificate Principal Balance of the Class M-5 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 85.10% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections
of
principal received during the related Prepayment Period) minus the product
of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as
of
the Cut-off Date.
21
“Class
M-6 Certificate”: Any one of the Class M-6 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-6 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date) and (vii) the Certificate Principal Balance
of
the Class M-6 Certificates immediately prior to such Distribution Date over
(y)
the lesser of (A) the product of (i) 88.20% and (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) and
(B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.
“Class
M-7 Certificate”: Any one of the Class M-7 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-7 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (vii) the Certificate Principal Balance
of
the Class M-6 Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date) and (viii) the
Certificate Principal Balance of the Class M-7 Certificates immediately prior
to
such Distribution Date over (y) the lesser of (A) the product of (i) 90.60%
and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans
as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment Period) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
22
“Class
M-8 Certificate”: Any one of the Class M-8 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-8 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (vii) the Certificate Principal Balance
of
the Class M-6 Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date), (viii) the
Certificate Principal Balance of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount on such
Distribution Date) and (ix) the Certificate Principal Balance of the Class
M-8
Certificates immediately prior to such Distribution Date over (y) the lesser
of
(A) the product of (i) 92.00% and (ii) the aggregate Stated Principal Balance
of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period,
to
the extent received or advanced and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) minus
the product of (i) 0.50% and (ii) the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
23
“Class
M-9 Certificate”: Any one of the Class M-9 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-2
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-9 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (vii) the Certificate Principal Balance
of
the Class M-6 Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date). (viii) the
Certificate Principal Balance of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount on such
Distribution Date), (ix) the Certificate Principal Balance of the Class M-8
Certificates (after taking into account the payment of the Class M-8 Principal
Distribution Amount on such Distribution Date) and (x) the Certificate Principal
Balance of the Class M-9 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 94.60% and (ii) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) and
(B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.
24
“Class
M-10 Certificate”: Any one of the Class M-10 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-3
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
M-10 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (vii) the Certificate Principal Balance
of
the Class M-6 Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date). (viii) the
Certificate Principal Balance of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount on such
Distribution Date), (ix) the Certificate Principal Balance of the Class M-8
Certificates (after taking into account the payment of the Class M-8 Principal
Distribution Amount on such Distribution Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates (after taking into account the payment
of
the Class M-9 Principal Distribution Amount on such Distribution Date) and
(xi)
the Certificate Principal Balance of the Class M-10 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
96.20% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans
as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced and unscheduled collections of principal received
during the related Prepayment Period) minus the product of (i) 0.50% and (ii)
the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
“Class
M-11 Certificate”: Any one of the Class M-11 Certificates executed and
authenticated by the Securities Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit
A-3
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
25
“Class
M-11 Principal Distribution Amount”: With respect to any Distribution Date on or
after the Stepdown Date and on which a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of
the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates after taking into account the
payment of the Class M-1 Principal Distribution Amount on the Distribution
Date,
(iii) the Certificate Principal Balance of the Class M-2 Certificates after
taking into account the payment of the Class M-2 Principal Distribution Amount
on the Distribution Date, (iv) the Certificate Principal Balance of the Class
M-3 Certificates after taking into account the payment of the Class M-3
Principal Distribution Amount on the Distribution Date, (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates
(after taking into account the payment of the Class M-5 Principal Distribution
Amount on such Distribution Date), (vii) the Certificate Principal Balance
of
the Class M-6 Certificates (after taking into account the payment of the Class
M-6 Principal Distribution Amount on such Distribution Date). (viii) the
Certificate Principal Balance of the Class M-7 Certificates (after taking into
account the payment of the Class M-7 Principal Distribution Amount on such
Distribution Date), (ix) the Certificate Principal Balance of the Class M-8
Certificates (after taking into account the payment of the Class M-8 Principal
Distribution Amount on such Distribution Date), (x) the Certificate Principal
Balance of the Class M-9 Certificates (after taking into account the payment
of
the Class M-9 Principal Distribution Amount on such Distribution Date), (xi)
the
Certificate Principal Balance of the Class M-10 Certificates (after taking
into
account the payment of the Class M-10 Principal Distribution Amount on such
Distribution Date) and (xii) the Certificate Principal Balance of the Class
M-11
Certificates immediately prior to such Distribution Date over (y) the lesser
of
(A) the product of (i) 98.20% and (ii) the aggregate Stated Principal Balance
of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period,
to
the extent received or advanced and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) minus
the product of (i) 0.50% and (ii) the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
“Class
P
Certificate”: Any one of the Class P Certificates executed and authenticated by
the Securities Administrator and delivered by the Trustee, substantially in
the
form annexed hereto as Exhibit
A-5
and
evidencing a Regular Interest in REMIC III for purposes of the REMIC
Provisions.
“Class
R
Certificates”: Any one of the Class R Certificates executed and authenticated by
the Securities Administrator and delivered by the Trustee, substantially in
the
form annexed hereto as Exhibit
A-6,
and
evidencing the Class R-I Interest, the Class R-II Interest and the Class R-III
Interest.
“Class
R-I Interest”: The uncertificated residual interest in REMIC I.
“Class
R-II Interest”: The uncertificated residual interest in REMIC II.
“Class
R-III Interest”: The uncertificated residual interest in REMIC III.
“Code”:
The Internal Revenue Code of 1986 as amended from time to time.
“Collection
Account”: The separate account or accounts created and maintained, or caused to
be created and maintained, by the Servicer pursuant to Section 3.08(a) of
this Agreement for the benefit of the Certificateholders, which shall be
entitled “Fremont Investment & Loan, as the Servicer for HSBC Bank USA,
National Association as Trustee, in trust for the registered holders of ACE
Securities Corp. Home Equity Loan Trust, Series 2006-FM1, Asset Backed
Pass-Through Certificates”. The Collection Account must be an Eligible
Account.
“Commission”:
The Securities and Exchange Commission.
“Controlling
Person”: Means, with respect to any Person, any other Person who “controls” such
Person within the meaning of the Securities Act.
“Corporate
Trust Office”: The principal corporate trust office of the Trustee or the
Securities Administrator, as the case may be, at which, at any particular time,
its corporate trust business in connection with this Agreement shall be
administered, which office at the date of the execution of this instrument
is
located at (i) with respect to the Trustee, HSBC Bank USA, National Association,
452 Fifth Avenue, New York, New York10018, Attention: CTLA-Structured
Finance/ACE Securities Corp., 2006-FM1, or at such other address as the Trustee
may designate from time to time by notice to the Certificateholders, the
Depositor, the Master Servicer, the Securities Administrator and the Servicer
and (ii) with respect to the Securities Administrator, (A) for purposes of
Certificate transfers and surrender, Wells Fargo Bank, National Association,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota55479, Attention:
Corporate Trust (ACE 2006-FM1), and (B) for all other purposes, Wells Fargo
Bank, National Association, P.O. Box 98, Columbia, Maryland21046, Attention:
Corporate Trust (ACE 2006-FM1) (or for overnight deliveries, at 9062 Old
Annapolis Road, Columbia, Maryland21045, Attention: Corporate Trust (ACE
2006-FM1)), or at such other address as the Securities Administrator may
designate from time to time by notice to the Certificateholders, the Depositor,
the Master Servicer, the Servicer and the Trustee.
“Corresponding
Certificate”: With respect to each REMIC II Regular Interest, as
follows:
REMIC
II Regular Interest
Class
REMIC
II Regular Interest A-1
A-1
REMIC
II Regular Interest A-2A
A-2A
REMIC
II Regular Interest A-2B
A-2B
REMIC
II Regular Interest A-2C
A-2C
REMIC
II Regular Interest A-2D
A-2D
REMIC
II Regular Interest M-1
M-1
REMIC
II Regular Interest M-2
M-2
REMIC
II Regular Interest M-3
M-3
REMIC
II Regular Interest M-4
M-4
REMIC
II Regular Interest M-5
M-5
REMIC
II Regular Interest M-6
M-6
REMIC
II Regular Interest M-7
M-7
REMIC
II Regular Interest M-8
M-8
REMIC
II Regular Interest M-9
M-9
REMIC
II Regular Interest M-10
M-10
REMIC
II Regular Interest M-11
M-11
REMIC
II Regular Interest P
P
27
“Credit
Enhancement Percentage”: For any Distribution Date, the percentage equivalent of
a fraction, the numerator of which is the sum of the aggregate Certificate
Principal Balances of the Mezzanine Certificates and the Class CE Certificates,
and the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans, calculated after taking into account distributions of principal
on the Mortgage Loans and distribution of the Principal Distribution Amount
to
the Certificates then entitled to distributions of principal on such
Distribution Date.
“Credit
Risk Management Agreements”: The agreements between the Credit Risk Manager and
the Servicer and/or Master Servicer, each regarding the loss mitigation and
advisory services to be provided by the Credit Risk Manager.
“Credit
Risk Management Fee”: The amount payable to the Credit Risk Manager on each
Distribution Date as compensation for all services rendered by it in the
exercise and performance of any and all powers and duties of the Credit Risk
Manager under the Credit Risk Management Agreements, which amount shall equal
one twelfth of the product of (i) the Credit Risk Management Fee Rate multiplied
by (ii) the Stated Principal Balance of the Mortgage Loans and any related
REO
Properties as of the first day of the related Due Period.
“Credit
Risk Management Fee Rate”: 0.0135% per annum.
“Credit
Risk Manager”: Clayton Fixed Income Services Inc. (formerly known as The
Murrayhill Company), a Colorado corporation, and its successors and
assigns.
“Custodial
Agreement”: The Custodial Agreement dated as of August 1, 2006, among the
Trustee, Wells Fargo and the Servicer, as may be amended or supplemented from
time to time.
“Custodian”:
Wells Fargo or any other custodian appointed under any custodial agreement
entered into after the date of this Agreement.
“Cut-off
Date”: With respect to each Mortgage Loan, August 1, 2006. With respect to all
Qualified Substitute Mortgage Loans, their respective dates of substitution.
References herein to the “Cut-off Date,” when used with respect to more than one
Mortgage Loan, shall be to the respective Cut-off Dates for such Mortgage
Loans.
“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, except such a reduction
resulting from a Deficient Valuation.
28
“Deficient
Valuation”: With respect to any Mortgage Loan, a valuation of the related
Mortgaged Property by a court of competent jurisdiction in an amount less than
the then outstanding principal balance of the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code.
“Definitive
Certificates”: As defined in Section 6.01(b) of this
Agreement.
“Deleted
Mortgage Loan”: A Mortgage Loan replaced or to be replaced by a Qualified
Substitute Mortgage Loan.
“Delinquency
Percentage”: As of the last day of the related Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate Stated
Principal Balance of all Mortgage Loans that, as of the last day of the previous
calendar month, are sixty (60) or more days delinquent, are in foreclosure,
have
been converted to REO Properties or have been discharged by reason of
bankruptcy, and the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties as of the last day of the
previous calendar month.
“Depositor”:
ACE Securities Corp., a Delaware corporation, or its successor in
interest.
“Depository”:
The Depository Trust Company, or any successor Depository hereafter named.
The
nominee of the initial Depository, for purposes of registering those
Certificates that are to be Book-Entry Certificates, is Cede & Co. The
Depository shall at all times be a “clearing corporation” as defined in
Section 8-102(3) of the Uniform Commercial Code of the State of New York
and a “clearing agency” registered pursuant to the provisions of
Section 17A of the Exchange Act.
“Depository
Institution”: Any depository institution or trust company, including the
Trustee, that (a) is incorporated under the laws of the United States of America
or any State thereof, (b) is subject to supervision and examination by federal
or state banking authorities and (c) has outstanding unsecured commercial paper
or other short-term unsecured debt obligations (or, in the case of a depository
institution that is the principal subsidiary of a holding company, such holding
company has unsecured commercial paper or other short-term unsecured debt
obligations) that are rated at least A-1+ by S&P, F-1+ by Fitch and P-1 by
Moody’s (or, if such Rating Agencies are no longer rating the Offered
Certificates, comparable ratings by any other nationally recognized statistical
rating agency then rating the Offered Certificates).
“Depository
Participant”: A broker, dealer, bank or other financial institution or other
Person for whom from time to time a Depository effects book-entry transfers
and
pledges of securities deposited with the Depository.
“Determination
Date”: With respect to each Distribution Date, the 18th day of the calendar
month in which such Distribution Date occurs, or if such 18th day is not a
Business Day, the Business Day immediately preceding such 18th day. The
Determination Date for purposes of Article X hereof shall mean the 15th day
of
the month or, if such 15th day is not a Business Day, the first Business Day
following such 15th day.
29
“Directly
Operate”: With respect to any REO Property, the furnishing or rendering of
services to the tenants thereof, the management or operation of such REO
Property, the holding of such REO Property primarily for sale to customers,
the
performance of any construction work thereon or any use of such REO Property
in
a trade or business conducted by REMIC I other than through an Independent
Contractor; provided, however, that the Servicer, on behalf of the Trustee,
shall not be considered to Directly Operate an REO Property solely because
the
Servicer establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
“Disqualified
Organization”: Any of the following: (i) the United States, any State or
political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its activities are subject to tax and, except
for Freddie Mac, a majority of its board of directors is not selected by such
governmental unit), (ii) any foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers’ cooperatives described in Section 521 of the
Code) which is exempt from the tax imposed by Chapter 1 of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable
income), (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, (v) an “electing large partnership” and
(vi) any other Person so designated by the Trustee based upon an Opinion of
Counsel that the holding of an Ownership Interest in a Residual Certificate
by
such Person may cause any Trust REMIC or any Person having an Ownership Interest
in any Class of Certificates (other than such Person) to incur a liability
for
any federal tax imposed under the Code that would not otherwise be imposed
but
for the Transfer of an Ownership Interest in a Residual Certificate to such
Person. The terms “United States,”“State” and “international organization”
shall have the meanings set forth in Section 7701 of the Code or successor
provisions.
“Distribution
Account”: The separate trust account or accounts created and maintained by the
Securities Administrator pursuant to Section 3.08(b) of this Agreement in
the name of the Securities Administrator for the benefit of the
Certificateholders and designated “Wells Fargo Bank, National Association, in
trust for registered holders of ACE Securities Corp. Home Equity Loan Trust,
Series 2006-FM1”. Funds in the Distribution Account shall be held in trust for
the Certificateholders for the uses and purposes set forth in this Agreement.
The Distribution Account must be an Eligible Account.
“Distribution
Date”: The 25th day of any month, or if such 25th day is not a Business Day, the
Business Day immediately following such 25th day, commencing in September
2006.
“Due
Date”: With respect to each Distribution Date, the day of the month on which the
Monthly Payment is due on a Mortgage Loan during the related Due Period,
exclusive of any days of grace.
“Due
Period”: With respect to any Distribution Date, the period commencing on the
second day of the month immediately preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which
such
Distribution Date occurs.
30
“Eligible
Account”: Any of (i) an account or accounts maintained with a Depository
Institution, (ii) an account or accounts the deposits in which are fully insured
by the FDIC or (iii) a trust account or accounts maintained with a federal
depository institution or state chartered depository institution acting in
its
fiduciary capacity. Eligible Accounts may bear interest.
“ERISA”:
The Employee Retirement Income Security Act of 1974, as amended from time to
time.
“Estate
in Real Property”: A fee simple estate in a parcel of land.
“Excess
Liquidation Proceeds”: To the extent that such amount is not required by law to
be paid to the related Mortgagor, the amount, if any, by which Liquidation
Proceeds with respect to a liquidated Mortgage Loan exceed the sum of (i) the
outstanding principal balance of such Mortgage Loan and accrued but unpaid
interest at the related Net Mortgage Rate through the last day of the month
in
which the related Liquidation Event occurs, plus (ii) related liquidation
expenses or other amounts to which the Servicer is entitled to be reimbursed
from Liquidation Proceeds with respect to such liquidated Mortgage Loan pursuant
to Section 3.09 of this Agreement.
“Exchange
Act”: The Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
“Extraordinary
Trust Fund Expense”: Any amounts payable or reimbursable to the Trustee, the
Master Servicer, the Securities Administrator, the Custodian or any director,
officer, employee or agent of any such Person from the Trust Fund pursuant
to
the terms of this Agreement and any amounts payable from the Distribution
Account in respect of taxes pursuant to Section 11.01(g)(v) of this
Agreement.
“Fannie
Mae”: Fannie Mae, formerly known as the Federal National Mortgage Association,
or any successor thereto.
“FDIC”:
Federal Deposit Insurance Corporation or any successor thereto.
“Final
Maturity Date”: The Distribution Date occurring in June 2036.
“Final
Recovery Determination”: With respect to any defaulted Mortgage Loan or any REO
Property (other than a Mortgage Loan or REO Property purchased by the Sponsor
or
the Master Servicer pursuant to or as contemplated by Section 2.03, 3.13(c)
or Section 10.01 of this Agreement), a determination made by the Servicer
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects
to
be finally recoverable in respect thereof have been so recovered, which
determination shall be evidenced by a certificate of a Servicing Officer of
the
Servicer delivered to the Master Servicer and maintained in its
records.
“Fitch”:
Fitch Ratings or any successor in interest.
31
“Form
8-K
Disclosure Information”: Has the meaning set forth in Section
5.06(b).
“Freddie
Mac”: Freddie Mac, formerly known as the Federal Home Loan Mortgage Corporation,
or any successor thereto.
“Fremont”:
Fremont Investment & Loan or any successor thereto appointed hereunder in
connection with the servicing and administration of the Mortgage
Loans.
“Gross
Margin”: With respect to each Adjustable Rate Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note that is added to the Index
on
each Adjustment Date in accordance with the terms of the related Mortgage Note
used to determine the Mortgage Rate for such Adjustable Rate Mortgage
Loan.
“Group
I
Allocation Percentage”: The aggregate principal balance of the Group I Mortgage
Loans divided by the sum of the aggregate principal balance of the Group I
Mortgage Loans and Group II Mortgage Loans.
“Group
I
Interest Remittance Amount”: With respect to any Distribution Date, that portion
of the Available Distribution Amount for such Distribution Date that represents
interest received or advanced on the Group I Mortgage Loans (net of the
Administration Fees and any Prepayment Charges and after taking into account
amounts payable or reimbursable to the Trustee, the Custodian, the Securities
Administrator, the Credit Risk Manager, the Master Servicer or the Servicer
pursuant to this Agreement or the Custodial Agreement with respect to the Group
I Mortgage Loans).
“Group
I
Mortgage Loans”: Those Mortgage Loans identified on the Mortgage Loan Schedule
as Group I Mortgage Loans.
“Group
I
Principal Distribution Amount”: With respect to any Distribution Date, the sum
of (i) the principal portion of all Monthly Payments on the Group I Mortgage
Loans due during the related Due Period, whether or not received on or prior
to
the related Determination Date; (ii) the principal portion of all proceeds
received in respect of the repurchase of a Group I Mortgage Loan or, in the
case
of a substitution, certain amounts representing a principal adjustment, during
the related Prepayment Period pursuant to or as contemplated by
Section 2.03, Section 3.13(c) and Section 10.01 of this
Agreement; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group I Mortgage Loans, net
in
each case of payments or reimbursements to the Trustee, the Custodian, the
Credit Risk Manager, the Master Servicer, the Securities Administrator or the
Servicer and (iv) the Class A-1 Allocation Percentage of the amount of any
Overcollateralization Increase Amount for such Distribution Date minus
(v) the
Class A-1 Allocation Percentage of the amount of any Overcollateralization
Reduction Amount for such Distribution Date.
32
“Group
I
Principal Remittance Amount”: With respect to any Distribution Date, the sum of
(a) the amounts described in clauses (i) through (iii) of the definition of
Group I Principal Distribution Amount.
“Group
II
Allocation Percentage”: The aggregate principal balance of the Group II Mortgage
Loans divided by the sum of the aggregate principal balance of the Group I
Mortgage Loans and Group II Mortgage Loans.
“Group
II
Interest Remittance Amount”: With respect to any Distribution Date, that portion
of the Available Distribution Amount for such Distribution Date that represents
interest received or advanced on the Group II Mortgage Loans (net of the
Administration Fees and any Prepayment Charges and after taking into account
amounts payable or reimbursable to the Trustee, the Custodian, the Securities
Administrator, the Credit Risk Manager, the Master Servicer or the Servicer
pursuant to this Agreement or the Custodial Agreement with respect to the Group
II Mortgage Loans).
“Group
II
Mortgage Loans”: Those Mortgage Loans identified on the Mortgage Loan Schedule
as Group II Mortgage Loans.
“Group
II
Principal Distribution Amount”: With respect to any Distribution Date, the sum
of (i) the principal portion of all Monthly Payments on the Group II Mortgage
Loans due during the related Due Period, whether or not received on or prior
to
the related Determination Date; (ii) the principal portion of all proceeds
received in respect of the repurchase of a Group II Mortgage Loan or, in the
case of a substitution, certain amounts representing a principal adjustment,
during the related Prepayment Period pursuant to or as contemplated by
Section 2.03, Section 3.13(c) and Section 10.01 of this
Agreement; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group II Mortgage Loans, net
in
each case of payments or reimbursements to the Trustee, the Custodian, the
Credit Risk Manager, the Master Servicer, the Securities Administrator or the
Servicer and (iv) the Class A-2 Allocation Percentage of the amount of any
Overcollateralization Increase Amount for such Distribution Date minus
(v) the
Class A-2 Allocation Percentage of the amount of any Overcollateralization
Reduction Amount for such Distribution Date.
“Group
II
Principal Remittance Amount”: With respect to any Distribution Date, the sum of
the amounts described in clauses (i) through (iii) of the definition of Group
II
Principal Distribution Amount.
“Independent”:
When used with respect to any accountants, a Person who is “independent” within
the meaning of Rule 2-01(B) of the Commission’s Regulation S-X. When used with
respect to any specified Person, any such Person who (a) is in fact independent
of the Depositor, the Master Servicer, the Securities Administrator, the
Servicer, the Sponsor, the originator and their respective Affiliates, (b)
does
not have any direct financial interest in or any material indirect financial
interest in the Depositor, the Master Servicer, the Securities Administrator,
the Servicer, the Sponsor or any Affiliate thereof, (c) is not connected with
the Depositor, the Master Servicer, the Securities Administrator, the Servicer,
the Sponsor or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions
and (d) is not a member of the immediate family of a Person defined on clause
(b) or (c) above.
33
“Independent
Contractor”: Either (i) any Person (other than a Servicer) that would be an
“independent contractor” with respect to REMIC I within the meaning of
Section 856(d)(3) of the Code if REMIC I were a real estate investment
trust (except that the ownership tests set forth in that section shall be
considered to be met by any Person that owns, directly or indirectly, 35% or
more of any Class of Certificates), so long as REMIC I does not receive or
derive any income from such Person and provided that the relationship between
such Person and REMIC I is at arm’s length, all within the meaning of Treasury
Regulation Section 1.856-4(b)(5), or (ii) any other Person (including any
Servicer) if the Trustee has received an Opinion of Counsel to the effect that
the taking of any action in respect of any REO Property by such Person, subject
to any conditions therein specified, that is otherwise herein contemplated
to be
taken by an Independent Contractor will not cause such REO Property to cease
to
qualify as “foreclosure property” within the meaning of Section 860G(a)(8)
of the Code (determined without regard to the exception applicable for purposes
of Section 860D(a) of the Code), or cause any income realized in respect of
such REO Property to fail to qualify as Rents from Real Property.
“Index”:
As of any Adjustment Date, the index applicable to the determination of the
Mortgage Rate on each Adjustable Rate Mortgage Loan will generally be either
(i)
the average of the interbank offered rates for six-month United States dollar
deposits in the London market as published in The
Wall Street Journal and
as
most recently available either (a) as of the first Business Day forty-five
(45)
days prior to such Adjustment Date or (b) as of the first Business Day of the
month preceding the month of such Adjustment Date, as specified in the related
Mortgage Note or (ii) the weekly average yield on United States Treasury
Securities adjusted to a constant maturity of one year, as published in the
Federal Statistical Release H.15 (519) as most recently announced as of a date
45 days prior to such Adjustment Date.
“Institutional
Accredited Investor”: As defined in Section 6.01(c).
“Insurance
Proceeds”: Proceeds of any title policy, hazard policy or other insurance
policy, covering a Mortgage Loan or the related Mortgaged Property, to the
extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor or a senior lienholder in
accordance with Accepted Servicing Practices, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
“Interest
Accrual Period”: With respect to any Distribution Date and the Class A
Certificates and the Mezzanine Certificates, the period commencing on the
Distribution Date of the month immediately preceding the month in which such
Distribution Date occurs (or, in the case of the first Distribution Date,
commencing on the Closing Date) and ending on the day preceding such
Distribution Date. With respect to any Distribution Date and the Class CE
Certificates and the REMIC I Regular Interests, the one-month period ending
on
the last day of the calendar month immediately preceding the month in which
such
Distribution Date occurs.
34
“Interest
Carry Forward Amount”: With respect to any Distribution Date and any Class A
Certificate or Mezzanine Certificate, the sum of (i) the amount, if any, by
which (a) the Interest Distribution Amount for such Class as of the immediately
preceding Distribution Date exceeded (b) the actual amount distributed on such
Class in respect of interest on such immediately preceding Distribution Date
and
(ii) the amount of any Interest Carry Forward Amount for such Class remaining
unpaid from the previous Distribution Date, plus accrued interest on such sum
calculated at the related Pass-Through Rate for the most recently ended Interest
Accrual Period.
“Interest
Determination Date”: With respect to the Class A Certificates, the Mezzanine
Certificates, REMIC I Regular Interests and REMIC II Regular Interests and
any
Interest Accrual Period therefor, the second London Business Day preceding
the
commencement of such Interest Accrual Period.
“Interest
Distribution Amount”: With respect to any Distribution Date and any Class A
Certificates, any Mezzanine Certificates and any Class CE Certificates, the
aggregate Accrued Certificate Interest on the Certificates of such Class for
such Distribution Date.
“Interest
Remittance Amount”: With respect to any Distribution Date, the sum of: (i) the
Group I Interest Remittance Amount and (ii) the Group II Interest Remittance
Amount.
“Last
Scheduled Distribution Date”: The Distribution Date in July 2036, which is the
Distribution Date immediately following the maturity date for the Mortgage
Loan
with the latest maturity date.
“Late
Collections”: With respect to any Mortgage Loan and any Due Period, all amounts
received subsequent to the Determination Date immediately following such Due
Period with respect to such Mortgage Loan, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously
recovered.
“Liquidation
Event”: With respect to any Mortgage Loan, any of the following events: (i) such
Mortgage Loan is paid in full; (ii) a Final Recovery Determination is made
as to
such Mortgage Loan or (iii) such Mortgage Loan is removed from REMIC I by reason
of its being purchased, sold or replaced pursuant to or as contemplated by
Section 2.03, Section 3.13(c) or Section 10.01 of this Agreement.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property or (ii) such REO Property
is removed from REMIC I by reason of its being purchased pursuant to
Section 10.01 of this Agreement.
“Liquidation
Proceeds”: The amount (other than Insurance Proceeds, amounts received in
respect of the rental of any REO Property prior to REO Disposition, or required
to be released to a Mortgagor or a senior lienholder in accordance with
applicable law or the terms of the related Mortgage Loan Documents) received
by
the Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation (other
than
amounts required to be released to the Mortgagor or a senior lienholder), (ii)
the liquidation of a defaulted Mortgage Loan through a trustee’s sale,
foreclosure sale or otherwise, (iii) the repurchase, substitution or sale of
a
Mortgage Loan or an REO Property pursuant to or as contemplated by
Section 2.03, Section 3.13(c), Section 3.21 or Section 10.01
of this Agreement or (iv) any Subsequent Recoveries.
35
“Loan-to-Value
Ratio”: As of any date of determination, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the related
Mortgage Loan at such date and the denominator of which is the Value of the
related Mortgaged Property.
“London
Business Day”: Any day on which banks in the Cities of London and New York are
open and conducting transactions in United States dollars.
“Loss
Severity Percentage”: With respect to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the amount of Realized
Losses incurred on a Mortgage Loan and the denominator of which is the principal
balance of such Mortgage Loan immediately prior to the liquidation of such
Mortgage Loan.
“Marker
Rate”: With respect to the Class CE Certificates and any Distribution Date, a
per annum rate equal to two (2) times the weighted average of the REMIC II
Remittance Rate for each of REMIC II Regular Interest A-1, REMIC II Regular
Interest A-2A, REMIC II Regular Interest A-2B, REMIC II Regular Interest A-2C,
REMIC II Regular Interest A-2D, REMIC II Regular Interest M-1, REMIC II Regular
Interest M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest M-4,
REMIC II Regular Interest M-5, REMIC II Regular Interest M-6, REMIC II Regular
Interest M-7, REMIC II Regular Interest M-8, REMIC II Regular Interest M-9,
REMIC II Regular Interest M-10, REMIC II Regular Interest M-11 and REMIC II
Regular Interest ZZ, with the rate on each such REMIC II Regular Interest (other
than REMIC II Regular Interest ZZ) subject to a cap equal to the lesser of
(i)
the related One-Month LIBOR Pass-Through Rate and (ii) the related Net WAC
Pass-Through Rate for the Corresponding Certificate for the purpose of this
calculation for such Distribution Date and with the rate on REMIC II Regular
Interest ZZ subject to a cap of zero for the purpose of this calculation;
provided however, each such cap for each REMIC II Regular Interest shall be
multiplied by a fraction the numerator of which is the actual number of days
in
the related Interest Accrual Period and the denominator of which is
30.
“Master
Servicer”: As of the Closing Date, Wells Fargo Bank, National Association and
thereafter, its respective successors in interest who meet the qualifications
of
this Agreement. The Master Servicer and the Securities Administrator shall
at
all times be the same Person or an Affiliate.
“Master
Servicer Event of Default”: One or more of the events described in
Section 8.01(b) of this Agreement.
“Master
Servicing Fee”: With respect to each Mortgage Loan and for any calendar month,
an amount equal to one-twelfth of the product of the Master Servicing Fee Rate
multiplied by the Scheduled Principal Balance of the Mortgage Loans as of the
Due Date in the preceding calendar month.
36
“Master
Servicing Fee Rate”: 0.005% per annum.
“Maximum
ZZ Uncertificated Interest Deferral Amount”: With respect to any Distribution
Date, the excess of (i) accrued interest at the REMIC II Remittance Rate
applicable to REMIC II Regular Interest ZZ for such Distribution Date on a
balance equal to the Uncertificated Balance of REMIC II Regular Interest ZZ
minus the REMIC II Overcollateralization Amount, in each case for such
Distribution Date, over (ii) Uncertificated Interest on REMIC II Regular
Interest A-1, REMIC II Regular Interest A-2A, REMIC II Regular Interest A-2B,
REMIC II Regular Interest A-2C, REMIC II Regular Interest A-2D, REMIC II Regular
Interest M-1, REMIC II Regular Interest M-2, REMIC II Regular Interest M-3,
REMIC II Regular Interest M-4, REMIC II Regular Interest M-5, REMIC II Regular
Interest M-6, REMIC II Regular Interest M-7, REMIC II Regular Interest M-8,
REMIC II Regular Interest M-9, REMIC II Regular Interest M-10 and REMIC II
Regular Interest M-11 for such Distribution Date, with the rate on each such
REMIC II Regular Interest subject to a cap equal to the lesser of (i) the
related One-Month LIBOR Pass-Through Rate and (ii) the related Net WAC
Pass-Through Rate for the Corresponding Certificate for the purpose of this
calculation for such Distribution Date; provided however, each such cap for
each
REMIC II Regular Interest shall be multiplied by a fraction the numerator of
which is the actual number of days in the related Interest Accrual Period and
the denominator of which is 30.
“Maximum
Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.
“MERS”:
Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor
thereto.
“MERS®
System”: The system of recording transfers of mortgages electronically
maintained by MERS.
“Mezzanine
Certificate”: Any Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class
M-6, Class M-7, Class M-8, Class M-9, Class M-10 or Class M-11
Certificate.
“MIN”:
The Mortgage Identification Number for Mortgage Loans registered with MERS
on
the MERS® System.
“Minimum
Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage Rate
thereunder.
“MOM
Loan”: With respect to any Mortgage Loan, MERS acting as the mortgagee of such
Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and
its successors and assigns, at the origination thereof.
“Monthly
Payment”: With respect to any Mortgage Loan, the scheduled monthly payment of
principal and interest on such Mortgage Loan which is payable by the related
Mortgagor from time to time under the related Mortgage Note, determined: (a)
after giving effect to (i) any Deficient Valuation and/or Debt Service Reduction
with respect to such Mortgage Loan and (ii) any reduction in the amount of
interest collectible from the related Mortgagor pursuant to the Relief Act
or
similar state or local laws; (b) without giving effect to any extension granted
or agreed to by the Servicer pursuant to Section 3.01 of this Agreement;
and (c) on the assumption that all other amounts, if any, due under such
Mortgage Loan are paid when due.
37
“Moody’s”:
Moody’s Investors Service, Inc. or any successor in interest.
“Mortgage”:
The mortgage, deed of trust or other instrument creating a first or second
lien
on, or first or second priority security interest in, a Mortgaged Property
securing a Mortgage Note.
“Mortgage
File”: The Mortgage Loan Documents pertaining to a particular Mortgage
Loan.
“Mortgage
Loan”: Each mortgage loan transferred and assigned to the Trustee and the
Mortgage Loan Documents for which have been delivered to the Custodian pursuant
to Section 2.01 of this Agreement and pursuant to the Custodial Agreement,
as held from time to time as a part of the Trust Fund, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule.
“Mortgage
Loan Documents”: The documents evidencing or relating to each Mortgage Loan
delivered to the Custodian under the Custodial Agreement on behalf of the
Trustee.
“Mortgage
Loan Purchase Agreement”: Shall mean the Mortgage Loan Purchase Agreement dated
as of August 25, 2006, between the Depositor and the Sponsor a copy of which
is
attached hereto as Exhibit
F.
“Mortgage
Loan Schedule”: As of any date, the list of Mortgage Loans included in REMIC I
on such date, separately identifying the Group I Mortgage Loans and the Group
II
Mortgage Loans, attached hereto as Schedule 1. The Depositor shall deliver
or
cause the delivery of the initial Mortgage Loan Schedule to the Servicer, the
Master Servicer, the Custodian and the Trustee on the Closing Date. The Mortgage
Loan Schedule shall set forth the following information with respect to each
Mortgage Loan:
(i) the
Mortgage Loan identifying number;
(ii) the
Mortgagor’s first and last name;
(iii) the
street address of the Mortgaged Property including the state and zip
code;
(iv) a
code
indicating whether the Mortgaged Property is owner-occupied;
(v) the
type
of Residential Dwelling constituting the Mortgaged Property;
38
(vi) the
original months to maturity;
(vii) the
original date of the Mortgage Loan and the remaining months to maturity from
the
Cut-off Date, based on the original amortization schedule;
(viii) the
Loan-to-Value Ratio at origination;
(ix) the
Mortgage Rate in effect immediately following the Cut-off Date;
(x) the
date
on which the first Monthly Payment was due on the Mortgage Loan;
(xi) the
stated maturity date;
(xii) the
amount of the Monthly Payment at origination;
(xiii) the
amount of the Monthly Payment as of the Cut-off Date;
(xiv) the
last
Due Date on which a Monthly Payment was actually applied to the unpaid Stated
Principal Balance;
(xv) the
original principal amount of the Mortgage Loan;
(xvi) the
Stated Principal Balance of the Mortgage Loan as of the close of business on
the
Cut-off Date;
(xvii) with
respect to each Adjustable Rate Mortgage Loan, the first Adjustment
Date;
(xviii) with
respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(xix) a
code
indicating the purpose of the loan (i.e., purchase financing, rate/term
refinancing, cash-out refinancing);
(xx) with
respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage Rate under
the terms of the Mortgage Note;
(xxi) with
respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate under
the terms of the Mortgage Note;
(xxii) the
Mortgage Rate at origination;
(xxiii) with
respect to each Adjustable Rate Mortgage Loan, the Periodic Rate
Cap;
(xxiv) with
respect to each Adjustable Rate Mortgage Loan, the first Adjustment Date
immediately following the Cut-off Date;
39
(xxv) with
respect to each Adjustable Rate Mortgage Loan, the Index;
(xxvi) the
date
on which the first Monthly Payment was due on the Mortgage Loan and, if such
date is not consistent with the Due Date currently in effect, such Due
Date;
(xxvii) a
code
indicating whether the Mortgage Loan is an Adjustable Rate Mortgage Loan or
a
fixed rate Mortgage Loan;
(xxviii)
a code
indicating the documentation style (i.e., full, stated or limited);
(xxix) a
code
indicating if the Mortgage Loan is subject to a primary insurance policy or
lender paid mortgage insurance policy and the name of the insurer and, if
applicable, the rate payable in connection therewith;
(xxx) the
Appraised Value of the Mortgaged Property;
(xxxi) the
sale
price of the Mortgaged Property, if applicable;
(xxxii) a
code
indicating whether the Mortgage Loan is subject to a Prepayment Charge, the
term
of such Prepayment Charge and the amount of such Prepayment Charge;
(xxxiii) the
product type (e.g., 2/28, 15 year fixed, 30 year fixed, 15/30 balloon,
etc.);
(xxxiv) the
Mortgagor’s debt to income ratio;
(xxxv) the
FICO
score at origination;
(xxxvi) with
respect to each Mortgage Loan registered on MERS, the MIN; and
(xxxvii) a
code
indicating whether the Mortgage Loan is secured by a first or second
lien.
The
Mortgage Loan Schedule shall set forth the following information with respect
to
the Mortgage Loans in the aggregate as of the Cut-off Date: (1) the number
of
Mortgage Loans; (2) the current principal balance of the Mortgage Loans; (3)
the
weighted average Mortgage Rate of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans. The Mortgage Loan Schedule shall be
amended from time to time by the Depositor in accordance with the provisions
of
this Agreement. With respect to any Qualified Substitute Mortgage Loan, the
Cut-off Date shall refer to the related Cut-off Date for such Mortgage Loan,
determined in accordance with the definition of Cut-off Date
herein.
“Mortgage
Note”: The original executed note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
40
“Mortgage
Rate”: With respect to each Mortgage Loan, the annual rate at which interest
accrues on such Mortgage Loan from time to time in accordance with the
provisions of the related Mortgage Note, which rate with respect to each
Adjustable Rate Mortgage Loan (A) as of any date of determination until the
first Adjustment Date following the Cut-off Date shall be the rate set forth
in
the Mortgage Loan Schedule as the Mortgage Rate in effect immediately following
the Cut-off Date and (B) as of any date of determination thereafter shall be
the
rate as adjusted on the most recent Adjustment Date equal to the sum, rounded
to
the nearest 0.125% as provided in the Mortgage Note, of the Index, as most
recently available as of a date prior to the Adjustment Date as set forth in
the
related Mortgage Note, plus the related Gross Margin; provided that the Mortgage
Rate on such Adjustable Rate Mortgage Loan on any Adjustment Date shall never
be
more than the lesser of (i) the sum of the Mortgage Rate in effect immediately
prior to the Adjustment Date plus the related Periodic Rate Cap, if any, and
(ii) the related Maximum Mortgage Rate, and shall never be less than the greater
of (i) the Mortgage Rate in effect immediately prior to the Adjustment Date
less
the Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage Rate.
With
respect to each Mortgage Loan that becomes an REO Property, as of any date
of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO
Property.
“Mortgaged
Property”: The underlying property securing a Mortgage Loan, including any REO
Property, consisting of an Estate in Real Property improved by a Residential
Dwelling.
“Mortgagor”:
The obligor on a Mortgage Note.
“Net
Monthly Excess Cashflow”: With respect to any Distribution Date, the sum of (i)
any Overcollateralization Reduction Amount for such Distribution Date and (ii)
the excess of (x) the Available Distribution Amount for such Distribution Date
over (y) the sum for such Distribution Date of (A) the aggregate Senior Interest
Distribution Amounts payable to the Holders of the Class A Certificates, (B)
the
aggregate Interest Distribution Amounts payable to the holders of the Mezzanine
Certificates, (C) the Principal Remittance Amount and (D) any Net Swap Payment
or Swap Termination Payment (not caused by the occurrence of a Swap Provider
Trigger Event) owed to the Swap Provider.
“Net
Mortgage Rate”: With respect to any Mortgage Loan (or the related REO Property)
as of any date of determination, a per annum rate of interest equal to the
then
applicable Mortgage Rate for such Mortgage Loan minus the Administration Fee
Rate.
“Net
Swap
Payment”: With respect to each Distribution Date, the net payment required to be
made pursuant to the terms of the Swap Agreement by either the Swap Provider
or
the Supplemental Interest Trust, which net payment shall not take into account
any Swap Termination Payment.
“Net
WAC
Pass-Through Rate”: With respect to the Class A-1 Certificates and any
Distribution Date, a rate per annum (adjusted for the actual number of days
elapsed in the related Interest Accrual Period) equal to the product of (i)
twelve and (ii) a fraction, expressed as a percentage, the numerator of which
is
the amount of interest which accrued on the Group I Mortgage Loans in the prior
calendar month minus the fees payable to the Servicer, the Master Servicer
and
the Credit Risk Manager with respect to the Group I Mortgage Loans for such
Distribution Date and the Group I Allocation Percentage of any Net Swap Payment
payable to the Swap Provider and Swap Termination Payment payable to the Swap
Provider which was not caused by the occurrence of a Swap Provider Trigger
Event, in each case for such Distribution Date and the denominator of which
is
the aggregate principal balance of the Group I Mortgage Loans as of the last
day
of the immediately preceding Due Period (or as of the Cut-off Date with respect
to the first Distribution Date). For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of (adjusted
for the actual number of days elapsed in the related Interest Accrual Period)
the REMIC II Remittance Rate on REMIC II Regular Interest I-GRP, weighted on
the
basis of the Uncertificated Balance of such REMIC II Regular Interest.
41
With
respect to the Class A-2 Certificates and any Distribution Date, a rate per
annum (adjusted for the actual number of days elapsed in the related Interest
Accrual Period) equal to the product of (i) twelve and (ii) a fraction,
expressed as a percentage, the numerator of which is the amount of interest
which accrued on the Group II Mortgage Loans in the prior calendar month minus
the fees payable to the Servicer, the Master Servicer and the Credit Risk
Manager with respect to the Group II Mortgage Loans for such Distribution Date
and the Group II Allocation Percentage of any Net Swap Payment payable to the
Swap Provider and Swap Termination Payment payable to the Swap Provider which
was not caused by the occurrence of a Swap Provider Trigger Event, in each
case
for such Distribution Date and the denominator of which is the aggregate
principal balance of the Group II Mortgage Loans as of the last day of the
immediately preceding Due Period (or as of the Cut-off Date with respect to
the
first Distribution Date). For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of (adjusted
for the actual number of days elapsed in the related Interest Accrual Period)
the REMIC II Remittance Rate on REMIC II Regular Interest II-GRP, weighted
on
the basis of the Uncertificated Balance of such REMIC II Regular
Interest.
With
respect to the Mezzanine Certificates and any Distribution Date a rate per
annum
equal to the weighted average (weighted in proportion to the results of
subtracting from the Scheduled Principal Balance of each loan group, the
Certificate Principal Balance of the related Class A Certificates), of (i)
the
Net WAC Pass-Through Rate for the Class A-1 Certificates and (ii) the Net WAC
Pass-Through Rate for the Class A-2 Certificates. For federal income tax
purposes, the economic equivalent of such rate shall be expressed as the
weighted average of (adjusted for the actual number of days elapsed in the
related Interest Accrual Period) the REMIC II Remittance Rates on (a) REMIC
II
Regular Interest I-SUB, subject to a cap and a floor equal to the REMIC II
Remittance Rate on REMIC II Regular Interest I-GRP, and (b) REMIC II Regular
Interest II-SUB, subject to a cap and a floor equal to the REMIC II Remittance
Rate on REMIC II Regular Interest II-GRP, weighted on the basis of the
Uncertificated Balance of each such REMIC II Regular Interest.
“New
Lease”: Any lease of REO Property entered into on behalf of REMIC I, including
any lease renewed or extended on behalf of REMIC I, if REMIC I has the right
to
renegotiate the terms of such lease.
“Nonrecoverable
P&I Advance”: Any P&I Advance previously made or proposed to be made in
respect of a Mortgage Loan or REO Property that, in the good faith business
judgment of the Servicer or a successor to the Servicer (including the Master
Servicer) will not or, in the case of a proposed P&I Advance, would not be
ultimately recoverable from related Late Collections, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided
herein.
“Nonrecoverable
Servicing Advance”: Any Servicing Advance previously made or proposed to be made
in respect of a Mortgage Loan or REO Property that, in the good faith business
judgment of the Servicer or a successor to the Servicer will not or, in the
case
of a proposed Servicing Advance, would not be ultimately recoverable from
related Late Collections, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
“Non-United
States Person”: Any Person other than a United States Person.
“Notional
Amount”: With respect to the Class CE Certificates and any Distribution Date,
the Uncertificated Balance of the REMIC II Regular Interests (other than REMIC
II Regular Interest P) for such Distribution Date. As of the Closing Date,
the
Notional Amount of the Class CE Certificates is equal to
$1,451,859,522.67.
“Offered
Certificates”: The Class A Certificates and the Mezzanine Certificates,
collectively.
“Officer’s
Certificate”: With respect to any Person, a certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of such Person (or, in the case
of
a Person that is not a corporation, signed by a person or persons having like
responsibilities.
43
“One-Month
LIBOR”: With respect to the Class A Certificates, the Mezzanine Certificates,
REMIC II Regular Interests and any Interest Accrual Period therefor, the rate
determined by the Securities Administrator on the related Interest Determination
Date on the basis of the offered rate for one-month U.S. dollar deposits, as
such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such
Interest Determination Date; provided that if such rate does not appear on
Telerate Page 3750, the rate for such date will be determined on the basis
of
the offered rates of the Reference Banks for one-month U.S. dollar deposits,
as
of 11:00 a.m. (London time) on such Interest Determination Date. In such event,
the Securities Administrator will request the principal London office of each
of
the Reference Banks to provide a quotation of its rate. If on such Interest
Determination Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16). If on such Interest Determination Date, fewer than
two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Securities Administrator shall select an alternative comparable index
(over which the Securities Administrator has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party. The establishment of
One-Month LIBOR by the Securities Administrator and the Securities
Administrator’s subsequent calculation of the One-Month LIBOR Pass-Through Rates
for the relevant Interest Accrual Period, shall, in the absence of manifest
error, be final and binding.
“One-Month
LIBOR Pass-Through Rate”: With respect to the Class A-1 Certificates and, for
purposes of the definition of “Marker Rate”, REMIC II Regular Interest A-1, a
per annum rate equal to One-Month LIBOR plus the related Certificate
Margin.
With
respect to the Class A-2A Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2A, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class A-2B Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2B, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class A-2C Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2C, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class A-2D Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest A-2D, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-1 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-1, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-2 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-2, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
44
With
respect to the Class M-3 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-3, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-4 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-4, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-5 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-5, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-6 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-6, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-7 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-7, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-8 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-8, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-9 Certificates and, for purposes of the definition of
“Marker Rate”, REMIC II Regular Interest M-9, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-10 Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest M-10, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
With
respect to the Class M-11 Certificates and, for purposes of the definition
of
“Marker Rate”, REMIC II Regular Interest M-11, a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin.
“Opinion
of Counsel”: A written opinion of counsel, who may, without limitation, be
salaried counsel for the Depositor, the Servicer, the Securities Administrator
or the Master Servicer, acceptable to the Trustee, except that any opinion
of
counsel relating to (a) the qualification of any REMIC as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of Independent
counsel.
“Optional
Termination Date”: The Distribution Date on which the aggregate principal
balance of the Mortgage Loans (and properties acquired in respect thereof)
remaining in the Trust Fund as of the last day of the related Due Period is
equal to or less than 10% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.
45
“Overcollateralization
Amount”: With respect to any Distribution Date, the excess, if any, of (a) the
aggregate Stated Principal Balances of the Mortgage Loans and REO Properties
immediately following such Distribution Date over (b) the sum of the aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates as of such Distribution Date (after
taking into account the payment of the Principal Remittance Amount on such
Distribution Date).
“Overcollateralization
Increase Amount”: With respect to any Distribution Date, the amount of Net
Monthly Excess Cashflow actually applied as an accelerated payment of principal
to the Class A Certificates and the Mezzanine Certificates then entitled to
distributions of principal to the extent the Required Overcollateralization
Amount exceeds the Overcollateralization Amount.
“Overcollateralization
Reduction Amount”: With respect to any Distribution Date, the lesser of (i) the
amount by which the Overcollateralization Amount exceeds the Required
Overcollateralization Amount and (ii) the Principal Remittance Amount; provided
however that on any Distribution Date on which a Trigger Event is in effect,
the
Overcollateralization Reduction Amount shall equal zero.
“Ownership
Interest”: As to any Certificate, any ownership or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
“P&I
Advance”: As to any Mortgage Loan or REO Property, any advance made by the
Servicer in respect of any Determination Date pursuant to Section 5.03 of
this Agreement, an Advance Financing Person pursuant to Section 3.25 of
this Agreement or in respect of any Distribution Date by a successor Servicer
pursuant to Section 8.02 of this Agreement (which advances shall not
include principal or interest shortfalls due to bankruptcy proceedings or
application of the Relief Act or similar state or local laws).
“Pass-Through
Rate”: With respect to the Class A Certificates and the Mezzanine Certificates,
and any Distribution Date, a rate per annum equal to the lesser of (i) the
related One-Month LIBOR Pass-Through Rate for such Distribution Date and (ii)
the related Net WAC Pass-Through Rate for such Distribution Date.
With
respect to the Class CE Certificates and any Distribution Date, a rate per
annum
equal to the percentage equivalent of a fraction, the numerator of which is
the
sum of the amounts calculated pursuant to clauses (i) through (xix) below,
and
the denominator of which is the aggregate Uncertificated Balances of REMIC
II
Regular Interest AA, REMIC II Regular Interest A-1, REMIC II Regular Interest
A-2A, REMIC II Regular Interest A-2B, REMIC II Regular Interest A-2C, REMIC
II
Regular Interest A-2D, REMIC II Regular Interest M-1, REMIC II Regular Interest
M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest M-4, REMIC II
Regular Interest M-5, REMIC II Regular Interest M-6, REMIC II Regular Interest
M-7, REMIC II Regular Interest M-8, REMIC II Regular Interest M-9, REMIC II
Regular Interest M-10, REMIC II Regular Interest M-11 and REMIC II Regular
Interest ZZ. For purposes of calculating the Pass-Through Rate for the Class
CE
Certificates, the numerator is equal to the sum of the following
components:
(i) the
REMIC
II Remittance Rate for REMIC II Regular Interest AA minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest AA;
46
(ii) the
REMIC
II Remittance Rate for REMIC II Regular Interest A-1 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest A-1;
(iii) the
REMIC
II Remittance Rate for REMIC II Regular Interest A-2A minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest A-2A;
(iv) the
REMIC
II Remittance Rate for REMIC II Regular Interest A-2B minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest A-2B;
(v) the
REMIC
II Remittance Rate for REMIC II Regular Interest A-2C minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest A-2C;
(vi) the
REMIC
II Remittance Rate for REMIC II Regular Interest A-2D minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest A-2D;
(vii) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-1 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-1;
(viii) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-2 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-2;
(ix) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-3 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-3;
(x) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-4 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-4;
(xi) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-5 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-5;
(xii) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-6 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-6;
47
(xiii) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-7 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-7;
(xiv) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-8 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-8;
(xv) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-9 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-9;
(xvi) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-10 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-10;
(xvii) the
REMIC
II Remittance Rate for REMIC II Regular Interest M-11 minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest M-11;
(xviii) the
REMIC
II Remittance Rate for REMIC II Regular Interest ZZ minus the Marker Rate,
applied to an amount equal to the Uncertificated Balance of REMIC II Regular
Interest ZZ; and
(xix) 100%
of
the interest on REMIC II Regular Interest P.
The
Class
IO Interest shall not have a Pass-Through Rate, but current interest for the
Class IO Interest and each Distribution Date shall be an amount equal to 100%
of
the amounts distributable to REMIC II Regular Interest IO for such Distribution
Date.
“PCAOB”:
Means the Public Company Accounting Oversight Board.
“Percentage
Interest”: With respect to any Class of Certificates (other than the Residual
Certificates), the undivided percentage ownership in such Class evidenced by
such Certificate, expressed as a percentage, the numerator of which is the
initial Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate initial Certificate Principal Balance
or
Notional Amount of all of the Certificates of such Class. The Class A
Certificates and the Mezzanine Certificates are issuable only in minimum
Percentage Interests corresponding to minimum initial Certificate Principal
Balances of $25,000 and integral multiples of $1.00 in excess thereof. The
Class
P Certificates are issuable only in Percentage Interests corresponding to
initial Certificate Principal Balances of $20 and integral multiples thereof.
The Class CE Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Notional Balances of $10,000 and integral
multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Notional
Balance of such Class or to an otherwise authorized denomination for such Class
plus such remainder. With respect to any Residual Certificate, the undivided
percentage ownership in such Class evidenced by such Certificate, as set forth
on the face of such Certificate. The Residual Certificates are issuable in
Percentage Interests of 20% and integral multiples of 5% in excess
thereof.
48
“Periodic
Rate Cap”: With respect to each Adjustable Rate Mortgage Loan and any Adjustment
Date therefor, the fixed percentage set forth in the related Mortgage Note,
which is the maximum amount by which the Mortgage Rate for such Adjustable
Rate
Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.
“Permitted
Investments”: Any one or more of the following obligations or securities
acquired at a purchase price of not greater than par, regardless of whether
issued by the Depositor, the Servicer, the Master Servicer, the Trustee or
any
of their respective Affiliates:
(i) direct
obligations of, or obligations fully guaranteed as to timely payment of
principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit
of
the United States;
(ii) (A)
demand and time deposits in, certificates of deposit of, bankers’ acceptances
issued by or federal funds sold by any depository institution or trust company
(including the Trustee or its agent acting in their respective commercial
capacities) 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
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, such depository institution or trust
company (or, if the only Rating Agency is S&P, in the case of the principal
depository institution in a depository institution holding company, debt
obligations of the depository institution holding company) or its ultimate
parent has a short-term uninsured debt rating in the highest available rating
category of Moody’s, Fitch and S&P and provided that each such investment
has an original maturity of no more than 365 days; and provided further that,
if
the only Rating Agency is S&P and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations of
such
subsidiary are not separately rated, the applicable rating shall be that of
the
bank holding company; and, provided further that, if the original maturity
of
such short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term rating of
such
institution shall be A-1+ in the case of S&P if S&P is the Rating
Agency; and (B) any other demand or time deposit or deposit which is fully
insured by the FDIC;
(iii) repurchase
obligations with a term not to exceed 30 days with respect to any security
described in clause (i) above and entered into with a depository institution
or
trust company (acting as principal) rated A-1+ or higher by S&P, F-1 or
higher by Fitch and P-1 or higher by Moody’s, provided, however, that collateral
transferred pursuant to such repurchase obligation must be of the type described
in clause (i) above and must (A) be valued daily at current market prices plus
accrued interest, (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by a party in exchange for such collateral and
(C)
be delivered to such party or, if such party is supplying the collateral, an
agent for such party, in such a manner as to accomplish perfection of a security
interest in the collateral by possession of certificated
securities;
49
(iv) securities
bearing interest or sold at a discount that are issued by any corporation
incorporated under the laws of the United States of America or any state thereof
and that are rated by each Rating Agency that rates such securities in its
highest long-term unsecured rating categories at the time of such investment
or
contractual commitment providing for such investment;
(v) commercial
paper (including both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than 30 days after the date of acquisition thereof) that is rated by each Rating
Agency that rates such securities in its highest short-term unsecured debt
rating available at the time of such investment;
(vi) units
of
money market funds that have been rated “AAA” by Fitch (if rated by Fitch),
“AAm” by S&P or “Aaa” by Moody’s including any such money market fund
managed or advised by the Master Servicer, the Trustee or any of their
Affiliates; and
(vii) if
previously confirmed in writing to the Trustee, any other demand, money market
or time deposit, or any other obligation, security or investment, as may be
acceptable to the Rating Agencies as a permitted investment of funds backing
securities having ratings equivalent to its highest initial rating of the Class
A Certificates;
provided,
however, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of
the
yield to maturity at par of the underlying obligations.
“Permitted
Transferee”: Any Transferee of a Residual Certificate other than a Disqualified
Organization or Non-United States Person.
“Person”:
Any individual, limited liability company, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or
government or any agency or political subdivision thereof.
“Plan”:
Any employee benefit plan or certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and bank
collective investment funds and insurance company general or separate accounts
in which such plans, accounts or arrangements are invested, that are subject
to
ERISA or Section 4975 of the Code.
“Prepayment
Assumption”: A prepayment rate for (a) the Adjustable Rate Mortgage Loans of
100% PPC, which represents (i) a per annum prepayment rate of 5% of the then
outstanding principal balance of the Adjustable Rate Mortgage Loans in the
first
month of the life of the Adjustable Rate Mortgage Loans, (ii) an additional
2%
per annum in each month thereafter through the eleventh month, (iii) building
to
a constant prepayment rate of 27% per annum beginning in the twelfth month
and
remaining constant until the twenty-third month, (iv) increasing to and
remaining constant at a prepayment rate of 60% per annum beginning in the
twenty-fourth month until the twenty-seventh month and (v) decreasing and
remaining constant at a prepayment rate of 30% per annum from the twenty-eighth
month and thereafter; provided, however, the prepayment rate will not exceed
85%
per annum in any period for any percentage of PPC; and (b) the fixed-rate
Mortgage Loans of 100% PPC, which represents (i) a per annum prepayment rate
of
4% of the then outstanding principal balance of the fixed rate Mortgage Loans
in
the first month of the life of such Mortgage Loans, (ii) an additional 1.72727%
per annum in each month thereafter through the eleventh month and (iii) a
constant prepayment rate of 23% per annum beginning in the twelfth month and
in
each month thereafter during the life of the fixed rate Mortgage Loans;
provided, however, the prepayment rate will not exceed 85% per annum in any
period for any percentage of PPC. The Prepayment Assumption is used solely
for
determining the accrual of original issue discount on the Certificates for
federal income tax purposes.
50
“Prepayment
Charge”: With respect to any Principal Prepayment, any prepayment premium,
penalty or charge payable by a Mortgagor in connection with any Principal
Prepayment on a Mortgage Loan pursuant to the terms of the related Mortgage
Note.
“Prepayment
Charge Schedule”: As of any date, the list of Mortgage Loans providing for a
Prepayment Charge included in the Trust Fund on such date, attached hereto
as
Schedule 2 (including the prepayment charge summary attached thereto). The
Depositor shall deliver or cause the delivery of the Prepayment Charge Schedule
to the Servicer, the Master Servicer and the Trustee on the Closing Date. The
Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge:
(i) the
Mortgage Loan identifying number;
(ii) a
code
indicating the type of Prepayment Charge;
(iii) the
date
on which the first Monthly Payment was due on the related Mortgage
Loan;
(iv) the
term
of the related Prepayment Charge;
(v) the
original Stated Principal Balance of the related Mortgage Loan; and
(vi) the
Stated Principal Balance of the related Mortgage Loan as of the Cut-off
Date.
“Prepayment
Interest Excess”: With respect to each Mortgage Loan that was the subject of a
Principal Prepayment in full during the portion of the related Prepayment Period
occurring between the first day of the calendar month in which such Distribution
Date occurs and the fifteenth (15th) day of the calendar month in which such
Distribution Date occurs, an amount equal to interest (to the extent received)
at the applicable Net Mortgage Rate on the amount of such Principal Prepayment
for the number of days commencing on the first day of the calendar month in
which such Distribution Date occurs and ending on the last date through which
interest is collected from the related Mortgagor. The Servicer may withdraw
such
Prepayment Interest Excess from the Collection Account in accordance with
Section 3.09(a)(x) of this Agreement.
51
“Prepayment
Interest Shortfall”: With respect to any Distribution Date, for each such
Mortgage Loan that was the subject of a Principal Prepayment in full or in
part
during the portion of the related Prepayment Period occurring between the first
day of the related Prepayment Period and the last day of the calendar month
preceding the month in which such Distribution Date occurs that was applied
by
the Servicer to reduce the outstanding principal balance of such Mortgage Loan
on a date preceding the Due Date in the succeeding Prepayment Period, an amount
equal to interest at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the date on which
the
prepayment is applied and ending on the last day of the calendar month preceding
such Distribution Date. The obligations of the Servicer and the Master Servicer
in respect of any Prepayment Interest Shortfall are set forth in
Section 3.22 and Section 4.19 of this Agreement, respectively.
“Prepayment
Period”: For any Distribution Date (i) with respect to prepayments in part, the
calendar month preceding the month in which the related Distribution Date occurs
and (ii) with respect to prepayments in full, the period beginning on the 16th
day of the month preceding the month in which the related Distribution Date
occurs (or with respect to the first Prepayment Period, the period commencing
on
the Cut-off Date) and ending on the 15th day of the month in which such
Distribution Date occurs.
“Principal
Prepayment”: Any voluntary payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to
the
month of prepayment.
“Principal
Distribution Amount”: With respect to any Distribution Date is the sum of the
Group I Principal Distribution Amount and the Group II Principal Distribution
Amount.
“Principal
Remittance Amount”: With respect to any Distribution Date is the sum of the
Group I Principal Remittance Amount and the Group II Principal Remittance
Amount.
“Purchase
Price”: With respect to any Mortgage Loan or REO Property to be purchased
pursuant to or as contemplated by Section 2.03, Section 3.13(c) or
Section 10.01 of this Agreement, and as confirmed by a certification of a
Servicing Officer of the Servicer to the Trustee, an amount equal to the sum
of
(i) 100% of the Stated Principal Balance thereof as of the date of purchase
(or
such other price as provided in Section 10.01 of this Agreement), (ii) in
the case of (x) a Mortgage Loan, accrued interest on such Stated Principal
Balance at the applicable Net Mortgage Rate in effect from time to time from
the
Due Date as to which interest was last covered by a payment by the Mortgagor
or
a P&I Advance by the Servicer, which payment or P&I Advance had as of
the date of purchase been distributed pursuant to Section 5.01 of this
Agreement, through the end of the calendar month in which the purchase is to
be
effected and (y) an REO Property, the sum of (1) accrued interest on such Stated
Principal Balance at the applicable Net Mortgage Rate in effect from time to
time from the Due Date as to which interest was last covered by a payment by
the
Mortgagor or a P&I Advance by the Servicer through the end of the calendar
month immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each calendar
month commencing with the calendar month in which such REO Property was acquired
and ending with the calendar month in which such purchase is to be effected,
net
of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds
and P&I Advances that as of the date of purchase had been distributed as or
to cover REO Imputed Interest pursuant to Section 5.01 of this Agreement,
(iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property and (iv)
in the case of a Mortgage Loan required to be purchased pursuant to
Section 2.03 of this Agreement, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation and any costs and damages incurred by
the
Trust Fund and the Trustee in connection with any violation by any such Mortgage
Loan of any predatory or abusive lending law.
52
“QIB”:
As
defined in Section 6.01(c).
“Qualified
Substitute Mortgage Loan”: A mortgage loan substituted for a Deleted Mortgage
Loan pursuant to the terms of this Agreement which must, on the date of such
substitution, (i) have an outstanding principal balance, after application
of
all scheduled payments of principal and interest due during or prior to the
month of substitution, not in excess of the Scheduled Principal Balance of
the
Deleted Mortgage Loan as of the Due Date in the calendar month during which
the
substitution occurs, (ii) have a Mortgage Rate not less than (and not more
than
one percentage point in excess of) the Mortgage Rate of the Deleted Mortgage
Loan, (iii) if the mortgage loan is an Adjustable Rate Mortgage Loan, have
a
Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted
Mortgage Loan, (iv) if the mortgage loan is an Adjustable Rate Mortgage Loan,
have a Minimum Mortgage Rate not less than the Minimum Mortgage Rate of the
Deleted Mortgage Loan, (v) if the mortgage loan is an Adjustable Rate Mortgage
Loan, have a Gross Margin equal to the Gross Margin of the Deleted Mortgage
Loan, (vi) if the mortgage loan is an Adjustable Rate Mortgage Loan, have a
next
Adjustment Date not more than two months later than the next Adjustment Date
on
the Deleted Mortgage Loan, (vii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(viii) have the same Due Date as the Due Date on the Deleted Mortgage Loan,
(ix)
have a Loan-to-Value Ratio as of the date of substitution equal to or lower
than
the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (x) be
secured by the same lien priority on the related Mortgaged Property as the
Deleted Mortgage Loan, (xi) have a credit grade at least equal to the credit
grading assigned on the Deleted Mortgage Loan, (xii) be a “qualified mortgage”
as defined in the REMIC Provisions and (xiii) conform to each representation
and
warranty set forth in Section 6 of the Mortgage Loan Purchase Agreement
applicable to the Deleted Mortgage Loan. In the event that one or more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Rates described in clause (ii) hereof shall
be
determined on the basis of weighted average Mortgage Rates, the terms described
in clause (vii) hereof shall be determined on the basis of weighted average
remaining term to maturity, the Loan-to-Value Ratios described in clause (ix)
hereof shall be satisfied as to each such mortgage loan, the credit grades
described in clause (x) hereof shall be satisfied as to each such mortgage
loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate,
as
the case may be.
53
“Rate/Term
Refinancing”: A Refinanced Mortgage Loan, the proceeds of which are not more
than a nominal amount in excess of the existing first mortgage loan and any
subordinate mortgage loan on the related Mortgaged Property and related closing
costs, and were used exclusively (except for such nominal amount) to satisfy
the
then existing first mortgage loan and any subordinate mortgage loan of the
Mortgagor on the related Mortgaged Property and to pay related closing
costs.
“Rating
Agency or Rating Agencies”: Moody’s and S&P or their successors. If such
agencies or their successors are no longer in existence, “Rating Agencies” shall
be such nationally recognized statistical rating agencies, or other comparable
Persons, designated by the Depositor, notice of which designation shall be
given
to the Trustee and the Servicer.
“Realized
Loss”: With respect to each Mortgage Loan as to which a Final Recovery
Determination has been made, an amount (not less than zero), as reported by
the
Servicer to the Master Servicer (in substantially the form of Schedule 4
hereto), equal to (i) the unpaid principal balance of such Mortgage Loan as
of
the commencement of the calendar month in which the Final Recovery Determination
was made, plus (ii) accrued interest from the Due Date as to which interest
was
last paid by the Mortgagor through the end of the calendar month in which such
Final Recovery Determination was made, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the annual rate at
which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close
of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b) of
this Agreement, minus (iv) the proceeds, if any, received in respect of such
Mortgage Loan during the calendar month in which such Final Recovery
Determination was made, net of amounts that are payable therefrom to the
Servicer with respect to such Mortgage Loan pursuant to
Section 3.09(a)(iii) of this Agreement.
With
respect to any REO Property as to which a Final Recovery Determination has
been
made, an amount (not less than zero) equal to (i) the unpaid principal balance
of the related Mortgage Loan as of the date of acquisition of such REO Property
on behalf of REMIC I, plus (ii) accrued interest from the Due Date as to which
interest was last paid by the Mortgagor in respect of the related Mortgage
Loan
through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the annual rate at
which
interest was then accruing on the related Mortgage Loan and (B) on a principal
amount equal to the Stated Principal Balance of the related Mortgage Loan as
of
the close of business on the Distribution Date during such calendar month,
plus
(iii) REO Imputed Interest for such REO Property for each calendar month
commencing with the calendar month in which such REO Property was acquired
and
ending with the calendar month in which such Final Recovery Determination was
made, plus (iv) any amounts previously withdrawn from the Collection Account
in
respect of the related Mortgage Loan pursuant to Section 3.09(a)(ix) and
Section 3.13(b) of this Agreement, minus (v) the aggregate of all P&I
Advances and Servicing Advances (in the case of Servicing Advances, without
duplication of amounts netted out of the rental income, Insurance Proceeds
and
Liquidation Proceeds described in clause (vi) below) made by the Servicer in
respect of such REO Property or the related Mortgage Loan for which the Servicer
has been or, in connection with such Final Recovery Determination, will be
reimbursed pursuant to Section 3.21 of this Agreement out of rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property, minus (vi) the total of all net rental income, Insurance Proceeds
and
Liquidation Proceeds received in respect of such REO Property that has been,
or
in connection with such Final Recovery Determination, will be transferred to
the
Distribution Account pursuant to Section 3.21 of this
Agreement.
54
With
respect to each Mortgage Loan which has become the subject of a Deficient
Valuation, the difference between the principal balance of the Mortgage Loan
outstanding immediately prior to such Deficient Valuation and the principal
balance of the Mortgage Loan as reduced by the Deficient Valuation.
With
respect to each Mortgage Loan which has become the subject of a Debt Service
Reduction, the portion, if any, of the reduction in each affected Monthly
Payment attributable to a reduction in the Mortgage Rate imposed by a court
of
competent jurisdiction. Each such Realized Loss shall be deemed to have been
incurred on the Due Date for each affected Monthly Payment.
To
the
extent the Servicer receives Subsequent Recoveries, with respect to any Mortgage
Loan, the amount of Realized Loss with respect to that Mortgage Loan will be
reduced to the extent such recoveries are applied to reduce the Certificate
Principal Balance of any Class of Certificates on any Distribution
Date.
“Record
Date”: With respect to each Distribution Date and the Class A Certificates and
the Mezzanine Certificates, the Business Day immediately preceding such
Distribution Date for so long as such Certificates are Book-Entry Certificates.
With respect to each Distribution Date and any other Class of Certificates,
including any Definitive Certificates, the last day of the calendar month
immediately preceding the month in which such Distribution Date
occurs.
“Reference
Banks”: Barclays Bank PLC, The Tokyo Mitsubishi Bank and National Westminster
Bank PLC and their successors in interest; provided, however, that if any of
the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Securities Administrator which are engaged in transactions
in Eurodollar deposits in the International Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Depositor or any Affiliate thereof and
(iii)
which have been designated as such by the Securities Administrator.
“Refinanced
Mortgage Loan”: A Mortgage Loan the proceeds of which were not used to purchase
the related Mortgaged Property.
55
“Regular
Certificate”: Any Class A Certificate, Mezzanine Certificate, Class CE
Certificate or Class P Certificate.
“Regular
Interest”: A “regular interest” in a REMIC within the meaning of
Section 860G(a)(1) of the Code.
“Regulation
AB”: Means Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§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.
“Regulation
S Temporary Global Certificate”: As defined in Section 6.01(c).
“Regulation
S Permanent Global Certificate”: As defined in Section 6.01(c).
“Release
Date”: The fortieth (40th) day after the later of (i) commencement of the
offering of the Class M-10, Class M-11, Class CE or Class P Certificates and
(ii) the Closing Date.
“Relevant
Servicing Criteria”: Means the Servicing Criteria applicable to the various
parties, as set forth on Exhibit
E
attached
hereto. For clarification purposes, multiple parties can have responsibility
for
the same Relevant Servicing Criteria. With respect to a Servicing Function
Participant engaged by the Master Servicer, the Securities Administrator, the
Trustee or the Servicer, the term “Relevant Servicing Criteria” may refer to a
portion of the Relevant Servicing Criteria applicable to such
parties.
“Relief
Act”: The Servicemembers Civil Relief Act, as amended, or similar state or local
laws.
“Relief
Act Interest Shortfall”: With respect to any Distribution Date and any Mortgage
Loan, any reduction in the amount of interest collectible on such Mortgage
Loan
for the most recently ended Due Period as a result of the application of the
Relief Act.
“REMIC”:
A “real estate mortgage investment conduit” within the meaning of
Section 860D of the Code.
“REMIC
I”: The segregated pool of assets subject hereto, constituting the primary trust
created hereby and to be administered hereunder, with respect to which a REMIC
election is to be made, consisting of: (i) such Mortgage Loans and Prepayment
Charges as from time to time are subject to this Agreement, together with the
Mortgage Files relating thereto, and together with all collections thereon
and
proceeds thereof; (ii) any REO Property, together with all collections thereon
and proceeds thereof; (iii) the Trustee’s rights with respect to the Mortgage
Loans under all insurance policies required to be maintained pursuant to this
Agreement and any proceeds thereof; (iv) the Depositor’s rights under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby), and (v) the Collection Account, the Distribution Account and any REO
Account, and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, REMIC I
specifically excludes (i) all payments and other collections of principal and
interest due on the Mortgage Loans on or before the Cut-off Date and all
Prepayment Charges payable in connection with Principal Prepayments made before
the Cut-off Date; (ii) the Reserve Fund and any amounts on deposit therein
from
time to time and any proceeds thereof; (iii) the Swap Agreement; and (iv) the
Supplemental Interest Trust.
56
“REMIC
I
Group I Regular Interests”: REMIC I Regular Interest I and REMIC I Regular
Interest I-1-A through REMIC I Regular Interest I-81-B as designated in the
Preliminary Statement hereto.
“REMIC
I
Group II Regular Interests”: REMIC I Regular Interest II and REMIC I Regular
Interest II-1-A through REMIC I Regular Interest II-81-B as designated in the
Preliminary Statement hereto.
“REMIC
I
Regular Interest”: Any of the 326 separate non-certificated beneficial ownership
interests in REMIC I issued hereunder and designated as a “regular interest” in
REMIC I. Each REMIC I Regular Interest shall accrue interest at the related
REMIC I Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
I
Remittance Rate”:
With
respect to REMIC I Regular Interest I, a per annum rate equal to the weighted
average of the Net Mortgage Rates of the Group I Mortgage Loans. With respect
to
each REMIC I Group I Regular Interest ending with the designation “A”, a per
annum rate equal to the weighted average of the Net Mortgage Rates of the Group
I Mortgage Loans multiplied by 2, subject to a maximum rate of 10.9750%. With
respect to each REMIC I Group I Regular Interest ending with the designation
“B”, the greater of (x) a per annum rate equal to the excess, if any, of (i) 2
multiplied by the weighted average of the Net Mortgage Rates of the Group I
Mortgage Loans over (ii) 10.9750% and (y) 0.00%. With respect to REMIC I Regular
Interest II, a per annum rate equal to the weighted average of the Net Mortgage
Rates of the Group II Mortgage Loans. With respect to each REMIC I Group II
Regular Interest ending with the designation “A”, a per annum rate equal to the
weighted average of the Net Mortgage Rates of the Group II Mortgage Loans
multiplied by 2, subject to a maximum rate of 10.9750%. With respect to each
REMIC I Group II Regular Interest ending with the designation “B”, the greater
of (x) a per annum rate equal to the excess, if any, of (i) 2 multiplied by
the
weighted average of the Net Mortgage Rates of the Group II Mortgage Loans over
(ii) 10.9750% and (y) 0.00%.
“REMIC
II”: The segregated pool of assets consisting of all of the REMIC I Regular
Interests conveyed in trust to the Trustee, for the benefit of the REMIC II
Regular Interests pursuant to Section 2.07, and all amounts deposited
therein, with respect to which a separate REMIC election is to be
made.
“REMIC
II
Interest Loss Allocation Amount”: With respect to any Distribution Date, an
amount equal to (a) the product of (i) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties then outstanding and (ii)
the
REMIC II Remittance Rate for REMIC II Regular Interest AA minus the Marker
Rate,
divided by (b) 12.
57
“REMIC
II
Marker Allocation Percentage”: 50% of any amount payable or loss attributable
from the Mortgage Loans, which shall be allocated to REMIC II Regular Interest
AA, REMIC II Regular Interest A-1, REMIC II Regular Interest A-2A, REMIC II
Regular Interest A-2B, REMIC II Regular Interest A-2C, REMIC II Regular Interest
A-2D, REMIC II Regular Interest M-1, REMIC II Regular Interest M-2, REMIC II
Regular Interest M-3, REMIC II Regular Interest M-4, REMIC II Regular Interest
M-5, REMIC II Regular Interest M-6, REMIC II Regular Interest M-7, REMIC II
Regular Interest M-8, REMIC II Regular Interest M-9, REMIC II Regular Interest
M-10, REMIC II Regular Interest M-11, REMIC II Regular Interest ZZ and REMIC
II
Regular Interest P.
“REMIC
II
Overcollateralization Amount”: With respect to any date of determination, (i)
0.50% of the aggregate Uncertificated Balances of the REMIC II Regular Interests
(other than REMIC II Regular Interest P) minus (ii) the aggregate of the
Uncertificated Balances of REMIC II Regular Interest A-1, REMIC II Regular
Interest A-2A, REMIC II Regular Interest A-2B, REMIC II Regular Interest A-2C,
REMIC II Regular Interest A-2D, REMIC II Regular Interest M-1, REMIC II Regular
Interest M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest M-4,
REMIC II Regular Interest M-5, REMIC II Regular Interest M-6, REMIC II Regular
Interest M-7, REMIC II Regular Interest M-8, REMIC II Regular Interest M-9,
REMIC II Regular Interest M-10 and REMIC II Regular Interest M-11, in each
case
as of such date of determination.
“REMIC
II
Principal Loss Allocation Amount”: With respect to any Distribution Date, an
amount equal to (a) the product of (i) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and REO Properties then outstanding and (ii)
1
minus a fraction, the numerator of which is two times the aggregate of the
Uncertificated Balances of REMIC II Regular Interest A-1, REMIC II Regular
Interest A-2A, REMIC II Regular Interest A-2B, REMIC II Regular Interest A-2C,
REMIC II Regular Interest A-2D, REMIC II Regular Interest M-1, REMIC II Regular
Interest M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest M-4,
REMIC II Regular Interest M-5, REMIC II Regular Interest M-6, REMIC II Regular
Interest M-7, REMIC II Regular Interest M-8, REMIC II Regular Interest M-9,
REMIC II Regular Interest M-10, REMIC II Regular Interest M-11 and the
denominator of which is the aggregate of the Uncertificated Balances of REMIC
II
Regular Interest A-1, REMIC II Regular Interest A-2A, REMIC II Regular Interest
A-2B, REMIC II Regular Interest A-2C, REMIC II Regular Interest A-2D, REMIC
II
Regular Interest M-1, REMIC II Regular Interest M-2, REMIC II Regular Interest
M-3, REMIC II Regular Interest M-4, REMIC II Regular Interest M-5, REMIC II
Regular Interest M-6, REMIC II Regular Interest M-7, REMIC II Regular Interest
M-8, REMIC II Regular Interest M-9, REMIC II Regular Interest M-10, REMIC II
Regular Interest M-11 and REMIC II Regular Interest ZZ.
“REMIC
II
Regular Interest”: Any of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a “regular interest” in
REMIC II. Each REMIC II Regular Interest shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto. The designations for the respective REMIC II
Regular Interests are set forth in the Preliminary Statement
hereto.
58
“REMIC
II
Regular Interest AA”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest AA shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest A-1”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest A-1 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest A-2A”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest A-2A shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest A-2B”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest A-2B shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest A-2C”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest A-2C shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest A-2D”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest A-2D shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest IO”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest IO shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time and shall not be entitled
to distributions of principal.
59
“REMIC
II
Regular Interest M-1”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-1 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-2”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-2 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-3”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-3 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-4”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-4 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-5”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-5 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-6”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-6 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-7”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-7 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
60
“REMIC
II
Regular Interest M-8”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-8 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-9”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest M-9 shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest M-10”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest M-10 shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest M-11”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest M-11 shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest P”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest P shall accrue interest at the related
REMIC
II Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest XX”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest XX shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
61
“REMIC
II
Regular Interest ZZ”: One of the separate non-certificated beneficial ownership
interests in REMIC II issued hereunder and designated as a Regular Interest
in
REMIC II. REMIC II Regular Interest ZZ shall accrue interest at the related
REMIC II Remittance Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in
the
Preliminary Statement hereto.
“REMIC
II
Regular Interest I-SUB”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest I-SUB shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest I-GRP”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest I-GRP shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest II-SUB”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest II-SUB shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Regular Interest II-GRP”: One of the separate non-certificated beneficial
ownership interests in REMIC II issued hereunder and designated as a Regular
Interest in REMIC II. REMIC II Regular Interest II-GRP shall accrue interest
at
the related REMIC II Remittance Rate in effect from time to time, and shall
be
entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Balance
as
set forth in the Preliminary Statement hereto.
“REMIC
II
Remittance Rate”: With respect to REMIC II Regular Interest AA, REMIC II Regular
Interest A-1, REMIC II Regular Interest A-2A, REMIC II Regular Interest A-2B,
REMIC II Regular Interest A-2C, REMIC II Regular Interest A-2D, REMIC II Regular
Interest M-1, REMIC II Regular Interest M-2, REMIC II Regular Interest M-3,
REMIC II Regular Interest M-4, REMIC II Regular Interest M-5, REMIC II Regular
Interest M-6, REMIC II Regular Interest M-7, REMIC II Regular Interest M-8,
REMIC II Regular Interest M-9, REMIC II Regular Interest M-10, REMIC II Regular
Interest M-11, REMIC II Regular Interest P, REMIC II Regular Interest ZZ, REMIC
II Regular Interest I-SUB, REMIC II Regular Interest II-SUB and REMIC II Regular
Interest XX, a per annum rate (but not less than zero) equal to the weighted
average of: (w) with respect to REMIC I Regular Interest I
and
REMIC
I
Regular Interest II,
the
REMIC I Remittance Rate for each such REMIC I Regular Interest for each such
Distribution Date, (x) with respect to each REMIC I Regular Interest ending
with
the designation “B”, the weighted average of the REMIC I Remittance Rates for
such REMIC I Regular Interests, weighted on the basis of the Uncertificated
Balances of such REMIC I Regular Interests for each such Distribution Date
and
(y) with respect to REMIC I Regular Interests ending with the designation “A”,
for each Distribution Date listed below, the weighted average of the rates
listed below for each such REMIC I Regular Interest listed below, weighted
on
the basis of the Uncertificated Balances of each such REMIC I Regular Interest
for each such Distribution Date:
62
Distribution
Date
REMIC
I Regular Interest
Rate
1
I-1-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
2
I-2-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-2-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate REMIC I Remittance
Rate
I-1-A
REMIC
I Remittance Rate
II-1-A
REMIC
I Remittance Rate
3
I-3-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-3-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
and I-2-A
REMIC
I Remittance Rate
II-1-A
and II-2-A
REMIC
I Remittance Rate
4
I-4-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-4-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-3-A
REMIC
I Remittance Rate
II-1-A
through II-3-A
REMIC
I Remittance Rate
5
I-5-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-5-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-4-A
REMIC
I Remittance Rate
II-1-A
through II-4-A
REMIC
I Remittance Rate
6
I-6-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-6-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-5-A
REMIC
I Remittance Rate
II-1-A
through II-5-A
REMIC
I Remittance Rate
7
I-7-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-7-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-6-A
REMIC
I Remittance Rate
II-1-A
through II-6-A
REMIC
I Remittance Rate
8
I-8-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-8-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-7-A
REMIC
I Remittance Rate
II-1-A
through II-7-A
REMIC
I Remittance Rate
9
I-9-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-9-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-8-A
REMIC
I Remittance Rate
II-1-A
through II-8-A
REMIC
I Remittance Rate
10
I-10-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-10-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-9-A
REMIC
I Remittance Rate
II-1-A
through II-9-A
REMIC
I Remittance Rate
11
I-11-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-11-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-10-A
REMIC
I Remittance Rate
II-1-A
through II-10-A
REMIC
I Remittance Rate
12
I-12-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-12-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-11-A
REMIC
I Remittance Rate
II-1-A
through II-11-A
REMIC
I Remittance Rate
13
I-13-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-13-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-12-A
REMIC
I Remittance Rate
II-1-A
through II-12-A
REMIC
I Remittance Rate
14
I-14-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-14-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-13-A
REMIC
I Remittance Rate
II-1-A
through II-13-A
REMIC
I Remittance Rate
15
I-15-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-15-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-14-A
REMIC
I Remittance Rate
II-1-A
through II-14-A
REMIC
I Remittance Rate
16
I-16-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-16-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-15-A
REMIC
I Remittance Rate
II-1-A
through II-15-A
REMIC
I Remittance Rate
17
I-17-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-17-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-16-A
REMIC
I Remittance Rate
II-1-A
through II-16-A
REMIC
I Remittance Rate
18
I-18-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-18-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-17-A
REMIC
I Remittance Rate
II-1-A
through II-17-A
REMIC
I Remittance Rate
19
I-19-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-19-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-18-A
REMIC
I Remittance Rate
II-1-A
through II-18-A
REMIC
I Remittance Rate
20
I-20-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-20-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-19-A
REMIC
I Remittance Rate
II-1-A
through II-19-A
REMIC
I Remittance Rate
63
Distribution
Date
REMIC
I Regular Interest
Rate
21
I-21-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-21-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-20-A
REMIC
I Remittance Rate
II-1-A
through II-20-A
REMIC
I Remittance Rate
22
I-22-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-22-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-21-A
REMIC
I Remittance Rate
II-1-A
through II-21-A
REMIC
I Remittance Rate
23
I-23-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-23-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-22-A
REMIC
I Remittance Rate
II-1-A
through II-22-A
REMIC
I Remittance Rate
24
I-24-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-24-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-23-A
REMIC
I Remittance Rate
II-1-A
through II-23-A
REMIC
I Remittance Rate
25
I-25-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-25-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-24-A
REMIC
I Remittance Rate
II-1-A
through II-24-A
REMIC
I Remittance Rate
26
I-26-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-26-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-25-A
REMIC
I Remittance Rate
II-1-A
through II-25-A
REMIC
I Remittance Rate
27
I-27-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-27-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-26-A
REMIC
I Remittance Rate
II-1-A
through II-26-A
REMIC
I Remittance Rate
28
I-28-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-28-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-27-A
REMIC
I Remittance Rate
II-1-A
through II-27-A
REMIC
I Remittance Rate
29
I-29-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-29-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-28-A
REMIC
I Remittance Rate
II-1-A
through II-28-A
REMIC
I Remittance Rate
30
I-30-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-30-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-29-A
REMIC
I Remittance Rate
II-1-A
through II-29-A
REMIC
I Remittance Rate
31
I-31-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-31-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-30-A
REMIC
I Remittance Rate
II-1-A
through II-30-A
REMIC
I Remittance Rate
64
Distribution
Date
REMIC
I Regular Interest
Rate
32
I-32-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-32-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-31-A
REMIC
I Remittance Rate
II-1-A
through II-31-A
REMIC
I Remittance Rate
33
I-33-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-33-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-32-A
REMIC
I Remittance Rate
II-1-A
through II-32-A
REMIC
I Remittance Rate
34
I-34-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-34-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-33-A
REMIC
I Remittance Rate
II-1-A
through II-33-A
REMIC
I Remittance Rate
35
I-35-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-35-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-34-A
REMIC
I Remittance Rate
II-1-A
through II-34-A
REMIC
I Remittance Rate
36
I-36-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-36-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-35-A
REMIC
I Remittance Rate
II-1-A
through II-35-A
REMIC
I Remittance Rate
37
I-37-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-37-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-36-A
REMIC
I Remittance Rate
II-1-A
through II-36-A
REMIC
I Remittance Rate
38
I-38-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-38-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-37-A
REMIC
I Remittance Rate
II-1-A
through II-37-A
REMIC
I Remittance Rate
39
I-39-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-39-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-38-A
REMIC
I Remittance Rate
II-1-A
through II-38-A
REMIC
I Remittance Rate
40
I-40-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-40-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-39-A
REMIC
I Remittance Rate
II-1-A
through II-39-A
REMIC
I Remittance Rate
41
I-41-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-41-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-40-A
REMIC
I Remittance Rate
II-1-A
through II-40-A
REMIC
I Remittance Rate
42
I-42-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-42-A
through II-41-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-41-A
REMIC
I Remittance Rate
II-1-A
through II-21-A
REMIC
I Remittance Rate
65
Distribution
Date
REMIC
I Regular Interest
Rate
43
I-43-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-43-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-42-A
REMIC
I Remittance Rate
II-1-A
through II-42-A
REMIC
I Remittance Rate
44
I-44-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-44-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-43-A
REMIC
I Remittance Rate
II-1-A
through II-43-A
REMIC
I Remittance Rate
45
I-45-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-45-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-44-A
REMIC
I Remittance Rate
II-1-A
through II-44-A
REMIC
I Remittance Rate
46
I-46-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-46-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-45-A
REMIC
I Remittance Rate
II-1-A
through II-45-A
REMIC
I Remittance Rate
47
I-47-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-47-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-46-A
REMIC
I Remittance Rate
II-1-A
through II-46-A
REMIC
I Remittance Rate
48
I-48-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-48-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-47-A
REMIC
I Remittance Rate
II-1-A
through II-47-A
REMIC
I Remittance Rate
49
I-49-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-49-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-48-A
REMIC
I Remittance Rate
II-1-A
through II-48-A
REMIC
I Remittance Rate
50
I-50-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-50-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-49-A
REMIC
I Remittance Rate
II-1-A
through II-49-A
REMIC
I Remittance Rate
51
I-51-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-51-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-50-A
REMIC
I Remittance Rate
II-1-A
through II-50-A
REMIC
I Remittance Rate
52
I-52-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-52-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-51-A
REMIC
I Remittance Rate
II-1-A
through II-51-A
REMIC
I Remittance Rate
53
I-53-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-53-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-52-A
REMIC
I Remittance Rate
II-1-A
through II-52-A
REMIC
I Remittance Rate
66
Distribution
Date
REMIC
I Regular Interest
Rate
54
I-54-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-54-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-53-A
REMIC
I Remittance Rate
II-1-A
through II-53-A
REMIC
I Remittance Rate
55
I-55-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-55-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-54-A
REMIC
I Remittance Rate
II-1-A
through II-54-A
REMIC
I Remittance Rate
56
I-56-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-56-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-55-A
REMIC
I Remittance Rate
II-1-A
through II-55-A
REMIC
I Remittance Rate
57
I-57-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-57-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-56-A
REMIC
I Remittance Rate
II-1-A
through II-56-A
REMIC
I Remittance Rate
58
I-58-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-58-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-57-A
REMIC
I Remittance Rate
II-1-A
through II-57-A
REMIC
I Remittance Rate
59
I-59-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-59-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-58-A
REMIC
I Remittance Rate
II-1-A
through II-58-A
REMIC
I Remittance Rate
60
I-60-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-60-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-59-A
REMIC
I Remittance Rate
II-1-A
through II-59-A
REMIC
I Remittance Rate
61
I-61-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-61-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-60-A
REMIC
I Remittance Rate
II-1-A
through II-60-A
REMIC
I Remittance Rate
62
I-62-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-62-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-61-A
REMIC
I Remittance Rate
II-1-A
through II-61-A
REMIC
I Remittance Rate
63
I-63-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-63-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-62-A
REMIC
I Remittance Rate
II-1-A
through II-62-A
REMIC
I Remittance Rate
64
I-64-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-64-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-63-A
REMIC
I Remittance Rate
II-1-A
through II-63-A
REMIC
I Remittance Rate
67
Distribution
Date
REMIC
I Regular Interest
Rate
65
I-65-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-65-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-64-A
REMIC
I Remittance Rate
II-1-A
through II-64-A
REMIC
I Remittance Rate
66
I-66-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-66-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-65-A
REMIC
I Remittance Rate
II-1-A
through II-65-A
REMIC
I Remittance Rate
67
I-67-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-67-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-66-A
REMIC
I Remittance Rate
II-1-A
through II-66-A
REMIC
I Remittance Rate
68
I-68-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-68-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-67-A
REMIC
I Remittance Rate
II-1-A
through II-67-A
REMIC
I Remittance Rate
69
I-69-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-69-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-68-A
REMIC
I Remittance Rate
II-1-A
through II-68-A
REMIC
I Remittance Rate
70
I-70-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-70-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-69-A
REMIC
I Remittance Rate
II-1-A
through II-69-A
REMIC
I Remittance Rate
71
I-71-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-71-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-70-A
REMIC
I Remittance Rate
II-1-A
through II-70-A
REMIC
I Remittance Rate
72
I-72-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-72-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-71-A
REMIC
I Remittance Rate
II-1-A
through II-71-A
REMIC
I Remittance Rate
73
I-73-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-73-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-72-A
REMIC
I Remittance Rate
II-1-A
through II-72-A
REMIC
I Remittance Rate
74
I-74-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-74-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-73-A
REMIC
I Remittance Rate
II-1-A
through II-73-A
REMIC
I Remittance Rate
68
Distribution
Date
REMIC
I Regular Interest
Rate
75
I-75-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-75-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-74-A
REMIC
I Remittance Rate
II-1-A
through II-74-A
REMIC
I Remittance Rate
76
I-76-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-76-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-75-A
REMIC
I Remittance Rate
II-1-A
through II-75-A
REMIC
I Remittance Rate
77
I-77-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-77-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-76-A
REMIC
I Remittance Rate
II-1-A
through II-76-A
REMIC
I Remittance Rate
78
I-78-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-78-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-77-A
REMIC
I Remittance Rate
II-1-A
through II-77-A
REMIC
I Remittance Rate
79
I-79-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-79-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-78-A
REMIC
I Remittance Rate
II-1-A
through II-78-A
REMIC
I Remittance Rate
80
I-80-A
and I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-80-A
and II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-79-A
REMIC
I Remittance Rate
II-1-A
through II-79-A
REMIC
I Remittance Rate
81
I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-80-A
REMIC
I Remittance Rate
II-1-A
through II-80-A
REMIC
I Remittance Rate
thereafter
I-1-A
through I-81-A
REMIC
I Remittance Rate
II-1-A
through II-81-A
REMIC
I Remittance Rate
69
With
respect to REMIC II Regular Interest I-GRP, a per annum rate (but not less
than
zero) equal to the weighted average of: (w) with respect to REMIC I Regular
Interest I,
the
REMIC I Remittance Rate for
such
REMIC I Regular Interest for each such Distribution Date, (x) with respect
to
REMIC I Group I Regular Interests ending with the designation “B”, the weighted
average of the REMIC I Remittance Rates for such REMIC I Regular Interests,
weighted on the basis of the Uncertificated Balances of each such REMIC I
Regular Interest for each such Distribution Date and (y) with respect to REMIC
I
Group I Regular Interests ending with the designation “A”, for each Distribution
Date listed below, the weighted average of the rates listed below for such
REMIC
I Regular Interests listed below, weighted on the basis of the Uncertificated
Balances of each such REMIC I Regular Interest for each such Distribution
Date:
Distribution
Date
REMIC
I Regular Interest
Rate
1
I-1-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
2
I-2-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
REMIC
I Remittance Rate
3
I-3-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
and I-2-A
REMIC
I Remittance Rate
4
I-4-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-3-A
REMIC
I Remittance Rate
5
I-5-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-4-A
REMIC
I Remittance Rate
6
I-6-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-5-A
REMIC
I Remittance Rate
7
I-7-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-6-A
REMIC
I Remittance Rate
8
I-8-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-7-A
REMIC
I Remittance Rate
9
I-9-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-8-A
REMIC
I Remittance Rate
10
I-10-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-9-A
REMIC
I Remittance Rate
11
I-11-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-10-A
REMIC
I Remittance Rate
12
I-12-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-11-A
REMIC
I Remittance Rate
13
I-13-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-12-A
REMIC
I Remittance Rate
14
I-14-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-13-A
REMIC
I Remittance Rate
15
I-15-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-14-A
REMIC
I Remittance Rate
16
I-16-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-15-A
REMIC
I Remittance Rate
70
Distribution
Date
REMIC
I Regular Interest
Rate
17
I-17-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-16-A
REMIC
I Remittance Rate
18
I-18-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-17-A
REMIC
I Remittance Rate
19
I-19-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-18-A
REMIC
I Remittance Rate
20
I-20-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-19-A
REMIC
I Remittance Rate
21
I-21-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-20-A
REMIC
I Remittance Rate
22
I-22-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-21-A
REMIC
I Remittance Rate
23
I-23-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-22-A
REMIC
I Remittance Rate
24
I-24-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-23-A
REMIC
I Remittance Rate
25
I-25-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-24-A
REMIC
I Remittance Rate
26
I-26-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-25-A
REMIC
I Remittance Rate
27
I-27-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-26-A
REMIC
I Remittance Rate
28
I-28-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-27-A
REMIC
I Remittance Rate
29
I-29-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-28-A
REMIC
I Remittance Rate
30
I-30-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-29-A
REMIC
I Remittance Rate
31
I-31-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-30-A
REMIC
I Remittance Rate
71
Distribution
Date
REMIC
I Regular Interest
Rate
32
I-32-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-31-A
REMIC
I Remittance Rate
33
I-33-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-32-A
REMIC
I Remittance Rate
34
I-34-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-33-A
REMIC
I Remittance Rate
35
I-35-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-34-A
REMIC
I Remittance Rate
36
I-36-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-35-A
REMIC
I Remittance Rate
37
I-37-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-36-A
REMIC
I Remittance Rate
38
I-38-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-37-A
REMIC
I Remittance Rate
39
I-39-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-38-A
REMIC
I Remittance Rate
40
I-40-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-39-A
REMIC
I Remittance Rate
41
I-41-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-40-A
REMIC
I Remittance Rate
42
I-42-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-41-A
REMIC
I Remittance Rate
43
I-43-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-42-A
REMIC
I Remittance Rate
44
I-44-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-43-A
REMIC
I Remittance Rate
45
I-45-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-44-A
REMIC
I Remittance Rate
46
I-46-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-45-A
REMIC
I Remittance Rate
72
Distribution
Date
REMIC
I Regular Interest
Rate
47
I-47-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-46-A
REMIC
I Remittance Rate
48
I-48-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-47-A
REMIC
I Remittance Rate
59
I-49-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-48-A
REMIC
I Remittance Rate
50
I-50-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-49-A
REMIC
I Remittance Rate
51
I-51-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-50-A
REMIC
I Remittance Rate
52
I-52-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-51-A
REMIC
I Remittance Rate
53
I-53-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-52-A
REMIC
I Remittance Rate
54
I-54-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-53-A
REMIC
I Remittance Rate
55
I-55-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-54-A
REMIC
I Remittance Rate
56
I-56-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-55-A
REMIC
I Remittance Rate
57
I-57-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-56-A
REMIC
I Remittance Rate
58
I-58-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-57-A
REMIC
I Remittance Rate
59
I-59-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-58-A
REMIC
I Remittance Rate
60
I-60-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-59-A
REMIC
I Remittance Rate
61
I-61-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-60-A
REMIC
I Remittance Rate
73
Distribution
Date
REMIC
I Regular Interest
Rate
62
I-62-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-61-A
REMIC
I Remittance Rate
63
I-63-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-62-A
REMIC
I Remittance Rate
64
I-64-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-63-A
REMIC
I Remittance Rate
65
I-65-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-64-A
REMIC
I Remittance Rate
66
I-66-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-65-A
REMIC
I Remittance Rate
67
I-67-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-66-A
REMIC
I Remittance Rate
68
I-68-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-67-A
REMIC
I Remittance Rate
69
I-69-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-68-A
REMIC
I Remittance Rate
70
I-70-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-69-A
REMIC
I Remittance Rate
71
I-71-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-70-A
REMIC
I Remittance Rate
72
I-72-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-71-A
REMIC
I Remittance Rate
73
I-73-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-72-A
REMIC
I Remittance Rate
74
I-74-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-73-A
REMIC
I Remittance Rate
75
I-75-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-74-A
REMIC
I Remittance Rate
76
I-76-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-75-A
REMIC
I Remittance Rate
74
Distribution
Date
REMIC
I Regular Interest
Rate
77
I-77-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-76-A
REMIC
I Remittance Rate
78
I-78-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-77-A
REMIC
I Remittance Rate
79
I-79-A
through I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-78-A
REMIC
I Remittance Rate
80
I-80-A
and I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-19-A
REMIC
I Remittance Rate
81
I-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
I-1-A
through I-80-A
REMIC
I Remittance Rate
thereafter
I-1-A
through I-81-A
REMIC
I Remittance Rate
With
respect to REMIC II Regular Interest II-GRP, a per annum rate (but not less
than
zero) equal to the weighted average of: (w) with respect to REMIC I Regular
Interest II, the REMIC I Remittance Rate for such REMIC I Regular Interest
for
each such Distribution Date, (x) with respect to REMIC I Group II Regular
Interests ending with the designation “B”, the weighted average of the REMIC I
Remittance Rates for such REMIC I Regular Interests, weighted on the basis
of
the Uncertificated Balances of each such REMIC I Regular Interest for each
such
Distribution Date and (y) with respect to REMIC I Group II Regular Interests
ending with the designation “A”, for each Distribution Date listed below, the
weighted average of the rates listed below for such REMIC I Regular Interests
listed below, weighted on the basis of the Uncertificated Balances of each
such
REMIC I Regular Interest for each such Distribution Date:
Distribution
Date
REMIC
I Regular Interest
Rate
1
II-1-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
2
II-2-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
REMIC
I Remittance Rate
3
II-3-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
and II-2-A
REMIC
I Remittance Rate
4
II-4-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-3-A
REMIC
I Remittance Rate
5
II-5-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-4-A
REMIC
I Remittance Rate
6
II-6-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-5-A
REMIC
I Remittance Rate
75
Distribution
Date
REMIC
I Regular Interest
Rate
7
II-7-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-6-A
REMIC
I Remittance Rate
8
II-8-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-7-A
REMIC
I Remittance Rate
9
II-9-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-8-A
REMIC
I Remittance Rate
10
II-10-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-9-A
REMIC
I Remittance Rate
11
II-11-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-10-A
REMIC
I Remittance Rate
12
II-12-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-11-A
REMIC
I Remittance Rate
13
II-13-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-12-A
REMIC
I Remittance Rate
14
II-14-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-13-A
REMIC
I Remittance Rate
15
II-15-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-14-A
REMIC
I Remittance Rate
16
II-16-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-15-A
REMIC
I Remittance Rate
17
II-17-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-16-A
REMIC
I Remittance Rate
18
II-18-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-17-A
REMIC
I Remittance Rate
19
II-19-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-18-A
REMIC
I Remittance Rate
20
II-20-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-19-A
REMIC
I Remittance Rate
76
Distribution
Date
REMIC
I Regular Interest
Rate
21
II-21-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-20-A
REMIC
I Remittance Rate
22
II-22-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-21-A
REMIC
I Remittance Rate
23
II-23-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-22-A
REMIC
I Remittance Rate
24
II-24-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-23-A
REMIC
I Remittance Rate
25
II-25-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-24-A
REMIC
I Remittance Rate
26
II-26-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-25-A
REMIC
I Remittance Rate
27
II-27-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-26-A
REMIC
I Remittance Rate
28
II-28-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-27-A
REMIC
I Remittance Rate
29
II-29-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-28-A
REMIC
I Remittance Rate
30
II-30-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-29-A
REMIC
I Remittance Rate
31
II-31-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-30-A
REMIC
I Remittance Rate
32
II-32-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-31-A
REMIC
I Remittance Rate
33
II-33-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-32-A
REMIC
I Remittance Rate
34
II-34-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-33-A
REMIC
I Remittance Rate
35
II-35-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-34-A
REMIC
I Remittance Rate
77
Distribution
Date
REMIC
I Regular Interest
Rate
36
II-36-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-35-A
REMIC
I Remittance Rate
37
II-37-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-36-A
REMIC
I Remittance Rate
38
II-38-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-37-A
REMIC
I Remittance Rate
39
II-39-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-38-A
REMIC
I Remittance Rate
40
II-40-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-39-A
REMIC
I Remittance Rate
41
II-41-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-40-A
REMIC
I Remittance Rate
42
II-42-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-41-A
REMIC
I Remittance Rate
43
II-43-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-42-A
REMIC
I Remittance Rate
44
II-44-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-43-A
REMIC
I Remittance Rate
45
II-45-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-44-A
REMIC
I Remittance Rate
46
II-46-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-45-A
REMIC
I Remittance Rate
47
II-47-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-46-A
REMIC
I Remittance Rate
48
II-48-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-47-A
REMIC
I Remittance Rate
59
II-49-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-48-A
REMIC
I Remittance Rate
50
II-50-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-49-A
REMIC
I Remittance Rate
78
Distribution
Date
REMIC
I Regular Interest
Rate
51
II-51-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-50-A
REMIC
I Remittance Rate
52
II-52-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-51-A
REMIC
I Remittance Rate
53
II-53-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-52-A
REMIC
I Remittance Rate
54
II-54-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-53-A
REMIC
I Remittance Rate
55
II-55-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-54-A
REMIC
I Remittance Rate
56
II-56-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-55-A
REMIC
I Remittance Rate
57
II-57-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-56-A
REMIC
I Remittance Rate
58
II-58-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-57-A
REMIC
I Remittance Rate
59
II-59-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-58-A
REMIC
I Remittance Rate
60
II-60-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-59-A
REMIC
I Remittance Rate
61
II-61-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-60-A
REMIC
I Remittance Rate
62
II-62-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-61-A
REMIC
I Remittance Rate
63
II-63-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-62-A
REMIC
I Remittance Rate
64
II-64-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-63-A
REMIC
I Remittance Rate
65
II-65-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-64-A
REMIC
I Remittance Rate
79
Distribution
Date
REMIC
I Regular Interest
Rate
66
II-66-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-65-A
REMIC
I Remittance Rate
67
II-67-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-66-A
REMIC
I Remittance Rate
68
II-68-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-67-A
REMIC
I Remittance Rate
69
II-69-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-68-A
REMIC
I Remittance Rate
70
II-70-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-69-A
REMIC
I Remittance Rate
71
II-71-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-70-A
REMIC
I Remittance Rate
72
II-72-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-71-A
REMIC
I Remittance Rate
73
II-73-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-72-A
REMIC
I Remittance Rate
74
II-74-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-73-A
REMIC
I Remittance Rate
75
II-75-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-74-A
REMIC
I Remittance Rate
76
II-76-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-75-A
REMIC
I Remittance Rate
77
II-77-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-76-A
REMIC
I Remittance Rate
78
II-78-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-77-A
REMIC
I Remittance Rate
79
II-79-A
through II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-78-A
REMIC
I Remittance Rate
80
II-80-A
and II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-19-A
REMIC
I Remittance Rate
81
II-81-A
2
multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance
Rate
II-1-A
through II-80-A
REMIC
I Remittance Rate
thereafter
II-1-A
through II-81-A
REMIC
I Remittance Rate
80
With
respect to REMIC II Regular Interest IO, and (i) the 1st
Distribution Date through the 81st
Distribution Date, the excess of (x) the weighted average of the REMIC I
Remittance Rates for REMIC I Regular Interests including the designation “A”,
over (y) 2 multiplied by Swap LIBOR and (ii) thereafter, 0.00%.
“REMIC
II
Subordinated Balance Ratio”: The ratio among the Uncertificated Balances of each
REMIC II Regular Interest ending with the designation “SUB,”, equal to the ratio
between, with respect to each such REMIC II Regular Interest, the excess of
(x)
the aggregate Stated Principal Balance of the Group I Mortgage Loans or Group
II
Mortgage Loans, as applicable over (y) the current Certificate Principal Balance
of related Class A Certificates.
“REMIC
II
Required Overcollateralization Amount”: 0.50% of the Required
Overcollateralization Amount.
“REMIC
III”: The segregated pool of assets consisting of all of the REMIC II Regular
Interests conveyed in trust to the Trustee, for the benefit of the REMIC III
Certificateholders pursuant to Section 2.07, and all amounts deposited
therein, with respect to which a separate REMIC election is to be
made.
“REMIC
III Certificate”: Any Regular Certificate or Class R Certificate.
“REMIC
III Certificateholder”: The Holder of any REMIC III Certificate.
“REMIC
Provisions”: Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at Section 860A through 860G of
the Code, and related provisions, and proposed, temporary and final regulations
and published rulings, notices and announcements promulgated thereunder, as
the
foregoing may be in effect from time to time.
“REMIC
Regular Interest”: Any REMIC I Regular Interest or REMIC II Regular
Interest.
“REMIC
Remittance Rate”: The REMIC I Remittance Rate or the REMIC II Remittance
Rate.
81
“Remittance
Report”: A report by the Servicer pursuant to Section 5.03(a) of this
Agreement.
“Rents
from Real Property”: With respect to any REO Property, gross income of the
character described in Section 856(d) of the Code as being included in the
term “rents from real property.”
“REO
Account”: The account or accounts maintained, or caused to be maintained, by the
Servicer in respect of an REO Property pursuant to Section 3.21 of this
Agreement.
“REO
Disposition”: The sale or other disposition of an REO Property on behalf of
REMIC I.
“REO
Imputed Interest”: As to any REO Property, for any calendar month during which
such REO Property was at any time part of REMIC I, one month’s interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such REO
Property (or, in the case of the first such calendar month, of the related
Mortgage Loan, if appropriate) as of the close of business on the Distribution
Date in such calendar month.
“REO
Principal Amortization”: With respect to any REO Property, for any calendar
month, the excess, if any, of (a) the aggregate of all amounts received in
respect of such REO Property during such calendar month, whether in the form
of
rental income, sale proceeds (including, without limitation, that portion of
the
Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 of this Agreement that
is allocable to such REO Property) or otherwise, net of any portion of such
amounts (i) payable in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.21(d) of this Agreement for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and
P&I Advances in respect of such REO Property or the related Mortgage Loan,
over (b) the REO Imputed Interest in respect of such REO Property for such
calendar month.
“REO
Property”: A Mortgaged Property acquired by the Servicer or its nominee on
behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.21 of this Agreement.
“Reportable
Event”: Has the meaning set forth in Section 5.06(b) of this
Agreement.
“Required
Overcollateralization Amount”: With respect to any Distribution Date (i) prior
to the Stepdown Date, the product of (A) 0.90% and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date, (ii) on or after the
Stepdown Date provided a Trigger Event is not in effect, the greater of (x)
1.80% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the
last day of the related Due Period and (y) an amount equal to the product of
(A)
0.50% and (B) the aggregate principal balance of the Mortgage Loans as of the
Cut-off Date, and (iii) on or after the Stepdown Date and a Trigger Event is
in
effect, the Required Overcollateralization Amount for the immediately preceding
Distribution Date. Notwithstanding the foregoing, on and after any Distribution
Date following the reduction of the aggregate Certificate Principal Balance
of
the Class A Certificates and Mezzanine Certificates to zero, the Required
Overcollateralization Amount shall be zero.
82
“Reserve
Fund”: A fund created pursuant to Section 3.24 which shall be an asset of
the Trust Fund but which shall not be an asset of any Trust REMIC.
“Reserve
Interest Rate”: With respect to any Interest Determination Date, the rate per
annum that the Securities Administrator determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of
1/16%) of the one-month U.S. dollar lending rates which New York City banks
selected by the Securities Administrator, after consultation with the Depositor,
are quoting on the relevant Interest Determination Date to the principal London
offices of leading banks in the London interbank market or (ii) in the event
that the Securities Administrator can determine no such arithmetic mean, the
lowest one-month U.S. dollar lending rate which New York City banks selected
by
the Securities Administrator are quoting on such Interest Determination Date
to
leading European banks.
“Residential
Dwelling”: Any one of the following: (i) a detached one-family dwelling, (ii) a
detached two- to four-family dwelling, (iii) a one-family dwelling unit in
a
Fannie Mae eligible condominium project, (iv) a manufactured home, (v) a
detached one-family dwelling in a planned unit development or (vi) a townhouse,
none of which is a co-operative or mobile home.
“Residual
Certificate”: Any one of the Class R Certificates.
“Residual
Interest”: The sole class of “residual interests” in a REMIC within the meaning
of Section 860G(a)(2) of the Code.
“Responsible
Officer”: When used with respect to the Trustee, any officer of the Trustee
having direct responsibility for the administration of this Agreement and,
with
respect to a particular matter, to whom such matter is referred because of
such
officer’s knowledge of and familiarity with the particular subject.
“Rule
144A”: As defined in Section 6.01(c).
“S&P”:
Standard and Poor’s, a division of the McGraw-Hill Companies, Inc.
“Sarbanes-Oxley
Act”: Means the Sarbanes-Oxley Act of 2002 and the rules and regulations of the
Commission promulgated thereunder (including any interpretations thereof by
the
Commission’s staff).
“Sarbanes-Oxley
Certification”: A written certification signed by an officer of the Master
Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as amended
from
time to time, and (ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect
from time to time; provided that if, after the Closing Date (a) the
Sarbanes-Oxley Act of 2002 is amended, (b) the Rules referred to in clause
(ii)
are modified or superceded by any subsequent statement, rule or regulation
of
the Commission or any statement of a division thereof, or (c) any future
releases, rules and regulations are published by the Commission from time to
time pursuant to the Sarbanes-Oxley Act of 2002, which in any such case affects
the form or substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous that then form of the required certification as of
the
Closing Date, the Sarbanes-Oxley Certification shall be as agreed to by the
Master Servicer, the Depositor and the Sponsor following a negotiation in good
faith to determine how to comply with any such new requirements.
83
“Scheduled
Principal Balance”: With respect to any Mortgage Loan: (a) as of the Cut-off
Date, the outstanding principal balance of such Mortgage Loan as of such date,
net of the principal portion of all unpaid Monthly Payments, if any, due on
or
before such date; (b) as of any Due Date subsequent to the Cut-off Date up
to
and including the Due Date in the calendar month in which a Liquidation Event
occurs with respect to such Mortgage Loan, the Scheduled Principal Balance
of
such Mortgage Loan as of the Cut-off Date, minus the sum of (i) the principal
portion of each Monthly Payment due on or before such Due Date but subsequent
to
the Cut-off Date, whether or not received, (ii) all Principal Prepayments
received before such Due Date but after the Cut-off Date, (iii) the principal
portion of all Liquidation Proceeds and Insurance Proceeds received before
such
Due Date but after the Cut-off Date, net of any portion thereof that represents
principal due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) on a Due Date occurring on or before the date on
which such proceeds were received and (iv) any Realized Loss incurred with
respect thereto as a result of a Deficient Valuation occurring before such
Due
Date, but only to the extent such Realized Loss represents a reduction in the
portion of principal of such Mortgage Loan not yet due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) as of
the
date of such Deficient Valuation; and (c) as of any Due Date subsequent to
the
occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.
With
respect to any REO Property: (a) as of any Due Date subsequent to the date
of
its acquisition on behalf of the Trust Fund up to and including the Due Date
in
the calendar month in which a Liquidation Event occurs with respect to such
REO
Property, an amount (not less than zero) equal to the Scheduled Principal
Balance of the related Mortgage Loan as of the Due Date in the calendar month
in
which such REO Property was acquired, minus the aggregate amount of REO
Principal Amortization, if any, in respect of REO Property for all previously
ended calendar months; and (b) as of any Due Date subsequent to the occurrence
of a Liquidation Event with respect to such REO Property, zero.
“Securities
Act”: The Securities Act of 1933, as amended and the rules and regulations
thereunder.
“Securities
Administrator”: As of the Closing Date, Wells Fargo Bank, National Association
and thereafter, its respective successors in interest that meet the
qualifications of this Agreement. The Securities Administrator and the Master
Servicer shall at all times be the same Person or Affiliates.
“Senior
Interest Distribution Amount”: With respect to any Distribution Date, an amount
equal to the sum of (i) the Interest Distribution Amount for such Distribution
Date for the Class A Certificates and (ii) the Interest Carry Forward Amount,
if
any, for such Distribution Date for the Class A Certificates.
84
“Servicer”:
Fremont, or any successor thereto appointed hereunder in connection with the
servicing and administration of the related Mortgage Loans.
“Servicer
Event of Default”: One or more of the events described in Section 8.01(a)
of this Agreement.
“Servicer
Remittance Date”: With respect to any Distribution Date, by 12:00 p.m. New York
time on the 22nd day of the month in which such Distribution Date occurs;
provided that if such 22nd day of a given month is not a Business Day, the
Servicer Remittance Date for such month shall be the Business Day immediately
preceding such 22nd day.
“Servicer
Report”: A report (substantially in the form of Schedules 3, 4 and 5 hereto) or
otherwise in form and substance acceptable to the Master Servicer and Securities
Administrator on an electronic data file or tape prepared by the Servicer
pursuant to Section 5.03(a) of this Agreement, with such additions,
deletions and modifications as agreed to by the Master Servicer, the Securities
Administrator and the Servicer.
“Service(s)(ing)”:
Means, in accordance with Regulation AB, the act of servicing and administering
the Mortgage Loans or any other assets of the Trust by an entity that meets
the
definition of “servicer” set forth in Item 1101 of Regulation AB and is subject
to the disclosure requirements set forth in Item 1108 of Regulation AB. For
clarification purposes, any uncapitalized occurrence of this term shall have
the
meaning commonly understood by participants in the residential mortgage-backed
securitization market.
“Servicing
Advances”: The customary and reasonable “out-of-pocket” costs and expenses
incurred prior to or on or after the Cut-off Date (the amounts incurred prior
to
the Cut-off Date shall be identified on the Servicing Advance Schedule by (a)
the Servicer with respect to any Mortgage Loans that were transferred to the
Servicer prior to the Cut-off Date and/or (b) the Depositor with respect to
any
Mortgage Loans that were transferred to the Servicer after the Cut-off Date)
by
the Servicer in connection with a default, delinquency or other unanticipated
event by the Servicer in the performance of its servicing obligations,
including, but not limited to, the cost of (i) the preservation, restoration
and
protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including but not limited to foreclosures, in respect of a
particular Mortgage Loan, including any expenses incurred in relation to any
such proceedings that result from the Mortgage Loan being registered on the
MERS® System, (iii) the management (including reasonable fees in connection
therewith) and liquidation of any REO Property, (iv) the performance of its
obligations under Section 3.01, Section 3.07, Section 3.11, Section 3.13 and
Section 3.21 of this Agreement and (v) obtaining any legal documentation
required to be included in the Mortgage File and/or correcting any outstanding
title issues (i.e., any lien or encumbrance on the Mortgaged Property that
prevents the effective enforcement of the intended lien position) reasonably
necessary for the Servicer perform its obligations under this Agreement.
Servicing Advances also include any reasonable “out-of-pocket” cost and expenses
(including legal fees) incurred by the Servicer in connection with executing
and
recording instruments of satisfaction, deeds of reconveyance or Assignments
to
the extent not recovered from the Mortgagor or otherwise payable under this
Agreement. The Servicer shall not be required to make any Nonrecoverable
Servicing Advances.
85
“Servicing
Advance Schedule”: With respect to any Servicing Advances incurred prior to the
Cut-off Date, the schedule or schedules provided by (a) the Servicer with
respect to any Mortgage Loans that were transferred to the Servicer prior to
the
Cut-off Date and/or (b) the Depositor with respect to any Mortgage Loans that
were transferred to the Servicer after the Cut-off Date, as applicable, to
the
Master Servicer and, if such schedule is provided by the Depositor, to the
Servicer, on the earlier of the date on which the Servicer or five (5) Business
Days following the Servicing Transfer Date, which schedule or schedules shall
contain the information set forth on Schedule 6.
“Servicing
Criteria”: Means the criteria set forth in paragraph (d) of Item 1122 of
Regulation AB, as such may be amended from time to time.
“Servicing
Fee”: With respect to each Mortgage Loan and for any calendar month, an amount
equal to one-twelfth of the product of the Servicing Fee Rate multiplied by
the
Scheduled Principal Balance of the Mortgage Loans as of the Due Date in the
preceding calendar month. The Servicing Fee is payable solely from collections
of interest on the Mortgage Loans.
“Servicing
Fee Rate”: 0.50% per annum.
“Servicing
Function Participant”: Means any Sub-Servicer, Subcontractor or any other
Person, other than each Servicer, the Master Servicer, the Custodian, the
Trustee and the Securities Administrator, that is determined to be
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB, without regard to any threshold referenced therein.
“Servicing
Officer”: Any officer of the Servicer or the Master Servicer involved in, or
responsible for, the administration and servicing of the related Mortgage Loans,
whose name and specimen signature appear on a list of Servicing Officers
furnished by the Servicer or the Master Servicer to the Trustee, the Master
Servicer (in the case of the Servicer), the Securities Administrator and the
Depositor on the Closing Date, as such list may from time to time be
amended.
“Single
Certificate”: With respect to any Class of Certificates (other than the Residual
Certificates), a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance of $1,000. With respect to the Residual Certificates, a hypothetical
Certificate of such Class evidencing a 100% Percentage Interest in such Class.
“Sponsor”:
DB Structured Products, Inc. or its successor in interest, in its capacity
as
seller under the Mortgage Loan Purchase Agreement.
“Startup
Day”: With respect to each Trust REMIC, the day designated as such pursuant to
Section 11.01(b) hereof.
86
“Stated
Principal Balance”: With respect to any Mortgage Loan: (a) as of any date of
determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the Scheduled Principal Balance of such Mortgage Loan
as
of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum
of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut-off Date, to the extent received from the Mortgagor or advanced
by
the Servicer or a successor to the Servicer and distributed pursuant to
Section 5.01 of this Agreement on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date, to the extent
distributed pursuant to Section 5.01 of this Agreement on or before such
date of determination, (iii) all Liquidation Proceeds and Insurance Proceeds
applied by the Servicer as recoveries of principal in accordance with the
provisions of Section 3.13 of this Agreement, to the extent distributed
pursuant to Section 5.01 of this Agreement on or before such date of
determination, and (iv) any Realized Loss incurred with respect thereto as
a
result of a Deficient Valuation made during or prior to the Prepayment Period
for the most recent Distribution Date coinciding with or preceding such date
of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed,
zero.
With respect to any REO Property: (a) as of any date of determination up to
but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the Servicer or a successor to the Servicer and distributed pursuant
to Section 5.01 of this Agreement, on or before such date of determination
and (ii) the aggregate amount of REO Principal Amortization in respect of such
REO Property for all previously ended calendar months, to the extent distributed
pursuant to Section 5.01 of this Agreement on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed,
zero.
“Stepdown
Date”: The earlier to occur of (i) the later to occur of (x) the Distribution
Date occurring in September 2009 and (y) the first Distribution Date on which
the Credit Enhancement Percentage (calculated for this purpose only after taking
into account distributions of principal on the Mortgage Loans, but prior to
any
distribution of the Principal Distribution Amount to the holders of the
Certificates then entitled to distributions of principal on such Distribution
Date), is greater than or equal to approximately 40.80% and (ii) the first
Distribution Date following the Distribution Date on which the aggregate
Certificate Principal Balance of the Class A Certificates has been reduced
to
zero.
“Subcontractor”:
Means any vendor, subcontractor or other Person that is not responsible for
the
overall servicing of Mortgage Loans but performs one or more discrete functions
identified in Item 1122(d) of Regulation AB (without regard to any threshold
percentage specified therein) with respect to Mortgage Loans under the direction
or authority of any Servicer (or a Sub-Servicer of any Servicer), the Master
Servicer, the Trustee, the Custodian or the Securities
Administrator.
“Subordinate
Certificates”: Collectively, the Mezzanine Certificates and the Class CE
Certificates.
“Subsequent
Recoveries”: As of any Distribution Date, amounts received during the related
Prepayment Period by the Servicer specifically related to a defaulted Mortgage
Loan or disposition of an REO Property prior to the related Prepayment Period
that resulted in a Realized Loss, after the liquidation or disposition of such
defaulted Mortgage Loan, net of any amounts reimbursable to the Servicer related
to such Mortgage Loan or REO Property.
87
“Sub-Servicer”:
Means any Person that (i) is considered to be a Servicing Function Participant,
(ii) services Mortgage Loans on behalf of any Servicer, the Master Servicer,
the
Securities Administrator or the Trustee, and (iii) is responsible for the
performance (whether directly or through sub-servicers or Subcontractors) of
Servicing functions required to be performed under this Agreement or any related
Sub-Servicing Agreement that is identified in Item 1122(d) of Regulation
AB.
“Sub-Servicing
Agreement”: The written contract between the Servicer and a Sub-Servicer
relating to servicing and administration of certain Mortgage Loans as provided
in Section 3.02 of this Agreement.
“Substitution
Shortfall Amount”: As defined in Section 2.03 of this
Agreement.
“Supplemental
Interest Trust”: The corpus of a trust created pursuant to Section 5.07 of
this Agreement and designated as the “Supplemental Interest Trust,” consisting
of the Swap Agreement, the Class IO Interest and the right to receive payments
in respect of the Class IO Distribution Amount. For the avoidance of doubt,
the
Supplemental Interest Trust does not constitute a part of the Trust
Fund.
“Supplemental
Interest Trust Trustee”: HSBC Bank USA, National Association a national banking
association, or its successor in interest, or any successor supplemental
interest trust trustee appointed as provided herein or in the Swap Agreement
provided.
“Swap
Agreement”: The Interest Rate Swap Agreement, dated as of August 25, 2006,
between the Supplemental Interest Trust Trustee, and the Swap Provider, which
agreement provides for Net Swap Payments and Swap Termination Payments to be
paid, as provided therein, together with any schedules, confirmations or other
agreements relating thereto. The Securities Administrator will provide a copy
of
the Swap Agreement to any Certificateholder upon request.
“Swap
LIBOR”: LIBOR as determined pursuant to the Swap Agreement.
88
“Swap
Notional Amount”: For each calculation period as defined in the Swap Agreement,
the lesser of (x) the aggregate Certificate Principal Balance of the Class
A
Certificates, the Mezzanine Certificates and the Class CE Certificates on the
day immediately preceding such Distribution Date and (y) the amount set forth
below for such Distribution Date which will be substantially the same schedule
as set forth in the Swap Agreement:
Distribution
Date
Swap
Notional Amount
($)
September
2006
$
1,451,859,622.00
October
2006
$
1,435,666,851.00
November
2006
$
1,416,991,871.00
December
2006
$
1,395,876,516.00
January
2007
$
1,372,375,794.00
February
2007
$
1,346,557,892.00
March
2007
$
1,318,504,064.00
April
2007
$
1,288,308,935.00
May
2007
$
1,256,085,724.00
June
2007
$
1,223,987,173.00
July
2007
$
1,192,707,288.00
August
2007
$
1,162,226,030.00
September
2007
$
1,132,523,003.00
October
2007
$
1,103,578,332.00
November
2007
$
1,075,372,652.00
December
2007
$
1,047,887,090.00
January
2008
$
1,021,103,257.00
February
2008
$
995,003,235.00
March
2008
$
969,569,563.00
April
2008
$
944,721,420.00
May
2008
$
891,799,200.00
June
2008
$
834,571,100.00
July
2008
$
781,383,172.00
August
2008
$
731,974,850.00
September
2008
$
705,649,049.00
October
2008
$
685,899,149.00
November
2008
$
666,714,453.00
December
2008
$
648,098,093.00
January
2009
$
630,012,341.00
February
2009
$
612,435,419.00
March
2009
$
595,352,899.00
April
2009
$
578,750,764.00
May
2009
$
562,615,395.00
June
2009
$
546,934,200.00
July
2009
$
531,694,005.00
August
2009
$
516,881,959.00
September
2009
$
502,485,939.00
October
2009
$
488,494,162.00
November
2009
$
474,895,186.00
December
2009
$
461,678,070.00
January
2010
$
448,831,960.00
February
2010
$
436,346,223.00
March
2010
$
424,210,665.00
April
2010
$
412,415,385.00
May
2010
$
400,950,760.00
89
Distribution
Date
Swap
Notional Amount
($)
June
2010
$
389,807,445.00
July
2010
$
378,976,359.00
August
2010
$
368,448,681.00
September
2010
$
358,215,838.00
October
2010
$
348,269,506.00
November
2010
$
338,601,593.00
December
2010
$
329,204,241.00
January
2011
$
320,069,813.00
February
2011
$
311,190,890.00
March
2011
$
302,560,264.00
April
2011
$
294,170,933.00
May
2011
$
286,016,094.00
June
2011
$
278,075,531.00
July
2011
$
270,353,641.00
August
2011
$
262,847,742.00
September
2011
$
255,551,790.00
October
2011
$
248,459,863.00
November
2011
$
241,566,210.00
December
2011
$
234,865,269.00
January
2012
$
228,351,604.00
February
2012
$
222,019,914.00
March
2012
$
215,865,072.00
April
2012
$
209,882,097.00
May
2012
$
204,066,150.00
June
2012
$
198,412,531.00
July
2012
$
192,916,670.00
August
2012
$
187,574,128.00
September
2012
$
182,380,591.00
October
2012
$
177,331,869.00
November
2012
$
172,423,891.00
December
2012
$
167,652,699.00
January
2013
$
163,014,449.00
February
2013
$
158,505,407.00
March
2013
$
154,121,941.00
April
2013
$
149,860,526.00
May
2013
$
145,717,734.00
June
2013
—
“Swap
Provider”: The swap provider under the Swap Agreement either (a) entitled to
receive payments from the Supplemental Interest Trust or (b) required to make
payments to the Supplemental Interest Trust, in either case pursuant to the
terms of the Swap Agreement, and any successor in interest or assign. Initially,
the Swap Provider shall be Deutsche Bank AG New York Branch.
90
“Swap
Provider Trigger Event”: A Swap Provider Trigger Event shall have occurred if
any of the following has occurred: (i) an Event of Default under the Swap
Agreement with respect to which the Swap Provider is a Defaulting Party (as
defined in the Swap Agreement), (ii) a Termination Event under the Swap
Agreement with respect to which the Swap Provider is the sole Affected Party
(as
defined in the Swap Agreement) or (iii) an Additional Termination Event under
the Swap Agreement with respect to which the Swap Provider is the sole Affected
Party.
“Swap
Termination Payment”: Upon the designation of an “Early Termination Date” as
defined in the Swap Agreement, the payment to be made by the Securities
Administrator on
behalf
of the Supplemental Interest Trust Trustee from
the
Supplemental Interest Trust to the Swap Provider, or by the Swap Provider to
the
Supplemental Interest Trust, as applicable, pursuant to the terms of the Swap
Agreement.
“Tax
Returns”: The federal income tax return on Internal Revenue Service Form 1066,
U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including
Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC
Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on
behalf of the Trust REMICs under the REMIC Provisions, together with any and
all
other information reports or returns that may be required to be furnished to
the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
“Telerate
Page 3750”: The display designated as page “3750” on the Dow Jones Telerate
Capital Markets Report (or such other page as may replace page 3750 on that
report for the purpose of displaying London interbank offered rates of major
banks).
“Termination
Price”: As defined in Section 10.01.
“Transfer”:
Any direct or indirect transfer, sale, pledge, hypothecation, or other form
of
assignment of any Ownership Interest in a Certificate.
“Transferee”:
Any Person who is acquiring by Transfer any Ownership Interest in a
Certificate.
“Transferor”:
Any Person who is disposing by Transfer of any Ownership Interest in a
Certificate.
91
“Trigger
Event”: A Trigger Event has occurred with respect to a Distribution Date if
either (x) the Delinquency Percentage exceeds 38.75% of the Credit Enhancement
Percentage with respect to such Distribution Date or (y) the aggregate amount
of
Realized Losses incurred since the Cut-off Date through the last day of the
related Due Period divided by the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date exceeds the applicable percentages set forth below
with respect to such Distribution Date:
Distribution
Date
Percentage
September
2008 to August 2009
1.30%,
plus 1/12th of 1.60% for each month thereafter
September
2009 to August 2010
2.90%,
plus 1/12th of 1.65% for each month thereafter
September
2010 to August 2011
4.55%,
plus 1/12th of 1.30% for each month thereafter
September
2011 to August 2012
5.85%,
plus 1/12th of 0.70% for each month thereafter
September
2012 to August 2013
6.55%,
plus 1/12th of 0.00% for each month thereafter
September
2013 and thereafter
6.55%
“Trust”:
ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM1, the trust created
hereunder.
“Trust
Fund”: Collectively, all of the assets of REMIC I, REMIC II, REMIC III and the
Reserve Fund and any amounts on deposit therein and any proceeds thereof. For
avoidance of doubt, the Trust Fund does not include the Supplemental Interest
Trust.
“Trust
REMIC”: REMIC I, REMIC II or REMIC III.
“Trustee”:
HSBC Bank USA, National Association a national banking association, or its
successor in interest, or any successor trustee appointed as herein
provided.
“Uncertificated
Balance”: The amount of the REMIC Regular Interests outstanding as of any date
of determination. As of the Closing Date, the Uncertificated Balance of each
REMIC Regular Interest shall equal the amount set forth in the Preliminary
Statement hereto as its initial uncertificated balance. On each Distribution
Date, the Uncertificated Balance of the REMIC Regular Interest shall be reduced
by all distributions of principal made on such REMIC Regular Interest on such
Distribution Date pursuant to Section 5.01 of this Agreement and, if and to
the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 5.04 of this
Agreement and the Uncertificated Balance of REMIC II Regular Interest ZZ shall
be increased by interest deferrals as provided in Section 5.01 of this
Agreement. The Uncertificated Balance of each REMIC Regular Interest shall
never
be less than zero.
“Uncertificated
Interest”: With respect to any REMIC Regular Interest for any Distribution Date,
one month’s interest at the related REMIC Remittance Rate applicable to such
REMIC Regular Interest for such Distribution Date, accrued on the Uncertificated
Balance thereof immediately prior to such Distribution Date. Uncertificated
Interest in respect of the REMIC Regular Interests shall accrue on the basis
of
a 360-day year consisting of twelve 30-day months. Uncertificated Interest
with
respect to each Distribution Date, as to any REMIC Regular Interest, shall
be
reduced by an amount equal to the sum of (a) the aggregate Prepayment Interest
Shortfall, if any, for such Distribution Date to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19 of this Agreement
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any
allocated, in each case, to such REMIC Regular Interest or REMIC Regular
Interest pursuant to Section 1.02 of this Agreement. In addition,
Uncertificated Interest with respect to each Distribution Date, as to any REMIC
Regular Interest, shall be reduced by Realized Losses, if any, allocated to
such
REMIC Regular Interest pursuant to Section 1.02 and Section 5.04 of
this Agreement.
92
“Uncertificated
Notional Amount”: With respect to REMIC II Regular Interest IO and each
Distribution Date listed below, the aggregate Uncertificated Balance of the
REMIC I Regular Interests ending with the designation “A” listed
below:
Distribution
Date
REMIC
I Regular Interests
1
I-1-A
through I-81-A and II-1-A through II-81-A
2
I-2-A
through I-81-A and II-2-A through II-81-A
3
I-3-A
through I-81-A and II-3-A through II-81-A
4
I-4-A
through I-81-A and II-4-A through II-81-A
5
I-5-A
through I-81-A and II-5-A through II-81-A
6
I-6-A
through I-81-A and II-6-A through II-81-A
7
I-7-A
through I-81-A and II-7-A through II-81-A
8
I-8-A
through I-81-A and II-8-A through II-81-A
9
I-9-A
through I-81-A and II-9-A through II-81-A
10
I-10-A
through I-81-A and II-10-A through II-81-A
11
I-11-A
through I-81-A and II-11-A through II-81-A
12
I-12-A
through I-81-A and II-12-A through II-81-A
13
I-13-A
through I-81-A and II-13-A through II-81-A
14
I-14-A
through I-81-A and II-14-A through II-81-A
15
I-15-A
through I-81-A and II-15-A through II-81-A
16
I-16-A
through I-81-A and II-16-A through II-81-A
17
I-17-A
through I-81-A and II-17-A through II-81-A
18
I-18-A
through I-81-A and II-18-A through II-81-A
19
I-19-A
through I-81-A and II-19-A through II-81-A
20
I-20-A
through I-81-A and II-20-A through II-81-A
21
I-21-A
through I-81-A and II-21-A through II-81-A
22
I-22-A
through I-81-A and II-22-A through II-81-A
23
I-23-A
through I-81-A and II-23-A through II-81-A
24
I-24-A
through I-81-A and II-24-A through II-81-A
25
I-25-A
through I-81-A and II-25-A through II-81-A
26
I-26-A
through I-81-A and II-26-A through II-81-A
27
I-27-A
through I-81-A and II-27-A through II-81-A
28
I-28-A
through I-81-A and II-28-A through II-81-A
29
I-29-A
through I-81-A and II-29-A through II-81-A
30
I-30-A
through I-81-A and II-30-A through II-81-A
31
I-31-A
through I-81-A and II-31-A through II-81-A
32
I-32-A
through I-81-A and II-32-A through II-81-A
33
I-33-A
through I-81-A and II-33-A through II-81-A
34
I-34-A
through I-81-A and II-34-A through II-81-A
35
I-35-A
through I-81-A and II-35-A through II-81-A
36
I-36-A
through I-81-A and II-36-A through II-81-A
37
I-37-A
through I-81-A and II-37-A through II-81-A
38
I-38-A
through I-81-A and II-38-A through II-81-A
39
I-39-A
through I-81-A and II-39-A through II-81-A
40
I-40-A
through I-81-A and II-40-A through II-81-A
41
I-41-A
through I-81-A and II-41-A through II-81-A
42
I-42-A
through I-81-A and II-42-A through II-81-A
43
I-43-A
through I-81-A and II-43-A through II-81-A
44
I-44-A
through I-81-A and II-44-A through II-81-A
45
I-45-A
through I-81-A and II-45-A through II-81-A
46
I-46-A
through I-81-A and II-46-A through II-81-A
47
I-47-A
through I-81-A and II-47-A through II-81-A
48
I-48-A
through I-81-A and II-48-A through II-81-A
49
I-49-A
through I-81-A and II-49-A through II-81-A
50
I-50-A
through I-81-A and II-50-A through II-81-A
51
I-51-A
through I-81-A and II-51-A through II-81-A
52
I-52-A
through I-81-A and II-52-A through II-81-A
53
I-53-A
through I-81-A and II-53-A through II-81-A
54
I-54-A
through I-81-A and II-54-A through II-81-A
55
I-55-A
through I-81-A and II-55-A through II-81-A
93
Distribution
Date
REMIC
I Regular Interests
56
I-56-A
through I-81-A and II-56-A through II-81-A
57
I-57-A
through I-81-A and II-57-A through II-81-A
58
I-58-A
through I-81-A and II-58-A through II-81-A
59
I-59-A
through I-81-A and II-59-A through II-81-A
60
I-60-A
through I-81-A and II-60-A through II-81-A
61
I-61-A
through I-81-A and II-61-A through II-81-A
62
I-62-A
through I-81-A and II-62-A through II-81-A
63
I-63-A
through I-81-A and II-63-A through II-81-A
64
I-64-A
through I-81-A and II-64-A through II-81-A
65
I-65-A
through I-81-A and II-65-A through II-81-A
66
I-66-A
through I-81-A and II-66-A through II-81-A
67
I-67-A
through I-81-A and II-67-A through II-81-A
68
I-68-A
through I-81-A and II-68-A through II-81-A
69
I-69-A
through I-81-A and II-69-A through II-81-A
70
I-70-A
through I-81-A and II-70-A through II-81-A
71
I-71-A
through I-81-A and II-71-A through II-81-A
72
I-72-A
through I-81-A and II-72-A through II-81-A
73
I-73-A
through I-81-A and II-73-A through II-81-A
74
I-74-A
through I-81-A and II-74-A through II-81-A
75
I-75-A
through I-81-A and II-75-A through II-81-A
76
I-76-A
through I-81-A and II-76-A through II-81-A
77
I-77-A
through I-81-A and II-77-A through II-81-A
78
I-78-A
through I-81-A and II-78-A through II-81-A
79
I-79-A
through I-81-A and II-79-A through II-81-A
80
I-80-A
and I-81-A and II-80-A and II-81-A
81
I-81-A
and II-81-A
thereafter
$0.00
With
respect to the Class IO Interest and any Distribution Date, an amount equal
to
the Uncertificated Notional Amount of the REMIC II Regular Interest
IO.
“Uninsured
Cause”: Any cause of damage to a Mortgaged Property such that the complete
restoration of such property is not fully reimbursable by the hazard insurance
policies required to be maintained pursuant to Section 3.11 of this
Agreement.
“United
States Person”: A citizen or resident of the United States, a corporation,
partnership or other entity created or organized in, or under the laws of,
the
United States or any political subdivision thereof (except, in the case of
a
partnership, to the extent provided in regulations) provided that, for purposes
solely of the restrictions on the transfer of any Class R Certificate, no
partnership or other entity treated as a partnership for United States federal
income tax purposes shall be treated as a United States Person unless all
persons that own an interest in such partnership either directly or through
any
entity that is not a corporation for United States federal income tax purposes
are required to be United States Persons, or an estate whose income is subject
to United 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 the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, a trust which was
in
existence on August 20, 1996 (other than a trust treated as owned by the grantor
under subpart E of part I of subchapter J of chapter I of the Code), and which
was treated as a United States person on August 20, 1996 may elect to continue
to be treated as a United States person notwithstanding the previous sentence.
The term “United States” shall have the meaning set forth in Section 7701
of the Code.
94
“Value”:
With respect to any Mortgaged Property, the lesser of (i) the lesser of (a)
the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Fannie Mae and Freddie Mac and (b) the
value
thereof as determined by a review appraisal conducted by the originator of
the
Mortgage Loan in accordance with the originator’s underwriting guidelines, and
(ii) the purchase price paid for the related Mortgaged Property by the Mortgagor
with the proceeds of the Mortgage Loan; provided, however, (A) in the case
of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the lesser of (1) the value determined by an appraisal made for the
originator of the Mortgage Loan of such Refinanced Mortgage Loan at the time
of
origination of such Refinanced Mortgage Loan by an appraiser who met the minimum
requirements of Fannie Mae and Freddie Mac and (2) the value thereof as
determined by a review appraisal conducted by the originator of the Mortgage
Loan in accordance with the originator’s underwriting guidelines, and (B) in the
case of a Mortgage Loan originated in connection with a “lease-option purchase,”
such value of the Mortgaged Property is based on the lower of the value
determined by an appraisal made for the originator of such Mortgage Loan at
the
time of origination or the sale price of such Mortgaged Property if the “lease
option purchase price” was set less than twelve (12) months prior to
origination, and is based on the value determined by an appraisal made for
the
originator of such Mortgage Loan at the time of origination if the “lease option
purchase price” was set twelve (12) months or more prior to
origination.
“Verification
Report”: As defined in Section 4.20.
“Voting
Rights”: The portion of the voting rights of all of the Certificates which is
allocated to any such Certificate. With respect to any date of determination,
98% of all Voting Rights will be allocated among the holders of the Class A
Certificates, the Mezzanine Certificates and the Class CE Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates, 1% of all Voting Rights will be allocated among the
holders of the Class P Certificates and 1% of all Voting Rights will be
allocated among the holders of the Class R Certificates. The Voting Rights
allocated to each Class of Certificate shall be allocated among Holders of
each
such Class in accordance with their respective Percentage Interests as of the
most recent Record Date.
“Wells
Fargo”: Wells Fargo Bank, National Association in its capacity as the Custodian
under the Wells Fargo Custodial Agreement or any successor thereto.
SECTION
1.02. Allocation
of Certain Interest Shortfalls.
For
purposes of calculating the amount of Accrued Certificate Interest and the
amount of the Interest Distribution Amount for the Class A Certificates, the
Mezzanine Certificates and the Class CE Certificates for any Distribution Date,
(1) the aggregate amount of any Prepayment Interest Shortfalls (to the extent
not covered by payments by the Servicer pursuant to Section 3.22 of this
Agreement or by the Master Servicer pursuant to Section 4.19 of this
Agreement) and any Relief Act Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, to the Class
CE Certificates, second, to the Class M-11 Certificates, third, to the Class
M-10 Certificates, fourth, to the Class M-9 Certificates, fifth, to the Class
M-8 Certificates, sixth, to the Class M-7 Certificates, seventh, to the Class
M-6 Certificates, eighth, to the Class M-5 Certificates, ninth, to the Class
M-4
Certificates, tenth, to the Class M-3 Certificates, eleventh, to the Class
M-2
Certificates, twelfth, to the Class M-1 Certificates and thirteenth, to the
Class A Certificates, on a pro
rata
basis,
in each case based on, and to the extent of, one month’s interest at the then
applicable respective Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount, as applicable, of each such Certificate and (2)
the
aggregate amount of any Realized Losses allocated to the Mezzanine Certificates
and Net WAC Rate Carryover Amounts paid to the Class A Certificates and the
Mezzanine Certificates incurred for any Distribution Date shall be allocated
to
the Class CE Certificates on a pro
rata
basis
based on, and to the extent of, one month’s interest at the then applicable
respective Pass-Through Rate on the respective Certificate Principal Balance
or
Notional Amount thereof, as applicable.
95
For
purposes of calculating the amount of Uncertificated Interest for the REMIC
I
Group I Regular Interests for any Distribution Date, the aggregate amount of
any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
Servicer pursuant to Section 3.22 of this Agreement or the Master Servicer
pursuant to Section 4.19 of this Agreement) and any Relief Act Interest
Shortfalls incurred in respect of Group I Mortgage Loans shall be allocated
first, to REMIC I Regular Interest I and to the REMIC I Group I Regular
Interests ending with the designation “B”, pro
rata
based
on, and to the extent of, one month’s interest at the then applicable respective
REMIC I Remittance Rates on the respective Uncertificated Principal Balances
of
each such REMIC I Regular Interest, and then, to REMIC I Group I Regular
Interests ending with the designation “A”, pro rata based on, and to the extent
of, one month’s interest at the then applicable respective REMIC I Remittance
Rates on the respective Uncertificated Balances of each such REMIC I Regular
Interest.
For
purposes of calculating the amount of Uncertificated Interest for the REMIC
I
Group II Regular Interests for any Distribution Date, the aggregate amount
of
any Prepayment Interest Shortfalls (to the extent not covered by payments by
the
Servicer pursuant to Section 3.22 of this Agreement or the Master Servicer
pursuant to Section 4.19 of this Agreement) and any Relief Act Interest
Shortfalls incurred in respect of Group II Mortgage Loans shall be allocated
first, to REMIC I Regular Interest II and to the REMIC I Group II Regular
Interests ending with the designation “B”, pro
rata
based
on, and to the extent of, one month’s interest at the then applicable respective
REMIC I Remittance Rates on the respective Uncertificated Principal Balances
of
each such REMIC I Regular Interest, and then, to REMIC I Group II Regular
Interests ending with the designation “A”, pro rata based on, and to the extent
of, one month’s interest at the then applicable respective REMIC I Remittance
Rates on the respective Uncertificated Balances of each such REMIC I Regular
Interest.
For
purposes of calculating the amount of Uncertificated Interest for the REMIC
II
Regular Interests for any Distribution Date:
(A) The
REMIC
II Marker Allocation Percentage of the aggregate amount of any Prepayment
Interest Shortfalls (to the extent not covered by payments by the Servicer
pursuant to Section 3.22 of this Agreement or the Master Servicer pursuant
to Section 4.19 of this Agreement) and the REMIC II Marker Allocation
Percentage of any Relief Act Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated among REMIC II
Regular Interest AA, REMIC II Regular Interest A-1, REMIC II Regular Interest
A-2A, REMIC II Regular Interest A-2B, REMIC II Regular Interest A-2C, REMIC
II
Regular Interest A-2D, REMIC II Regular Interest M-1, REMIC II Regular Interest
M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest M-4, REMIC II
Regular Interest M-5, REMIC II Regular Interest M-6, REMIC II Regular Interest
M-7, REMIC II Regular Interest M-8, REMIC II Regular Interest M-9, REMIC II
Regular Interest M-10, REMIC II Regular Interest M-11, REMIC II Regular Interest
M-11, REMIC II Regular Interest P and REMIC II Regular Interest ZZ pro
rata
based
on, and to the extent of, one month’s interest at the then applicable respective
REMIC II Remittance Rate on the respective Uncertificated Balance of each such
REMIC II Regular Interest; and
(B) The
REMIC
II Sub WAC Allocation Percentage of the aggregate amount of any Prepayment
Interest Shortfalls (to the extent not covered by payments by the Servicer
pursuant to Section 3.22 of this Agreement or by the Master Servicer
pursuant to Section 4.19 of this Agreement) and the REMIC II Sub WAC
Allocation Percentage of any Relief Act Interest Shortfalls incurred in respect
of the Mortgage Loans for any Distribution Date shall be allocated first, to
Uncertificated Interest payable to REMIC II Regular Interest I-SUB, REMIC II
Regular Interest I-GRP, REMIC II Regular Interest II-SUB, REMIC II Regular
Interest II-GRP and REMIC II Regular Interest XX, pro
rata
based
on, and to the extent of, one month’s interest at the then applicable respective
REMIC II Remittance Rate on the respective Uncertificated Balance of each such
REMIC II Regular Interest.
96
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS;
ORIGINAL
ISSUANCE OF CERTIFICATES
SECTION
2.01. Conveyance
of the Mortgage Loans.
The
Depositor, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey to the Trustee, on behalf of
the
Trust, without recourse, for the benefit of the Certificateholders, all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under
the
Mortgage Loan Purchase Agreement (including, without limitation the right to
enforce the obligations of the other parties thereto thereunder), the right
to
any Net Swap Payment and any Swap Termination Payment made by the Swap Provider
and all other assets included or to be included in REMIC I. Such assignment
includes all interest and principal received by the Depositor and the Servicer
on or with respect to the Mortgage Loans (other than payments of principal
and
interest due on such Mortgage Loans on or before the Cut-off Date). A copy
of
the Mortgage Loan Purchase Agreement is attached hereto as Exhibit
F.
In
connection with such transfer and assignment, the Depositor does hereby deliver
to, and deposit with the Custodian pursuant to the Custodial Agreement the
documents with respect to each Mortgage Loan as described under Section 2
of the Custodial Agreement (the “Mortgage Loan Documents”). In connection with
such delivery and as further described in the Custodial Agreement, the Custodian
will be required to review such Mortgage Loan Documents and deliver to the
Trustee, the Depositor, the Servicer and the Sponsor certifications (in the
forms attached to the Custodial Agreement) with respect to such review with
exceptions noted thereon. In addition, under the Custodial Agreement the
Depositor will be required to cure certain defects with respect to the Mortgage
Loan Documents for the related Mortgage Loans after the delivery thereof by
the
Depositor to the Custodian as more particularly set forth therein.
Notwithstanding
anything to the contrary contained herein, the parties hereto acknowledge that
the functions of the Trustee with respect to the custody, acceptance, inspection
and release of the Mortgage Files, including, but not limited to certain
insurance policies and documents contemplated by Section 4.11 of this
Agreement, and preparation and delivery of the certifications shall be performed
by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.
The
Depositor shall deliver or cause the originator to deliver to the Servicer
copies of all trailing documents required to be included in the related Mortgage
File at the same time the originals or certified copies thereof are delivered
to
the Trustee or Custodian, such documents including the mortgagee policy of
title
insurance and any Mortgage Loan Documents upon return from the recording office.
The Servicer shall not be responsible for any custodian fees or other costs
incurred in obtaining such documents and the Depositor shall cause the Servicer
to be reimbursed for any such costs the Servicer may incur in connection with
performing its obligations under this Agreement.
97
The
Mortgage Loans permitted by the terms of this Agreement to be included in the
Trust are limited to (i) Mortgage Loans (which the Depositor acquired pursuant
to the Mortgage Loan Purchase Agreement, which contains, among other
representations and warranties, a representation and warranty of the Sponsor
that no Mortgage Loan is a “High-Cost Home Loan” as defined in the New Jersey
Home Ownership Act effective November 27, 2003 or as defined in the New Mexico
Home Loan Protection Act effective January 1, 2004, as defined in the
Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004
(Mass. Ann. Laws Ch. 183C) or as defined in the Indiana Home Loan Practices
Act,
effective January 1, 2005 (Ind. Code Ann. Sections 24-9-1 through 24-9-9))
or a
“high risk home loan” under the Illinois High Risk Home Loan Act, effective as
of January 1, 2004, and (ii) Qualified Substitute Mortgage Loans (which, by
definition as set forth herein and referred to in the Mortgage Loan Purchase
Agreement, are required to conform to, among other representations and
warranties, the representation and warranty of the Sponsor that no Qualified
Substitute Mortgage Loan is a “High-Cost Home Loan” as defined in the New Jersey
Home Ownership Act effective November 27, 2003 or as defined in the New Mexico
Home Loan Protection Act effective January 1, 2004, as defined in the
Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004
(Mass. Ann. Laws Ch. 183C) or as defined in the Indiana Home Loan Practices
Act,
effective January 1, 2005 (Ind. Code Ann. Sections 24-9-1 through 24-9-9).
The
Depositor and the Trustee on behalf of the Trust understand and agree that
it is
not intended that any Mortgage Loan be included in the Trust that is a
“High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective
November 27, 2003, as defined in the New Mexico Home Loan Protection Act
effective January 1, 2004, as defined in the Massachusetts Predatory Home Loan
Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or as
defined in the Indiana Home Loan Practices Act, effective January 1, 2005 (Ind.
Code Ann. Sections 24-9-1 through 24-9-9) or a “high risk home loan” under the
Illinois High Risk Home Loan Act, effective as of January 1, 2004.
SECTION
2.02. Acceptance
of REMIC I by Trustee.
The
Trustee acknowledges receipt, subject to the provisions of Section 2.01
hereof and Section 2 of the Custodial Agreement, of the Mortgage Loan
Documents and all other assets included in the definition of “REMIC I” under
clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into the
Distribution Account) and declares that it holds (or the Custodian on its behalf
holds) and will hold such documents and the other documents delivered to it
constituting a Mortgage Loan Document, and that it holds (or the Custodian
on
its behalf holds) or will hold all such assets and such other assets included
in
the definition of “REMIC I” in trust for the exclusive use and benefit of all
present and future Certificateholders.
SECTION
2.03. Repurchase
or Substitution of Mortgage Loans.
(a) Upon
discovery or receipt of notice of any materially defective document in, or
that
a document is missing from, a Mortgage File or of a breach by the Sponsor of
any
representation, warranty or covenant under the Mortgage Loan Purchase Agreement
in respect of any Mortgage Loan that materially and adversely affects the value
of such Mortgage Loan or the interest therein of the Certificateholders, the
Trustee shall promptly notify the Sponsor and the Servicer of such defect,
missing document or breach and request that the Sponsor deliver such missing
document, cure such defect or breach within sixty (60) days from the date the
Sponsor was notified of such missing document, defect or breach, and if the
Sponsor does not deliver such missing document or cure such defect or breach
in
all material respects during such period, the Trustee shall enforce the
obligations of the Sponsor under the Mortgage Loan Purchase Agreement to
repurchase such Mortgage Loan from REMIC I at the Purchase Price within ninety
(90) days after the date on which the Sponsor was notified of such missing
document, defect or breach, if and to the extent that the Sponsor is obligated
to do so under the Mortgage Loan Purchase Agreement. The Purchase Price for
the
repurchased Mortgage Loan shall be remitted to the Servicer for deposit in
the
Collection Account, and the Trustee, upon receipt of written certification
from
the Servicer of such deposit, shall release or cause the Custodian (upon receipt
of a request for release in the form attached to the Custodial Agreement) to
release to the Sponsor the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as the Sponsor shall furnish to it and
as
shall be necessary to vest in the Sponsor any Mortgage Loan released pursuant
hereto, and the Trustee shall not have any further responsibility with regard
to
such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided
above, if so provided in the Mortgage Loan Purchase Agreement, the Sponsor
may
cause such Mortgage Loan to be removed from REMIC I (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set forth in
Section 2.03(b) of this Agreement. It is understood and agreed that the
obligation of the Sponsor to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect
or
breach available to the Trustee and the Certificateholders. Notwithstanding
anything to the contrary contained herein, any breach of a representation or
warranty contained in clauses (viii),
(xxxviii), (xxxix), (xl), (xli), (xlvi), (xlvii ), (lvi), (lvii), (lxi), (lxiv),
(lxvii), (lxix) and/or (lxx)
of
Section 6 of the Mortgage Loan Purchase Agreement shall be automatically
deemed to affect materially and adversely the interests of the
Certificateholders.
98
In
addition, promptly upon the earlier of discovery by the Servicer or receipt
of
notice by the Servicer of the breach of the representation or covenant of the
Sponsor set forth in Section 5(xii) of the Mortgage Loan Purchase Agreement
which materially and adversely affects the interests of the Holders of the
Class
P Certificates in any Prepayment Charge, the Servicer shall promptly notify
the
Sponsor and the Trustee of such breach. The Trustee shall enforce the
obligations of the Sponsor under the Mortgage Loan Purchase Agreement to remedy
such breach to the extent and in the manner set forth in the Mortgage Loan
Purchase Agreement.
(b) Any
substitution of Qualified Substitute Mortgage Loans for Deleted Mortgage Loans
made pursuant to Section 2.03(a) of this Agreement must be effected prior
to the date which is two years after the Startup Day for REMIC I.
As
to any
Deleted Mortgage Loan for which the Sponsor substitutes a Qualified Substitute
Mortgage Loan or Loans, such substitution shall be effected by the Sponsor
delivering to the Trustee or the Custodian on behalf of the Trustee, for such
Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage,
the Assignment, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2 of the Custodial
Agreement, as applicable, together with an Officers’ Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Custodian on behalf of the Trustee
shall acknowledge receipt of such Qualified Substitute Mortgage Loan or Loans
and, within ten (10) Business Days thereafter, review such documents and deliver
to the Depositor, the Trustee and the Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, an initial certification pursuant to the
Custodial Agreement, with any applicable exceptions noted thereon. Within one
year of the date of substitution, the Custodian on behalf of the Trustee shall
deliver to the Depositor, the Trustee and the Servicer a final certification
pursuant to the Custodial Agreement with respect to such Qualified Substitute
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month
of
substitution are not part of REMIC I and will be retained by the Sponsor. For
the month of substitution, distributions to Certificateholders will reflect
the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date
in
the month of substitution, and the Sponsor shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. The Depositor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan
from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee and the Servicer. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall constitute part of the Trust Fund and
shall be subject in all respects to the terms of this Agreement and the Mortgage
Loan Purchase Agreement, including all applicable representations and warranties
thereof included herein or in the Mortgage Loan Purchase Agreement.
99
For
any
month in which the Sponsor substitutes one or more Qualified Substitute Mortgage
Loans for one or more Deleted Mortgage Loans, the Servicer will determine the
amount (the “Substitution Shortfall Amount”), if any, by which the aggregate
Purchase Price of all such Deleted Mortgage Loans exceeds the aggregate of,
as
to each such Qualified Substitute Mortgage Loan, the Scheduled Principal Balance
thereof as of the date of substitution, together with one month’s interest on
such Scheduled Principal Balance at the applicable Net Mortgage Rate, plus
all
outstanding P&I Advances and Servicing Advances (including Nonrecoverable
P&I Advances and Nonrecoverable Servicing Advances) related thereto. On the
date of such substitution, the Sponsor will deliver or cause to be delivered
to
the Servicer for deposit in the Collection Account an amount equal to the
Substitution Shortfall Amount, if any, and the Trustee or the Custodian on
behalf of the Trustee, upon receipt of the related Qualified Substitute Mortgage
Loan or Loans, upon receipt of a request for release in the form attached to
the
Custodial Agreement and certification by the Servicer of such deposit, shall
release to the Sponsor the related Mortgage File or Files and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as the Sponsor shall deliver
to it
and as shall be necessary to vest therein any Deleted Mortgage Loan released
pursuant hereto.
In
addition, the Sponsor shall obtain at its own expense and deliver to the Trustee
an Opinion of Counsel to the effect that such substitution will not cause (a)
any federal tax to be imposed on any Trust REMIC, including without limitation,
any federal tax imposed on “prohibited transactions” under
Section 860F(a)(1) of the Code or on “contributions after the startup date”
under Section 860G(d)(1) of the Code, or (b) any Trust REMIC to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
100
(c) Upon
discovery by the Depositor, the Sponsor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a “qualified mortgage” within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall
within two (2) Business Days give written notice thereof to the other parties.
In connection therewith, the Sponsor shall repurchase or substitute one or
more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan within ninety
(90) days of the earlier of discovery or receipt of such notice with respect
to
such affected Mortgage Loan. Such repurchase or substitution shall be made
by
(i) the Sponsor if the affected Mortgage Loan’s status as a non-qualified
mortgage is or results from a breach of any representation, warranty or covenant
made by the Sponsor under the Mortgage Loan Purchase Agreement or (ii) the
Depositor, if the affected Mortgage Loan’s status as a non-qualified mortgage
does not result from a breach of a representation or warranty. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 2.03(a) of this Agreement. The Trustee shall reconvey to the
Sponsor the Mortgage Loan to be released pursuant hereto in the same manner,
and
on the same terms and conditions, as it would a Mortgage Loan repurchased for
breach of a representation or warranty.
(d) With
respect to a breach of the representations made pursuant to Section 5(xii)
of the Mortgage Loan Purchase Agreement that materially and adversely affects
the value of such Mortgage Loan or the interest therein of the
Certificateholders, the Sponsor shall be required to take the actions set forth
in this Section 2.03 of this Agreement.
(e) Within
ninety (90) days of the earlier of discovery by the Servicer or receipt of
notice by the Servicer of the breach of any representation, warranty or covenant
of the Servicer set forth in Section 2.05 of this Agreement which
materially and adversely affects the interests of the Certificateholders in
any
Mortgage Loan or Prepayment Charge, the Servicer shall cure such breach in
all
material respects.
SECTION
2.04. Representations
and Warranties of the Master Servicer.
The
Master Servicer hereby represents, warrants and covenants to the Servicer,
the
Depositor and the Trustee, for the benefit of each of the Trustee and the
Certificateholders, that as of the Closing Date or as of such date specifically
provided herein:
(i) The
Master Servicer is a national banking association duly formed, validly existing
and in good standing under the laws of the United States of America and is
duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by the Master Servicer;
(ii) The
Master Servicer has the full power and authority to conduct its business as
presently conducted by it and to execute, deliver and perform, and to enter
into
and consummate, all transactions contemplated by this Agreement. The Master
Servicer has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of the Master Servicer,
enforceable against it in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar
laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity;
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(iii) The
execution and delivery of this Agreement by the Master Servicer, the
consummation by the Master Servicer of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof are
in
the ordinary course of business of the Master Servicer and will not (A) result
in a breach of any term or provision of the charter and by-laws of the Master
Servicer or (B) conflict with, result in a breach, violation or acceleration
of,
or result in a default under, the terms of any other material agreement or
instrument to which the Master Servicer is a party or by which it may be bound,
or any statute, order or regulation applicable to the Master Servicer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Master Servicer; and the Master Servicer is not a party
to, bound by, or in breach or violation of any indenture or other agreement
or
instrument, or subject to or in violation of any statute, order or regulation
of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to the Master
Servicer’s knowledge, would in the future materially and adversely affect, (x)
the ability of the Master Servicer to perform its obligations under this
Agreement or (y) the business, operations, financial condition, properties
or
assets of the Master Servicer taken as a whole;
(iv) The
Master Servicer does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant made by it and contained
in this Agreement;
(v) No
litigation is pending against the Master Servicer that would materially and
adversely affect the execution, delivery or enforceability of this Agreement
or
the ability of the Master Servicer to perform any of its other obligations
hereunder in accordance with the terms hereof;
(vi) There
are
no actions or proceedings against, or investigations known to it of, the Master
Servicer before any court, administrative or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to prevent the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the Master
Servicer of its obligations under, or validity or enforceability of, this
Agreement;
(vii) No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Master
Servicer of, or compliance by the Master Servicer with, this Agreement or the
consummation by it of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date;
(viii) There
are
no affiliations, relationships or transactions relating to the Master Servicer
of a type that are described under Item 1119 of Regulation AB with the
Depositor, the Sponsor, the Servicer, the Credit Risk Manager, the Swap Provider
or the Trustee.
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It
is
understood and agreed that the representations, warranties and covenants set
forth in this Section 2.04 shall survive the resignation or termination of
the parties hereto and the termination of this Agreement and shall inure to
the
benefit of the Trustee, the Depositor and the Certificateholders.
SECTION
2.05. Representations,
Warranties and Covenants of the Servicer.
The
Servicer hereby represents, warrants and covenants to the Master Servicer,
the
Securities Administrator, the Depositor and the Trustee, for the benefit of
each
of such Persons and the Certificateholders that as of the Closing Date or as
of
such date specifically provided herein:
(i) The
Servicer is a California industrial bank duly organized and validly existing
under the laws of the jurisdiction of its formation, and is duly authorized
and
qualified to transact any and all business contemplated by this Agreement to
be
conducted by the Servicer in any state in which a Mortgaged Property related
to
a Mortgage Loan is located or is otherwise not required under applicable law
to
effect such qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure its ability
to enforce each Mortgage Loan and to service the Mortgage Loans in accordance
with the terms of this Agreement;
(ii) The
Servicer has the full power and authority to conduct its business as presently
conducted by it and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The Servicer has
duly authorized the execution, delivery and performance of this Agreement,
has
duly executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the other parties hereto, constitutes
a
legal, valid and binding obligation of the Servicer, enforceable against it
in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors’ rights generally and by general principles of
equity;
(iii) The
execution and delivery of this Agreement by the Servicer, the servicing of
the
Mortgage Loans by the Servicer hereunder, the consummation by the Servicer
of
any other of the transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of business of
the
Servicer and will not (A) result in a breach of any term or provision of the
charter or by-laws of the Servicer or (B) conflict with, result in a breach,
violation or acceleration of, or result in a default under, the terms of any
other material agreement or instrument to which the Servicer is a party or
by
which it may be bound, or any statute, order or regulation applicable to the
Servicer of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Servicer; and the Servicer is not a party
to,
bound by, or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation
of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to the
Servicer’s knowledge, would in the future materially and adversely affect, (x)
the ability of the Servicer to perform its obligations under this Agreement,
(y)
the business, operations, financial condition, properties or assets of the
Servicer taken as a whole or (z) the legality, validity or enforceability of
this Agreement;
103
(iv) The
Servicer does not believe, nor does it have any reason or cause to believe,
that
it cannot perform each and every covenant made by it and contained in this
Agreement;
(v) No
litigation is pending against the Servicer that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or the
ability of the Servicer to service the Mortgage Loans or to perform any of
its
other obligations hereunder in accordance with the terms hereof;
(vi) There
are
no actions or proceedings against, or investigations known to it of, the
Servicer before any court, administrative or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to prevent the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement;
(vii) No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Servicer
of,
or compliance by the Servicer with, this Agreement or the consummation by it
of
the transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior
to
the Closing Date;
(viii) The
Servicer has fully furnished and will continue to fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (e.g., favorable and unfavorable) on its borrower
credit files to Equifax, Experian and Trans Union Credit Information Company
or
their successors on a monthly basis;
(ix) The
Servicer is a member of MERS in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the Mortgage Loans that are registered with MERS; and
(x) The
Servicer will not waive any Prepayment Charge other than in accordance with
the
standard set forth in Section 3.01.
Notwithstanding
anything to the contrary contained in this Agreement, if the covenant of the
Servicer set forth in Section 2.05(x) above is breached, the Servicer will
pay
the amount of such waived Prepayment Charge, from its own funds without any
right of reimbursement, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account within
90
days of the earlier of discovery by the Servicer or receipt of notice by the
Servicer of such breach; provided, however, the Servicer shall not have any
obligation to pay the amount of any uncollected Prepayment Charge under this
Section 2.05 if the Servicer did not have a copy of the related Mortgage Note,
the Servicer requested a copy of the same from the Custodian in accordance
with
the terms of the Custodial Agreement and the Custodian failed to provide such
a
copy within the time frame set forth in the Custodial Agreement. Furthermore,
notwithstanding any other provisions of this Agreement, any payments made by
the
Servicer in respect of any waived Prepayment Charges pursuant to this paragraph
shall be deemed to be paid outside of the Trust Fund.
104
(c)
It is
understood and agreed that the representations, warranties and covenants set
forth in this Section 2.05 shall survive the resignation or termination of
the
parties hereto, the termination of this Agreement and the delivery of the
Mortgage Files to the Custodian and shall inure to the benefit of the Trustee,
the Master Servicer, the Securities Administrator, the Depositor, the
Certificateholders. Upon discovery by any such Person or the Servicer of a
breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Charge or the interests therein of the Certificateholders, the party discovering
such breach shall give prompt written notice (but in no event later than two
(2)
Business Days following such discovery) to the Trustee. Subject to Section
8.01,
unless such breach shall not be susceptible of cure within ninety (90) days,
the
obligation of the Servicer set forth in Section 2.03(e) to cure breaches shall
constitute the sole remedy against the Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.
SECTION
2.06. Issuance
of the REMIC I Regular Interests and the Class R-I Interest.
The
Trustee acknowledges the assignment to it of the Mortgage Loans and the delivery
to the Custodian on its behalf of the Mortgage Loan Documents, subject to the
provisions of Section 2.01 and Section 2.02 hereof and Section 2
of the Custodial Agreement, together with the assignment to it of all other
assets included in REMIC I, the receipt of which is hereby acknowledged. The
interests evidenced by the Class R-I Interest, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership interest in REMIC I.
The
rights of the Holders of the Class R-I Interest and REMIC I (as holder of the
REMIC I Regular Interests) to receive distributions from the proceeds of REMIC
I
in respect of the Class R-I Interest and the REMIC I Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-I Interest and the REMIC I Regular Interests, shall be as set forth in this
Agreement.
SECTION
2.07. Conveyance
of the REMIC I Regular Interests; Acceptance of REMIC II and REMIC III by the
Trustee.
The
Depositor, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey to the Trustee, without recourse
all the right, title and interest of the Depositor in and to the REMIC I Regular
Interests for the benefit of the Class R-II Interest and REMIC II (as holder
of
the REMIC I Regular Interests). The Trustee acknowledges receipt of the REMIC
I
Regular Interests and declares that it holds and will hold the same in trust
for
the exclusive use and benefit of all present and future Holders of the Class
R-II Interest and REMIC II (as holder of the REMIC I Regular Interests). The
rights of the Holder of the Class R-II Interest and REMIC II (as holder of
the
REMIC I Regular Interests) to receive distributions from the proceeds of REMIC
II in respect of the Class R-II Interest and the REMIC II Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-II Interest and the REMIC II Regular Interests, shall be as set forth in
this
Agreement. The Class R-II Interest and the REMIC II Regular Interests shall
constitute the entire beneficial ownership interest in REMIC II. The Trustee
acknowledges receipt of the REMIC II Regular Interests and declares that it
holds and will hold the same in trust for the exclusive use and benefit of
all
present and future Holders of the Class R-III Interest and REMIC III (as holder
of the REMIC II Regular Interests). The rights of the Holder of the Class R-III
Interest and REMIC III (as holder of the REMIC II Regular Interests) to receive
distributions from the proceeds of REMIC III in respect of the Class R-III
Interest, the Class IO Interest and the Regular Certificates, respectively,
and
all ownership interests evidenced or constituted by the Class R-III Interest
,
the Class IO Interest and the Regular Certificates, shall be as set forth in
this Agreement. The Class R-III Interest, the Class IO Interest and the Regular
Certificates shall constitute the entire beneficial ownership interest in REMIC
III.
105
SECTION
2.08. Issuance
of the Residual Certificates.
The
Trustee acknowledges the assignment to it of the REMIC I Regular Interests
and,
concurrently therewith and in exchange therefor, pursuant to the written request
of the Depositor executed by an officer of the Depositor, the Securities
Administrator has executed and authenticated and the Trustee has delivered
to or
upon the order of the Depositor, the Class R Certificates in authorized
denominations. The Class R Certificates evidence ownership in the Class R-I
Interest, the Class R-II Interest and the Class R-III Interest.
SECTION
2.09. Establishment
of the Trust.
The
Depositor does hereby establish, pursuant to the further provisions of this
Agreement and the laws of the State of New York, an express trust to be known,
for convenience, as “ACE Securities Corp. Home Equity Loan Trust, Series
2006-FM1” and does hereby appoint HSBC Bank USA, National Association as Trustee
in accordance with the provisions of this Agreement.
SECTION
2.10. Purpose
and Powers of the Trust.
The
purpose of the common law trust, as created hereunder, is to engage in the
following activities:
(a) acquire
and hold the Mortgage Loans and the other assets of the Trust Fund and the
proceeds therefrom;
(b) to
issue
the Certificates sold to the Depositor in exchange for the Mortgage
Loans;
106
(c) to
make
payments on the Certificates;
(d) to
engage
in those activities that are necessary, suitable or convenient to accomplish
the
foregoing or are incidental thereto or connected therewith; and
(e) subject
to compliance with this Agreement, to engage in such other activities as may
be
required in connection with the conservation of the Trust Fund and the making
of
distributions to the Certificateholders.
The
trust
is hereby authorized to engage in the foregoing activities. The Trustee shall
not cause the trust to engage in any activity other than in connection with
the
foregoing or other than as required or authorized by the terms of this Agreement
(or those ancillary thereto) while any Certificate is outstanding, and this
Section 2.10 may not be amended, without the consent of the Certificateholders
evidencing 51% or more of the aggregate voting rights of the
Certificates.
107
ARTICLE
III
ADMINISTRATION
AND SERVICING
OF
THE
MORTGAGE LOANS; ACCOUNTS
SECTION
3.01. The
Servicer to Act as Servicer.
On
and
after the Closing Date, the Servicer shall service and administer the Mortgage
Loans on behalf of the Trust Fund and in the best interests of and for the
benefit of the Certificateholders (as determined by the Servicer in its good
faith reasonable judgment) in accordance with the terms of this Agreement and
the respective Mortgage Loans and all applicable law and regulations and, to
the
extent consistent with such terms, in the same manner in which it services
and
administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of prudent mortgage
lenders and loan servicers administering similar mortgage loans but without
regard to:
(i) any
relationship that the Servicer or any of its Affiliates may have with the
related Mortgagor;
(ii) the
ownership of any Certificate by the Servicer or any of its
Affiliates;
(iii) the
Servicer’s obligation to make P&I Advances or Servicing Advances;
or
(iv) the
Servicer’s right to receive compensation for its services
hereunder;
To
the
extent consistent with the foregoing, the Servicer shall also seek to maximize
the timely and complete recovery of principal and interest on the related
Mortgage Notes and shall waive (or permit a Sub-Servicer to waive) a Prepayment
Charge only under the following circumstances: (i) such waiver is standard
and
customary in servicing similar Mortgage Loans and such waiver is related to
a
default or reasonably foreseeable default and would, in the reasonable judgment
of the Servicer, maximize recovery of total proceeds taking into account the
value of such Prepayment Charge and the related Mortgage Loan and, if such
waiver is made in connection with a refinancing of the related Mortgage Loan,
such refinancing is related to a default or a reasonably foreseeable default,
(ii) such Prepayment Charge is unenforceable in accordance with applicable
law
or the collection of such related Prepayment Charge would otherwise violate
applicable law or (iii) the collection of such Prepayment Charge would be
considered “predatory” pursuant to written guidance published or issued by any
applicable federal, state or local regulatory authority acting in its official
capacity and having jurisdiction over such matters. Notwithstanding any
provision in this Agreement to the contrary, in the event the Prepayment Charge
payable under the terms of the Mortgage Note is less than the amount of the
Prepayment Charge set forth in the Prepayment Charge Schedule or other
information provided to the Servicer, the Servicer and the Master Servicer
shall
not have any liability or obligation with respect to such difference (including
any obligation to recalculate any Prepayment Charges), and in addition shall
not
have any liability or obligation to pay the amount of any uncollected Prepayment
Charge if the failure to collect such amount is the direct result of inaccurate
or incomplete information on the Prepayment Charge Schedule.
108
In
the
event the Servicer waives a Prepayment Charge in connection with clauses (ii)
or
(iii) of the preceding paragraph, within three (3) Business Days of such waiver,
the Servicer shall provide a written explanation of the Servicer’s determination
to the Master Servicer, and the Master Servicer shall provide a copy of such
writing to the Sponsor and the Depositor.
Subject
only to the above-described servicing standards (the “Accepted Servicing
Practices”) and the terms of this Agreement and of the related Mortgage Loans,
the Servicer shall have full power and authority, to do or cause to be done
any
and all things in connection with such servicing and administration which it
may
deem necessary or desirable with the goal of maximizing proceeds of the Mortgage
Loan. Without limiting the generality of the foregoing, the Servicer in its
own
name is hereby authorized and empowered by the Trustee when the Servicer
believes it appropriate in its best judgment, to execute and deliver, on behalf
of the Trust Fund, the Certificateholders and the Trustee or any of them, and
upon written notice to the Trustee, any and all instruments of satisfaction
or
cancellation, or of partial or full release or discharge or subordination,
and
all other comparable instruments, with respect to the related Mortgage Loans
and
the related Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Trustee, for the benefit of the Trust Fund and the Certificateholders.
The Servicer shall service and administer the related Mortgage Loans in
accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. The Servicer
shall also comply in the performance of this Agreement with all reasonable
rules
and requirements of each insurer under any standard hazard insurance policy.
Subject to Section 3.14, the Trustee shall execute, at the written request
of
the Servicer, and furnish to the Servicer a power of attorney in the form of
Exhibit
D
hereto
and other documents necessary or appropriate to enable the Servicer to carry
out
its servicing and administrative duties hereunder, and furnished to the Trustee
by the Servicer, and the Trustee shall not be liable for the actions of the
Servicer under such powers of attorney and shall be indemnified by the Servicer
for any cost, liability or expense incurred by the Trustee in connection with
the Servicer’s use or misuse of any such power of attorney.
The
Servicer is hereby authorized and empowered in its own name or in the name
of a
Sub-Servicer, when the Servicer or such Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan
on
the MERS® System, or cause the removal from the registration of any Mortgage
Loan on the MERS® System, to execute and deliver, on behalf of the Trustee and
the Certificateholders or any of them, any and all instruments of assignment
and
other comparable instruments with respect to such assignment or re-recording
of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any reasonable expenses incurred in connection with
the
actions described in the preceding sentence or as a result of MERS discontinuing
or becoming unable to continue operations in connection with the MERS® System,
shall be reimbursable by the Trust Fund to the Servicer.
109
In
accordance with Accepted Servicing Practices, the Servicer shall make or cause
to be made Servicing Advances as necessary for the purpose of effecting the
payment of taxes and assessments on the Mortgaged Properties, which Servicing
Advances shall be reimbursable in the first instance from related collections
from the related Mortgagors pursuant to Section 3.07 of this Agreement, and
further as provided in Section 3.09 of this Agreement; provided, however, the
Servicer shall only make such Servicing Advance if the related Mortgagor has
not
made such payment and if the failure to make such Servicing Advance would result
in the loss of the related Mortgaged Property due to a tax sale or foreclosure
as a result of a tax lien; provided, however, that the Servicer shall be
required to make such Servicing Advances only to the extent that such Servicing
Advances, in the good faith judgment of the Servicer, will be recoverable by
the
Servicer out of Insurance Proceeds, Liquidation Proceeds, or otherwise out
of
the proceeds of the related Mortgage Loan. Any cost incurred by the Servicer
in
effecting the payment of taxes and assessments on a Mortgaged Property shall
not, for the purpose of calculating the Stated Principal Balance of such
Mortgage Loan or distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. The parties to this Agreement acknowledge
that
Servicing Advances shall be reimbursable pursuant to Section 3.09
of this
Agreement. Notwithstanding the foregoing, the parties understand and agree
that,
with respect to any Mortgage Loan (1) the reimbursement of any Servicing Advance
made with respect to such Mortgage Loan prior to the Cut-off Date (each, a
“Pre-Cut-off Date Advance”) will only be allowed if such Servicing Advance is
included in a Servicing Advance Schedule delivered to the Master Servicer
listing the amount of Pre-Cut-off Date Advances made in respect of such Mortgage
Loan from (a) the Servicer with respect to any Mortgage Loans that were
transferred to the Servicer prior to the Cut-off Date and/or (b) the Depositor
with respect to any Mortgage Loans that were transferred to the Servicer after
the Cut-off Date, (2) the aggregate Pre-Cut-off Date Advances reimbursable
hereunder with respect to such Mortgage Loan shall not exceed the amount of
Pre-Cut-off Date Advances for such Mortgage Loan shown on the Servicing Advance
Schedule delivered to the Master Servicer, and (3) the Depositor shall be deemed
to have agreed with and approved the Pre-Cut-off Date Advances shown on any
Servicing Advance Schedule furnished to the Master Servicer.
Notwithstanding
anything in this Agreement to the contrary, the Servicer may not make any future
advances with respect to a Mortgage Loan and shall not permit any modification
with respect to any related Mortgage Loan that would change the Mortgage Rate,
reduce or increase the principal balance (except for reductions resulting from
actual payments of principal) or change the final maturity date on such related
Mortgage Loan (unless, as provided in Section 3.06 of this Agreement, the
related Mortgagor is in default with respect to the related Mortgage Loan or
such default is, in the judgment of the Servicer, reasonably foreseeable) or
any
modification, waiver or amendment of any term of any related Mortgage Loan
that
would both (A) effect an exchange or reissuance of such Mortgage Loan under
Section 1001 of the Code (or final, temporary or proposed Treasury
regulations promulgated thereunder) and (B) cause any Trust REMIC created
hereunder to fail to qualify as a REMIC under the Code or the imposition of
any
tax on “prohibited transactions” or “contributions after the startup date” under
the REMIC Provisions.
In
the
event that the Mortgage Loan Documents relating to a Mortgage Loan contain
provisions requiring the related Mortgagor to arbitrate disputes (at the option
of the Trustee, on behalf of the Trust), the Trustee hereby authorizes the
Servicer to waive the Trustee’s right or option to arbitrate disputes and to
send written notice of such waiver to the Mortgagor, although the Mortgagor
may
still require arbitration at its option.
110
SECTION
3.02. Sub-Servicing
Agreements Between the Servicer and Sub-Servicers.
(a) The
Servicer may arrange for the subservicing of any Mortgage Loan by a Sub-Servicer
pursuant to a Sub-Servicing Agreement; provided that such sub-servicing
arrangement and the terms of the related Sub-Servicing Agreement must provide
for the servicing of such Mortgage Loans in a manner consistent with the
servicing arrangements contemplated hereunder and the Servicer shall cause
any
Sub-Servicer to comply with the provisions of this Agreement (including, without
limitation, to provide the information required to be delivered under Sections
3.17, 3.18 and 3.19 hereof), to the same extent as if such Sub-Servicer were
the
Servicer. The Servicer shall be responsible for obtaining from each Sub-Servicer
and delivering to the Master Servicer any annual statement of compliance,
assessment of compliance, attestation report and Sarbanes-Oxley related
certification as and when required to be delivered. Each Sub-Servicer shall
be
authorized to transact business in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement. Notwithstanding the provisions
of any Sub-Servicing Agreement, any of the provisions of this Agreement relating
to agreements or arrangements between the Servicer or a Sub-Servicer or
reference to actions taken through the Servicer or otherwise, the Servicer
shall
remain obligated and liable to the Depositor, the Trustee and the
Certificateholders for the servicing and administration of the Mortgage Loans
in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such 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. Every Sub-Servicing
Agreement entered into by the Servicer shall contain a provision giving the
successor servicer the option to terminate such agreement in the event a
successor servicer is appointed. All actions of each Sub-Servicer performed
pursuant to the related Sub-Servicing Agreement shall be performed as an agent
of the Servicer with the same force and effect as if performed directly by
the
Servicer.
(b) Notwithstanding
the foregoing, the Servicer shall be entitled to outsource one or more separate
servicing functions to a Subcontractor that does not meet the eligibility
requirements for a Sub-Servicer, so long as such outsourcing does not constitute
the delegation of the Servicer’s obligation to perform all or substantially all
of the servicing of the related Mortgage Loans to such Subcontractor. The
Servicer shall promptly, upon request, provide to the Master Servicer, the
Trustee and the Depositor a written description (in form and substance
reasonably satisfactory to the Master Servicer, the Trustee and the Depositor)
of the role and function of each Subcontractor utilized by the Servicer,
specifying (i) the identity of each such Subcontractor “participating in the
servicing function” within the meaning of Item 1122 of Regulation AB, and (ii)
which elements of the Servicing Criteria will be addressed in assessments of
compliance provided by each Subcontractor identified pursuant to clause (i)
of
this subsection; provided, however, that the Servicer shall not be required
to
provide the information in clauses (i) or (ii) of this subsection until such
time that the applicable assessment of compliance is due pursuant to Section
3.18 of this Agreement. The use by the Servicer of any such Subcontractor shall
not release the Servicer from any of its obligations hereunder and the Servicer
shall remain responsible hereunder for all acts and omissions of such
Subcontractor as fully as if such acts and omissions were those of the Servicer,
and the Servicer shall pay all fees and expenses of the Subcontractor from
the
Servicer’s own funds.
111
(c) As
a
condition to the utilization of any Subcontractor determined to be
“participating in the servicing function” within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer for the benefit of the Master Servicer, the Trustee and the Depositor
to comply with the provisions of Sections 3.18 and 3.19 of this Agreement to
the
same extent as if such Subcontractor were the Servicer. The Servicer shall
be
responsible for obtaining from each such Subcontractor and delivering to the
Master Servicer, the Trustee and any Depositor any assessment of compliance,
attestation report and Sarbanes-Oxley related certification required to be
delivered by such Subcontractor under Sections 3.18 and 3.19, in each case
as
and when required to be delivered.
(d) For
purposes of this Agreement, the Servicer shall be deemed to have received any
collections, recoveries or payments with respect to the Mortgage Loans that
are
received by a Sub-Servicer regardless of whether such payments are remitted
by
the Sub-Servicer to the Servicer.
SECTION
3.03. Successor
Sub-Servicers.
Any
Sub-Servicing Agreement shall provide that the Servicer shall be entitled to
terminate any Sub-Servicing Agreement and to either itself directly service
the
related Mortgage Loans or enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02. Any Sub-Servicing Agreement
shall include the provision that such agreement may be immediately terminated
as
soon as is reasonably possible by any successor to the Servicer without fee
or,
in the event a termination fee exists, such fee shall be payable by the Servicer
from its own funds without reimbursement therefor, in accordance with the terms
of this Agreement, in the event that the Servicer (or any successor to the
Servicer) shall, for any reason, no longer be the Servicer of the related
Mortgage Loans (including termination due to the Servicer Event of Default).
The
Servicer shall be entitled to enter into an agreement with its Sub-Servicer
and
Subcontractor for indemnification of the Servicer or Subcontractor, as
applicable, by such Sub-Servicer and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
SECTION
3.04. No
Contractual Relationship Between Sub-Servicer, Subcontractor, Trustee or the
Certificateholders.
Any
Sub-Servicing Agreement and any other transactions or services relating to
the
Mortgage Loans involving a Sub-Servicer or a Subcontractor, as applicable shall
be deemed to be between the Sub-Servicer and the Servicer or Subcontractor,
as
applicable alone and the Master Servicer, Securities Administrator, Trustee
and
the Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer or Subcontractor except as set forth in Section 3.05 of this
Agreement.
112
SECTION
3.05. Assumption
or Termination of Sub-Servicing Agreement by Successor Servicer.
In
connection with the assumption of the responsibilities, duties and liabilities
and of the authority, power and rights of the Servicer hereunder by a successor
servicer pursuant to Section 8.02, it is understood and agreed that the
Servicer’s rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously
by
such successor servicer without act or deed on the part of such successor
servicer; provided, however, that any successor servicer may terminate the
Sub-Servicer.
The
Servicer shall, upon the reasonable request of the Master Servicer, but at
its
own expense, deliver to the assuming party documents and records relating to
each Sub-Servicing Agreement and an accounting of amounts collected and held
by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Sub-Servicing Agreements to the assuming party.
The
Servicing Fee payable to any such successor servicer shall be payable from
payments received on the related Mortgage Loans in the amount and in the manner
set forth in this Agreement.
SECTION
3.06. Collection
of Certain Mortgage Loan Payments.
The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the related Mortgage Loans, and shall, to the extent
such procedures shall be consistent with this Agreement and Accepted Servicing
Practices, follow such collection procedures as it would follow with respect
to
mortgage loans comparable to the Mortgage Loans and held for its own account.
Consistent with the foregoing, the Servicer may in its discretion (i) waive
any
late payment charge or, if applicable, penalty interest or (ii) extend the
due
dates for the Monthly Payments due on a Mortgage Note related to a Mortgage
Loan
for a period of not greater than 180 days; provided that any extension pursuant
to this clause shall not affect the amortization schedule of any Mortgage Loan
for purposes of any computation hereunder. Notwithstanding the foregoing, in
the
event that any Mortgage Loan is in default or, in the judgment of the Servicer,
such default is reasonably foreseeable, the Servicer, consistent with Accepted
Servicing Practices may waive, modify or vary any term of such Mortgage Loan
(including, but not limited to, modifications that change the Mortgage Rate,
forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount
less than the Stated Principal Balance in final satisfaction of such Mortgage
Loan, or consent to the postponement of strict compliance with any such term
or
otherwise grant indulgence to any Mortgagor if in the Servicer’s determination
such waiver, modification, postponement or indulgence is not materially adverse
to the interests of the Certificateholders (taking into account any estimated
Realized Loss that might result absent such action). The Servicer shall not
be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation)
if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
113
SECTION
3.07. Collection
of Taxes, Assessments and Similar Items; Servicing Accounts.
To
the
extent the terms of a Mortgage provide for Escrow Payments, the Servicer shall
establish and maintain one or more accounts (the “Servicing Accounts”), into
which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, fire, flood, and hazard
insurance premiums, and comparable items for the account of the Mortgagors
(“Escrow Payments”) shall be deposited and retained. Servicing Accounts shall be
Eligible Accounts. The Servicer shall deposit in the clearing account in which
it customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one (1) Business Day after the Servicer’s receipt thereof, all Escrow
Payments collected on account of the related Mortgage Loans and shall thereafter
deposit such Escrow Payments in the Servicing Accounts, in no event later than
the second Business Day after the deposit of good funds into the clearing
account, and retain therein, all Escrow Payments collected on account of the
related Mortgage Loans, for the purpose of effecting the timely payment of
any
such items as required under the terms of this Agreement. Withdrawals of amounts
from a Servicing Account may be made by the Servicer only to (i) effect timely
payment of taxes, assessments, fire, flood, and hazard insurance premiums,
and
comparable items; (ii) reimburse itself out of related collections for any
Servicing Advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.11 (with respect to fire, flood and hazard
insurance); (iii) refund to Mortgagors any sums as may be determined to be
overages; (iv) for application to restore or repair the related Mortgaged
Property in accordance with Section 3.11; (v) pay interest, if required and
as
described below, to Mortgagors on balances in the Servicing Account; or, only
to
the extent not required to be paid to the related Mortgagors, to pay itself
interest on balances in the Servicing Account; or (vi) clear and terminate
the
Servicing Account at the termination of the Servicer’s obligations and
responsibilities in respect of the related Mortgage Loans under this Agreement
in accordance with Article X. As part of its servicing duties, the Servicer
shall pay to the Mortgagors interest on funds in Servicing Accounts, to the
extent required by law and, to the extent that interest earned on funds in
the
Servicing Accounts is insufficient, to pay such interest from its own funds,
without any reimbursement therefor. Notwithstanding the foregoing, the Servicer
shall not be obligated to collect Escrow Payments if the related Mortgage Loan
does not require such payments but the Servicer shall nevertheless be obligated
to make Servicing Advances as provided in Section 3.01 and Section 3.11. In
the
event the Servicer shall deposit in the Servicing Accounts any amount not
required to be deposited therein, it may at any time withdraw such amount from
the Servicing Accounts, any provision to the contrary
notwithstanding.
To
the
extent that a Mortgage does not provide for Escrow Payments, the Servicer (i)
shall determine whether any such payments are made by the Mortgagor in a manner
and at a time that is necessary to avoid the loss of the Mortgaged Property
due
to a tax sale or foreclosure as a result of a tax lien and (ii) shall ensure
that all insurance required to be maintained on the Mortgaged Property pursuant
to this Agreement is maintained. If any such payment has not been made and
the
Servicer receives notice of a tax lien with respect to the Mortgage Loan being
imposed, the Servicer shall, promptly and to the extent required to avoid loss
of the Mortgaged Property, advance or cause to be advanced funds necessary
to
discharge such lien on the Mortgaged Property unless the Servicer determines
the
advance to be nonrecoverable. The Servicer assumes full responsibility for
the
payment of all such bills and shall effect payments of all such bills
irrespective of the Mortgagor’s faithful performance in the payment of same or
the making of the Escrow Payments and shall make Servicing Advances to effect
such payments subject to its determination of recoverability.
114
SECTION
3.08. Collection
Account and Distribution Account.
(a) On
behalf
of the Trust Fund, the Servicer shall establish and maintain one or more
“Collection Accounts”, held in trust for the benefit of the Trustee, the Trust
Fund and the Certificateholders. On behalf of the Trust Fund, the Servicer
shall
deposit or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Servicer’s receipt thereof, and shall thereafter
deposit in the Collection Account, in no event later than two Business Days
after the deposit of good funds into the clearing account, as and when received
or as otherwise required hereunder, the following payments and collections
received or made by it on or subsequent to the Cut-off Date other than amounts
attributable to a Due Date on or prior to the Cut-off Date:
(i) all
payments on account of principal, including Principal Prepayments, on the
related Mortgage Loans;
(ii) all
payments on account of interest (net of the related Servicing Fee and any
Prepayment Interest Excess) on each related Mortgage Loan;
(iii) all
Insurance Proceeds and Liquidation Proceeds (other than proceeds collected
in
respect of any particular REO Property) and all Subsequent Recoveries with
respect to the related Mortgage Loans;
(iv) any
amounts required to be deposited by the Servicer pursuant to Section 3.10
of this Agreement in connection with any losses realized on Permitted
Investments with respect to funds held in the Collection Account;
(v) any
amounts required to be deposited by the Servicer pursuant to the second
paragraph of Section 3.11(a) of this Agreement in respect of any blanket
policy deductibles;
(vi) any
Purchase Price or Substitution Shortfall Amount delivered to the Servicer and
all proceeds (net of amounts payable or reimbursable to the Servicer, the Master
Servicer, the Trustee, the Custodian or the Securities Administrator) of
Mortgage Loans purchased in accordance with Section 2.03, Section 3.13
or Section 10.01 of this Agreement; and
(vii) any
Prepayment Charges collected by the Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans or amounts required to be deposited
by
the Servicer in connection with a breach of its obligations under Section
2.05.
115
The
foregoing requirements for deposit in the Collection Account shall be exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, Ancillary Income need not be deposited by the Servicer in the
Collection Account and may be retained by the Servicer as additional servicing
compensation. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(b) On
behalf
of the Trust Fund, the Securities Administrator shall establish and maintain
one
or more accounts (such account or accounts, the “Distribution Account”), held in
trust for the benefit of the Trustee, the Trust Fund and the Certificateholders.
On behalf of the Trust Fund, the Servicer shall deliver to the Securities
Administrator in immediately available funds for deposit in the Distribution
Account the Servicer Remittance Date, that portion of the Available Distribution
Amount (calculated without regard to the references in clause (2) of the
definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account and the amount of all Prepayment Charges collected by the Servicer
in
connection with the Principal Prepayment of any of the Mortgage Loans then
on
deposit in the Collection Account and the amount of any funds reimbursable
to an
Advance Financing Person pursuant to Section 3.25 of this Agreement. If the
balance on deposit in a Collection Account exceeds $100,000 as of the
commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of “Eligible Account,” the Servicer shall, on or before 5:00 p.m. New York time
on such Business Day, withdraw from the Collection Account any and all amounts
payable or reimbursable to the Depositor, the Servicer, the Trustee, the Master
Servicer, the Securities Administrator or the Sponsor pursuant to Section 3.09
of this Agreement and shall pay such amounts to the Persons entitled thereto
or
shall establish a separate Collection Account (which shall also be an Eligible
Account) and withdraw from the existing Collection Account the amount on deposit
therein in excess of $100,000 and deposit such excess in the newly created
Collection Account.
With
respect to any remittance received by the Securities Administrator on or after
the first Business Day following the Business Day on which such payment was
due,
the Securities Administrator shall send written notice thereof to the Servicer.
The Servicer shall pay to the Securities Administrator interest on any such
late
payment by the Servicer at an annual rate equal to Prime Rate (as defined in
The
Wall Street Journal)
plus
one percentage point, but in no event greater than the maximum amount permitted
by applicable law. Such interest shall be paid by the Servicer to the Securities
Administrator on the date such late payment is made and shall cover the period
commencing with the day following the Servicer Remittance Date and ending with
the Business Day on which such payment is made, both inclusive. The payment
by
the Servicer of any such interest, or the failure of the Securities
Administrator to notify the Servicer of such interest, shall not be deemed
an
extension of time for payment or a waiver of any Event of Default by the
Servicer.
(c) Funds
in
the Collection Account and in the Distribution Account may be invested in
Permitted Investments in accordance with the provisions set forth in Section
3.10. The Servicer shall give notice to the Trustee, the Securities
Administrator and the Master Servicer of the location of the Collection Account
when established and prior to any change thereof. The Securities Administrator
shall give notice to the Servicer and the Depositor of the location of the
Distribution Account when established and prior to any change
thereof.
116
(d) Funds
held in the Collection Account at any time may be delivered by the Servicer
in
immediately available funds to the Securities Administrator for deposit in
the
Distribution Account. In the event the Servicer shall deliver to the Securities
Administrator for deposit in the Distribution Account any amount not required
to
be deposited therein, it may at any time request that the Securities
Administrator withdraw such amount from the Distribution Account and remit
to it
any such amount, any provision herein to the contrary notwithstanding. In no
event shall the Securities Administrator incur liability as a result of
withdrawals from the Distribution Account at the direction of the Servicer
in
accordance with the immediately preceding sentence. In addition, the Servicer
shall deliver to the Securities Administrator no later than the Servicer
Remittance Date the amounts set forth in clauses (i) through (iv)
below:
(i) any
P&I Advances, as required pursuant to Section 5.03 of this
Agreement;
(ii) any
amounts required to be deposited pursuant to Section 3.21(d) or 3.21(f) of
this
Agreement in connection with any related REO Property;
(iii)
any
amounts to be paid in connection with a purchase of Mortgage Loans and REO
Properties pursuant to Section 10.01 of this Agreement; and
(iv)
any
amounts required to be deposited pursuant to Section 3.22 of this Agreement
in
connection with any Prepayment Interest Shortfalls.
SECTION
3.09. Withdrawals
from the Collection Account and Distribution Account.
(a) The
Servicer shall, from time to time, make withdrawals from the Collection Account
for any of the following purposes or as described in Section 5.03 of this
Agreement:
(i) to
remit
to the Securities Administrator for deposit in the Distribution Account the
amounts required to be so remitted pursuant to Section 3.08(b) of this
Agreement or permitted to be so remitted pursuant to the first sentence of
Section 3.08(d) of this Agreement;
(ii) subject
to Section 3.13(d) of this Agreement, to reimburse itself (including any
successor Servicer) for P&I Advances made by it, but only to the extent of
amounts received which represent Late Collections (net of the related Servicing
Fees) of Monthly Payments on related Mortgage Loans with respect to which such
P&I Advances were made in accordance with the provisions of
Section 5.03;
(iii) subject
to Section 3.13(d) of this Agreement, to pay itself any unpaid Servicing
Fees and reimburse itself any unreimbursed Servicing Advances with respect
to
each related Mortgage Loan, but only to the extent of any Liquidation Proceeds
and Insurance Proceeds received with respect to such related Mortgage Loan
or
rental or other income from the related REO Property;
117
(iv) to
pay to
itself as servicing compensation (in addition to the Servicing Fee or portion
thereof payable to the Servicer) on the Servicer Remittance Date any interest
or
investment income earned on funds deposited in the Collection
Account;
(v) to
pay to
itself or the Sponsor, as the case may be, with respect to each related Mortgage
Loan that has previously been purchased or replaced pursuant to
Section 2.03 or Section 3.13(c) of this Agreement all amounts received
thereon not included in the Purchase Price or the Substitution Shortfall
Amount;
(vi) to
reimburse itself (including any successor to the Servicer) for
(A) any
P&I Advance or Servicing Advance previously made by it which the Servicer
has determined to be a Nonrecoverable P&I Advance or a Nonrecoverable
Servicing Advance in accordance with the provisions of Section 5.03 of this
Agreement provided however, that the Servicer shall not be entitled to
reimbursement for any Servicing Advance made prior to the Cut-off Date if the
Servicer determines that such Servicing Advance constitutes a Nonrecoverable
Servicing Advance of this Agreement;
(B) any
unpaid Servicing Fees to the extent not recoverable from Liquidation Proceeds,
Insurance Proceeds or other amounts received with respect to the related
Mortgage Loan under Section 3.06(a)(iii) of this Agreement; or
(C) any
P&I Advance or Servicing Advance made with respect to a delinquent Mortgage
Loan which Mortgage Loan has been modified by the Servicer in accordance with
the terms of this Agreement; provided that the Servicer shall only reimburse
itself for such P&I Advances and Servicing Advances at the time of such
modification or as otherwise provided in this Section 3.09;
(vii) to
reimburse itself or the Depositor for expenses incurred by or reimbursable
to
itself or the Depositor, as the case may be, pursuant to Section 3.01 or Section
7.03 of this Agreement;
(viii) to
reimburse itself or the Trustee, as the case may be, for expenses reasonably
incurred in respect of the breach or defect giving rise to the purchase
obligation under Section 2.03 of this Agreement that were included in the
Purchase Price of the related Mortgage Loan, including any expenses arising
out
of the enforcement of the purchase obligation;
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(ix) to
pay,
or to reimburse itself for advances in respect of, expenses incurred in
connection with any related Mortgage Loan pursuant to Section 3.13(b) of this
Agreement;
(x) to
pay to
itself any Prepayment Interest Excess on the related Mortgage Loans to the
extent not retained pursuant to Section 3.08(a)(ii)) of this Agreement;
and
(xi) to
clear
and terminate the Collection Account pursuant to Section 10.01 of this
Agreement.
The
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (x)
above.
(b) The
Securities Administrator shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without
priority:
(i) to
make
distributions to Certificateholders in accordance with Section 5.01 of this
Agreement;
(ii) to
pay to
itself, the Custodian and the Master Servicer amounts to which it is entitled
pursuant to Section 9.05 of this Agreement or any other provision of this
Agreement and any Extraordinary Trust Fund Expenses;
(iii) to
reimburse itself or the Master Servicer pursuant to Section 8.02 of this
Agreement;
(iv) to
pay
any Net Swap Payment or Swap Termination Payment payable to the Supplemental
Interest Trust (unless the Swap Provider is the sole Defaulting Party or the
sole Affected Party (as defined in the Swap Agreement)) owed to the Swap
Provider;
(v) to
pay
any amounts in respect of taxes pursuant to Section 11.01(g)(v) of this
Agreement;
(vi) to
pay
the Credit Risk Management Fee to the Credit Risk Manager; and
(vii) to
clear
and terminate the Distribution Account pursuant to Section 10.01 of this
Agreement.
SECTION
3.10. Investment
of Funds in the Investment Accounts.
(a) The
Servicer may direct, by means of written directions (which may be standing
directions), any depository institution maintaining the Collection Account
to
invest the funds in the Collection Account (for purposes of this Section 3.10,
an “Investment Account”) in one or more Permitted Investments bearing interest
or sold at a discount, and maturing, unless payable on demand, (i) no later
than
the Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if a Person other
than the Securities Administrator is the obligor thereon, and (ii) no later
than
the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if the Securities Administrator is the obligor
on
such Permitted Investment. Amounts in the Distribution Account may be invested
in Permitted Investments as directed in writing by the Securities Administrator
and maturing, unless payable on demand, (i) no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the
Securities Administrator is the obligor thereon, and (ii) no later than the
date
on which such funds are required to be withdrawn from such account pursuant
to
this Agreement, if the Securities Administrator is the obligor thereon. All
such
Permitted Investments shall be held to maturity, unless payable on demand.
Any
investment of funds shall be made in the name of the Trustee (in its capacity
as
such) or in the name of a nominee of the Trustee. The Securities Administrator
shall be entitled to sole possession over each such investment in the
Distribution Account and, subject to subsection (b) below, the income thereon,
and any certificate or other instrument evidencing any such investment shall
be
delivered directly to the Securities Administrator or its agent, together with
any document of transfer necessary to transfer title to such investment to
the
Trustee or its nominee. In the event amounts on deposit in a Collection Account
are at any time invested in a Permitted Investment payable on demand, the party
with investment discretion over such Investment Account shall:
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(x) consistent
with any notice required to be given thereunder, demand that payment thereon
be
made on the last day such Permitted Investment may otherwise mature hereunder
in
an amount equal to the lesser of (1) all amounts then payable thereunder and
(2)
the amount required to be withdrawn on such date; and
(y) demand
payment of all amounts due thereunder promptly upon receipt by such party of
written notice from the Servicer or Securities Administrator, as applicable,
that such Permitted Investment would not constitute a Permitted Investment
in
respect of funds thereafter on deposit in the Investment Account.
(b) All
income and gain realized from the investment of funds deposited in the
Collection Account shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 3.09. The Servicer shall deposit
in
the Collection Account the amount of any loss incurred in respect of any such
Permitted Investment made with funds in such account immediately upon
realization of such loss. All earnings and gain realized from the investment
of
funds deposited in the Distribution Account shall be for the benefit of the
Master Servicer. The Master Servicer shall remit from its own funds for deposit
into the Distribution Account the amount of any loss incurred on Permitted
Investments in the Distribution Account.
(c) Except
as
otherwise expressly provided in this Agreement, if any default occurs in the
making of a payment due under any Permitted Investment, or if a default occurs
in any other performance required under any Permitted Investment, the Trustee
may and, subject to Section 9.01 and Section 9.02(a)(v), shall, at the written
direction of the Servicer or Master Servicer, take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate proceedings.
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(d) The
Trustee, the Master Servicer or their respective Affiliates are permitted to
receive additional compensation that could be deemed to be in the Trustee’s or
the Master Servicer’s economic self-interest for (i) serving as investment
adviser, administrator, shareholder servicing agent, custodian or sub-custodian
with respect to certain of the Permitted Investments, (ii) using Affiliates
to
effect transactions in certain Permitted Investments and (iii) effecting
transactions in certain Permitted Investments. Such compensation shall not
be
considered an amount that is reimbursable or payable to the Trustee or the
Master Servicer pursuant to Section 3.09 or 3.10 or otherwise payable in respect
of Extraordinary Trust Fund Expenses. Such additional compensation shall not
be
an expense of the Trust Fund.
SECTION
3.11. Maintenance
of Hazard Insurance, Errors and Omissions and Fidelity Coverage and Primary
Mortgage Insurance.
(a) The
terms
of each Mortgage Note require the related Mortgagor to maintain fire, flood
and
hazard insurance policies. To the extent such policies are not maintained,
the
Servicer shall cause to be maintained for each Mortgaged Property fire and
hazard insurance with extended coverage as is customary in the area where the
Mortgaged Property is located in an amount which is at least equal to the lesser
of the current principal balance of the related Mortgage Loan and the amount
necessary to compensate fully for any damage or loss to the improvements which
are a part of such property on a replacement cost basis, in each case in an
amount not less than such amount as is necessary to avoid the application of
any
coinsurance clause contained in the related hazard insurance policy. The
Servicer shall also cause to be maintained fire and hazard insurance on each
REO
Property with extended coverage as is customary in the area where the Mortgaged
Property is located in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage
Loan
(including, with respect to each second lien mortgage loan, the outstanding
principal balance of the related first lien) at the time it became an REO
Property, in each case in an amount not less than such amount as is necessary
to
avoid the application of any coinsurance clause contained in the related hazard
insurance policy. The Servicer will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by 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 amounts to be released to the Mortgagor
in
accordance with Accepted Servicing Practices, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in
the
Collection Account, subject to withdrawal pursuant to Section 3.09, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.21, if received in respect of an REO Property. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that
the
terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor
other than pursuant to such applicable laws and regulations as shall at any
time
be in force and as shall require such additional insurance. If the Mortgaged
Property or REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, the Servicer will cause to be maintained a flood insurance policy
in
respect thereof. Such flood insurance shall be in an amount equal to the lesser
of (i) the unpaid principal balance of the related Mortgage Loan and (ii) the
maximum amount of such insurance available for the related Mortgaged Property
under the national flood insurance program (assuming that the area in which
such
Mortgaged Property is located is participating in such program), in each case
in
an amount not less than such amount as is necessary to avoid the application
of
any coinsurance clause contained in the related hazard insurance
policy.
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In
the
event that the Servicer shall obtain and maintain a blanket policy with an
insurer having a General Policy Rating of B:VI or better in Best’s Key Rating
Guide or otherwise acceptable to Fannie Mae or Freddie Mac insuring against
hazard losses on all of the related Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations to cause fire and hazard insurance
to
be maintained on the Mortgaged Properties, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with this Section 3.11, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the related
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee, the Trust Fund and the Certificateholders, claims under any such
blanket policy in a timely fashion in accordance with the terms of such
policy.
(b) The
Servicer shall keep in force during the term of this Agreement a policy or
policies of insurance covering errors and omissions for failure in the
performance of its respective obligations under this Agreement, which policy
or
policies shall be in such form and amount that would meet the requirements
of an
FDIC regulated institution. The Servicer shall also maintain a fidelity bond
in
the form and amount that would meet the requirements of the FDIC. The Servicer
shall be deemed to have complied with this provision if an Affiliate of the
Servicer, has such errors and omissions and fidelity bond coverage and, by
the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Servicer. Any such errors and omissions policy and
fidelity bond shall by its terms not be cancelable without thirty days’ prior
written notice to the Trustee. Servicer shall provide copies of or evidence
of
such insurance to Trustee, the Master Servicer or Securities Administrator
upon
request.
(c) The
Servicer shall not take any action that would result in noncoverage under any
applicable primary mortgage insurance policy of any loss which, but for the
actions of the Servicer would have been covered thereunder. The Servicer shall
use its best efforts to keep in force and effect any applicable primary mortgage
insurance policy and, to the extent that the related Mortgage Loan requires
the
Mortgagor to maintain such insurance, any other primary mortgage insurance
applicable to any Mortgage Loan. Except as required by applicable law or the
related Mortgage Loan Documents, the Servicer shall not cancel or refuse to
renew any such primary mortgage insurance policy that is in effect at the date
of the initial issuance of the related Mortgage Note and is required to be
kept
in force hereunder.
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The
Servicer agrees to present on behalf of the Trustee and the Certificateholders
claims to the applicable insurer under any primary mortgage insurance policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any primary mortgage insurance policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.08 of this Agreement, any
amounts collected by the Servicer under any primary mortgage insurance policies
shall be deposited in the related Collection Account, subject to withdrawal
pursuant to Section 3.09 of this Agreement. Notwithstanding any provision
to the contrary, the Servicer shall not have any responsibility with respect
to
a primary mortgage insurance policy unless the Servicer has been made aware
of
such policy, as reflected on the Mortgage Loan Schedule or otherwise and have
been provided with adequate information to administer such policy.
(d) The
Servicer need not obtain the approval of the Master Servicer prior to releasing
any Insurance Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with Accepted
Servicing Practices. At a minimum, the Servicer shall comply with the following
conditions in connection with any such release of Insurance Proceeds in excess
of $10,000:
(i) the
Servicer shall receive satisfactory independent verification of completion
of
repairs and issuance of any required approvals with respect
thereto;
(ii) the
Servicer shall take all steps necessary to preserve the priority of the lien
of
the Mortgage, including, but not limited to requiring waivers with respect
to
mechanics’ and materialmen’s liens; and
(iii) pending
repairs or restoration, the Servicer shall place the Insurance Proceeds in
the
related Escrow Account, if any.
(e) The
Servicer agrees to present on behalf of the Trustee and the Certificateholders
claims to the applicable insurer under any primary mortgage insurance policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any primary mortgage insurance policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.08, any amounts collected by
the
Servicer under any primary mortgage insurance policies shall be deposited in
the
Collection Account, subject to withdrawal pursuant to Section 3.09.
Notwithstanding any provision to the contrary, the Servicer shall not have
any
responsibility with respect to a primary mortgage insurance policy unless the
Servicer has been made aware of such policy, as reflected on the Mortgage Loan
Schedule or otherwise and have been provided with adequate information to
administer such policy.
SECTION
3.12. Enforcement
of Due-on-Sale Clauses; Assumption Agreements
The
Servicer shall, to the extent it has knowledge of any conveyance of any related
Mortgaged Property by any related Mortgagor (whether by absolute conveyance
or
by contract of sale, and whether or not the Mortgagor remains or is to remain
liable under the Mortgage Note and/or the Mortgage), exercise its rights to
accelerate the maturity of such Mortgage Loan under the “due-on-sale” clause, if
any, applicable thereto; provided, however, that the Servicer shall not exercise
any such rights if prohibited by law from doing so. If the Servicer reasonably
believes that it is unable under applicable law to enforce such “due-on-sale”
clause, or if any of the other conditions set forth in the proviso to the
preceding sentence apply, the Servicer shall enter into an assumption and
modification agreement from or with the person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note and, to the extent permitted by applicable state
law, the Mortgagor remains liable thereon. The Servicer is also authorized
to
enter into a substitution of liability agreement with such person, pursuant
to
which the original Mortgagor is released from liability and such person is
substituted as the Mortgagor and becomes liable under the Mortgage Note,
provided that no such substitution shall be effective unless such person
satisfies the then current underwriting criteria of the Servicer for mortgage
loans similar to the related Mortgage Loans. In connection with any assumption
or substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected
by
the Servicer in respect of an assumption or substitution of liability agreement
will be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Servicer shall notify the Trustee (or the
Custodian) that any such substitution or assumption agreement has been completed
by forwarding to the Trustee (or the Custodian) the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of
such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
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Notwithstanding
the foregoing paragraph or any other provision of this Agreement, the Servicer
shall not be deemed to be in default, breach or any other violation of its
obligations hereunder by reason of any assumption of a Mortgage Loan by
operation of law or by the terms of the Mortgage Note or any assumption which
the Servicer may be restricted by law from preventing, for any reason whatever.
For purposes of this Section 3.12, the term “assumption” is deemed to also
include a sale (of the Mortgaged Property) subject to the Mortgage that is
not
accompanied by an assumption or substitution of liability
agreement.
SECTION
3.13. Realization
Upon Defaulted Mortgage Loans.
(a) The
Servicer shall use its commercially reasonable efforts, consistent with Accepted
Servicing Practices, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made
for
collection of delinquent payments pursuant to Section 3.06. The Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Sections 3.09 and
3.21.
The foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Servicer shall
not be required to expend its own funds toward the restoration of such property
unless it shall determine in its discretion that such restoration will increase
the proceeds of liquidation of the related Mortgage Loan after reimbursement
to
itself for such expenses.
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(b) Notwithstanding
the foregoing provisions of this Section 3.13 or any other provision of this
Agreement, with respect to any Mortgage Loan as to which the Servicer has
received actual notice of, or has actual knowledge of, the presence of any
toxic
or hazardous substance on the related Mortgaged Property, the Servicer shall
not, on behalf of the Trust Fund, either (i) obtain title to such Mortgaged
Property as a result of or in lieu of foreclosure or otherwise, or (ii)
otherwise acquire possession of, or take any other action with respect to,
such
Mortgaged Property, if, as a result of any such action, the Trust Fund, the
Trustee or the Certificateholders would be considered to hold title to, to
be a
“mortgagee-in-possession” of, or to be an “owner” or “operator” of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Servicer has also previously determined,
based
on its reasonable judgment and a prudent report prepared by an Independent
Person who regularly conducts environmental audits using customary industry
standards, that:
(1) such
Mortgaged Property is in compliance with applicable environmental laws or,
if
not, that it would be in the best economic interest of the Trust Fund to take
such actions as are necessary to bring the Mortgaged Property into compliance
therewith; and
(2) there
are
no circumstances present at such Mortgaged Property relating to the use,
management or disposal of any hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under any
federal, state or local law or regulation, or that if any such materials are
present for which such action could be required, that it would be in the best
economic interest of the Trust Fund to take such actions with respect to the
affected Mortgaged Property.
The
cost
of the environmental audit report contemplated by this Section 3.13 shall be
advanced by the Servicer, subject to the Servicer’s right to be reimbursed
therefor from the Collection Account as provided in Section 3.09(a)(ix), such
right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans serviced by the Servicer.
If
the
Servicer determines, as described above, that it is in the best economic
interest of the Trust Fund to take such actions as are necessary to bring any
such Mortgaged Property into compliance with applicable environmental laws,
or
to take such action with respect to the containment, clean-up or remediation
of
hazardous substances, hazardous materials, hazardous wastes, or petroleum-based
materials affecting any such Mortgaged Property, then the Servicer shall take
such action as it deems to be in the best economic interest of the Trust Fund.
The cost of any such compliance, containment, cleanup or remediation shall
be
advanced by the Servicer, subject to the Servicer’s right to be reimbursed
therefor from the Collection Account as provided in Sections 3.09(a)(iii) or
3.09(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received
in
respect of the affected Mortgage Loan or other Mortgage Loans serviced by the
Servicer.
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(c) The
Servicer shall have the right to purchase from REMIC I any defaulted Mortgage
Loan serviced by it that is 90 days or more delinquent, which the Servicer
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee, in form and substance satisfactory to the Servicer and the Trustee
prior to purchase), at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the
Servicer of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Servicer shall furnish and as shall be
necessary to vest in the Servicer title to any Mortgage Loan released pursuant
hereto.
(d) Proceeds
received in connection with any Final Recovery Determination, as well as any
recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds, in respect of any Mortgage Loan, will be applied in the
following order of priority: first, to reimburse the Servicer for any related
unreimbursed P&I Advances and Servicing Advances, pursuant to Section
3.09(a)(ii) or (a)(iii); second, to accrued and unpaid interest on the Mortgage
Loan, to the date of the Final Recovery Determination, or to the Due Date prior
to the Distribution Date on which such amounts are to be distributed if not
in
connection with a Final Recovery Determination; and third, as a recovery of
principal of the Mortgage Loan. If the amount of the recovery so allocated
to
interest is less than the full amount of accrued and unpaid interest due on
such
Mortgage Loan, the amount of such recovery will be allocated by the Servicer
as
follows: first, to unpaid Servicing Fees; and second, to the balance of the
interest then due and owing. The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Servicer pursuant to Section
3.09(a)(iii). The portion of the recovery allocated to interest (net of unpaid
Servicing Fees) and the portion of the recovery allocated to principal of the
Mortgage Loan shall be applied as follows: first, to reimburse the Servicer
for
any related unreimbursed Servicing Advances or P&I Advances in accordance
with Section 3.09(a)(ii) and any other amounts reimbursable to the Servicer
pursuant to Section 3.09, and second, as part of the amounts to be transferred
to the Distribution Account in accordance with Section 3.08(b). Excess proceeds,
if any, from the liquidation of a Liquidated Mortgage Loan will be retained
by
the Servicer as additional servicing compensation pursuant to Section
3.15.
SECTION
3.14. Trustee
to Cooperate; Release of Mortgage Files.
(a) Upon
becoming aware of the payment in full of any Mortgage Loan, or the receipt
by
the Servicer of a notification that payment in full has been escrowed in a
manner customary for such purposes for payment to Certificateholders on the
next
Distribution Date, the Servicer will promptly furnish to the Custodian, on
behalf of the Trustee, two copies of a request for release in
accordance with the Custodial Agreement, and which shall be
substantially in the form attached to the Custodial Agreement signed by a
Servicing Officer or in a mutually agreeable electronic format which will,
in
lieu of a signature on its face, originate from a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Collection Account have been or will be so deposited) and shall request that
the
Custodian, on behalf of the Trustee, deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Custodian,
on
behalf of the Trustee, shall within five (5) Business Days release the related
Mortgage File to the Servicer and the Trustee and the Custodian shall have
no
further responsibility with regard to such Mortgage File. Upon any such payment
in full, the Servicer is authorized under
the
Custodial Agreement and this Agreement,
to
give, as agent for the Trustee, as the mortgagee under the Mortgage that secured
the Mortgage Loan, an instrument of satisfaction (or assignment of mortgage
without recourse) regarding the Mortgaged Property subject to the Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor
of
such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case
may
be, shall be chargeable to the Collection Account, unless it shall represent
a
Servicing Advance.
126
(b) From
time
to time and as appropriate for the servicing or foreclosure of any Mortgage
Loan, the Trustee shall execute such documents as shall be prepared and
furnished to the Trustee by the Servicer (in form reasonably acceptable to
the
Trustee) and as are necessary to the prosecution of any such proceedings. The
Custodian, on behalf of the Trustee, shall, upon the request of the Servicer,
and delivery to the Custodian, on behalf of the Trustee, of two copies of a
request for release signed by a Servicing Officer substantially in the form
attached to the Custodial Agreement (or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer), release within five (5) Business Days the related Mortgage
File held in its possession or control to the Servicer. Such trust receipt
shall
obligate the Servicer to return the Mortgage File to the Custodian on behalf
of
the Trustee, when the need therefor by the Servicer no longer exists unless
the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the Mortgage
File
shall be released by the Custodian, on behalf of the Trustee, to the
Servicer.
Notwithstanding
the foregoing, in connection with a Principal Prepayment in full of any Mortgage
Loan, the Master Servicer may request release of the related Mortgage File
from
the Custodian, in accordance with the provisions of the Custodial Agreement,
in
the event the Servicer fails to do so.
Upon
written certification of a Servicing Officer, the Trustee shall execute and
deliver to the Servicer, any court pleadings, requests for trustee’s sale or
other documents prepared and delivered to the Trustee and reasonably acceptable
to it and necessary to the foreclosure or trustee’s sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against
any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee’s sale.
So long as no Servicer Event of Default shall have occurred and be continuing,
the Servicer shall have the right to execute any and all such court pleadings,
requests and other documents as attorney-in-fact for, and on behalf of the
Trustee. Notwithstanding the preceding sentence, the Trustee shall in no way
be
liable or responsible for the willful malfeasance of the Servicer, or for any
wrongful or negligent actions taken by the Servicer, while the Servicer is
acting in its capacity as attorney in fact for and on behalf of the
Trustee.
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SECTION
3.15. Servicing
Compensation.
As
compensation for its activities hereunder, the Servicer shall be entitled to
the
Servicing Fee with respect to each Mortgage Loan payable solely from payments
of
interest in respect of such Mortgage Loan, subject to Section 3.22. In
addition, the Servicer shall be entitled to recover unpaid Servicing Fees out
of
Insurance Proceeds or Liquidation Proceeds to the extent permitted by
Section 3.09(a)(iii) and out of amounts derived from the operation and sale
of an REO Property to the extent permitted by Section 3.21. The right to
receive the Servicing Fee may not be transferred in whole or in part except
in
connection with the transfer of all of the Servicer’s responsibilities and
obligations under this Agreement to the extent permitted herein.
Additional
servicing compensation in the form of Ancillary Income (other than Prepayment
Charges) shall be retained by the Servicer only to the extent such fees or
charges are received by the Servicer. The Servicer shall also be entitled
pursuant to Section 3.09(a)(iv) to withdraw from the Collection Account and
pursuant to Section 3.21(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.10. In addition, the Servicer shall be entitled to
retain or withdraw from the Collection Account, pursuant to Section 3.09(a)(x),
any Prepayment Interest Excess with respect to the Mortgage Loans serviced
by it
as additional servicing compensation. The Servicer shall be required to pay
all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided herein.
SECTION
3.16. Collection
Account Statements.
Upon
request, not later than fifteen (15) days after each Distribution Date, the
Servicer shall forward to the Master Servicer and the Securities Administrator,
the Trustee and the Depositor, a statement prepared by the institution at which
the Collection Account is maintained setting forth the status of the Collection
Account as of the close of business on such Distribution Date and showing,
for
the period covered by such statement, the aggregate amount of deposits into
and
withdrawals from the Collection Account. Copies of such statement and any
similar statements provided by the Servicer shall be provided by the Securities
Administrator to any Certificateholder and to any Person identified to the
Securities Administrator as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Securities Administrator.
SECTION
3.17. Annual
Statement as to Compliance.
(a) The
Servicer shall deliver (and shall cause any Additional Servicer engaged by
it to
deliver) to the Master Servicer and to the Depositor on or before March 15
of
each year, commencing in March 2007, an Officer’s Certificate stating, as to the
signer thereof, that (A) a review of such party’s activities during the
preceding calendar year or portion thereof and of the Servicer’s performance
under this Agreement, or such other applicable agreement in the case of an
Additional Servicer, has been made under such officer’s supervision and (B) to
the best of such officer’s knowledge, based on such review, such party has
fulfilled all its obligations under this Agreement, or such other applicable
agreement in the case of an Additional Servicer, in all material respects
throughout such year or 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. Promptly after
receipt of each such Officer’s Certificate from the Servicer, any Additional
Servicer engaged by the Servicer, the Depositor, the Master Servicer and the
Securities Administrator shall review such Officer’s Certificate and, if
applicable, consult with each such party, as applicable, as to the nature of
any
failures by such party, in the fulfillment of any of the Servicer’s obligations
hereunder or, in the case of an Additional Servicer, under such other applicable
agreement.
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(b) Failure
of the Servicer to comply timely with this Section 3.17 shall be deemed the
Servicer Event of Default as to the Servicer, automatically, without notice
and
without any cure period, and the Master Servicer may, in addition to whatever
rights the Master Servicer may have under this Agreement and at law or in equity
or to damages, including injunctive relief and specific performance, terminate
all the rights and obligations of the Servicer under this Agreement and in
and
to the Mortgage Loans and the proceeds thereof without compensating the Servicer
for the same (other than the Servicer’s right to reimbursement of unreimbursed
P&I Advances and Servicing Advances and accrued and unpaid Servicing Fees in
the manner provided in this Agreement). This paragraph shall supersede any
other
provision in this Agreement or any other agreement to the contrary.
SECTION
3.18. Assessments
of Compliance and Attestation Reports.
(a) By
March
15 of each year, commencing in March 2007, the Servicer, at its own expense,
shall furnish, and shall cause any Servicing Function Participant engaged by
it
to furnish, each at its own expense, to the Master Servicer, a report on an
assessment of compliance with the Relevant Servicing Criteria that contains
(A)
a statement by such party of its responsibility for assessing compliance with
the Relevant Servicing Criteria, (B) a statement that such party used the
Relevant Servicing Criteria to assess compliance with the Relevant Servicing
Criteria, (C) such party’s assessment of compliance with the Relevant Servicing
Criteria as of and for the fiscal year covered by the Form 10-K required to
be
filed pursuant to Section 5.06(d), including, if there has been any material
instance of noncompliance with the Relevant Servicing Criteria, a discussion
of
each such failure and the nature and status thereof, and (D) a statement that
a
registered public accounting firm has issued an attestation report on such
party’s assessment of compliance with the Relevant Servicing Criteria as of and
for such period.
(b) By
March
15 of each year, commencing in March 2007, the Servicer, at its own expense,
shall cause, and the Servicer shall cause any Servicing Function Participant
engaged by it to cause, each at its own expense, a registered public accounting
firm (which may also render other services to the Servicer or such other
Servicing Function Participants, as the case may be) and that is a member of
the
American Institute of Certified Public Accountants to furnish a report to the
Master Servicer, to the effect that (i) it has obtained a representation
regarding certain matters from the management of such party, which includes
an
assertion that such party has complied with the Relevant Servicing Criteria,
and
(ii) on the basis of an examination conducted by such firm in accordance with
standards for attestation engagements issued or adopted by the PCAOB, it is
expressing an opinion as to whether such party’s compliance with the Relevant
Servicing Criteria was fairly stated in all material respects, or it cannot
express an overall opinion regarding such party’s assessment of compliance with
the Relevant Servicing Criteria. In the event that an overall opinion cannot
be
expressed, such registered public accounting firm shall state in such report
why
it was unable to express such an opinion. Such report must be available for
general use and not contain restricted use language.
129
(c) Failure
of the Servicer to comply timely with this Section 3.18 shall be deemed a
Servicer Event of Default as to the Servicer, automatically, without notice
and
without any cure period, and the Master Servicer may, in addition to whatever
rights the Master Servicer may have under this Agreement and at law or in equity
or to damages, including injunctive relief and specific performance, terminate
all the rights and obligations of the Servicer under this Agreement and in
and
to the Mortgage Loans and the proceeds thereof without compensating the Servicer
for the same (other than the Servicer’s right to reimbursement of unreimbursed
P&I Advances and Servicing Advances and accrued and unpaid Servicing Fees in
the manner provided for in this Agreement). This paragraph shall supersede
any
other provision in this Agreement or any other agreement to the
contrary.
(a) The
Servicer shall and shall cause any Servicing Function Participant engaged by
it
to, provide to the Person who signs the Sarbanes-Oxley Certification (the
“Certifying Person”), by March 15 of each year in which the Trust is subject to
the reporting requirements of the Exchange Act a certification (each, a “Back-Up
Certification”), in the form attached hereto as Exhibit
C,
upon
which the Certifying Person, the entity for which the Certifying Person acts
as
an officer, and such entity’s officers, directors and Affiliates (collectively
with the Certifying Person, “Certification Parties”) can reasonably rely. The
officer of the Master Servicer in charge of the master servicing function shall
serve as the Certifying Person on behalf of the Trust. In the event the Servicer
or any Servicing Function Participant engaged by it is terminated or resigns
pursuant to the terms of this Agreement, or any applicable Sub-Servicing
Agreement, as the case may be, such party shall provide a Back-Up Certification
to the Certifying Person pursuant to this Section 3.19 with respect to the
period of time it was subject to this Agreement or any applicable Sub-Servicing
Agreement, as the case may be.
(b) The
Servicer shall indemnify and hold harmless the Master Servicer, the Securities
Administrator, the Trustee, 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 this Section 3.19 or the Servicer’s negligence, bad faith or
willful misconduct in connection therewith. Such indemnity shall survive the
termination or resignation of the parties hereto or the termination of this
Agreement. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Master Servicer, the Securities Administrator,
the Trustee and the Depositor, then the Servicer agrees that it shall contribute
to the amount paid or payable by the Master Servicer, the Securities
Administrator, the Trustee and the Depositor as a result of the losses, claims,
damages or liabilities of the Master Servicer, the Securities Administrator,
the
Trustee and the Depositor in such proportion as is appropriate to reflect the
relative fault of the Master Servicer, the Securities Administrator, the Trustee
and the Depositor on the one hand and the Servicer on the other in connection
with a breach of the Servicer’s obligations under this Section
3.19.
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(c) The
Servicer shall provide to the Master Servicer prompt notice of the occurrence
of
any of the following:
(i) any
Servicer Event of Default under the terms of this Agreement, any merger,
consolidation or sale of substantially all of the assets of the Servicer, the
Servicer’s engagement of any Sub-Servicer to perform or assist in the
performance of any of the Servicer’s obligations under this Agreement, any
material litigation involving the Servicer that is material to the
Certificateholders, and to the extent disclosure is required under Regulation
AB, any affiliation or other significant relationship between the Servicer
and
the Sponsor, the Depositor, the Master Servicer, the Securities Administrator,
the Trustee, the Custodian or the Swap Provider.
(ii) If
the
Servicer has actual knowledge of the occurrence of any of the events described
in this clause (ii), then no later than ten days prior to the deadline for
the
filing of any Distribution Report on Form 10-D in respect of the Trust, the
Servicer shall provide to the Master Servicer notice of the occurrence of any
of
the following events along with all information, data, and materials related
thereto as may be required to be included in the related Distribution Report
on
Form 10-D (as specified in the provisions of Regulation AB referenced below):
(A) any
material modifications, extensions or waivers of pool asset terms, fees,
penalties or payments during the distribution period or that have cumulatively
become material over time (Item 1121(a)(11) of Regulation AB);
(B) material
breaches of pool asset representations or warranties or servicer transaction
covenants (Item 1121(a)(12) of Regulation AB); and
(C) any
material pool asset changes (such as, additions, substitutions or repurchases)
relating to the Mortgage Loans serviced by the Servicer (Item 1121(a)(14) of
Regulation AB).
(d) The
Servicer shall provide to the Securities Administrator and the Master Servicer
such additional information as the Securities Administrator and the Master
Servicer may reasonably request, including evidence of the authorization of
the
person signing any certification or statement, financial information and reports
and of the fidelity bond and errors and omissions insurance policy required
to
be maintained by the Servicer pursuant to this Agreement, and such other
information related to the Servicer or its performance hereunder.
SECTION
3.20. Access
to
Certain Documentation.
The
Servicer shall provide to the Office of Thrift Supervision, the FDIC, and any
other federal or state banking or insurance regulatory authority that may
exercise authority over any Certificate Owner, access to the documentation
regarding the related Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it. Nothing in this Section 3.20 shall limit the
obligation of the Servicer to comply with any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section. Nothing in this
Section 3.20 shall require the Servicer to collect, create, collate or otherwise
generate any information that it does not generate in its usual course of
business. The Servicer shall not be required to make copies of or ship documents
to any Person unless provisions have been made for the reimbursement of the
costs thereof.
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SECTION
3.21. Title,
Management and Disposition of REO Property.
(a) The
deed
or certificate of sale of any REO Property related to a Mortgage Loan shall
be
taken in the name of the Trustee, or its nominee, on behalf of the Trust Fund
and for the benefit of the Certificateholders. The Servicer, on behalf of REMIC
I, shall either sell any REO Property by the close of the third calendar year
following the calendar year in which REMIC I acquires ownership of such REO
Property for purposes of Section 860(a)(8) of the Code or request from the
Internal Revenue Service, no later than sixty (60) days before the day on which
the three-year grace period would otherwise expire an extension of the
three-year grace period, unless the Servicer had delivered to the Trustee an
Opinion of Counsel, addressed to the Trustee and the Depositor, to the effect
that the holding by REMIC I of such REO Property subsequent to three (3) years
after its acquisition will not result in the imposition on any Trust REMIC
created hereunder of taxes on “prohibited transactions” thereof, as defined in
Section 860F of the Code, or cause any Trust REMIC hereunder to fail to qualify
as a REMIC under Federal law at any time that any Certificates are outstanding.
The Servicer shall manage, conserve, protect and operate each REO Property
for
the Certificateholders solely for the purpose of its prompt disposition and
sale
in a manner which does not cause such REO Property to fail to qualify as
“foreclosure property” within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any Trust REMIC created hereunder of any “income from
non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code,
or any “net income from foreclosure property” which is subject to taxation under
the REMIC Provisions.
(b) The
Servicer shall segregate and hold all funds collected and received in connection
with the operation of any REO Property separate and apart from its own funds
and
general assets and shall establish and maintain with respect to REO Properties
an account held in trust for the Trustee, on behalf of the Trust Fund and for
the benefit of the Certificateholders (the “REO Account”), which shall be an
Eligible Account. The Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to the maintenance of separate
ledgers for each REO Property. The Servicer shall be entitled to retain or
withdraw any interest income paid on funds deposited in the related REO
Account.
(c) The
Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement, to do any and all things in
connection with any REO Property related to a Mortgage Loan serviced by it
as
are consistent with the manner in which the Servicer manages and operates
similar property owned by it or any of its Affiliates, all on such terms and
for
such period as the Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Servicer shall deposit, or
cause to be deposited in the clearing account in which it customarily deposits
payments and collections on mortgage loans in connection with its mortgage
loan
servicing activities on a daily basis, and in no event more than one (1)
Business Day after the Servicer’s receipt thereof, and shall thereafter deposit
in the REO Account in no event more than two (2) Business Days after the deposit
of good funds into the clearing account, all revenues received by it with
respect to an REO Property related to a Mortgage Loan serviced by it and shall
withdraw therefrom funds necessary for the proper operation, management and
maintenance of such REO Property including, without limitation:
132
(i) all
insurance premiums due and payable in respect of such REO Property;
(ii) all
real
estate taxes and assessments in respect of such REO Property that may result
in
the imposition of a lien thereon; and
(iii) all
costs
and expenses necessary to maintain such REO Property.
To
the
extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Servicer shall advance from
its own funds such amount as is necessary for such purposes if, but only if,
the
Servicer would make such advances if the Servicer owned the REO Property and
if
in the Servicer’s judgment, the payment of such amounts will be recoverable from
the rental or sale of the REO Property.
Subject
to compliance with applicable laws and regulations as shall at any time be
in
force, and notwithstanding the foregoing, the Servicer, on behalf of the Trust
Fund, shall not:
(i) enter
into, renew or extend any New Lease with respect to any REO Property, if the
New
Lease by its terms will give rise to any income that does not constitute Rents
from Real Property;
(ii) permit
any amount to be received or accrued under any New Lease other than amounts
that
will constitute Rents from Real Property;
(iii) authorize
or permit any construction on any REO Property, other than the completion of
a
building or other improvement thereon, and then only if more than ten percent
of
the construction of such building or other improvement was completed before
default on the related Mortgage Loan became imminent, all within the meaning
of
Section 856(e)(4)(B) of the Code; or
(iv) allow
any
Person to Directly Operate any REO Property on any date more than ninety (90)
days after its date of acquisition by the Trust Fund;
unless,
in any such case, the Servicer has obtained an Opinion of Counsel, provided
to
the Servicer and the Trustee, to the effect that such action will not cause
such
REO Property to fail to qualify as “foreclosure property” within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC I, in which
case the Servicer may take such actions as are specified in such Opinion of
Counsel.
133
The
Servicer may contract with any Independent Contractor for the operation and
management of any REO Property, provided that:
(i) the
terms
and conditions of any such contract shall not be inconsistent
herewith;
(ii) any
such
contract shall require, or shall be administered to require, that the
Independent Contractor pay all costs and expenses incurred in connection with
the operation and management of such REO Property, including those listed above
and remit all related revenues (net of such costs and expenses) to the Servicer
as soon as practicable, but in no event later than thirty (30) days following
the receipt thereof by such Independent Contractor;
(iii) none
of
the provisions of this Section 3.21(c) relating to any such contract or to
actions taken through any such Independent Contractor shall be deemed to relieve
the Servicer of any of its duties and obligations to the Trustee on behalf
of
the Trust Fund and for the benefit of the Certificateholders with respect to
the
operation and management of any such REO Property; and
(iv) the
Servicer shall be obligated with respect thereto to the same extent as if it
alone were performing all duties and obligations in connection with the
operation and management of such REO Property.
The
Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations
hereunder for indemnification of the Servicer by such Independent Contractor,
and nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be solely liable for all fees owed by it
to
any such Independent Contractor, irrespective of whether the Servicer’s
compensation pursuant to Section 3.15 is sufficient to pay such fees. Any such
agreement shall include a provision that such agreement may be immediately
terminated by any successor Servicer without fee, in the event the Servicer
shall for any reason, no longer be the Servicer of the Mortgage Loans (including
termination due to the Servicer Event of Default).
(d) In
addition to the withdrawals permitted under Section 3.21(c), the Servicer may
from time to time make withdrawals from the REO Account for any REO Property:
(i) to pay itself unpaid Servicing Fees in respect of the related Mortgage
Loan;
and (ii) to reimburse itself or any Sub-Servicer for unreimbursed Servicing
Advances and other advances made in respect of such REO Property or the related
Mortgage Loan. On the Servicer Remittance Date, the Servicer shall withdraw
from
each REO Account and deposit into the Distribution Account in accordance with
Section 3.08(d)(ii), for distribution on the related Distribution Date in
accordance with Section 5.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.21(c) or this Section 3.21(d).
134
(e) Subject
to the time constraints set forth in Section 3.21(a), each REO Disposition
shall
be carried out by the Servicer at such price and upon such terms and conditions
as the Servicer shall deem necessary or advisable, as shall be normal and usual
in accordance with Accepted Servicing Practices.
(f) The
proceeds from the REO Disposition, net of any amount required by law to be
remitted to the Mortgagor under the related Mortgage Loan and net of any payment
or reimbursement to the Servicer as provided above, shall be deposited in the
Distribution Account in accordance with Section 3.08(d)(ii) on the Servicer
Remittance Date in the month following the receipt thereof for distribution
on
the related Distribution Date in accordance with Section 5.01. Any REO
Disposition shall be for cash only (unless changes in the REMIC Provisions
made
subsequent to the Startup Day allow a sale for other
consideration).
(g) The
Servicer shall file information returns (and shall provide a certification
of a
Servicing Officer to the Master Servicer that such filings have been made)
with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property
as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.
SECTION
3.22. Obligations
of the Servicer in Respect of Prepayment Interest Shortfalls; Relief Act
Interest Shortfalls.
The
Servicer shall deliver to the Securities Administrator for deposit into the
Distribution Account on or before 12:00 noon New York time on the Servicer
Remittance Date from its own funds an amount equal to the lesser of (i) the
aggregate amount of the Prepayment Interest Shortfalls attributable to
prepayments in full on the related Mortgage Loans for the related Distribution
Date resulting solely from voluntary Principal Prepayments received by the
Servicer during the portion of the related Prepayment Period occurring between
the fifteenth day of the month preceding the month in which the related
Distribution Date occurs and ending on the last day of such month and (ii)
the
aggregate amount of the related Servicing Fees payable to Servicer on such
Distribution Date with respect to the related Mortgage Loans. The Servicer
shall
not have the right to reimbursement for any amounts remitted to the Securities
Administrator in respect of this Section 3.22. The Servicer shall not be
obligated to pay the amounts set forth in this Section 3.22 with respect to
shortfalls resulting from the application of the Relief Act.
SECTION
3.23. Obligations
of the Servicer in Respect of Mortgage Rates and Monthly Payments.
In
the
event that a shortfall in any collection on or liability with respect to any
Mortgage Loan results from or is attributable to adjustments to Mortgage Rates,
Monthly Payments or Stated Principal Balances that were made by the Servicer
in
a manner not consistent with the terms of the related Mortgage Note and this
Agreement, the Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Securities Administrator for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Securities
Administrator, the Master Servicer, the Depositor and any successor servicer
in
respect of any such liability. Such indemnities shall survive the termination
or
discharge of this Agreement. Notwithstanding the foregoing, this
Section 3.23 shall not limit the ability of the Servicer to seek recovery
of any such amounts from the related Mortgagor under the terms of the related
Mortgage Note and Mortgage, to the extent permitted by applicable
law.
135
SECTION
3.24. Reserve
Fund.
(a) No
later
than the Closing Date, the Securities Administrator shall establish and maintain
a separate, segregated trust account entitled, “Reserve Fund, Wells Fargo Bank,
N.A., in trust for the registered holders of ACE Securities Corp. Home Equity
Loan Trust, Series 2006-FM1, Asset Backed Pass-Through Certificates.” On the
Closing Date, the Depositor will deposit, or cause to be deposited, into the
Reserve Fund $1,000.
(b) On
each
Distribution Date, the Securities Administrator shall deposit into the Reserve
Fund the amounts described in Section 5.01(c)(7)(vi), rather than
distributing such amounts to the Class CE Certificateholders pursuant to
Section 5.01(c)(7)(viii). On each such Distribution Date, the Securities
Administrator shall hold all such amounts for the benefit of the Holders of
the
Class A Certificates and the Mezzanine Certificates and will distribute such
amounts to the Holders of the Class A Certificates and the Mezzanine
Certificates, in the amounts and priorities set forth in Section 5.01(a).
If no Net WAC Rate Carryover Amounts are payable on a Distribution Date, the
Securities Administrator shall deposit, into the Reserve Fund on behalf of
the
Class CE Certificateholders, from amounts otherwise distributable to the Class
CE Certificateholders, an amount such that when added to other amounts already
on deposit in the Reserve Fund, the aggregate amount on deposit therein is
equal
to $1,000.
(c) It
is the
intention of the parties hereto that, for federal and state income and state
and
local franchise tax purposes, the Reserve Fund be disregarded as an entity
separate from the Holder of the Class CE Certificates unless and until the
date
when either (a) there is more than one Class CE Certificateholder or (b) any
Class of Certificates in addition to the Class CE Certificates is
recharacterized as an equity interest in the Reserve Fund for federal income
tax
purposes, in which case it is the intention of the parties hereto that, for
federal and state income and state and local franchise tax purposes, the Reserve
Fund be treated as a partnership. The Master Servicer shall not be required
to
prepare and file partnership tax returns in respect of such partnership unless
it receives additional reasonable compensation (not to exceed $10,000 per year)
for the preparation of such filings, written notification recognizing the
creation of a partnership agreement or comparable documentation evidencing
the
partnership. All amounts deposited into the Reserve Fund (other than the initial
deposit therein of $1,000) shall be treated as amounts distributed by REMIC
III
to the Holders of the Class CE Certificates. Upon the termination of the Trust
Fund, or the payment in full of the Class A Certificates and the Mezzanine
Certificates, all amounts remaining on deposit in the Reserve Fund will be
released by the Trust Fund and distributed to the Class CE Certificateholders
or
their designees. The Reserve Fund constitutes an “outside reserve fund” within
the meaning of Treasury Regulation § 1.860G-2(h). The Reserve Fund will be part
of the Trust Fund but not part of any REMIC and any payments to the Holders
of
the Class A Certificates or the Mezzanine Certificates of Net WAC Rate Carryover
Amounts will not be payments with respect to a “regular interest” in a REMIC
within the meaning of Code Section 860(G)(a)(1).
136
(d) By
accepting a Class CE Certificate, each Class CE Certificateholder hereby agrees
that the Securities Administrator will deposit into the Reserve Fund the amounts
described above on each Distribution Date rather than distributing such amounts
to the Class CE Certificateholders. By accepting a Class CE Certificate, each
Class CE Certificateholder further agrees that its agreement to such action
by
the Securities Administrator is given for good and valuable consideration,
the
receipt and sufficiency of which is acknowledged by such
acceptance.
(e) At
the
direction of the Holders of a majority in Percentage Interest in the Class
CE
Certificates, the Securities Administrator shall direct any depository
institution maintaining the Reserve Fund to invest the funds in such account
in
one or more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the
Securities Administrator or an Affiliate manages or advises such investment,
and
(ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Securities Administrator
or
an Affiliate manages or advises such investment. All income and gain earned
upon
such investment shall be deposited into the Reserve Fund. In no event shall
the
Securities Administrator be liable for any investments made pursuant to this
clause (e). If the Holders of a majority in Percentage Interest in the Class
CE
Certificates fail to provide investment instructions, funds on deposit in the
Reserve Fund shall be held uninvested by the Securities Administrator without
liability for interest or compensation.
(f) For
federal tax return and information reporting, the right of the Class A
Certificateholders and the Mezzanine Certificateholders to receive payments
from
the Reserve Fund and the Supplemental Interest Trust in respect of any Net
WAC
Rate Carryover Amount shall be assigned a value of $1,000.
SECTION
3.25. Advance
Facility.
(a) Notwithstanding
anything to the contrary contained herein, (i) the Servicer is hereby authorized
to enter into an advance facility (“Advance Facility”) but no more than two
Advance Facilities, without the prior written consent of the Trustee, which
consent shall not be unreasonably withheld, under which (A) the Servicer sells,
assigns or pledges to an advancing person (an “Advance Financing Person”) its
rights under this Agreement to be reimbursed for any P&I Advances or
Servicing Advances and/or (B) an Advance Financing Person agrees to finance
some
or all P&I Advances or Servicing Advances required to be made by the
Servicer pursuant to this Agreement and (ii) the Servicer is hereby authorized
to assign its rights to the Servicing Fee (which rights shall terminate upon
the
resignation, termination or removal of the Servicer pursuant to the terms of
this Agreement); it being understood that neither the Trust Fund nor any party
hereto shall have a right or claim (including without limitation any right
of
offset) to any amounts for reimbursement of P&I Advances or Servicing
Advances so assigned or to the portion of the Servicing Fee so assigned. Subject
to the provisions of the first sentence of this Section 3.25(a), no consent
of
the Depositor, Trustee, Securities Administrator, Master Servicer,
Certificateholders or any other party is required before the Servicer may enter
into an Advance Facility, but the Servicer shall provide notice to the
Depositor, Master Servicer, Securities Administrator and the Trustee of the
existence of any such Advance Facility promptly upon the consummation thereof
stating (a) the identity of the Advance Financing Person and (b) the identity
of
any Person (“Servicer’s Assignee”) who has the right to receive amounts in
reimbursement of previously unreimbursed P&I Advances or Servicing Advances.
Notwithstanding the existence of any Advance Facility under which an advancing
person agrees to finance P&I Advances and/or Servicing Advances on the
Servicer’s behalf, the Servicer shall remain obligated pursuant to this
Agreement to make P&I Advances and Servicing Advances pursuant to and as
required by this Agreement, and shall not be relieved of such obligations by
virtue of such Advance Facility.
137
(b) Reimbursement
amounts (“Advance Reimbursement Amounts”) shall consist solely of amounts in
respect of P&I Advances and/or Servicing Advances made with respect to the
related Mortgage Loans for which the Servicer would be permitted to reimburse
itself in accordance with this Agreement, assuming the Servicer had made the
related P&I Advance(s) and/or Servicing Advance(s).
(c) The
Servicer shall maintain and provide to any successor servicer (with, upon
request, a copy to the Trustee) a detailed accounting on a loan-by-loan basis
as
to amounts advanced by, pledged or assigned to, and reimbursed to any Advance
Financing Person. The successor servicer shall be entitled to rely on any such
information provided by the predecessor servicer, and the successor Servicer
shall not be liable for any errors in such information.
(d) Reimbursement
amounts distributed with respect to each Mortgage Loan shall be allocated to
outstanding unreimbursed P&I Advances or Servicing Advances (as the case may
be) made with respect to that Mortgage Loan on a “first-in, first out” (FIFO)
basis. The documentation establishing any Advance Facility shall require the
Servicer to provide to the related Advance Financing Person or its designee
loan-by-loan information with respect to each such reimbursement amount
distributed to such Advance Financing Person or Advance Facility trustee on
each
Distribution Date, to enable the Advance Financing Person or Advance Facility
trustee to make the FIFO allocation of each such reimbursement amount with
respect to each Mortgage Loan. The Servicer shall remain entitled to be
reimbursed by the Advance Financing Person or Advance Facility trustee for
all
P&I Advances and Servicing Advances funded by the Servicer to the extent the
related rights to be reimbursed therefor have not been sold, assigned or pledged
to an Advance Financing Person.
(e) Any
amendment to this Section 3.25 or to any other provision of this Agreement
that
may be necessary or appropriate to effect the terms of an Advance Facility
as
described generally in this Section 3.25, including amendments to add provisions
relating to a successor Servicer, may be entered into by the Trustee, the
Depositor, and the Servicer without the consent of any Certificateholder,
notwithstanding anything to the contrary in this Agreement, provided, that
the
Trustee has been provided an Opinion of Counsel that such amendment is
authorized hereunder and has no material adverse effect on the
Certificateholders, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the
Trust
Fund; provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders if the
Person requesting the amendment obtains a letter from each Rating Agency
(instead of obtaining an Opinion of Counsel to such effect) stating that the
amendment would not result in the downgrading or withdrawal of the respective
ratings then assigned to the Certificates; it being understood and agreed that
any such rating letter in and of itself will not represent a determination
as to
the materiality of any such amendment and will represent a determination only
as
to the credit issues affecting any such rating. Prior to entering into an
Advance Facility, the Servicer shall notify the lender under such facility
in
writing that: (a) the P&I Advances and/or Servicing Advances financed by
and/or pledged to the lender are obligations owed to the Servicer on a
non-recourse basis payable only from the cash flows and proceeds received under
this Agreement for reimbursement of P&I Advances and/or Servicing Advances
only to the extent provided herein, and neither the Master Servicer, the
Securities Administrator, the Trustee nor the Trust are otherwise obligated
or
liable to repay any P&I Advances and/or Servicing Advances financed by the
lender; (b) the Servicer will be responsible for remitting to the lender the
applicable amounts collected by it as Servicing Fees and as reimbursement for
P&I Advances and/or Servicing Advances funded by the lender, as applicable,
subject to the restrictions and priorities created in this Agreement; and (c)
neither the Master Servicer, the Securities Administrator nor the Trustee shall
have any responsibility to calculate any amount payable under an Advance
Facility or to track or monitor the administration of the financing arrangement
between the Servicer and the lender or the payment of any amount under an
Advance Facility.
138
(f) The
Servicer shall indemnify the Master Servicer, the Securities Administrator,
the
Trustee and the Trust Fund for any cost, liability or expense relating to the
Advance Facility including, without limitation, a claim, pending or threatened,
by an Advance Financing Person.
SECTION
3.26. Indemnification.
The
Servicer agrees to indemnify the Trustee, Master Servicer and the Securities
Administrator, from, and hold the Trustee, Master Servicer and the Securities
Administrator harmless against, any loss, liability or expense (including
reasonable attorney’s fees and expenses) incurred by any such Person by reason
of the Servicer’s willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement or by reason of the Servicer’s
reckless disregard of its obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and
the
resignation or removal of the Servicer, the Trustee, the Master Servicer and
the
Securities Administrator. Any payment hereunder made by the Servicer to any
such
Person shall be from the Servicer’s own funds, without reimbursement from REMIC
I therefor.
139
ARTICLE
IV
ADMINISTRATION
AND MASTER SERVICING
OF
THE
MORTGAGE LOANS BY THE MASTER SERVICER
SECTION
4.01. Master
Servicer.
The
Master Servicer shall, from and after the Closing Date supervise, monitor and
oversee the obligations of the Servicer under this Agreement to service and
administer the related Mortgage Loans in accordance with the terms of this
Agreement, and shall have full power and authority to do any and all things
which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with
the
Servicer as necessary from time-to-time to carry out the Master Servicer’s
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by the Servicer
and
shall cause the Servicer to perform and observe the covenants, obligations
and
conditions to be performed or observed by the Servicer under this Agreement.
The
Master Servicer shall independently and separately monitor the Servicer’s
servicing activities with respect to each Mortgage Loan, reconcile the results
of such monitoring with such information provided in the previous sentence
on a
monthly basis and coordinate corrective adjustments to the Servicer’s and Master
Servicer’s records, and based on such reconciled and corrected information,
prepare the statements specified in Section 5.03 and any other information
and
statements required to be provided by the Master Servicer hereunder. The Master
Servicer shall reconcile the results of its Mortgage Loan monitoring with the
actual remittances of the Servicer to the Distribution Account pursuant to
the
terms hereof based on information provided to the Master Servicer by the
Servicer.
The
Trustee shall furnish the Servicer and the Master Servicer with any limited
powers of attorney and other documents in form acceptable to it necessary or
appropriate to enable the Servicer and the Master Servicer to service and
administer the Mortgage Loans and REO Properties. The Trustee shall have no
responsibility for any action of the Master Servicer or the Servicer pursuant
to
any such limited power of attorney and shall be indemnified by the Master
Servicer or the Servicer, as applicable, for any cost, liability or expense
incurred by the Trustee in connection with such Person’s misuse of any such
power of attorney.
The
Trustee, the Custodian and the Securities Administrator shall provide access
to
the records and documentation in possession of the Trustee, the Custodian or
the
Securities Administrator regarding the Mortgage Loans and REO Property and
the
servicing thereof to the Certificateholders, the FDIC, and the supervisory
agents and examiners of the FDIC, such access being afforded only upon
reasonable prior written request and during normal business hours at the office
of the Trustee, the Custodian or the Securities Administrator; provided,
however, that, unless otherwise required by law, none of the Trustee, the
Custodian or the Securities Administrator shall be required to provide access
to
such records and documentation if the provision thereof would violate the legal
right to privacy of any Mortgagor. The Trustee, the Custodian and the Securities
Administrator shall allow representatives of the above entities to photocopy
any
of the records and documentation and shall provide equipment for that purpose
at
a charge that covers the Trustee’s, the Custodian’s or the Securities
Administrator’s actual costs.
140
The
Trustee shall execute and deliver to the Servicer or the Master Servicer upon
request any court pleadings, requests for trustee’s sale or other documents
necessary or desirable to (i) the foreclosure or trustee’s sale with respect to
a Mortgaged Property; (ii) any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or any other Mortgage Loan Document; (iii)
obtain a deficiency judgment against the Mortgagor; or (iv) enforce any other
rights or remedies provided by the Mortgage Note or any other Mortgage Loan
Document or otherwise available at law or equity.
SECTION
4.02. REMIC-Related
Covenants.
For
as
long as each REMIC shall exist, the Trustee and the Securities Administrator
shall act in accordance herewith to treat such REMIC as a REMIC, and the Trustee
and the Securities Administrator shall comply with any directions of the
Sponsor, the Servicer or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale
of
all or any portion of the Mortgage Loans or of any investment of deposits in
an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreement or
Section 2.03 of this Agreement, as applicable, accept any contribution to
any REMIC after the Startup Day without receipt of an Opinion of Counsel stating
that such contribution will not result in an Adverse REMIC Event as defined
in
Section 11.01(f).
SECTION
4.03. Monitoring
of Servicer.
(a) The
Master Servicer shall be responsible for monitoring the compliance by the
Servicer with its duties under this Agreement. In the review of the Servicer’s
activities, the Master Servicer may rely upon an Officer’s Certificate of the
Servicer with regard to the Servicer’s compliance with the terms of this
Agreement. In the event that the Master Servicer, in its judgment, determines
that the Servicer should be terminated in accordance with the terms hereof,
or
that a notice should be sent pursuant to the terms hereof with respect to the
occurrence of an event that, unless cured, would constitute the Servicer Event
of Default, the Master Servicer shall notify the Servicer, the Sponsor and
the
Trustee thereof and the Master Servicer shall issue such notice or take such
other action as it deems appropriate.
(b) The
Master Servicer, for the benefit of the Trustee and the Certificateholders,
shall enforce the obligations of the Servicer under this Agreement and shall,
in
the event that the Servicer fails to perform its obligations in accordance
with
this Agreement, subject to this Section and Article VIII, notify the Trustee
and
the Trustee shall terminate the rights and obligations of the Servicer hereunder
in accordance with the provisions of Article VIII. In the event the rights
and
obligations of the Servicer (or any successor thereto) are terminated, the
Master Servicer shall act as servicer of the Mortgage Loans or a successor
servicer shall be appointed in accordance with the provisions of Article VIII.
Such enforcement, including, without limitation, the legal prosecution of claims
and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master Servicer, in its good
faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense, provided that the Master Servicer shall not be required to prosecute
or
defend any legal action except to the extent that the Master Servicer shall
have
received reasonable indemnity for its costs and expenses in pursuing such
action.
141
(c) The
Master Servicer shall be entitled to be reimbursed by the Servicer (or from
amounts on deposit in the Distribution Account if the Servicer is unable to
fulfill its obligations hereunder) for all reasonable out-of-pocket or third
party costs associated with the transfer of servicing from the predecessor
Servicer (or if the predecessor Servicer is the Master Servicer, from the
Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
successor servicer to correct any errors or insufficiencies in the servicing
data or otherwise to enable the successor servicer to service the Mortgage
Loans
properly and effectively, upon presentation of reasonable documentation of
such
costs and expenses.
(d) The
Master Servicer shall require the Servicer to comply with the remittance
requirements and other obligations set forth in this Agreement.
(e) If
the
Master Servicer acts as successor to the Servicer, it will not assume any
liability for the representations and warranties of the terminated
Servicer.
SECTION
4.04. Fidelity
Bond.
The
Master Servicer, at its expense, shall maintain in effect a blanket fidelity
bond and an errors and omissions insurance policy, affording coverage with
respect to all directors, officers, employees and other Persons acting on such
Master Servicer’s behalf, and covering errors and omissions in the performance
of the Master Servicer’s obligations hereunder. The errors and omissions
insurance policy and the fidelity bond shall be in such form and amount
generally acceptable for entities serving as master servicers or
trustees.
SECTION
4.05. Power
to
Act; Procedures.
The
Master Servicer shall master service the Mortgage Loans and shall have full
power and authority, subject to the REMIC Provisions and the provisions of
Article XI, to do any and all things that it may deem necessary or desirable
in
connection with the master servicing and administration of the Mortgage Loans,
including but not limited to the power and authority (i) to execute and deliver,
on behalf of the Certificateholders and the Trustee, customary consents or
waivers and other instruments and documents, (ii) to consent to transfers of
any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages,
(iii) to collect any Insurance Proceeds and Liquidation Proceeds, and (iv)
to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan, in each case, in accordance with the
provisions of this Agreement; provided, however, that the Master Servicer shall
not (and, consistent with its responsibilities under Section 4.03, shall not
permit the Servicer to) knowingly or intentionally take any action, or fail
to
take (or fail to cause to be taken) any action reasonably within its control
and
the scope of duties more specifically set forth herein, that, under the REMIC
Provisions, if taken or not taken, as the case may be, would cause REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC or result in the imposition
of a tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) unless the
Master Servicer has received an Opinion of Counsel (but not at the expense
of
the Master Servicer) to the effect that the contemplated action will not cause
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC or result in the
imposition of a tax upon REMIC I, REMIC II or REMIC III, as the case may be.
The
Trustee shall furnish the Master Servicer, upon written request from a Servicing
Officer, with any powers of attorney prepared and delivered to it and reasonably
acceptable to it by empowering the Master Servicer or Servicer to execute and
deliver instruments of satisfaction or cancellation, or of partial or full
release or discharge, and to foreclose upon or otherwise liquidate Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to
the
Mortgage Loans or the Mortgaged Property, in accordance with this Agreement
and
the Trustee shall execute and deliver such other documents prepared and
delivered to it and reasonably acceptable to it, as the Master Servicer, the
Servicer may request, to enable the Master Servicer to master service and
administer the Mortgage Loans and carry out its duties hereunder, in each case
in accordance with Accepted Master Servicing Practices (and the Trustee shall
have no liability for misuse of any such powers of attorney by the Master
Servicer or the Servicer and shall be indemnified by the Master Servicer or
the
Servicer, as applicable, for any cost, liability or expense incurred by the
Trustee in connection with such Person’s use or misuse of any such power of
attorney). If the Master Servicer or the Trustee has been advised that it is
likely that the laws of the state in which action is to be taken prohibit such
action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the “doing business” or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee
in
the appointment of a co-trustee pursuant to Section 9.10. In the performance
of
its duties hereunder, the Master Servicer shall be an independent contractor
and
shall not, except in those instances where it is taking action in the name
of
the Trustee, be deemed to be the agent of the Trustee.
To
the
extent Mortgage Loans contain enforceable due-on-sale clauses, the Master
Servicer shall cause the Servicer to enforce such clauses in accordance with
this Agreement. If applicable law prohibits the enforcement of a due-on-sale
clause or such clause is otherwise not enforced in accordance with this
Agreement and, as a consequence, a Mortgage Loan is assumed, the original
Mortgagor may be released from liability in accordance with this
Agreement.
SECTION
4.07. Documents,
Records and Funds in Possession of Master Servicer To Be Held for
Trustee.
(a) The
Master Servicer shall transmit to the Trustee or the Custodian such documents
and instruments coming into the possession of the Master Servicer from time
to
time as are required by the terms hereof to be delivered to the Trustee or
the
Custodian. Any funds received by the Master Servicer in respect of any Mortgage
Loan or which otherwise are collected by the Master Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall be remitted
to the Securities Administrator for deposit in the Distribution Account. The
Master Servicer shall, and, subject to Section 3.20 of this Agreement, shall
cause the Servicer to provide access to information and documentation regarding
the Mortgage Loans to the Trustee, its agents and accountants at any time upon
reasonable request and during normal business hours, and to Certificateholders
that are savings and loan associations, banks or insurance companies, the Office
of Thrift Supervision, the FDIC and the supervisory agents and examiners of
such
Office and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of
the
Office of Thrift Supervision or other regulatory authority, such access to
be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it.
In
fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
143
(b) All
Mortgage Files and funds collected or held by, or under the control of, the
Master Servicer, in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds or Insurance
Proceeds, shall be remitted to the Securities Administrator for deposit in
the
Distribution Account.
SECTION
4.08. Standard
Hazard Insurance and Flood Insurance Policies.
For
each
Mortgage Loan, the Master Servicer shall enforce the obligation of the Servicer
under this Agreement to maintain or cause to be maintained standard fire and
casualty insurance and, where applicable, flood insurance, all in accordance
with the provisions of this Agreement. It is understood and agreed that such
insurance shall be with insurers meeting the eligibility requirements set forth
in Section 3.11 of this Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted 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.
SECTION
4.09. Presentment
of Claims and Collection of Proceeds.
The
Master Servicer shall enforce the Servicer’s obligations under this Agreement to
prepare and present on behalf of the Trustee and the Certificateholders all
claims under any insurance policies and take such actions (including the
negotiation, settlement, compromise or enforcement of the insured’s claim) as
shall be necessary to realize recovery under such policies. Any proceeds
disbursed to the Master Servicer (or disbursed to the Servicer and remitted
to
the Master Servicer) in respect of such policies, bonds or contracts shall
be
promptly deposited in the Distribution Account upon receipt, except that any
amounts realized that are to be applied to the repair or restoration of the
related Mortgaged Property as a condition precedent to the presentation of
claims on the related Mortgage Loan to the insurer under any applicable
insurance policy need not be so deposited or remitted.
SECTION
4.10. Maintenance
of Primary Mortgage Insurance Policies.
(a) The
Master Servicer shall not take, or permit the Servicer to take (to the extent
such action is prohibited by this Agreement), any action that would result
in
noncoverage under any primary mortgage insurance policy of any loss which,
but
for the actions of the Master Servicer, the Servicer would have been covered
thereunder. The Master Servicer shall use its best reasonable efforts to cause
the Servicer to keep in force and effect (to the extent that the Mortgage Loan
requires the Mortgagor to maintain such insurance), primary mortgage insurance
applicable to each Mortgage Loan in accordance with the provisions of this
Agreement. The Master Servicer shall not, and shall not permit the Servicer
to,
cancel or refuse to renew any primary mortgage insurance policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement.
144
(b) The
Master Servicer agrees to cause the Servicer to present, on behalf of the
Trustee and the Certificateholders, claims to the insurer under any primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Mortgage Loans.
SECTION
4.11. Trustee
to Retain Possession of Certain Insurance Policies and Documents.
The
Trustee or the Custodian, shall retain possession and custody of the originals
(to the extent available) of any primary mortgage insurance policies, or
certificate of insurance if applicable, and any certificates of renewal as
to
the foregoing as may be issued from time to time as contemplated by this
Agreement. Until all amounts distributable in respect of the Certificates have
been distributed in full and the Master Servicer and the Servicer have otherwise
fulfilled their respective obligations under this Agreement, the Trustee or
the
Custodian shall also retain possession and custody of each Mortgage File in
accordance with and subject to the terms and conditions of this Agreement and
the Custodial Agreement. The Master Servicer shall promptly deliver or cause
to
be delivered to the Trustee or the Custodian, upon the execution or receipt
thereof the originals of any primary mortgage insurance policies, any
certificates of renewal, and such other documents or instruments that constitute
Mortgage Loan Documents that come into the possession of the Master Servicer
from time to time.
SECTION
4.12. Realization
Upon Defaulted Mortgage Loans.
The
Master Servicer shall cause the Servicer to foreclose upon, repossess or
otherwise comparably convert the ownership of Mortgaged Properties securing
such
of the Mortgage Loans as come into and continue in default and as to which
no
satisfactory arrangements can be made for collection of delinquent payments,
all
in accordance with this Agreement.
SECTION
4.13. Compensation
for the Master Servicer.
As
compensation for the activities of the Master Servicer hereunder, the Master
Servicer shall be entitled to the Master Servicing Fee and the income from
investment of or earnings on the funds from time to time in the Distribution
Account, as provided in Section 3.10. The compensation payable to the
Master Servicer in respect of any Distribution Date shall be reduced in
accordance with Section 4.19. The Master Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder and
shall not be entitled to reimbursement therefor except as provided in this
Agreement.
145
SECTION
4.14. REO
Property.
(a) In
the
event the Trust Fund acquires ownership of any REO Property in respect of any
Mortgage Loan, the deed or certificate of sale shall be issued to the Trustee,
or to its nominee, on behalf of the related Certificateholders. The Master
Servicer shall cause the Servicer to sell, any REO Property as expeditiously
as
possible and in accordance with the provisions of this Agreement or. Further,
the Master Servicer shall cause the Servicer to sell any REO Property prior
to
three years after the end of the calendar year of its acquisition by REMIC
I
unless (i) the Trustee shall have been supplied by the Servicer with an Opinion
of Counsel to the effect that the holding by the Trust Fund of such REO Property
subsequent to such three-year period will not result in the imposition of taxes
on “prohibited transactions” of any REMIC hereunder as defined in section 860F
of the Code or cause any REMIC hereunder to fail to qualify as a REMIC at any
time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such Mortgaged Property (subject to any conditions contained
in
such Opinion of Counsel) or (ii) the Servicer shall have applied for, prior
to
the expiration of such three-year period, an extension of such three-year period
in the manner contemplated by Section 856(e)(3) of the Code, in which case
the
three-year period shall be extended by the applicable extension period. The
Master Servicer shall cause the Servicer to protect and conserve, such REO
Property in the manner and to the extent required by this Agreement in
accordance with the REMIC Provisions and in a manner that does not result in
a
tax on “net income from foreclosure property” or cause such REO Property to fail
to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of
the Code.
(b) The
Master Servicer shall cause the Servicer to deposit all funds collected and
received in connection with the operation of any REO Property in the REO
Account.
SECTION
4.15. Master
Servicer Annual Statement of Compliance.
(a) The
Master Servicer and the Securities Administrator shall deliver (or otherwise
make available) (and the Master Servicer and Securities Administrator shall
cause any Additional Servicer or Servicing Function Participant engaged by
it to
deliver) to the Depositor and the Securities Administrator, and in the case
of
the Master Servicer, to the Trustee, on or before March 15 of each year,
commencing in March 2007, an Officer’s Certificate stating, as to the signer
thereof, that (A) a review of such party’s activities during the preceding
calendar year or portion thereof and of such party’s performance under this
Agreement, or such other applicable agreement in the case of an Additional
Servicer or Servicing Function Participant, has been made under such officer’s
supervision and (B) to the best of such officer’s knowledge, based on such
review, such party has fulfilled all its obligations under this Agreement,
or
such other applicable agreement in the case of an Additional Servicer or
Servicing Function Participant, in all material respects throughout such year
or
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.
146
(b) The
Master Servicer shall include all annual statements of compliance received
by it
from the Servicer with its own annual statement of compliance to be submitted
to
the Securities Administrator pursuant to this Section.
(c) In
the
event the Master Servicer, the Securities Administrator or any Servicing
Function Participant engaged by such parties is terminated, assigns its rights
and obligations under or resigns pursuant to the terms of this Agreement, or
any
applicable agreement in the case of a Servicing Function Participant, as the
case may be, such party shall provide an Officer’s Certificate pursuant to this
Section 4.15(c) or to such other applicable agreement, as the case may be,
notwithstanding any such termination, assignment or resignation.
(d) Failure
of the Master Servicer to comply timely with this Section 4.15 shall be deemed
a
Master Servicer Event of Default, automatically, without notice and without
any
cure period, and the Trustee may, in addition to whatever rights the Trustee
may
have under this Agreement and at law or in equity or to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Master Servicer
for the same. This paragraph shall supersede any other provision in this
Agreement or any other agreement to the contrary.
(e) Copies
of
such Master Servicer annual statements of compliance shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at
the
Master Servicer’s expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer’s
failure to provide such statement).
SECTION
4.16. Master
Servicer Assessments of Compliance.
(a) By
March
15 of each year, commencing in March 2007, the Master Servicer and the
Securities Administrator, each at its own expense, shall furnish, or otherwise
make available, and each such party shall cause any Servicing Function
Participant engaged by it to furnish, each at its own expense, to the Securities
Administrator and the Depositor, a report on an assessment of compliance with
the Relevant Servicing Criteria that contains (A) a statement by such party
of
its responsibility for assessing compliance with the Relevant Servicing
Criteria, (B) a statement that such party used the Relevant Servicing Criteria
to assess compliance with the Relevant Servicing Criteria, (C) such party’s
assessment of compliance with the Relevant Servicing Criteria as of and for
the
fiscal year covered by the Form 10-K required to be filed pursuant to Section
5.06(d), including, if there has been any material instance of noncompliance
with the Relevant Servicing Criteria, a discussion of each such failure and
the
nature and status thereof, and (D) a statement that a registered public
accounting firm has issued an attestation report on such party’s assessment of
compliance with the Relevant Servicing Criteria as of and for such period.
(b) No
later
than the end of each fiscal year for the Trust for which a 10-K is required
to
be filed, the Master Servicer shall forward to the Securities Administrator
and
the Depositor the name of each Servicing Function Participant engaged by it
and
what Relevant Servicing Criteria will be addressed in the report on assessment
of compliance prepared by such Servicing Function Participant (provided,
however,
that
the Master Servicer need not provide such information to the Securities
Administrator so long as the Master Servicer and the Securities Administer
are
the same Person). When the Master Servicer and the Securities Administrator
(or
any Servicing Function Participant engaged by them) submit their assessments
to
the Securities Administrator, such parties will also at such time include the
assessment (and attestation pursuant to Section 4.17) of each Servicing Function
Participant engaged by it.
147
(c) Promptly
after receipt of each such report on assessment of compliance, (i) the Depositor
shall review each such report and, if applicable, consult with the Master
Servicer, the Securities Administrator and any Servicing Function Participant
engaged by such parties as to the nature of any material instance of
noncompliance with the Relevant Servicing Criteria by each such party, and
(ii)
the Securities Administrator shall confirm that the assessments, taken as a
whole, address all of the Servicing Criteria and taken individually address
the
Relevant Servicing Criteria for each party as set forth on Exhibit
E
and on
any similar exhibit set forth in each servicing agreement in respect of the
Servicer and notify the Depositor of any exceptions.
(d) The
Master Servicer shall include all annual reports on assessment of compliance
received by it from the Servicer with its own assessment of compliance to be
submitted to the Securities Administrator pursuant to this Section.
(e) In
the
event the Master Servicer, the Securities Administrator or any Servicing
Function Participant engaged by such parties is terminated, assigns its rights
and obligations under, or resigns pursuant to the terms of this Agreement,
or
any applicable agreement in the case of a Servicing Function Participant, as
the
case may be, such party shall provide a report on assessment of compliance
pursuant to this Section 4.16(e) or to such other applicable agreement,
notwithstanding any such termination, assignment or resignation.
(f) Failure
of the Master Servicer to comply timely with this Section 4.16 shall be deemed
a
Master Servicer Event of Default, automatically, without notice and without
any
cure period, and the Trustee may, in addition to whatever rights the Trustee
may
have under this Agreement and at law or in equity or to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Master Servicer
for the same. This paragraph shall supersede any other provision in this
Agreement or any other agreement to the contrary.
(g) Delivery
under this Section 4.16 of such reports, information and documents to the
Trustee is for informational purposes only, and the Trustee’s receipt of such
shall not constitute constructive notice of any information contained therein
or
determinable from information contained therein, including the Master Servicer’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to conclusively rely exclusively on an Officer’s
Certificate).
(a) By
March
15 of each year, commencing in March 2007, the Master Servicer and the
Securities Administrator, each at its own expense, shall cause, and each such
party shall cause any Servicing Function Participant engaged by it to cause,
each at its own expense, a registered public accounting firm (which may also
render other services to the Master Servicer, the Securities Administrator,
or
such other Servicing Function Participants, as the case may be) and that is
a
member of the American Institute of Certified Public Accountants to furnish
an
attestation report to the Securities Administrator and the Depositor, to the
effect that (i) it has obtained a representation regarding certain matters
from
the management of such party, which includes an assertion that such party has
complied with the Relevant Servicing Criteria, and (ii) on the basis of an
examination conducted by such firm in accordance with standards for attestation
engagements issued or adopted by the PCAOB, it is expressing an opinion as
to
whether such party’s compliance with the Relevant Servicing Criteria was fairly
stated in all material respects, or it cannot express an overall opinion
regarding such party’s assessment of compliance with the Relevant Servicing
Criteria. In the event that an overall opinion cannot be expressed, such
registered public accounting firm shall state in such report why it was unable
to express such an opinion. Such report must be available for general use and
not contain restricted use language.
148
(b) Promptly
after receipt of such assessment of compliance and attestation report from
the
Master Servicer, the Securities Administrator or any Servicing Function
Participant engaged by such parties, the Securities Administrator shall confirm
that each assessment submitted pursuant to Section 4.16 is coupled with an
attestation meeting the requirements of this Section and notify the Depositor
of
any exceptions.
(c) The
Master Servicer shall include each such attestation furnished to it from the
Servicer with its own attestation to be submitted to the Securities
Administrator pursuant to this Section.
(d) In
the
event the Master Servicer, the Securities Administrator or any Servicing
Function Participant engaged by such parties is terminated, assigns its rights
and duties under, or resigns pursuant to the terms of this Agreement, or any
applicable custodial agreement or servicing or sub-servicing agreement in the
case of a Servicing Function Participant, as the case may be, such party shall
cause a registered public accounting firm to provide an attestation pursuant
to
this Section 4.17 or such other applicable agreement notwithstanding any such
termination, assignment or resignation.
(e) Failure
of the Master Servicer to comply timely with this Section 4.17 shall be deemed
a
Master Servicer Event of Default, automatically, without notice and without
any
cure period, and the Trustee may, in addition to whatever rights the Trustee
may
have under this Agreement and at law or in equity or to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Master Servicer
for the same. This paragraph shall supersede any other provision in this
Agreement or any other agreement to the contrary.
SECTION
4.18. Annual
Certification.
Each
Form
10-K required to be filed for the Trust pursuant to Section 5.06 shall include
a
certification (the “Sarbanes-Oxley Certification”) required to be included
therewith pursuant to the Sarbanes-Oxley Act. Each of the Master Servicer and
the Securities Administrator shall provide, and shall cause any Servicing
Function Participant engaged by it to, provide to the Person who signs the
Sarbanes-Oxley Certification (the “Certifying Person”), by March 15 of each year
in which the Trust is subject to the reporting requirements of the Exchange
Act
and otherwise within a reasonable period of time upon request, a certification
(each, a “Back-Up Certification”), in the form attached hereto as Exhibit
C,
upon
which the Certifying Person, the entity for which the Certifying Person acts
as
an officer, and such entity’s officers, directors and Affiliates (collectively
with the Certifying Person, “Certification Parties”) can reasonably rely. The
officer of the Master Servicer in charge of the master servicing function shall
serve as the senior Certifying Person on behalf of the Trust. Such officer
of
the Certifying Person can be contacted by e-mail at
cts.sec.notifications@wellsfargo.com or by facsimile at 410-715-2380. In the
event any such party or any Servicing Function Participant engaged by such
party
is terminated, assigns its rights or duties under, or resigns pursuant to the
terms of this Agreement, or any applicable sub-servicing agreement, as the
case
may be, such party shall provide a Back-Up Certification to the Certifying
Person pursuant to this Section 4.18 with respect to the period of time it
was
subject to this Agreement or any applicable sub-servicing agreement, as the
case
may be. Notwithstanding the foregoing, (i) the Master Servicer and the
Securities Administrator shall not be required to deliver a Back-Up
Certification to each other if both are the same Person and the Master Servicer
is the Certifying Person and (ii) the Master Servicer shall not be obligated
to
sign the Sarbanes-Oxley Certification in the event that it does not receive
any
Back-Up Certification required to be furnished to it pursuant to this section.
149
SECTION
4.19. Obligation
of the Master Servicer in Respect of Prepayment Interest
Shortfalls.
In
the
event of any Prepayment Interest Shortfalls, the Master Servicer shall deposit
into the Distribution Account not later than the related Distribution Date
an
amount equal to the lesser of (i) the aggregate amounts required to be paid
by
the Servicer with respect to Prepayment Interest Shortfalls attributable to
Principal Prepayments in full on the Mortgage Loans for the related Distribution
Date, and not so paid by the Servicer and (ii) the aggregate amount of the
compensation payable to the Master Servicer for such Distribution Date in
accordance with Section 4.13, without reimbursement therefor.
SECTION
4.20. Prepayment
Penalty Verification.
On
or
prior to each Servicer Remittance Date, the Servicer shall provide in an
electronic format acceptable to the Master Servicer the data necessary for
the
Master Servicer to perform its verification duties set forth in this Section
4.20. The Master Servicer or a third party reasonably acceptable to the Master
Servicer and the Depositor (the “Verification Agent”) will perform such
verification duties and will use its best efforts to issue its findings in
a
report (the “Verification Report”) delivered to the Master Servicer and the
Depositor within ten (10) Business Days following the related Distribution
Date;
provided, however, that if the Verification Agent is unable to issue the
Verification Report within ten (10) Business Days following the Distribution
Date, the Verification Agent may issue and deliver to the Master Servicer and
the Depositor the Verification Report upon the completion of its verification
duties. The Master Servicer shall forward the Verification Report to the
Servicer and shall notify the Servicer if the Master Servicer has determined
that the Servicer did not deliver the appropriate Prepayment Charge to the
Securities Administrator in accordance with this Agreement. Such written
notification from the Master Servicer shall include the loan number, prepayment
penalty code and prepayment penalty amount as calculated by the Master Servicer
or the Verification Agent, as applicable, of each Mortgage Loan for which there
is a discrepancy. If the Servicer agrees with the verified amounts, the Servicer
shall adjust the immediately succeeding Servicer Report and the amount remitted
to the Securities Administrator with respect to prepayments accordingly. If
the
Servicer disagrees with the determination of the Master Servicer, the Servicer
shall, within five (5) Business Days of its receipt of the Verification Report,
notify the Master Servicer of such disagreement and provide the Master Servicer
with detailed information to support its position. The Servicer and the Master
Servicer shall cooperate to resolve any discrepancy on or prior to the
immediately succeeding Servicer Remittance Date, and the Servicer will indicate
the effect of such resolution on the Servicer Report and shall adjust the amount
remitted with respect to prepayments on such Servicer Remittance Date
accordingly.
150
During
such time as the Servicer and the Master Servicer are resolving discrepancies
with respect to the Prepayment Charges, no payments in respect of any disputed
Prepayment Charges will be remitted to the Securities Administrator for deposit
in the Distribution Account and the Master Servicer shall not be obligated
to
deposit such payments, unless otherwise required pursuant to Section 8.01
hereof. In connection with such duties, the Master Servicer shall be able to
rely solely on the information provided to it by the Servicer in accordance
with
this Section. The Master Servicer shall not be responsible for verifying the
accuracy of any of the information provided to it by the
Servicer.
151
ARTICLE
V
PAYMENTS
TO CERTIFICATEHOLDERS
SECTION
5.01. Distributions.
On
each
Distribution Date, the following amounts, in the following order of priority,
shall be distributed by REMIC I to REMIC II on account of the REMIC I Regular
Interests and distributed to the holders of the Class R Certificates (in respect
of the Class R-I Interest), as the case may be:
(a) (1) With
respect to the Group I Mortgage Loans:
(i) to
Holders of REMIC I Regular Interest I, and each of REMIC I Regular Interest
I-1-A through I-81-B, pro
rata,
in an
amount equal to (A) Uncertificated Interest for such REMIC I Regular Interests
for such Distribution Date, plus (B) any amounts payable in respect thereof
remaining unpaid from previous Distribution Dates;
(ii) to
the
extent of amounts remaining after the distributions made pursuant to clause
(i)
above, to the Holders of REMIC I Regular Interest I, an amount of principal
shall be distributed to such Holders until the Uncertificated Balance of REMIC
I
Regular Interest I is reduced to zero; and
(iii) to
the
extent of amounts remaining after the distributions made pursuant to clause
(i)
and (ii) above, payments of principal shall be allocated to REMIC I Regular
interests I-1-A through I-81-B starting with the lowest numerical denomination
until the Uncertificated Balance of each such REMIC I Regular Interest is
reduced to zero, provided that, for REMIC I Regular Interests with the same
numerical denomination, such payments of principal shall be allocated
pro
rata
between
such REMIC I Regular Interests.
(2) With
respect to the Group II Mortgage Loans:
(i) to
Holders of REMIC I Regular Interest II and each of REMIC I Regular Interest
II-1-A through II-81-B, pro
rata,
in an
amount equal to (A) Uncertificated Interest for such REMIC I Regular Interests
for such Distribution Date, plus (B) any amounts payable in respect thereof
remaining unpaid from previous Distribution Dates.
(ii) to
the
extent of amounts remaining after the distributions made pursuant to clause
(i)
above, to the Holders of REMIC I Regular Interest II, an amount of principal
shall be distributed to such Holders until the Uncertificated Balance of REMIC
I
Regular Interest II is reduced to zero; and
(iii) to
the
extent of amounts remaining after the distributions made pursuant to clause
(i)
and (ii) above, payments of principal shall be allocated to REMIC I Regular
interests II-1-A through II-81-B starting with the lowest numerical denomination
until the Uncertificated Balance of each such REMIC I Regular Interest is
reduced to zero, provided that, for REMIC I Regular Interests with the same
numerical denomination, such payments of principal shall be allocated
pro
rata
between
such REMIC I Regular Interests.
152
(b) to
the
Holders of REMIC I Regular Interest I-81-B, all amounts representing Prepayment
Charges in respect of the Group I Mortgage Loans received during the related
Prepayment Period and to the Holders of REMIC I Regular Interest II-81-B, all
amounts representing Prepayment Charges in respect of the Group II Mortgage
Loans received during the related Prepayment Period.
(c) (1)
On
each Distribution Date, the following amounts, in the following order of
priority, shall be distributed by REMIC II to REMIC III on account of the REMIC
II Regular Interests or withdrawn from the Distribution Account and distributed
to the Holders of the Class R Certificates (in respect of the Class R-II
Interest), as the case may be:
(i) first
to
the Holders of REMIC II Regular Interest IO, in an amount equal to (A)
Uncertificated Interest for such REMIC II Regular Interest for such Distribution
Date, plus (B) any amounts in respect thereof remaining unpaid from previous
Distribution Dates and second, to the Holders of REMIC II Regular Interest
AA,
REMIC II Regular Interest A-1, REMIC II Regular Interest A-2A, REMIC II Regular
Interest A-2B, REMIC II Regular Interest A-2C, REMIC II Regular Interest A-2D,
REMIC II Regular Interest M-1, REMIC II Regular Interest M-2, REMIC II Regular
Interest M-3, REMIC II Regular Interest M-4, REMIC II Regular Interest M-5,
REMIC II Regular Interest M-6, REMIC II Regular Interest M-7, REMIC II Regular
Interest M-8, REMIC II Regular Interest M-9, REMIC II Regular Interest M-10,
REMIC II Regular Interest M-11, REMIC II Regular Interest P and REMIC II Regular
Interest ZZ, pro
rata,
in an
amount equal to (A) the Uncertificated Interest for such Distribution Date,
plus
(B) any amounts in respect thereof remaining unpaid from previous Distribution
Dates. Amounts payable as Uncertificated Interest in respect of REMIC II Regular
Interest ZZ shall be reduced when the REMIC II Overcollateralization Amount
is
less than the REMIC II Required Overcollateralization Amount, by the lesser
of
(x) the amount of such difference and (y) the Maximum ZZ Uncertificated Interest
Deferral Amount and such amount will be payable to the Holders of REMIC II
Regular Interest A-1, REMIC II Regular Interest A-2A, REMIC II Regular Interest
A-2B, REMIC II Regular Interest A-2C, REMIC II Regular Interest A-2D, REMIC
II
Regular Interest M-1, REMIC II Regular Interest M-2, REMIC II Regular Interest
M-3, REMIC II Regular Interest M-4, REMIC II Regular Interest M-5, REMIC II
Regular Interest M-6, REMIC II Regular Interest M-7, REMIC II Regular Interest
M-8, REMIC II Regular Interest M-9, REMIC II Regular Interest M-10 and REMIC
II
Regular Interest M-11 in the same proportion as the Overcollateralization
Increase Amount is allocated to the Corresponding Certificates and the
Uncertificated Balance of REMIC II Regular Interest ZZ shall be increased by
such amount;
(ii) to
Holders of REMIC II Regular Interest I-SUB, REMIC II Regular Interest I-GRP,
REMIC II Regular Interest II-SUB, REMIC II Regular Interest II-GRP, and REMIC
II
Regular Interest XX, pro
rata,
in an
amount equal to (A) the Uncertificated Interest for such Distribution Date,
plus
(B) any amounts in respect thereof remaining unpaid from previous Distribution
Dates;
153
(iii) to
the
Holders of REMIC II Regular Interests, in an amount equal to the remainder
of
the REMIC II Marker Allocation Percentage of the available funds for such
Distribution Date after the distributions made pursuant to clause (i) above,
allocated as follows:
(A) 98.00%
of
such remainder to the Holders of REMIC II Regular Interest AA, until the
Uncertificated Balance of such REMIC II Regular Interest is reduced to
zero;
(B) 2.00%
of
such remainder, first, to the Holders of REMIC II Regular Interest A-1, REMIC
II
Regular Interest A-2A, REMIC II Regular Interest A-2B, REMIC II Regular Interest
A-2C, REMIC II Regular Interest A-2D, REMIC II Regular Interest M-1, REMIC
II
Regular Interest M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest
M-4, REMIC II Regular Interest M-5, REMIC II Regular Interest M-6, REMIC II
Regular Interest M-7, REMIC II Regular Interest M-8, REMIC II Regular Interest
M-9, REMIC II Regular Interest M-10 and REMIC II Regular Interest M-11, 1%
of
and in the same proportion as principal payments are allocated to the
Corresponding Certificates, until the Uncertificated Balances of such REMIC
II
Regular Interests are reduced to zero and second to the Holders of REMIC II
Regular Interest ZZ, until the Uncertificated Balance of such REMIC II Regular
Interest is reduced to zero;
(C) to
the
Holders of REMIC II Regular Interest P, (1) 100% of the Prepayment Charges
deemed distributed on REMIC I Regular Interest I-81-B and REMIC I Regular
Interest II-81-B and (2) on the Distribution Date immediately following the
expiration of the latest Prepayment Charge as identified on the Prepayment
Charge Schedule or any Distribution Date thereafter until $100 has been
distributed pursuant to this clause; then
(D) any
remaining amount to the Holders of the Class R Certificate, in respect of the
Class R-II Interest;
provided,
however, that 98.00% and 2.00% of any principal payments that are attributable
to an Overcollateralization Reduction Amount shall be allocated to Holders
of
REMIC II Regular Interest AA and REMIC II Regular Interest ZZ,
respectively.
(iv) to
the
Holders of REMIC II Regular Interests, in an amount equal to the remainder
of
the REMIC II Sub WAC Allocation Percentage of available funds for such
Distribution Date after the distributions made pursuant to clause (ii) above,
such that distributions of principal shall be deemed to be made to the REMIC
II
Regular Interests first, so as to keep the Uncertificated Balance of each REMIC
II Regular Interest ending with the designation “GRP” equal to 0.01% of the
aggregate Stated Principal Balance of the Mortgage Loans in the related loan
group; second, to each REMIC II Regular Interest ending with the designation
“SUB,” so that the Uncertificated Balance of each such REMIC II Regular Interest
is equal to 0.01% of the excess of (x) the aggregate Stated Principal Balance
of
the Mortgage Loans in the related loan group over (y) the current Certificate
Principal Balance of the Class A Certificate in the related loan group (except
that if any such excess is a larger number than in the preceding distribution
period, the least amount of principal shall be distributed to such REMIC II
Regular Interests such that the REMIC II Subordinated Balance Ratio is
maintained); and third, any remaining principal to REMIC II Regular Interest
XX.
154
(v) Notwithstanding
the distributions described in Section 5.01(c)(1), distributions of funds shall
be made to Certificateholders only in accordance with Section 5.01(c)(2) through
(7).
(2) On
each
Distribution Date, the Securities Administrator shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group I Interest Remittance Amount and make the following disbursements and
transfers in the order of priority described below, in each case to the extent
of the Group I Interest Remittance Amount remaining for such Distribution
Date:
first,
to the
Supplemental Interest Trust, an amount equal to the Group I Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event;
second,
to the
Holders of the Class A-1 Certificates, the Senior Interest Distribution Amount
allocable to the Class A-1 Certificates; and
third,
concurrently, to the Holders of the Class A-2A, Class A-2B, Class A-2C and
Class
A-2D Certificates, the Senior Interest Distribution Amount allocable to each
such Class, to the extent remaining unpaid after the distribution of the Group
II Interest Remittance Amount as set forth in Section 5.01(c)(3) below on a
pro
rata basis, based on the entitlement of each such Class.
(3) On
each
Distribution Date, the Securities Administrator shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group II Interest Remittance Amount and make the following disbursements and
transfers in the order of priority described below, in each case to the extent
of the Group II Interest Remittance Amount remaining for such Distribution
Date:
first,
to the
Supplemental Interest Trust, an amount equal to the Group II Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event;
second,concurrently,
to the Holders of the Class A-2A, Class A-2B, Class A-2C and Class A-2D
Certificates, the Senior Interest Distribution Amount allocable to each such
Class, on a pro rata basis, based on the entitlement of each such Class;
and
155
third,
to the
Holders of the Class A-1 Certificates, the Senior Interest Distribution Amount
allocable to the Class A-1 Certificates, to the extent remaining unpaid after
the distribution of the Group I Interest Remittance Amount as set forth in
Section 5.01(c)(2) above.
(4) On
each
Distribution Date, the Securities Administrator shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group I Interest Remittance Amount and the Group II Interest Remittance Amount
remaining after the distributions required by clauses (2) and (3) above and
make
the following disbursements and transfers in the order of priority described
below, in each case to the extent of the Group I Interest Remittance Amount
and
Group II Interest Remittance Amount remaining for such Distribution
Date:
sequentially,
to the Holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, to the extent of the Interest Distribution Amount
allocable to each such Class.
(5) On
each
Distribution Date (a) prior to the Stepdown Date or (b) on which a Trigger
Event
is in effect, the Securities Administrator shall withdraw from the Distribution
Account to the extent on deposit therein an amount equal to the Group I
Principal Distribution Amount and the Group II Principal Distribution Amount
and
distribute to the Certificateholders the following amounts, in the following
order of priority:
(i) The
Group
I Principal Distribution Amount shall be distributed in the following order
of
priority:
first,
to the
Supplemental Interest Trust, an amount equal to the Group I Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event to the extent not paid from the Interest Remittance Amount on
such
Distribution Date;
second,
to the
Holders of the Class A-1 Certificates until the Certificate Principal Balance
of
the Class A-1 Certificates has been reduced to zero; and
third,
sequentially, to the Holders of the Class A-2A, Class A-2B, Class A-2C and
Class
A-2D Certificates, in that order, after taking into account the distribution
of
the Group II Principal Distribution Amount as described in Section
5.01(c)(5)(ii) below, until the Certificate Principal Balance of each such
Class
has been reduced to zero.
(ii) The
Group
II Principal Distribution Amount shall be distributed in the following order
of
priority:
first,
to the
Supplemental Interest Trust, an amount equal to the Group II Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event to the extent not paid from the Interest Remittance Amount on
such
Distribution Date;
156
second,
sequentially, to the Holders of the Class A-2A Class A-2B, Class A-2C and Class
A-2D Certificates, in that order, until the Certificate Principal Balance of
each such Class has been reduced to zero; and
third,
to the
Holders of the Class A-1 Certificates after taking into account the distribution
of the Group I Principal Distribution Amount as described in Section
5.01(c)(5)(i) above, until the Certificate Principal Balance of such Class
has
been reduced to zero.
(iii) The
Group
I Principal Distribution Amount and Group II Principal Distribution Amount
remaining after distributions pursuant to Sections 5.01(c)(5)(i) and (ii) above
shall be distributed in the following order of priority:
sequentially,
to the Holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, until the Certificate Principal Balance of each
such Class has been reduced to zero.
(6) On
each
Distribution Date (a) on or after the Stepdown Date and (b) on which a Trigger
Event is not in effect, the Securities Administrator shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group I Principal Distribution Amount and the Group II Principal Distribution
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority:
(i) The
Group
I Principal Distribution Amount shall be distributed in the following order
of
priority:
first,
to the
Supplemental Interest Trust, an amount equal to the Group I Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event to the extent not paid from the Interest Remittance Amount on
such
Distribution Date;
second,
to the
Holders of the Class A-1 Certificates, the Class A-1 Principal Distribution
Amount, until the Certificate Principal Balance of such Class has been reduced
to zero; and
third,
sequentially, to the Holders of the Class A-2A, Class A-2B, Class A-2C and
Class
A-2D Certificates, in that order, after taking into account the distribution
of
the Group II Principal Distribution Amount pursuant to Section 5.01(c)(6)(ii)
below, up to an amount equal to the amount, if any, of the Class A-2 Principal
Distribution Amount remaining unpaid on such Distribution Date, until the
Certificate Principal Balance of each such Class has been reduced to
zero.
157
(ii) The
Group
II Principal Distribution Amount shall be distributed in the following order
of
priority:
first,
to the
Supplemental Interest Trust, an amount equal to the Group II Allocation
Percentage of (i) any Net Swap Payment owed to the Swap Provider and (ii) any
Swap Termination Payment owed to the Swap Provider not due to a Swap Provider
Trigger Event to the extent not paid from the Interest Remittance Amount on
such
Distribution Date;
second,
sequentially, to the Holders of the Class A-2A, Class A-2B, Class A-2C and
Class
A-2D Certificates, in that order, the Class A-2 Principal Distribution Amount,
until the Certificate Principal Balance of each such Class has been reduced
to
zero; and
third,
to the
Holders of the Class A-1 Certificates, after taking into account the
distribution of the Group I Principal Distribution Amount pursuant to Section
5.01(c)(6)(i) above, up to an amount equal to the amount, if any, of the Class
A-1 Principal Distribution Amount remaining unpaid on such Distribution Date,
until the Certificate Principal Balance of the Class A-1 Certificates has been
reduced to zero.
(iii) The
Principal Distribution Amount remaining after distributions pursuant to Sections
5.01(c)(6)(i) and (ii) above shall be distributed in the following order of
priority:
first,
to the
Holders of the Class M-1 Certificates, the lesser of (x) remaining Principal
Distribution Amount and (y) the Class M-1 Principal Distribution Amount, until
the Certificate Principal Balance of the Class M-1 Certificates has been reduced
to zero;
second,
to the
Holders of the Class M-2 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the amount distributed to
the
Holders of the Class M-1 Certificates under clause first
above,
and (y) the Class M-2 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-2 Certificates has been reduced to
zero;
third,
to the
Holders of the Class M-3 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above
and to the Holders of the Class M-2 Certificates under clause second
above,
and (y) the Class M-3 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-3 Certificates has been reduced to
zero;
fourth,
to the
Holders of the Class M-4 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above
and to the Holders of the Class M-3 Certificates under clause third
above,
and (y) the Class M-4 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-4 Certificates has been reduced to
zero;
158
fifth,
to the
Holders of the Class M-5 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above
and to the Holders of the Class M-4 Certificates under clause fourth
above,
and (y) the Class M-5 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-5 Certificates has been reduced to
zero;
sixth,
to the
Holders of the Class M-6 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above,
to the Holders of the Class M-4 Certificates under clause fourth
above
and
to the Holders of the Class M-5 Certificates under clause fifth
above,
and (y) the Class M-6 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-6 Certificates has been reduced to zero;
seventh,
to the
Holders of the Class M-7 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above,
to the Holders of the Class M-4 Certificates under clause fourth
above,
to the Holders of the Class M-5 Certificates under clause fifth
above
and to the Holders of the Class M-6 Certificates under clause sixth
above,
and (y) the Class M-7 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-7 Certificates has been reduced to
zero;
eighth,
to the
Holders of the Class M-8 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above,
to the Holders of the Class M-4 Certificates under clause fourth
above,
to the Holders of the Class M-5 Certificates under clause fifth
above,
to the Holders of the Class M-6 Certificates under clause sixth
above
and to the Holders of the Class M-7 Certificates under clause seventh
above,
and (y) the Class M-8 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-8 Certificates has been reduced to zero;
ninth,
to the
Holders of the Class M-9 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above,
to the Holders of the Class M-4 Certificates under clause fourth
above,
to
the Holders of the Class M-5 Certificates under clause fifth
above,
to the Holders of the Class M-6 Certificates under clause sixth
above,
to the Holders of the Class M-7 Certificates under clause seventh
above
and to the Holders of the Class M-8 Certificates under clause eighth
above,
and (y) the Class M-9 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-9 Certificates has been reduced to
zero;
159
tenth,
to the
Holders of the Class M-10 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above,
to the Holders of the Class M-4 Certificates under clause fourth
above,
to
the Holders of the Class M-5 Certificates under clause fifth
above,
to
the Holders of the Class M-6 Certificates under clause sixth
above,
to the Holders of the Class M-7 Certificates under clause seventh
above,
to
the Holders of the Class M-8 Certificates under clause eighth
above
and to the Holders of the Class M-9 Certificates under clause ninth
above,
and (y) the Class M-10 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-10 Certificates has been reduced to
zero;
and
eleventh,
to the
Holders of the Class M-11 Certificates, the lesser of (x) the excess of (i)
the
remaining Principal Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1 Certificates under clause
first
above,
to the Holders of the Class M-2 Certificates under clause second
above,
to the Holders of the Class M-3 Certificates under clause third
above,
to the Holders of the Class M-4 Certificates under clause fourth
above,
to
the Holders of the Class M-5 Certificates under clause fifth
above,
to
the Holders of the Class M-6 Certificates under clause sixth
above,
to the Holders of the Class M-7 Certificates under clause seventh
above,
to the Holders of the Class M-8 Certificates under clause eighth
above,
to the Holders of the Class M-9 Certificates under clause ninth
above
and to the Holders of the Class M-10 Certificates under clause tenth
above,
and (y) the Class M-11 Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-11 Certificates has been reduced to
zero.
Notwithstanding
the priority of distributions described in this Section 5.01(c) with respect
to
the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, on any
Distribution Date which occurs after the Certificate Principal Balances of
the
Mezzanine Certificates have been reduced to zero distributions in respect of
principal to the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates
will be made on a pro rata basis, based on the Certificate Principal Balance
of
each such Class, until the Certificate Principal Balance of each such Class
has
been reduced to zero.
160
(7) On
each
Distribution Date, the Net Monthly Excess Cashflow (or, in the case of clause
(i) below, the Net Monthly Excess Cashflow exclusive of any
Overcollateralization Reduction Amount) shall be distributed as
follows:
(i) to
the
Holders of the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount equal to the
Overcollateralization Increase Amount, payable to such Holders in accordance
with the priorities set forth in Section 5.01(c)(5) and (6) above;
(ii) sequentially,
to the Holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in an amount equal to the Interest Carry Forward
Amount allocable to each such Class;
(iii) sequentially,
to the Holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in an amount equal to the Allocated Realized Loss
Amount allocable to each such Class;
(iv) concurrently,
to the Holders of the Class A Certificates, in an amount equal to such
Certificates’ allocated share of any Prepayment Interest Shortfalls on the
Mortgage Loans to the extent not covered by payments pursuant to Section 3.22
or
4.19 of this Agreement and any shortfalls resulting from the application of
the
Relief Act or similar state or local law or the bankruptcy code with respect
to
the Mortgage Loans to the extent not previously reimbursed pursuant to Section
1.02;
(v) sequentially,
to the Holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, in an amount equal to such certificates’ share of
any Prepayment Interest Shortfalls on the Mortgage Loans to the extent not
covered by payments pursuant to Sections 3.22 or Section 4.19 of this Agreement
and any Relief Act Interest Shortfall, in each case that were allocated to
such
Class for such Distribution Date and for any prior Distribution Date, to the
extent not previously reimbursed pursuant to Section 1.02;
(vi) to
the
Reserve Fund, the amount by which the Net WAC Rate Carryover Amounts, if any,
with respect to the Class A Certificates and Mezzanine Certificates exceeds
the
amount in the Reserve Fund that was not distributed on prior Distribution
Dates;
(vii) to
the
Supplemental Interest Trust, an amount equal to any Swap Termination Payment
owed to the Swap Provider due to a Swap Provider Trigger Event pursuant to
the
Swap Agreement;
(viii)
to the
Holders of the Class CE Certificates the Interest Distribution Amount and any
Overcollateralization Reduction Amount for such Distribution Date;
and
161
(ix) to
the
Holders of the Class R Certificates, in respect of the Class R-III Interest,
any
remaining amounts; provided that if such Distribution Date is the Distribution
Date immediately following the expiration of the latest Prepayment Charge term
as identified on the Mortgage Loan Schedule or any Distribution Date thereafter,
then any such remaining amounts will be distributed first, to the Holders of
the
Class P Certificates, until the Certificate Principal Balance thereof has been
reduced to zero and second, to the Holders of the Class R
Certificates.
The
Class
CE Certificates are intended to receive all principal and interest received
by
the Trust on the Mortgage Loans that is not otherwise distributable to any
other
Class of Regular Certificates or REMIC Regular Interests. If the Securities
Administrator determines that the Residual Certificates are entitled to any
distributions on any Distribution Date other than the final Distribution Date,
the Securities Administrator, prior to any such distribution to any Residual
Certificate, shall notify the Depositor of such impending distribution. Upon
such notification, the Depositor will prepare and request that the other parties
hereto enter into an amendment to the Pooling and Servicing Agreement pursuant
to Section 12.01, to revise such mistake in the distribution
provisions.
On
each
Distribution Date, after making the distributions of the Available Distribution
Amount as set forth above, the Securities Administrator will first, withdraw
from the Reserve Fund all income from the investment of funds in the Reserve
Fund and distribute such amount to the Holders of the Class CE Certificates,
and
second, withdraw from the Reserve Fund, to the extent of amounts remaining
on
deposit therein, the amount of any Net WAC Rate Carryover Amount for such
Distribution Date and distribute such amount first, concurrently to the Class
A
Certificates on a pro
rata
basis,
based on the entitlement of each such Class; second, to the Class M-1
Certificates, third, to the Class M-2 Certificates, fourth, to the Class M-3
Certificates, fifth, to the Class M-4 Certificates, sixth, to the Class M-5
Certificates, seventh, to the Class M-6 Certificates, eighth, to the Class
M-7
Certificates, ninth, to the Class M-8 Certificates, tenth, to the Class M-9
Certificates, eleventh, to the Class M-10 Certificates and twelfth, to the
Class
M-11 Certificates, in each case to the extent to the extent any Net WAC Rate
Carryover Amount is allocable to each such Class.
(d) As
described in Section 5.01(c)(2), (3), (5) and (6) above, Net Swap Payments
and Swap Termination Payments (other than Swap Termination Payments resulting
from a Swap Provider Trigger Event) payable by the Supplemental Interest Trust
to the Swap Provider pursuant to the Swap Agreement shall be deducted from
the
Interest Remittance Amount, and to the extent of any such remaining amounts
due,
from the Principal Remittance Amount, prior to any distributions to the
Certificateholders. On each Distribution Date, such amounts will be remitted
to
the Supplemental Interest Trust, first to make any Net Swap Payment owed to
the
Swap Provider pursuant to the Swap Agreement for such Distribution Date, and
second to make any Swap Termination Payment (not due to a Swap Provider Trigger
Event) owed to the Swap Provider pursuant to the Swap Agreement for such
Distribution Date. Any Swap Termination Payment triggered by a Swap Provider
Trigger Event owed to the Swap Provider pursuant to the Swap Agreement will
be
subordinated to distributions to the Holders of the Class A Certificates and
Mezzanine Certificates and shall be paid pursuant to Section
5.01(c)(7)(vii).
162
(e) On
each
Distribution Date, to the extent required, following the distribution of the
Net
Monthly Excess Cashflow and withdrawals from the Reserve Fund, the Securities
Administrator will withdraw any amounts in the Supplemental Interest Trust
and
distribute such amounts in the following order of priority:
first,
to the
Swap Provider, any Net Swap Payment owed to the Swap Provider pursuant to the
Swap Agreement for such Distribution Date;
second,
to the
Swap Provider, any Swap Termination Payment owed to the Swap Provider not due
to
a Swap Provider Trigger Event pursuant to the Swap Agreement;
third,
concurrently, to each Class of Class A Certificates, the related Senior Interest
Distribution Amount remaining undistributed after the distributions of the
Group
I Interest Remittance Amount and the Group II Interest Remittance Amount, on
a
pro
rata
basis
based on such respective remaining Senior Interest Distribution
Amounts;
fourth,
sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, the related Interest Distribution Amount and
Interest Carry Forward Amount, to the extent remaining undistributed after
the
distributions of the Group I Interest Remittance Amount, the Group II Interest
Remittance Amount and the Net Monthly Excess Cashflow;
fifth,
to
the
holders of the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount necessary to maintain the
Required Overcollateralization Amount after taking into account distributions
made pursuant to Section 5.01(c)(7)(i) above;
sixth,
sequentially to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class
M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates,
in
that order, in each case up to the related Allocated Realized Loss Amount
related to such Certificates for such Distribution Date remaining undistributed
after distribution of the Net Monthly Excess Cashflow;
seventh,
concurrently, to each Class of Class A Certificates, the related Net WAC Rate
Carryover Amount, to the extent remaining undistributed after distributions
of
Net Monthly Excess Cashflow on deposit in the Reserve Fund, on a pro
rata
basis
based on such respective Net WAC Rate Carryover Amounts remaining
unpaid;
eighth,
sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11
Certificates, in that order, the related Net WAC Rate Carryover Amount, to
the
extent remaining undistributed after distributions are made from the Reserve
Fund;
ninth,
to the
Swap Provider, an amount equal to any Swap Termination Payment owed to the
Swap
Provider due to a Swap Provider Trigger Event pursuant to the Swap Agreement;
and
tenth,
to the
Class CE Certificates, any remaining amounts.
163
(f) On
each
Distribution Date, the Securities Administrator shall withdraw any amounts
then
on deposit in the Distribution Account that represent Prepayment Charges and
shall distribute such amounts to the Class P Certificateholders as described
above.
(g) All
distributions made with respect to each Class of Certificates on each
Distribution Date shall be allocated pro
rata
among
the outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 5.01(i)
or
Section 10.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates,
and
shall be made by wire transfer of immediately available funds to the account
of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Securities Administrator
in
writing at least five (5) Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Certificates
having an initial aggregate Certificate Principal Balance that is in excess
of
the lesser of (i) $5,000,000 or (ii) two-thirds of the initial Certificate
Principal Balance of such Class of Certificates, or otherwise by check mailed
by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Securities Administrator or such other location
specified in the notice to Certificateholders of such final
distribution.
Each
distribution with respect to a Book-Entry Certificate shall be paid to the
Depository, as Holder thereof, and the Depository shall be responsible for
crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a “brokerage firm” or “indirect participating firm”) for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Depositor, the Servicer, the Securities Administrator or the Master Servicer
shall have any responsibility therefor except as otherwise provided by this
Agreement or applicable law.
(h) The
rights of the Certificateholders to receive distributions in respect of the
Certificates, and all interests of the Certificateholders in such distributions,
shall be as set forth in this Agreement. None of the Holders of any Class of
Certificates, the Trustee, the Servicer, the Securities Administrator or the
Master Servicer shall in any way be responsible or liable to the Holders of
any
other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.
164
(i) Except
as
otherwise provided in Section 10.01, whenever the Securities Administrator
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Securities Administrator shall,
no later than three (3) days before the related Distribution Date, mail to
each
Holder on such date of such Class of Certificates a notice to the effect
that:
(i)
the
Securities Administrator expects that the final distribution with
respect
to such Class of Certificates will be made on such Distribution Date
but
only upon presentation and surrender of such Certificates at the
office of
the Securities Administrator therein specified,
and
(ii)
no
interest shall accrue on such Certificates from and after the end
of the
related Interest Accrual Period.
Any
funds
not distributed to any Holder or Holders of Certificates of such Class on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust by the
Securities Administrator and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has
been
given pursuant to this Section 5.01(i) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Securities Administrator shall mail a second notice to the remaining
non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto.
If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Securities Administrator shall, directly
or through an agent, mail a final notice to the remaining non-tendering
Certificateholders concerning surrender of their Certificates but shall continue
to hold any remaining funds for the benefit of non-tendering Certificateholders.
The costs and expenses of maintaining the funds in trust and of contacting
such
Certificateholders shall be paid out of the assets remaining in such trust
fund.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Securities Administrator shall pay to
the
Depositor all such amounts, and all rights of non-tendering Certificateholders
in or to such amounts shall thereupon cease. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust by the Securities
Administrator as a result of such Certificateholder’s failure to surrender its
Certificate(s) on the final Distribution Date for final payment thereof in
accordance with this Section 5.01(i). Any such amounts held in trust by the
Securities Administrator shall be held uninvested in an Eligible
Account.
(j) Notwithstanding
anything to the contrary herein, (i) in no event shall the Certificate Principal
Balance of a Class A Certificate or a Mezzanine Certificate be reduced more
than
once in respect of any particular amount both (a) allocated to such Certificate
in respect of Realized Losses pursuant to Section 5.04 and (b) distributed
to
the Holder of such Certificate in reduction of the Certificate Principal Balance
thereof pursuant to this Section 5.01 from Net Monthly Excess Cashflow and
(ii)
in no event shall the Uncertificated Balance of a REMIC Regular Interest be
reduced more than once in respect of any particular amount both (a) allocated
to
such REMIC Regular Interest in respect of Realized Losses pursuant to Section
5.04 and (b) distributed on such REMIC Regular Interest in reduction of the
Uncertificated Balance thereof pursuant to this Section 5.01.
165
SECTION
5.02. Statements
to Certificateholders.
On
each
Distribution Date, the Securities Administrator (based on the information set
forth in the Servicer Reports for such Distribution Date, information provided
by the Swap Provider under the Swap Agreement with respect to payments made
pursuant to the Swap Agreement) shall make available to each Holder of the
Certificates and the Credit Risk Manager, a statement as to the distributions
made on such Distribution Date setting forth:
(i) applicable
Interest Accrual Periods and general Distribution Dates;
(ii) with
respect to each loan group, the total cash flows received and the general
sources thereof;
(iii) the
aggregate Servicing Fee received by the Servicer during the related Due
Period;
(iv) the
amount, if any, of other fees or expenses accrued and paid, with an
identification of the payee and the general purpose of such fees;
(v) with
respect to each loan group, the amount of the related distribution to Holders
of
the Certificates (by class) allocable to principal, separately identifying
(A)
the aggregate amount of any Principal Prepayments included therein, (B) the
aggregate of all scheduled payments of principal included therein and (C) any
Overcollateralization Increase Amount included therein;
(vi) with
respect to each loan group, the amount of such distribution to Holders of the
Certificates (by class) allocable to interest and the portion thereof, if any,
provided by the Swap Agreement;
(vii) with
respect to each loan group, the Interest Carry Forward Amounts and any Net
WAC
Rate Carryover Amounts for the related Certificates (if any);
(viii) the
aggregate amount of Advances included in the distributions on the Distribution
Date (including the general purpose of such Advances);
(ix) with
respect to each loan group, the number and aggregate principal balance of any
Mortgage Loans (not including any Liquidated Mortgage Loans as of the end of
the
Prepayment Period) that were (A) delinquent (exclusive of Mortgage Loans in
foreclosure) using the “OTS” method (1) one scheduled payment is delinquent, (2)
two scheduled payments are delinquent, (3) three scheduled payments are
delinquent and (4) foreclosure proceedings have been commenced, and loss
information for the period;
(x) the
number, aggregate principal balance, weighted average remaining term to maturity
and weighted average Mortgage Rate of the Mortgage Loans as of the related
Due
Date;
(xi) with
respect to each loan group and any Mortgage Loan that was liquidated during
the
preceding calendar month, the loan number and Scheduled Principal Balance of,
and Realized Loss on, such Mortgage Loan as of the end of the related Prepayment
Period;
166
(xii) the
total
number and principal balance of any real estate owned, or REO Properties, as
of
the end of the related Prepayment Period;
(xiii) with
respect to each loan group, whether the Stepdown Date has occurred and whether
Trigger Event is in effect;
(xiv) with
respect to each loan group, the cumulative Realized Losses through the end
of
the preceding month;
(xv) the
aggregate amount of Extraordinary Trust Fund Expenses withdrawn from the
Distribution Account for such Distribution Date;
(xvi) with
respect to each loan group, the Certificate Principal Balance of the related
Certificates before and after giving effect to the distribution of principal
and
allocation of Allocated Realized Loss Amounts on such Distribution
Date,
and the
Certificate Principal Balance of the Class CE Certificates before and after
giving effect to the distribution of principal and allocation of Allocated
Realized Loss Amounts on such Distribution Date;
(xvii) with
respect to each loan group, the number and Scheduled Principal Balance of all
the Mortgage Loans for the following Distribution Date;
(xviii) with
respect to each loan group, the three-month rolling average of the percent
equivalent of a fraction, the numerator of which is the aggregate Scheduled
Principal Balance of the Mortgage Loans in such loan group that are 60 days
or
more delinquent or are in bankruptcy or foreclosure or are REO Properties,
and
the denominator of which is the Scheduled Principal Balances of all of the
Mortgage Loans in such loan group;
(xix) the
Certificate Factor for each such Class of Certificates applicable to such
Distribution Date;
(xx) the
Interest Distribution Amount in respect of the Class A Certificates, the
Mezzanine Certificates and the Class CE Certificates for such Distribution
Date
and the Interest Carry Forward Amount, if any, with respect to the Class A
Certificates and the Mezzanine Certificates on such Distribution Date, and
in
the case of the Class A Certificates and the Mezzanine Certificates separately
identifying any reduction thereof due to allocations of Prepayment Interest
Shortfalls and interest shortfalls including the following Realized Losses:
Relief Act Interest Shortfalls and Net WAC Rate Carryover Amounts;
(xxi) the
aggregate amount of any Prepayment Interest Shortfall for such Distribution
Date, to the extent not covered by payments by the Servicer pursuant to
Section 3.22 of this Agreement, the Master Servicer pursuant to
Section 4.19 of this Agreement;
(xxii) the
aggregate amount of Relief Act Interest Shortfalls for such Distribution
Date;
167
(xxiii) the
amount of, if any, of Net Monthly Excess Cashflow or excess spread and the
application of such Net Monthly Excess Cashflow;
(xxiv) the
Required Overcollateralization Amount and the Credit Enhancement Percentage
for
such Distribution Date;
(xxv) the
Overcollateralization Increase Amount, if any, for such Distribution
Date;
(xxvi) the
Overcollateralization Reduction Amount, if any, for such Distribution
Date;
(xxvii) the
Pass-Through Rate for each class of Certificates for such Distribution
Date;
(xxviii)
the
amount of any deposit to the Reserve Fund contemplated by
Section 3.24(b);
(xxix) the
balance of the Reserve Fund prior to the deposit or withdrawal of any amounts
on
such Distribution Date;
(xxx) the
amount of any deposit to the Reserve Fund pursuant to
Section 5.01(c)(7)(vi);
(xxxi) the
Loss
Severity Percentage with respect to each Mortgage Loan;
(xxxii) the
Aggregate Loss Severity Percentage;
(xxxiii)
with
respect to each loan group, the amount of the Prepayment Charges remitted by
the
Servicer; and
(xxxiv)
the
amount of any Net Swap Payment payable to the Trust, any related Net Swap
Payment payable to the Swap Provider, any Swap Termination Payment payable
to
the Trust and any related Swap Termination Payment payable to the Swap
Provider.
The
Securities Administrator will make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to the Certificateholders and the Rating Agencies via
the
Securities Administrator’s internet website. The Securities Administrator’s
internet website shall initially be located at http:\\www.ctslink.com and
assistance in using the website can be obtained by calling the Securities
Administrator’s customer service desk at 1-301-815-6600. Parties that are unable
to use the above distribution options are entitled to have a paper copy mailed
to them via first class mail by calling the customer service desk and indicating
such. The Securities Administrator shall have the right to change the way such
statements are distributed in order to make such distribution more convenient
and/or more accessible to the above parties and the Securities Administrator
shall provide timely and adequate notification to all above parties regarding
any such changes.
168
In
the
case of information furnished pursuant to subclauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Single Certificate of the
relevant Class.
Within
a
reasonable period of time after the end of each calendar year, the Securities
Administrator shall furnish upon request to each Person who at any time during
the calendar year was a Holder of a Regular Certificate a statement containing
the information set forth in subclauses (i) through (iii) above, aggregated
for
such calendar year or applicable portion thereof during which such person was
a
Certificateholder. Such obligation of the Securities Administrator shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Securities Administrator pursuant to any
requirements of the Code as from time to time are in force.
Within
a
reasonable period of time after the end of each calendar year, the Securities
Administrator shall furnish upon request to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.
The
Securities Administrator shall, upon request, furnish to each Certificateholder
during the term of this Agreement, such periodic, special, or other reports
or
information, whether or not provided for herein, as shall be reasonable with
respect to the Certificateholder, or otherwise with respect to the purposes
of
this Agreement, all such reports or information to be provided at the expense
of
the Certificateholder, in accordance with such reasonable and explicit
instructions and directions as the Certificateholder may provide.
On
each
Distribution Date the Securities Administrator shall provide Bloomberg Financial
Markets, L.P. (“Bloomberg”) CUSIP level factors for each Class of Certificates
as of such Distribution Date, using a format and media mutually acceptable
to
the Securities Administrator and Bloomberg.
SECTION
5.03. Servicer
Reports; P&I Advances.
(a) On
or
before 12:00 noon New York time on the 18th
calendar
day of each month, and if the 18th
calendar
day is not a Business Day, the immediately following Business Day, the Servicer
shall deliver to the Master Servicer and the Securities Administrator by
telecopy or electronic mail (or by such other means as the Servicer, the Master
Servicer and the Securities Administrator may agree from time to time) the
Servicer Report containing such information with respect to the related Mortgage
Loans and the related Distribution Date as is reasonably available to the
Servicer as the Master Servicer or the Securities Administrator may reasonably
require so as to enable the Master Servicer to master service the related
Mortgage Loans and oversee the servicing by the Servicer and the Securities
Administrator to fulfill its obligations hereunder with respect to securities
and tax reporting.
(b) The
amount of P&I Advances to be made by the Servicer on any Distribution Date
shall equal, subject to Section 5.03(d), (i) the aggregate amount of Monthly
Payments (net of the related Servicing Fees), due during the related Due Period
in respect of the Mortgage Loans serviced by the Servicer, which Monthly
Payments were delinquent as of the close of business on the related
Determination Date and (ii) with respect to each REO Property, which was
acquired during or prior to the related Prepayment Period and as to which an
REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, if any, of the REO Imputed Interest on such REO Property for
the
most recently ended calendar month, over the net income from such REO Property
deposited in the Collection Account pursuant to Section 3.21 of this Agreement
for distribution on such Distribution Date; provided, however, the Servicer
shall not be required to make P&I Advances with respect to Relief Act
Interest Shortfalls, shortfalls due to bankruptcy proceedings, or with respect
to Prepayment Interest Shortfalls in excess of its obligations under Section
3.22. For purposes of the preceding sentence, the Monthly Payment on each
Balloon Mortgage Loan with a delinquent Balloon Payment is equal to the assumed
monthly payment that would have been due on the related Due Date based on the
original principal amortization schedule for such Balloon Mortgage
Loan.
169
By
12:00
noon New York time, on the Servicer Remittance Date, the Servicer shall remit
in
immediately available funds to the Securities Administrator for deposit in
the
Distribution Account an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the related Mortgage Loans for the
related Distribution Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of any Amounts Held For Future Distribution
on
deposit therein (in which case it will cause to be made an appropriate entry
in
the records of the Collection Account that Amounts Held For Future Distribution
have been, as permitted by this Section 5.03, used by the Servicer in discharge
of any such P&I Advance) or (iii) in the form of any combination of (i) and
(ii) aggregating the total amount of P&I Advances to be made by the Servicer
with respect to the related Mortgage Loans. In addition, the Servicer shall
have
the right to reimburse itself for any outstanding P&I Advance made from its
own funds from Amounts Held for Future Distribution. Any Amounts Held For Future
Distribution used by the Servicer to make P&I Advances or to reimburse
itself for outstanding P&I Advances shall be appropriately reflected in the
Servicer’s records and replaced by the Servicer by deposit in the Collection
Account no later than the close of business on the Servicer Remittance Date
immediately following the Due Period or Prepayment Period for which such amounts
relate. The Securities Administrator will notify the Servicer and the Master
Servicer by the close of business on the Business Day prior to the Distribution
Date in the event that the amount remitted by the Servicer to the Securities
Administrator on such date is less than the P&I Advances required to be made
by the Servicer for the related Distribution Date.
(c) The
obligation of the Servicer to make such P&I Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below,
and, with respect to any related Mortgage Loan or REO Property, shall continue
until a Final Recovery Determination in connection therewith or the removal
thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(d) Notwithstanding
anything herein to the contrary, no P&I Advance or Servicing Advance shall
be required to be made hereunder by the Servicer if such P&I Advance or
Servicing Advance would, if made, constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively. The determination by the
Servicer that it has made a Nonrecoverable P&I Advance or a Nonrecoverable
Servicing Advance or that any proposed P&I Advance or Servicing Advance, if
made, would constitute a Nonrecoverable P&I Advance or Nonrecoverable
Servicing Advance, respectively, shall be evidenced by a certification of a
Servicing Officer delivered to the Master Servicer.
170
(e) In
the
event that the Servicer (or any successor thereto) fails to make a required
P&I Advance, the Master Servicer (in its capacity as successor to the
Servicer) will be required to make such P&I Advance on the Distribution Date
on which the Servicer was required to make such P&I Advance, subject to its
determination of recoverability.
SECTION
5.04. Allocation
of Realized Losses.
(a) Prior
to
the Determination Date, the Servicer shall determine as to each Mortgage Loan
serviced by the Servicer and any related REO Property and include in the
Servicer Report provided to the Master Servicer and the Securities Administrator
(substantially in the form of Schedule 4 hereto) such information as is
reasonably available to the Servicer as the Master Servicer or the Securities
Administrator may reasonably require so as to enable the Master Servicer to
master service the Mortgage Loans and oversee the servicing by the Servicer
and
the Securities Administrator to fulfill its obligations hereunder with respect
to securities and tax reporting, which shall include, but not be limited to:
(i)
the total amount of Realized Losses, if any, incurred in connection with any
Final Recovery Determinations made during the related Prepayment Period; and
(ii) the respective portions of such Realized Losses allocable to interest
and
allocable to principal. Prior to each Determination Date, the Servicer shall
also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses,
if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period.
(b) All
Realized Losses on the Mortgage Loans allocated to any REMIC I Regular Interest
pursuant to Section 5.04(c) on the Mortgage Loans shall be allocated by the
Securities Administrator on each Distribution Date as follows: first,
to Net
Monthly Excess Cashflow and to Net Swap Payments received from the Swap Provider
under the Swap Agreement for that purpose; second,
to the
Class CE Certificates; third,
to the
Class M-11 Certificates, until the Certificate Principal Balance of the Class
M-11 Certificates has been reduced to zero; fourth,
to the
Class M-10 Certificates, until the Certificate Principal Balance of the Class
M-10 Certificates has been reduced to zero; fifth,
to the
Class M-9 Certificates, until the Certificate Principal Balance of the Class
M-9
Certificates has been reduced to zero; sixth,
to the
Class M-8 Certificates, until the Certificate Principal Balance of the Class
M-8
Certificates has been reduced to zero; seventh,
to the
Class M-7 Certificates, until the Certificate Principal Balance of the Class
M-7
Certificates has been reduced to zero; eighth,
to the
Class M-6 Certificates, until the Certificate Principal Balance of the Class
M-6
Certificates has been reduced to zero; ninth,
to the
Class M-5 Certificates, until the Certificate Principal Balance of the Class
M-5
Certificates has been reduced to zero; tenth,
to the
Class M-4 Certificates, until the Certificate Principal Balance of the Class
M-4
Certificates has been reduced to zero; eleventh,
to the
Class M-3 Certificates, until the Certificate Principal Balance of the Class
M-3
Certificates has been reduced to zero, twelfth,
to the
Class M-2 Certificates, until the Certificate Principal Balance of the Class
M-2
Certificates has been reduced to zero; and thirteenth,
to the
Class M-1 Certificates, until the Certificate Principal Balance of the Class
M-1
Certificates has been reduced to zero. All Realized Losses to be allocated
to
the Certificate Principal Balances of all Classes on any Distribution Date
shall
be so allocated after the actual distributions to be made on such date as
provided above. All references above to the Certificate Principal Balance of
any
Class of Certificates shall be to the Certificate Principal Balance of such
Class immediately prior to the relevant Distribution Date, before reduction
thereof by any Realized Losses, in each case to be allocated to such Class
of
Certificates, on such Distribution Date.
171
Any
allocation of Realized Losses to a Mezzanine Certificate on any Distribution
Date shall be made by reducing the Certificate Principal Balance thereof by
the
amount so allocated; any allocation of Realized Losses to a Class CE Certificate
shall be made by reducing the amount otherwise payable in respect thereof
pursuant to Section 5.01(c)(7)(viii). No allocations of any Realized Losses
shall be made to the Certificate Principal Balances of the Class A Certificates
or Class P Certificates.
As
used
herein, an allocation of a Realized Loss on a “pro
rata
basis”
among two or more specified Classes of Certificates means an allocation on
a
pro
rata
basis,
among the various Classes so specified, to each such Class of Certificates
on
the basis of their then outstanding Certificate Principal Balances prior to
giving effect to distributions to be made on such Distribution Date. All
Realized Losses and all other losses allocated to a Class of Certificates
hereunder will be allocated among the, Certificates of such Class in proportion
to the Percentage Interests evidenced thereby.
In
addition, in the event that the Servicer receives any Subsequent Recoveries
with
respect to a Mortgage Loan serviced by it, the Servicer shall deposit such
funds
into the Collection Account pursuant to Section 3.08. If, after taking into
account such Subsequent Recoveries, the amount of a Realized Loss is reduced,
the amount of such Subsequent Recoveries will be applied to increase the
Certificate Principal Balance of the Class of Subordinate Certificates with
the
highest payment priority to which Realized Losses have been allocated, but
not
by more than the amount of Realized Losses previously allocated to that Class
of
Subordinate Certificates pursuant to this Section 5.04 and not previously
reimbursed to such Class of Subordinate Certificates with Net Monthly Excess
Cashflow pursuant to Section 5.01(c)(7). The amount of any remaining Subsequent
Recoveries will be applied to sequentially increase the Certificate Principal
Balance of the Subordinate Certificates, beginning with the Class of Subordinate
Certificates with the next highest payment priority, up to the amount of such
Realized Losses previously allocated to such Class of Subordinate Certificates
pursuant to this Section 5.04 and not previously reimbursed to such Class of
Subordinate Certificates with Net Monthly Excess Cashflow pursuant to Section
5.01(c)(7)(iii). Holders of such Certificates will not be entitled to any
payment in respect of current interest on the amount of such increases for
any
Interest Accrual Period preceding the Distribution Date on which such increase
occurs. Any such increases shall be applied to the Certificate Principal Balance
of each Subordinate Certificate of such Class in accordance with its respective
Percentage Interest.
(c)(i) Realized
Losses on the Group I Mortgage Loans shall be allocated on each Distribution
Date first, to REMIC I Regular Interest I until the Uncertificated Balance
of
such REMIC I Regular Interest has been reduced to zero and second, to REMIC
I
Regular Interest I-1-A through REMIC I Regular Interest I-81-B, starting with
the lowest numerical denomination until such REMIC I Regular Interest has been
reduced to zero, provided that, for REMIC I Regular Interests with the same
numerical denomination, such Realized Losses shall be allocated pro
rata
between
such REMIC I Regular Interests. All Realized Losses on the Group II Mortgage
Loans shall be allocated on each Distribution Date first, to REMIC I Regular
Interest II until the Uncertificated Balance of such REMIC I Regular Interest
has been reduced to zero and second, to REMIC I Regular Interest II-1-A through
REMIC I Regular Interest II-81-B, starting with the lowest numerical
denomination until such REMIC I Regular Interest has been reduced to zero,
provided that, for REMIC I Regular Interests with the same numerical
denomination, such Realized Losses shall be allocated pro
rata
between
such REMIC I Regular Interests.
172
(ii) REMIC
II
Marker Allocation Percentage of all Realized Losses on the Mortgage Loans shall
be allocated by the Securities Administrator on each Distribution Date to the
following REMIC II Regular Interests in the specified percentages, as follows:
first, to Uncertificated Interest payable to the REMIC II Regular Interest
AA
and REMIC II Regular Interest ZZ up to an aggregate amount equal to the REMIC
II
Interest Loss Allocation Amount, 98.00% and 2.00%, respectively; second, to
the
Uncertificated Balances of the REMIC II Regular Interest AA and REMIC II Regular
Interest ZZ up to an aggregate amount equal to the REMIC II Principal Loss
Allocation Amount, 98.00% and 2.00%, respectively; third, to the Uncertificated
Balances of REMIC II Regular Interest AA, REMIC II Regular Interest M-11 and
REMIC II Regular Interest ZZ, 98.00%, 1.00% and 1.00%, respectively, until
the
Uncertificated Balance of REMIC II Regular Interest M-11 has been reduced to
zero; fourth, to the Uncertificated Balances of REMIC II Regular Interest AA,
REMIC II Regular Interest M-10 and REMIC II Regular Interest ZZ, 98.00%, 1.00%
and 1.00%, respectively, until the Uncertificated Balance of REMIC II Regular
Interest M-10 has been reduced to zero; fifth, to the Uncertificated Balances
of
REMIC II Regular Interest AA, REMIC II Regular Interest M-9 and REMIC II Regular
Interest ZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC II Regular Interest M-9 has been reduced to zero; sixth, to
the
Uncertificated Balances of REMIC II Regular Interest AA, REMIC II Regular
Interest M-8 and REMIC II Regular Interest ZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
M-8
has been reduced to zero; seventh, to the Uncertificated Balances of REMIC
II
Regular Interest AA, REMIC II Regular Interest M-7 and REMIC II Regular Interest
ZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance
of
REMIC II Regular Interest M-7 has been reduced to zero; eighth, to the
Uncertificated Balances of REMIC II Regular Interest AA, REMIC II Regular
Interest M-6 and REMIC II Regular Interest ZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
M-6
has been reduced to zero; ninth, to the Uncertificated Balances of REMIC II
Regular Interest AA, REMIC II Regular Interest M-5 and REMIC II Regular Interest
ZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance
of
REMIC II Regular Interest M-5 has been reduced to zero; tenth, to the
Uncertificated Balances of REMIC II Regular Interest AA, REMIC II Regular
Interest M-4 and REMIC II Regular Interest ZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
M-4
has been reduced to zero; eleventh, to the Uncertificated Balances of REMIC
II
Regular Interest AA, REMIC II Regular Interest M-3 and REMIC II Regular Interest
ZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance
of
REMIC II Regular Interest M-3 has been reduced to zero; twelfth, to the
Uncertificated Balances of REMIC II Regular Interest AA, REMIC II Regular
Interest M-2 and REMIC II Regular Interest ZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
M-2
has been reduced to zero; and thirteenth, to the Uncertificated Balances of
REMIC II Regular Interest AA, REMIC II Regular Interest M-1 and REMIC II Regular
Interest ZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC II Regular Interest M-1 has been reduced to zero.
173
(iii) The
REMIC
II Sub WAC Allocation Percentage of all Realized Losses shall be applied after
all distributions have been made on each Distribution Date first, so as to
keep
the Uncertificated Balance of each REMIC II Regular Interest ending with the
designation “GRP” equal to 0.01% of the aggregate Stated Principal Balance of
the Mortgage Loans in the related loan group; second, to each REMIC II Regular
Interest ending with the designation “SUB,” so that the Uncertificated Balance
of each such REMIC II Regular Interest is equal to 0.01% of the excess of (x)
the aggregate Stated Principal Balance of the Mortgage Loans in the related
loan
group over (y) the current Certificate Principal Balance of the Class A
Certificate in the related loan group (except that if any such excess is a
larger number than in the preceding distribution period, the least amount of
Realized Losses shall be applied to such REMIC II Regular Interests such that
the REMIC II Subordinated Balance Ratio is maintained); and third, any remaining
Realized Losses shall be allocated to REMIC II Regular Interest XX.
SECTION
5.05. Compliance
with Withholding Requirements.
Notwithstanding
any other provision of this Agreement, the Trustee and the Securities
Administrator shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that
the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event
the
Securities Administrator does withhold any amount from interest or original
issue discount payments or advances thereof to any Certificateholder pursuant
to
federal withholding requirements, the Securities Administrator shall indicate
the amount withheld to such Certificateholders.
SECTION
5.06. Reports
Filed with Securities and Exchange Commission.
(a)(i) Within
15
days after each Distribution Date (subject to permitted extensions under the
Exchange Act), the Securities Administrator shall prepare and file on behalf
of
the Trust any Form 10-D required by the Exchange Act, in form and substance
as
required by the Exchange Act. The Securities Administrator shall file each
Form
10-D with a copy of the related Monthly Statement attached thereto. Any
disclosure in addition to the Monthly Statement that is required to be included
on Form 10-D (“Additional Form 10-D Disclosure”) shall be reported by the
parties set forth on Exhibit
G
to the
Depositor and the Securities Administrator and directed and approved by the
Depositor pursuant to the following paragraph, and the Securities Administrator
will have no duty or liability for any failure hereunder to determine or prepare
any Additional Form 10-D Disclosure, except as set forth in the next paragraph.
(ii) As
set
forth on Exhibit
G
hereto,
within 5 calendar days after the related Distribution Date, (A) certain parties
to the ACE Securities Corp., Home Equity Loan Trust, Series 2006-FM1 transaction
shall be required to provide to the Securities Administrator and the Depositor,
to the extent known by a responsible officer thereof, in EDGAR-compatible form,
or in such other form as otherwise agreed upon by the Securities Administrator
and such party, the form and substance of any Additional Form 10-D Disclosure,
if applicable, together with an Additional Disclosure Notification in the form
of Exhibit H
hereto
(an “Additional Disclosure Notification”) and (B) the Depositor will approve, as
to form and substance, or disapprove, as the case may be, the inclusion of
the
Additional Form 10-D Disclosure on Form 10-D. The Depositor will be responsible
for any reasonable fees and expenses assessed or incurred by the Securities
Administrator in connection with including any Additional Form 10-D Disclosure
on Form 10-D pursuant to this paragraph.
174
(iii) After
preparing the Form 10-D, the Securities Administrator shall forward
electronically a copy of the Form 10-D to the Depositor (provided that such
Form
10-D includes any Additional Form 10-D Disclosure). Within two Business Days
after receipt of such copy, but no later than the 12th calendar day after the
Distribution Date, the Depositor shall notify the Securities Administrator
in
writing (which may be furnished electronically) of any changes to or approval
of
such Form 10-D. In the absence of receipt of any written changes or approval
by
the due date specified herein, or if the Depositor does not request a copy
of a
Form 10-D, the Securities Administrator shall be entitled to assume that such
Form 10-D is in final form and the Securities Administrator may proceed with
the
execution and filing of the Form 10-D. A duly authorized representative of
the
Master Servicer shall sign each Form 10-D. If a Form 10-D cannot be filed on
time or if a previously filed Form 10-D needs to be amended, the Securities
Administrator will follow the procedures set forth in Section 5.06(c)(ii).
Promptly (but no later than 1 Business Day) after filing with the Commission,
the Securities Administrator will make available on its internet website a
final
executed copy of each Form 10-D filed by the Securities Administrator. Each
party to this Agreement acknowledges that the performance by the Securities
Administrator and the Master Servicer of their duties under this Section 5.06(a)
related to the timely preparation, execution and filing of Form 10-D is
contingent upon such parties strictly observing all applicable deadlines in
the
performance of their duties as set forth in this Agreement. Neither the
Securities Administrator nor the Master Servicer shall have any liability for
any loss, expense, damage, claim arising out of or with respect to any failure
to properly prepare, execute and/or timely file such Form 10-D, where such
failure results from the Securities Administrator’s inability or failure to
receive, on a timely basis, any information from any other party hereto needed
to prepare, arrange for execution or file such Form 10-D, not resulting from
its
own negligence, bad faith or willful misconduct.
(b)(i) Within
four (4) Business Days after the occurrence of an event requiring disclosure
on
Form 8-K (each such event, a “Reportable Event”), and if requested by the
Depositor, the Securities Administrator shall prepare and file on behalf of
the
Trust a Form 8-K, as required by the Exchange Act, provided that the Depositor
shall file the initial Form 8-K in connection with the issuance of the
Certificates. Any disclosure or information related to a Reportable Event or
that is otherwise required to be included on Form 8-K other than the initial
Form 8K (“Form 8-K Disclosure Information”) shall be reported by the parties set
forth on Exhibit
G
to the
Depositor and the Securities Administrator and directed and approved by the
Depositor pursuant to the following paragraph, and the Securities Administrator
will have no duty or liability for any failure hereunder to determine or prepare
any Form 8-K Disclosure Information or any Form 8-K, except as set forth in
the
next paragraph.
(ii) As
set
forth on Exhibit
G
hereto,
for so long as the Trust is subject to the Exchange Act reporting requirements,
no later than the close of business New York City time on the 2nd Business
Day
after the occurrence of a Reportable Event (i) the parties to the ACE Securities
Corp., Home Equity Loan Trust, Series 2006-FM1 transaction shall be required
to
provide to the Securities Administrator and the Depositor, to the extent known
by a responsible officer thereof, in EDGAR-compatible form, or in such other
form as otherwise agreed upon by the Securities Administrator and such party,
the form and substance of any Form 8-K Disclosure Information, if applicable,
together with an Additional Disclosure Notification, and (ii) the Depositor
will
approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Form 8-K Disclosure Information. The Depositor will be
responsible for any reasonable fees and expenses assessed or incurred by the
Securities Administrator in connection with including any Form 8-K Disclosure
Information on Form 8-K pursuant to this paragraph.
175
(iii) After
preparing the Form 8-K, the Securities Administrator shall, upon request,
forward electronically a copy of the Form 8-K to the Depositor. Promptly, but
no
later than the close of business on the third Business Day after the Reportable
Event, the Depositor shall notify the Securities Administrator in writing (which
may be furnished electronically) of any changes to or approval of such Form
8-K.
In the absence of receipt of any written changes or approval by the third
Business Day, or if the Depositor does not request a copy of a Form 8-K, the
Securities Administrator shall be entitled to assume that such Form 8-K is
in
final form and the Securities Administrator may proceed with the execution
and
filing of the Form 8-K. A duly authorized representative of the Master Servicer
shall sign each Form 8-K. If a Form 8-K cannot be filed on time or if a
previously filed Form 8-K needs to be amended, the Securities Administrator
will
follow the procedures set forth in Section 5.06(c)(ii). Promptly (but no later
than 1 Business Day) after filing with the Commission, the Securities
Administrator will, make available on its internet website a final executed
copy
of each Form 8-K that has been prepared and filed by the Securities
Administrator. The parties to this Agreement acknowledge that the performance
by
the Master Servicer and the Securities Administrator of their duties under
this
Section 5.06(b) related to the timely preparation, execution and filing of
Form
8-K is contingent upon such parties strictly observing all applicable deadlines
in the performance of their duties under this Agreement. Neither the Master
Servicer nor the Securities Administrator shall have any liability for any
loss,
expense, damage, claim arising out of or with respect to any failure to properly
prepare, execute and/or timely file such Form 8-K, where such failure results
from the Securities Administrator’s inability or failure to receive, on a timely
basis, any information from any other party hereto needed to prepare, execute
or
arrange for execution or file such Form 8-K, not resulting from its own
negligence, bad faith or willful misconduct.
(c)(i) On
or
prior to January 30th of the first year in which the Securities Administrator
is
able to do so under applicable law, the Securities Administrator shall prepare
and file a Form 15 suspension notification relating to the automatic suspension
of reporting in respect of the Trust under the Exchange Act.
(ii) In
the
event that the Securities Administrator is unable to timely file with the
Commission all or any required portion of any Form 8-K, 10-D or 10-K required
to
be filed by this Agreement because required disclosure information was either
not delivered to it or delivered to it after the delivery deadlines set forth
in
this Agreement or for any other reason, the Securities Administrator will
promptly electronically notify the Depositor. In the case of Form 10-D and
10-K,
the parties to this Agreement will cooperate to prepare and file a Form 12b-25
and a 10-DA and 10-KA, as applicable, pursuant to Rule 12b-25 of the Exchange
Act. In the case of Form 8-K, the Securities Administrator will, upon receipt
of
all required Form 8-K Disclosure Information and upon the approval and direction
of the Depositor, include such disclosure information on the next Form 10-D.
In
the event that any previously filed Form 8-K, 10-D or 10-K needs to be amended
and such amendment includes any Additional Form 10-D Disclosure (other than
for
the purposes of restating any Monthly Report), any Additional Form 10-K
Disclosure or any Form 8-K Disclosure Information or any amendment to such
disclosure, the Securities Administrator will electronically notify the
Depositor only if the amendment pertains to an additional reporting item being
revised and/or amended on such form, but not if an amendment is being filed
as a
result of a Remittance Report revision, and the Depositor will cooperate with
the Securities Administrator in preparing any necessary 8-KA, 10-DA or 10-KA.
Any Form 15, Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K shall be
signed by a duly authorized representative or senior officer in charge of master
servicing, as applicable, of the Master Servicer. The parties to this Agreement
acknowledge that the performance by the Securities Administrator and the Master
Servicer of their duties under this Section 5.06(c) related to the timely
preparation, execution and filing of Form 15, a Form 12b-25 or any amendment
to
Form 8-K, 10-D or 10-K is contingent upon each such party performing its duties
under this Agreement. Neither the Master Servicer nor the Securities
Administrator shall have any liability for any loss, expense, damage, claim
arising out of or with respect to any failure to properly prepare, execute
and/or timely file any such Form 15, Form 12b-25 or any amendments to Forms
8-K,
10-D or 10-K, where such failure results from the Securities Administrator’s
inability or failure to receive, on a timely basis, any information from any
other party hereto needed to prepare, execute or arrange for execution or file
such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, not
resulting from its own negligence, bad faith or willful misconduct.
176
(d)(i) On
or
prior to the 90th day after the end of each fiscal year of the Trust or such
earlier date as may be required by the Exchange Act (the “10-K Filing Deadline”)
(it being understood that the fiscal year for the Trust ends on December 31st
of
each year), commencing in March 2007, the Securities Administrator shall prepare
and file on behalf of the Trust a Form 10-K, in form and substance as required
by the Exchange Act. Each such Form 10-K shall include the following items,
in
each case to the extent they have been delivered to the Securities Administrator
within the applicable time frames set forth in this Agreement and the Custodial
Agreement, (i) an annual compliance statement for each Servicer, each Additional
Servicer, the Master Servicer, the Securities Administrator and any Servicing
Function Participant engaged by such parties (each, a “Reporting Servicer”) as
described under Section 3.17 and Section 4.15 and in such other agreements,
(ii)(A) the annual reports on assessment of compliance with servicing criteria
for each Reporting Servicer, as described under Section 3.18 and Section 4.16
and in such other agreements, and (B) if each Reporting Servicer’s report on
assessment of compliance with servicing criteria described under Section 3.18
and Section 4.16 identifies any material instance of noncompliance, disclosure
identifying such instance of noncompliance, or if each Reporting Servicer’s
report on assessment of compliance with servicing criteria described under
Section 3.18 and Section 4.16 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 each Reporting Servicer, as described under Section 3.18 and Section
4.17, and (B) if any registered public accounting firm attestation report
described under Section 3.18 and Section 4.17 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 Sarbanes-Oxley
Certification (“Sarbanes-Oxley Certification”) as described in Section 3.19 and
Section 4.18 (provided, however, that the Securities Administrator, at its
discretion, may omit from the Form 10-K any annual compliance statement,
assessment of compliance or attestation report that is not required to be filed
with such Form 10-K pursuant to Regulation AB). 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”) reported by the parties set forth on
Exhibit
G
to the
Depositor and the Securities Administrator and directed and approved by the
Depositor pursuant to the following paragraph, and the Securities Administrator
will have no duty or liability for any failure hereunder to determine or prepare
any Additional Form 10-K Disclosure, except as set forth in the next paragraph.
177
(ii) As
set
forth on Exhibit
G
hereto,
no later than March 15 of each year that the Trust is subject to the Exchange
Act reporting requirements, commencing in 2007, (i) the parties to the ACE
Securities Corp., Home Equity Loan Trust, Series 2006-FM1 transaction shall
be
required to provide to the Securities Administrator and the Depositor, to the
extent known by a responsible officer thereof, in EDGAR-compatible form, or
in
such other form as otherwise agreed upon by the Securities Administrator and
such party, the form and substance of any Additional Form 10-K Disclosure,
if
applicable, together with an Additional Disclosure Notification, and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case
may
be, the inclusion of the Additional Form 10-K Disclosure on Form 10-K. The
Depositor will be responsible for any reasonable fees and expenses assessed
or
incurred by the Securities Administrator in connection with including any
Additional Form 10-K Disclosure on Form 10-K pursuant to this
paragraph.
(iii) After
preparing the Form 10-K, the Securities Administrator shall, upon request,
forward electronically a copy of the Form 10-K to the Depositor. Within three
Business Days after receipt of such copy, but in no event later than March
25th
of each year that the Trust is subject to Exchange Act reporting requirements,
the Depositor shall notify the Securities Administrator in writing (which may
be
furnished electronically) of any changes to or approval of such Form 10-K.
In
the absence of receipt of any written changes or approval by March 25th, or
if
the Depositor does not request a copy of a Form 10-K, the Securities
Administrator shall be entitled to assume that such Form 10-K is in final form
and the Securities Administrator may proceed with the execution and filing
of
the Form 10-K. A senior officer of the Master Servicer in charge of the master
servicing function shall sign the Form 10-K. If a Form 10-K cannot be filed
on
time or if a previously filed Form 10-K needs to be amended, the Securities
Administrator will follow the procedures set forth in Section 5.06(c)(ii).
Promptly (but no later than 1 Business Day) after filing with the Commission,
the Securities Administrator will make available on its internet website a
final
executed copy of each Form 10-K filed by the Securities Administrator. The
parties to this Agreement acknowledge that the performance by the Master
Servicer and the Securities Administrator of their respective duties under
this
Section 5.06(d) related to the timely preparation, execution and filing of
Form
10-K is contingent upon such parties (and any Additional Servicer or Servicing
Function Participant) strictly observing all applicable deadlines in the
performance of their duties under this Section 5.06(d), Section 3.17, Section
3.18, Section 3.19, Section 4.16, Section 4.17 and Section 4.18. Neither the
Master Servicer nor the Securities Administrator shall have any liability for
any loss, expense, damage or claim arising out of or with respect to any failure
to properly prepare, execute and/or timely file such Form 10-K, where such
failure results from the Securities Administrator’s inability or failure to
receive, on a timely basis, any information from any other party hereto needed
to prepare, arrange for execution or file such Form 10-K, not resulting from
its
own negligence, bad faith or willful misconduct.
178
(e) Each
of
Form 10-D and Form 10-K requires the registrant to indicate (by checking “yes”
or “no”) that it “(1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been
subject to such filing requirements for the past 90 days.” The Depositor hereby
represents to the Securities Administrator that the Depositor has filed all
such
required reports during the preceding 12 months and that it has been subject
to
such filing requirement for the past 90 days. The Depositor shall notify the
Securities Administrator in writing, no later than the fifth calendar day after
the related Distribution Date with respect to the filing of a report on Form
10-D and no later than March 15th with respect to the filing of a report on
Form
10-K, if the answer to the question should be “no” as a result of filings that
relate to other securitization transactions of the Depositor for which the
Securities Administrator does not have the obligation to prepare and file
Exchange Act reports.
(f) The
Securities Administrator shall indemnify and hold harmless the Depositor, the
Trustee and their respective officers, directors and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising
out
of or based upon a breach of the Master Servicer’s obligations under this
Section 5.06 or the Master Servicer’s negligence, bad faith or willful
misconduct in connection therewith.
(g) Notwithstanding
the provisions of Section 12.01, this Section 5.06 may be amended without the
consent of the Certificateholders.
SECTION
5.07. Supplemental
Interest Trust.
(a) On
the
Closing Date, the Securities Administrator shall establish and maintain in
the
name of the Trustee a separate account for the benefit of the holders of the
Class A Certificates and Mezzanine Certificates (the “Supplemental Interest
Trust”). The Supplemental Interest Trust shall be an Eligible Account, and funds
on deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trustee or of the Securities Administrator held pursuant to this
Agreement.
(b) On
each
Distribution Date, the Securities Administrator shall deposit into the
Supplemental Interest Trust amounts distributable to the Swap Provider by the
Supplemental Interest Trust pursuant to Section 5.01(c)(2), (3), (5) and
(6) and Section 5.01(c)(7)(vii)
of this
Agreement. On each Distribution Date, the Securities Administrator shall
distribute any such amounts to the Swap Provider pursuant to the Swap Agreement,
first to pay any Net Swap Payment owed to the Swap Provider for such
Distribution Date, and second to pay any Swap Termination Payment owed to the
Swap Provider not due to a Swap Provider Trigger Event.
179
(c) The
Supplemental Interest Trust constitutes an “outside reserve fund” within the
meaning of Treasury Regulation § 1.860G-2(h) and is not an asset of any REMIC.
The Holders of the Class CE Certificates shall be the beneficial owner of the
Supplemental Interest Trust, subject to the power of the Securities
Administrator to transfer amounts under this Agreement. The Securities
Administrator shall keep records that accurately reflect the funds on deposit
in
the Supplemental Interest Trust. The Securities Administrator shall, at the
written direction of the majority of the Class CE Certificateholders, invest
amounts on deposit in the Supplemental Interest Trust in Permitted Investments.
In the absence of written direction to the Securities Administrator from the
majority of the Class CE Certificateholders, all funds in the Supplemental
Interest Trust shall remain uninvested. On each Distribution Date, the
Securities Administrator shall distribute, not in respect of any REMIC, any
interest earned on the Supplemental Interest Trust to the Holders of the Class
CE Certificates.
(d) For
federal income tax purposes, amounts paid to the Supplemental Interest Trust
on
each Distribution Date pursuant to Section 5.01(c)(2), (3), (4), (6) and
(7) and Section 5.01(c)(7)(vii) shall first be deemed paid to the
Supplemental Interest Trust in respect of the Class IO Interest to the extent
of
the amount distributable on such Class IO Interest on such Distribution Date,
and any remaining amount shall be deemed paid to the Supplemental Interest
Trust
in respect of a Class IO Distribution Amount. It is the intention of the parties
hereto that, for federal and state income and state and local franchise tax
purposes, the Supplemental Interest Trust be disregarded as an entity separate
from the Holder of the Class CE Certificates unless and until the date when
either (a) there is more than one Class CE Certificateholder or (b) any Class
of
Certificates in addition to the Class CE Certificates is recharacterized as
an
equity interest in the Supplemental Interest Trust for federal income tax
purposes, in which case it is the intention of the parties hereto that, for
federal and state income and state and local franchise tax purposes, the
Supplemental Interest Trust be treated as a partnership. The Master Servicer
shall not be required to prepare and file partnership tax returns in respect
of
such partnership unless it receives additional reasonable compensation (not
to
exceed $10,000 per year) for the preparation of such filings, written
notification recognizing the creation of a partnership agreement or comparable
documentation evidencing the partnership.
(e) The
Securities Administrator shall treat the Holders of Certificates (other than
the
Class P, Class CE and Residual Certificates) as having entered into a notional
principal contract with respect to the Holders of the Class CE Certificates.
Pursuant to each such notional principal contract, all Holders of Certificates
(other than the Class P, Class CE and Residual Certificates) shall be treated
as
having agreed to pay, on each Distribution Date, to the Holder of the Class
CE
Certificates an aggregate amount equal to the excess, if any, of (i) the amount
payable on such Distribution Date on the Regular Interest ownership of which
is
represented by such Class of Certificates over (ii) the amount payable on such
Class of Certificates on such Distribution Date (such excess, a “Class IO
Distribution Amount”). A Class IO Distribution Amount payable from interest
collections shall be allocated pro rata among such Certificates based on the
amount of interest otherwise payable to such Certificates, and a Class IO
Distribution Amount payable from principal collections shall be allocated to
the
most subordinate Class of such Certificates with an outstanding principal
balance to the extent of such balance. In addition, pursuant to such notional
principal contract, the Holder of the Class CE Certificates shall be treated
as
having agreed to pay Net WAC Rate Carryover Amounts to the Holders of the
Certificates (other than the Class CE, Class P and Residual Certificates) in
accordance with the terms of this Agreement. Any payments to such Certificates
from amounts deemed received in respect of this notional principal contract
shall not be payments with respect to a Regular Interest in a REMIC within
the
meaning of Code Section 860G(a)(1). However, any payment from the Certificates
(other than the Class CE, Class P and Residual Certificates) of a Class IO
Distribution Amount shall be treated for tax purposes as having been received
by
the Holders of such Certificates in respect of the Regular Interest ownership
of
which is represented by such Certificates, and as having been paid by such
Holders to the Supplemental Interest Trust pursuant to the notional principal
contract. Thus, each Certificate (other than the Class P Certificates and
Residual Certificates) shall be treated as representing not only ownership
of a
Regular Interest in REMIC III, but also ownership of an interest in, and
obligations with respect to, a notional principal contract.
180
(f) For
federal tax return and information reporting, the right of the holders of the
Class A Certificates and Mezzanine Certificates to receive payments from the
Supplemental Interest Trust and the Reserve Fund in respect of any Net WAC
Rate
Carryover Amount shall be assigned a value of $1,000.
(g) In
the
event that the Swap Agreement is terminated prior to the Distribution Date
in
June 2013, the Sponsor shall use reasonable efforts to appoint a successor
swap
provider using any Swap Termination Payments paid by the Swap Provider. If
the
Sponsor is unable to locate a qualified successor swap provider, any such Swap
Termination Payments will be remitted to the Securities Administrator for
payment to the holders of the Class A Certificates and Mezzanine Certificates
in
accordance with Section 5.01(c).
SECTION
5.08. Tax
Treatment of Swap Payments and Swap Termination Payments.
For
federal income tax purposes, each holder of an Offered Certificate is deemed
to
own an undivided beneficial ownership interest in a REMIC regular interest
and
the right to receive payments from either the Reserve Fund or the Supplemental
Interest Trust in respect of any Net WAC Rate Carryover Amounts or the
obligation to make payments to the Supplemental Interest Trust. For federal
income tax purposes, the Securities Administrator will account for payments
to
each Class A Certificate or Mezzanine Certificate as follows: each Class A
Certificate or Mezzanine Certificate will be treated as receiving their entire
payment from REMIC III (regardless of any Swap Termination Payment or obligation
under the Swap Agreement) and subsequently paying their portion of any Swap
Termination Payment in respect of each such Class’s obligation under the Swap
Agreement. In the event that any such Class is resecuritized in a REMIC, the
obligation under the Swap Agreement to pay any such Swap Termination Payment
(or
any shortfall in Net Swap Payment), will be made by one or more of the REMIC
Regular Interests issued by the resecuritization REMIC subsequent to such REMIC
Regular Interest receiving its full payment from any such Class A Certificate
or
Mezzanine Certificate.
The
REMIC
Regular Interest corresponding to an Class A Certificate or Mezzanine
Certificate will be entitled to receive interest and principal payments at
the
times and in the amounts equal to those made on the certificate to which it
corresponds, except that (i) the maximum interest rate of that REMIC regular
interest will equal the Net WAC Pass-Through Rate computed for this purpose
by
limiting the Swap Notional Amount of the Swap Agreement to the aggregate Stated
Principal Balance of the Mortgage Loans and (ii) any Swap Termination Payment
will be treated as being payable solely from amounts otherwise payable to the
Class CE Certificates. As a result of the foregoing, the amount of distributions
and taxable income on the REMIC Regular Interest corresponding to a Class A
Certificate or Mezzanine Certificate may exceed the actual amount of
distributions on the Class A Certificate or Mezzanine
Certificate.
181
ARTICLE
VI
THE
CERTIFICATES
SECTION
6.01. The
Certificates.
(a) The
Certificates in the aggregate will represent the entire beneficial ownership
interest in the Mortgage Loans and all other assets included in REMIC I, REMIC
II and REMIC III.
The
Certificates will be substantially in the forms annexed hereto as Exhibits
A-1
through A-6. The Certificates of each Class will be issuable in registered
form
only, in denominations of authorized Percentage Interests as described in the
definition thereof. Each Certificate will share ratably in all rights of the
related Class.
Upon
original issue, the Certificates shall be executed and authenticated by the
Securities Administrator and delivered by the Trustee to and upon the written
order of the Depositor. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trust by the Securities Administrator
by an
authorized signatory. Certificates bearing the manual or facsimile signatures
of
individuals who were at any time the proper officers of the Securities
Administrator shall bind the Trust, notwithstanding that such individuals or
any
of them have ceased to hold such offices prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided herein
executed by the Securities Administrator by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their
authentication.
(b) The
Class
A Certificates and the Mezzanine Certificates shall initially be issued as
one
or more Certificates held by the Book-Entry Custodian or, if appointed to hold
such Certificates as provided below, the Depository and registered in the name
of the Depository or its nominee and, except as provided below, registration
of
such Certificates may not be transferred by the Securities Administrator except
to another Depository that agrees to hold such Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to such Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to definitive, fully registered Certificates
(“Definitive Certificates”) in respect of such Ownership Interests. All
transfers by Certificate Owners of their respective Ownership Interests in
the
Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the 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. The Securities Administrator is hereby initially
appointed as the Book-Entry Custodian and hereby agrees to act as such in
accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and,
if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, the Servicer and,
if the Trustee is not the Book-Entry Custodian, the Trustee, any other transfer
agent (including the Depository or any successor Depository) to act as
Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than
the
Depository. If the Securities Administrator resigns or is removed in accordance
with the terms hereof, the successor Securities Administrator or, if it so
elects, the Depository shall immediately succeed to its predecessor’s duties as
Book-Entry Custodian. The Depositor shall have the right to inspect, and to
obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.
182
The
Class
M-10, Class M-11 and Class CE Certificates initially offered and sold in
offshore transactions in reliance on Regulation S shall be issued in the form
of
a temporary global certificate in definitive, fully registered form (each,
a
“Regulation S Temporary Global Certificate”), which shall be deposited with the
Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as
nominee of the Depository for the account of designated agents holding on behalf
of Euroclear or Clearstream. Beneficial interests in each Regulation S Temporary
Global Certificate may be held only through Euroclear or Clearstream; provided,
however, that such interests may be exchanged for interests in a Definitive
Certificate in accordance with the requirements described in Section 6.02.
After
the expiration of the Release Date, a beneficial interest in a Regulation S
Temporary Global Certificate may be exchanged for a beneficial interest in
the
related permanent global certificate of the same Class (each, a “Regulation S
Permanent Global Certificate”), in accordance with the procedures set forth in
Section 6.02. Each Regulation S Permanent Global Certificate shall be deposited
with the Securities Administrator or an agent of the Securities Administrator
as
custodian for the Depository and registered in the name of Cede & Co. as
nominee of the Depository.
(c) The
Class
M-10 Certificates and Class M-11 Certificates offered and sold to Qualified
Institutional Buyers (“QIBs”) in reliance on Rule 144A under the Securities Act
(“Rule 144A”) or institutional investors that are accredited investors within
the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act (“Institutional Accredited Investors”) will be issued in the form
of Book-Entry Certificates.
(d) The
Class
CE Certificates and Class P Certificates offered and sold to QIBs in reliance
on
Rule 144A will be issued in the form of Definitive Certificates.
(e) The
Trustee, the Servicer, the Securities Administrator, the Master Servicer and
the
Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates and Global Certificates) deal with the Depository as
the
authorized representative of the Certificate Owners with respect to the
Book-Entry Certificates and Global Certificates for the purposes of exercising
the rights of Certificateholders hereunder. The rights of Certificate Owners
with respect to the Book-Entry Certificates and Global Certificates shall be
limited to those established by law and agreements between such Certificate
Owners and the Depository Participants and brokerage firms representing such
Certificate Owners. Multiple requests and directions from, and votes of, the
Depository as Holder of the Book-Entry Certificates and Global Certificates
with
respect to any particular matter shall not be deemed inconsistent if they are
made with respect to different Certificate Owners. The Securities Administrator
may establish a reasonable record date in connection with solicitations of
consents from or voting by Certificateholders and shall give notice to the
Depository of such record date.
183
If
(i)(A)
the Depositor advises the Securities Administrator in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Securities
Administrator in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of the Servicer Event
of
Default, Certificate Owners representing in the aggregate not less than 51%
of
the Ownership Interests of the Book-Entry Certificates advise the Securities
Administrator through the Depository, in writing, that the continuation of
a
book-entry system through the Depository is no longer in the best interests
of
the Certificate Owners, the Securities Administrator shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. With respect to a Global Certificate, the related
Certificate Owner (other than a Holder of a Regulation S Temporary Global
Certificate) may request that its interest in a Global Certificate be exchanged
for a Definitive Certificate. Upon surrender to the Securities Administrator
of
the Book-Entry Certificates by the Book-Entry Custodian or the Depository,
as
applicable, or the Global Certificates by the Depository accompanied by
registration instructions from the Depository for registration of transfer,
the
Securities Administrator shall cause the Definitive Certificates to be issued.
Such Definitive Certificates will be issued in minimum denominations of $10,000
except that any beneficial ownership that was represented by a Book-Entry
Certificate, or a Global Certificate, as applicable in an amount less than
$10,000 immediately prior to the issuance of a Definitive Certificate shall
be
issued in a minimum denomination equal to the amount represented by such
Book-Entry Certificate or a Global Certificate, as applicable. None of the
Depositor, the Servicer, the Master Servicer, the Securities Administrator
or
the Trustee shall be liable for any delay in the delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Securities Administrator, to the extent
applicable with respect to such Definitive Certificates, and the Securities
Administrator shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
SECTION
6.02. Registration
of Transfer and Exchange of Certificates.
(a) The
Securities Administrator shall cause to be kept at one of the offices or
agencies to be appointed by the Securities Administrator in accordance with
the
provisions of Section 9.11, a Certificate Register for the Certificates in
which, subject to such reasonable regulations as it may prescribe, the
Securities Administrator shall provide for the registration of Certificates
and
of transfers and exchanges of Certificates as herein provided.
(b) No
transfer of any Class M-10 Certificate, Class M-11 Certificate, Class CE
Certificate, Class P Certificate or Residual Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under
the
Securities Act, and effective registration or qualification under applicable
state securities laws, or is made in a transaction that does not require such
registration or qualification. In the event that such a transfer of a Class
M-10
Certificate, Class M-11 Certificate, Class CE Certificate, Class P Certificate
or Residual Certificate is to be made without registration or qualification
(other than in connection with the initial transfer of any such Certificate
by
the Depositor), the Securities Administrator shall require receipt of: (i)
if
such transfer is purportedly being made in reliance upon Rule 144A under the
Securities Act, written certifications from the Certificateholder desiring
to
effect the transfer and from such Certificateholder’s prospective transferee,
substantially in the form attached hereto as Exhibit
B-1;
(ii) if
such transfer is purportedly being made in reliance upon Rule 501(a) under
the
Securities Act, written certifications from the Certificateholder desiring
to
effect the transfer and from such Certificateholder’s prospective transferee,
substantially in the form attached hereto as Exhibit
B-2,
(iii)
if such transfer is purportedly being made in reliance on Regulation S, a
written certification from the prospective transferee, substantially in the
form
attached hereto as Exhibit
B-1
and
(iv)
in
all
other cases, an Opinion of Counsel satisfactory to the Securities Administrator
that such transfer may be made without such registration or qualification (which
Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Trustee, the Master Servicer, the Securities Administrator or
the
Servicer), together with copies of the written certification(s) of the
Certificateholder desiring to effect the transfer and/or such
Certificateholder’s prospective transferee upon which such Opinion of Counsel is
based, if any. Neither of the Depositor nor the Securities Administrator is
obligated to register or qualify any such Certificates under the Securities
Act
or any other securities laws or to take any action not otherwise required under
this Agreement to permit the transfer of such Certificates without registration
or qualification. Any Certificateholder desiring to effect the transfer of
any
such Certificate shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer, the Securities Administrator and the Servicer
against any liability that may result if the transfer is not so exempt or is
not
made in accordance with such federal and state laws.
184
A
holder
of a beneficial interest in a Regulation S Temporary Global Certificate must
provide Euroclear or Clearstream, as the case may be, with a certificate in
the
form of Annex A to Exhibit B-1 hereto certifying that the beneficial owner
of
the interest in such Global Certificate is not a U.S. Person (as defined in
Regulation S), and Euroclear or Clearstream, as the case may be, must provide
to
the Trustee and Securities Administrator a certificate in the form of Exhibit
B-1 hereto prior to (i) the payment of interest or principal with respect to
such holder’s beneficial interest in the Regulation S Temporary Global
Certificate and (ii) any exchange of such beneficial interest for a beneficial
interest in a Regulation S Permanent Global Certificate.
(c) No
transfer of a Class CE Certificate, Class P Certificate or a Residual
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with “Plan
Assets” of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. § 2510.3-101 (“Plan Assets”) unless the Securities
Administrator is provided with an Opinion of Counsel on which the Depositor,
the
Master Servicer, the Securities Administrator, the Trustee and the Servicer
may
rely, which establishes to the satisfaction of the Securities Administrator
that
the purchase of such Certificates is permissible under applicable law, will
not
constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Depositor, the Servicer,
the Trustee, the Master Servicer, the Securities Administrator or the Trust
Fund
to any obligation or liability (including obligations or liabilities under
ERISA
or Section 4975 of the Code) in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Depositor,
the Servicer, the Trustee, the Master Servicer, the Securities Administrator
or
the Trust Fund. An Opinion of Counsel will not be required in connection with
the initial transfer of any such Certificate by the Depositor to an affiliate
of
the Depositor (in which case, the Depositor or any affiliate thereof shall
have
deemed to have represented that such affiliate is not a Plan or a Person
investing Plan Assets) and the Securities Administrator shall be entitled to
conclusively rely upon a representation (which, upon the request of the
Securities Administrator, shall be a written representation) from the Depositor
of the status of such transferee as an affiliate of the Depositor.
185
For
so
long as the Supplemental Interest Trust is in existence, each beneficial owner
of an Offered Certificate,
or
any
interest therein, shall be deemed to have represented, by virtue of its
acquisition or holding of the Offered Certificate, or interest therein, that
either (i) it is not a Plan or (ii)(A) it is an accredited investor within
the
meaning of Prohibited Transaction Exemption 2002-41, as amended from time to
time (the “Exemption”) and (B) the acquisition and holding of such Certificate
and the separate right to receive payments from the Supplemental Interest Trust
are eligible for the exemptive relief available under Prohibited Transaction
Class Exemption (“PTCE”) 84-14 (for transactions by independent “qualified
professional asset managers”), 91-38 (for transactions by bank collective
investment funds), 90-1 (for transactions by insurance company pooled separate
accounts), 95-60 (for transactions by insurance company general accounts) or
96-23 (for transactions effected by “in-house asset managers”) in
the
case of an Offered Certificate or PTCE 95-60 in the case of a Class M-10
Certificate
or Class
M-11 Certificate.
Each
Transferee of a Mezzanine Certificate or any interest therein that is acquired
after the termination of the Supplemental Interest Trust will be deemed to
have
represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) except in the case of a Class M-10
Certificate or Class M-11 Certificate, it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption (“PTE”) 94-84 or FAN
97-03E, as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE
2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41, 67 Fed. Reg.
54487 (August 22, 2002) (the “Exemption”), and that it understands that there
are certain conditions to the availability of the Exemption including that
such
Certificate must be rated, at the time of purchase, not lower than “BBB-” (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of
funds
used to purchase or hold such Certificate (or interest therein) is an “insurance
company general account” (as defined in PTCE 95-60, and (iii) the conditions set
forth in Sections I and III of PTCE 95-60 have been satisfied.
If
any
Certificate or any interest therein is acquired or held in violation of the
conditions described in this Section 6.02(c), the next preceding permitted
beneficial owner will be treated as the beneficial owner of that Certificate,
retroactive to the date of transfer to the purported beneficial owner. Any
purported beneficial owner whose acquisition or holding of any certificate
or
interest therein was effected in violation of the conditions described in this
Section 6.02(c) shall indemnify and hold harmless the Depositor, the
Trustee, the Servicer, the Master Servicer, the Securities Administrator and
the
Trust Fund from and against any and all liabilities, claims, costs or expenses
incurred by those parties as a result of that acquisition or
holding.
186
(d)
(i)
Each
Person who has or who acquires any Ownership Interest in a Residual Certificate
shall be deemed by the acceptance or acquisition of such Ownership Interest
to
have agreed to be bound by the following provisions and to have irrevocably
authorized the Securities Administrator or its designee under clause (iii)(A)
below to deliver payments to a Person other than such Person and to negotiate
the terms of any mandatory sale under clause (iii)(B) below and to execute
all
instruments of Transfer and to do all other things necessary in connection
with
any such sale. The rights of each Person acquiring any Ownership Interest in
a
Residual Certificate are expressly subject to the following
provisions:
(A) Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
shall be a Permitted Transferee and shall promptly notify the Securities
Administrator of any change or impending change in its status as a Permitted
Transferee.
(B) In
connection with any proposed Transfer of any Ownership Interest in a Residual
Certificate, the Securities Administrator shall require delivery to it, and
shall not register the Transfer of any Residual Certificate until its receipt
of, an affidavit and agreement (a “Transfer Affidavit and Agreement,” in the
form attached hereto as Exhibit
B-3)
from
the proposed Transferee, in form and substance satisfactory to the Securities
Administrator, representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Residual Certificate that is the subject of the proposed
Transfer as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted Transferee, and that it
has
reviewed the provisions of this Section 6.02(d) and agrees to be bound by
them.
(C) Notwithstanding
the delivery of a Transfer Affidavit and Agreement by a proposed Transferee
under clause (B) above, if an authorized officer of the Securities Administrator
who is assigned to this transaction has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer of an Ownership Interest
in a Residual Certificate to such proposed Transferee shall be
effected.
(D) Each
Person holding or acquiring any Ownership Interest in a Residual Certificate
shall agree (x) to require a Transfer Affidavit and Agreement from any other
Person to whom such Person attempts to transfer its Ownership Interest in a
Residual Certificate and (Y) not to transfer its Ownership Interest unless
it
provides a Transferor Affidavit (in the form attached hereto as Exhibit
B-2)
to the
Securities Administrator stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee.
187
(E) Each
Person holding or acquiring an Ownership Interest in a Residual Certificate,
by
purchasing an Ownership Interest in such Certificate, agrees to give the
Securities Administrator written notice that it is a “pass-through interest
holder” within the meaning of temporary Treasury regulation
Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
Interest in a Residual Certificate, if it is, or is holding an Ownership
Interest in a Residual Certificate on behalf of, a “pass-through interest
holder.”
(ii) The
Securities Administrator will register the Transfer of any Residual Certificate
only if it shall have received the Transfer Affidavit and Agreement and all
of
such other documents as shall have been reasonably required by the Securities
Administrator as a condition to such registration. In addition, no Transfer
of a
Residual Certificate shall be made unless the Securities Administrator shall
have received a representation letter from the Transferee of such Certificate
to
the effect that such Transferee is a Permitted Transferee.
(iii) (A)
If
any purported Transferee shall become a Holder of a Residual Certificate in
violation of the provisions of this Section 6.02(d), then the last
preceding Permitted Transferee shall be restored, to the extent permitted by
law, to all rights as holder thereof retroactive to the date of registration
of
such Transfer of such Residual Certificate. The Securities Administrator shall
be under no liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by this Section 6.02(d)
or for making any payments due on such Certificate to the holder thereof or
for
taking any other action with respect to such holder under the provisions of
this
Agreement.
(B) If
any
purported Transferee shall become a holder of a Residual Certificate in
violation of the restrictions in this Section 6.02(d) and to the extent
that the retroactive restoration of the rights of the holder of such Residual
Certificate as described in clause (iii)(A) above shall be invalid, illegal
or
unenforceable, then the Securities Administrator shall have the right, without
notice to the holder or any prior holder of such Residual Certificate, to sell
such Residual Certificate to a purchaser selected by the Securities
Administrator on such terms as the Securities Administrator may choose. Such
purported Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of the Securities Administrator.
Such purchaser may be the Securities Administrator itself or any Affiliate
of
the Securities Administrator. The proceeds of such sale, net of the commissions
(which may include commissions payable to the Securities Administrator or its
Affiliates), expenses and taxes due, if any, will be remitted by the Securities
Administrator to such purported Transferee. The terms and conditions of any
sale
under this clause (iii)(B) shall be determined in the sole discretion of the
Securities Administrator, and the Securities Administrator shall not be liable
to any Person having an Ownership Interest in a Residual Certificate as a result
of its exercise of such discretion.
188
(iv) The
Securities Administrator shall make available to the Internal Revenue Service
and those Persons specified by the REMIC Provisions all information necessary
to
compute any tax imposed (A) as a result of the Transfer of an Ownership Interest
in a Residual Certificate to any Person who is a Disqualified Organization,
including the information described in Treasury regulations sections
1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the “excess inclusions” of
such Residual Certificate and (B) as a result of any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate or organization described in Section 1381 of the Code that holds an
Ownership Interest in a Residual Certificate having as among its record holders
at any time any Person which is a Disqualified Organization. Reasonable
compensation for providing such information may be charged or collected by
the
Securities Administrator.
(v) The
provisions of this Section 6.02(d) set forth prior to this subsection (v)
may be modified, added to or eliminated, provided that there shall have been
delivered to the Securities Administrator at the expense of the party seeking
to
modify, add to or eliminate any such provision the following:
(A) written
notification from each Rating Agency to the effect that the modification,
addition to or elimination of such provisions will not cause such Rating Agency
to downgrade its then-current ratings of any Class of Certificates;
and
(B) an
Opinion of Counsel, in form and substance satisfactory to the Securities
Administrator, to the effect that such modification of, addition to or
elimination of such provisions will not cause any Trust REMIC to cease to
qualify as a REMIC and will not cause any Trust REMIC, as the case may be,
to be
subject to an entity-level tax caused by the Transfer of any Residual
Certificate to a Person that is not a Permitted Transferee or a Person other
than the prospective transferee to be subject to a REMIC-tax caused by the
Transfer of a Residual Certificate to a Person that is not a Permitted
Transferee.
(e) Subject
to the preceding subsections, upon surrender for registration of transfer of
any
Certificate at any office or agency of the Securities Administrator maintained
for such purpose pursuant to Section 9.11, the Securities Administrator
shall execute, authenticate and deliver, in the name of the designated
Transferee or Transferees, one or more new Certificates of the same Class of
a
like aggregate Percentage Interest.
(f) At
the
option of the Holder thereof, any Certificate may be exchanged for other
Certificates of the same Class with authorized denominations and a like
aggregate Percentage Interest, upon surrender of such Certificate to be
exchanged at any office or agency of the Securities Administrator maintained
for
such purpose pursuant to Section 9.11. Whenever any Certificates are so
surrendered for exchange, the Securities Administrator shall execute,
authenticate and deliver, the Certificates 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 Securities Administrator)
be duly endorsed by, or be accompanied by a written instrument of transfer
in
the form satisfactory to the Securities Administrator duly executed by, the
Holder thereof or his attorney duly authorized in writing. In addition, with
respect to each Class R Certificate, the holder thereof may exchange, in the
manner described above, such Class R Certificate for three separate
certificates, each representing such holder's respective Percentage Interest
in
the Class R-I Interest, the Class R-II Interest and the Class R-III Interest,
respectively, in each case that was evidenced by the Class R Certificate being
exchanged.
189
(g) No
service charge to the Certificateholders shall be made for any transfer or
exchange of Certificates, but the Securities Administrator 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 Certificates.
(h) All
Certificates surrendered for transfer and exchange shall be canceled and
destroyed by the Securities Administrator in accordance with its customary
procedures.
SECTION
6.03. Mutilated,
Destroyed, Lost or Stolen Certificates.
If
(i)
any mutilated Certificate is surrendered to the Securities Administrator, or
the
Securities Administrator receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof,
and
(ii) there is delivered to the Securities Administrator such security or
indemnity as may be required by it to save it harmless, then, in the absence
of
actual knowledge by the Securities Administrator that such Certificate has
been
acquired by a protected purchaser, the Securities Administrator, shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class
and
of like denomination and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Securities Administrator may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Securities Administrator) connected therewith. Any
replacement Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the applicable REMIC created
hereunder, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION
6.04. Persons
Deemed Owners.
The
Depositor, the Servicer, the Trustee, the Master Servicer, the Securities
Administrator and any agent of any of them may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and none of the Depositor, the Servicer, the Trustee,
the
Master Servicer, the Securities Administrator or any agent of any of them shall
be affected by notice to the contrary.
SECTION
6.05. Certain
Available Information.
On
or
prior to the date of the first sale of any Class M-10 Certificate, Class M-11
Certificate, Class CE Certificate, Class P Certificate or Residual Certificate
to an Independent third party, the Depositor shall provide to the Securities
Administrator ten copies of any private placement memorandum or other disclosure
document used by the Depositor in connection with the offer and sale of such
Certificate. In addition, if any such private placement memorandum or disclosure
document is revised, amended or supplemented at any time following the delivery
thereof to the Securities Administrator, the Depositor promptly shall inform
the
Securities Administrator of such event and shall deliver to the Securities
Administrator ten copies of the private placement memorandum or disclosure
document, as revised, amended or supplemented. The Securities Administrator
shall maintain at its office as set forth in Section 12.05 hereof and shall
make available free of charge during normal business hours for review by any
Holder of a Certificate or any Person identified to the Securities Administrator
as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder or prospective transferee of a
Class M-10 Certificate, Class M-11 Certificate, Class CE Certificate, Class
P
Certificate or Residual Certificate, the related private placement memorandum
or
other disclosure document relating to such Class of Certificates, in the form
most recently provided to the Securities Administrator; and (ii) in all cases,
(A) this Agreement and any amendments hereof entered into pursuant to
Section 11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 5.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date and (C) any copies of all
Officers’ Certificates of the Servicer since the Closing Date delivered to the
Master Servicer to evidence such Person’s determination that any P&I Advance
or Servicing Advance was, or if made, would be a Nonrecoverable P&I Advance
or Nonrecoverable Servicing Advance. Copies and mailing of any and all of the
foregoing items will be available from the Securities Administrator upon request
at the expense of the Person requesting the same.
190
ARTICLE
VII
THE
DEPOSITOR, THE SERVICER AND THE MASTER SERVICER
SECTION
7.01. Liability
of the Depositor, the Servicer and the Master Servicer.
The
Depositor, the Servicer and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor,
Servicer and Master Servicer and undertaken hereunder by the Depositor, the
Servicer and the Master Servicer herein.
SECTION
7.02. Merger
or
Consolidation of the Depositor, the Servicer or the Master Servicer.
Subject
to the following paragraph, the Depositor will keep in full effect its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation. Subject to the following paragraph, The
Servicer will keep in full effect its existence, rights and franchises as a
California corporation. Subject to the following paragraph, the Master Servicer
will keep in full effect its existence, rights and franchises as a national
banking association. The Depositor, the Servicer and the Master Servicer each
will obtain and preserve its qualification to do business as a foreign entity
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 respective duties under this
Agreement.
The
Depositor, the Servicer or the Master Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets
to
any Person, in which case any Person resulting from any merger or consolidation
to which the Depositor, the Servicer or the Master Servicer shall be a party,
or
any Person succeeding to the business of the Depositor, the Servicer or the
Master Servicer, shall be the successor of the Depositor, the Servicer or the
Master Servicer, as the case may be, hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that any
successor to the Servicer or the Master Servicer shall meet the eligibility
requirements set forth in clauses (i) and (iii) of the last paragraph of
Section 8.02(a) or Section 7.06 of this Agreement.
SECTION
7.03. Limitation
on Liability of the Depositor, the Servicer, the Master Servicer and
Others.
None
of
the Depositor, the Servicer, the Securities Administrator, the Master Servicer
or any of the directors, officers, employees or agents of the Depositor, the
Servicer or the Master Servicer shall be under any liability to the Trust Fund
or the Certificateholders for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Servicer, the Securities Administrator, the Master Servicer
or
any such person against any breach of warranties, representations or covenants
made herein or against any specific liability imposed on any such Person
pursuant hereto or 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 Depositor, the Servicer, the Securities Administrator, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Servicer, the Securities Administrator and the Master Servicer may rely in
good
faith on any document of any kind which, prima facie, is properly executed
and
submitted by any Person respecting any matters arising hereunder. The Depositor,
the Servicer, the Securities Administrator, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Servicer, the
Securities Administrator or the Master Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred
in
connection with any legal action relating to this Agreement, the Certificates
or
any Credit Risk Management Agreement or any loss, liability or expense incurred
other than by reason of willful misfeasance, bad faith or gross negligence
in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Servicer, the
Securities Administrator or the Master Servicer shall be under any obligation
to
appear in, prosecute or defend any legal action unless such action is related
to
its respective duties under this Agreement and, in its opinion, does not involve
it in any expense or liability; provided, however, that each of the Depositor,
the Servicer, the Securities Administrator and the Master Servicer may in its
discretion 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
and the interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason
of
reckless disregard of obligations and duties hereunder) shall be expenses,
costs
and liabilities of the Trust Fund, and the Depositor, the Servicer, the
Securities Administrator and the Master Servicer shall be entitled to be
reimbursed therefor from the Collection Account or the Distribution Account
as
and to the extent provided in Article III and Article IV, any such right of
reimbursement being prior to the rights of the Certificateholders to receive
any
amount in the Collection Account and the Distribution Account.
191
Notwithstanding
anything to the contrary contained herein, the Servicer shall not be liable
for
any actions or inactions prior to the Cut-off Date of any prior servicer of
the
related Mortgage Loans and the Master Servicer shall not be liable for any
action or inaction of the Servicer, except to the extent expressly provided
herein, or the Credit Risk Management Agreement.
SECTION
7.04. Limitation
on Resignation of the Servicer.
(a) Except
as
expressly provided herein, the Servicer shall neither assign all or
substantially all of its rights under this Agreement or the servicing hereunder
nor delegate all or substantially all of its duties hereunder nor sell or
otherwise dispose of all or substantially all of its property or assets without,
in each case, the prior written consent of the Master Servicer, which consent
shall not be unreasonably withheld; provided, that in each case, there must
be
delivered to the Trustee and the Master Servicer a letter from each Rating
Agency to the effect that such transfer of servicing or sale or disposition
of
assets will not result in a qualification, withdrawal or downgrade of the
then-current rating of any of the Certificates. Notwithstanding the foregoing,
the Servicer, without the consent of the Trustee or the Master Servicer, may
retain third-party contractors to perform certain servicing and loan
administration functions, including without limitation hazard insurance
administration, tax payment and administration, flood certification and
administration, collection services and similar functions, provided, however,
that the retention of such contractors by the Servicer shall not limit the
obligation of the Servicer to service the related Mortgage Loans pursuant to
the
terms and conditions of this Agreement. The Servicer shall not resign from
the
obligations and duties hereby imposed on it except upon determination that
its
duties hereunder are no longer permissible under applicable law. No such
resignation shall become effective unless evidenced by an Opinion of Counsel
to
such effect obtained at the expense of the Servicer and delivered to the Trustee
and the Rating Agencies.
192
Notwithstanding
anything to the contrary, no resignation of the Servicer shall become effective
until the Master Servicer or a successor servicer shall have assumed the
Servicer’s responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
(b) Except
as
expressly provided herein, the Servicer shall not assign or transfer any of
its
rights, benefits or privileges hereunder to any other Person, or delegate to
or
subcontract with, or authorize or appoint any other Person to perform any of
the
duties, covenants or obligations to be performed by the Servicer hereunder.
The
foregoing prohibition on assignment shall not prohibit the Servicer from
designating a Sub-Servicer as payee of any indemnification amount payable to
the
Servicer hereunder; provided, however, that as provided in Section 3.02, no
Sub-Servicer shall be a third-party beneficiary hereunder and the parties hereto
shall not be required to recognize any Sub-Servicer as an indemnitee under
this
Agreement.
SECTION
7.05. Limitation
on Resignation of the Master Servicer.
The
Master Servicer shall not resign from the obligations and duties hereby imposed
on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall
be
evidenced by an Opinion of Counsel to such effect obtained at the expense of
the
Master Servicer and delivered to the Trustee and the Rating Agencies. No
resignation of the Master Servicer shall become effective until the Trustee
or a
successor Master Servicer meeting the criteria specified in Section 7.06
shall have assumed the Master Servicer’s responsibilities, duties, liabilities
(other than those liabilities arising prior to the appointment of such
successor) and obligations under this Agreement.
SECTION
7.06. Assignment
of Master Servicing.
The
Master Servicer may sell and assign its rights and delegate its duties and
obligations in its entirety as Master Servicer under this Agreement; provided,
however, that: (i) the purchaser or transferee accept in writing such assignment
and delegation and assume the obligations of the Master Servicer hereunder
(a)
shall have a net worth of not less than $25,000,000 (unless otherwise approved
by each Rating Agency pursuant to clause (ii) below); (b) shall be reasonably
satisfactory to the Trustee (as evidenced in a writing signed by the Trustee);
and (c) shall execute and deliver to the Trustee an agreement, in form and
substance reasonably satisfactory to 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 it as master servicer
under this Agreement, any custodial agreement from and after the effective
date
of such agreement; (ii) each Rating Agency shall be given prior written notice
of the identity of the proposed successor to the Master Servicer and each Rating
Agency’s rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter
to
such effect delivered to the Master Servicer and the Trustee; and (iii) the
Master Servicer assigning and selling the master servicing shall deliver to
the
Trustee an Officer’s Certificate and an Opinion of Independent counsel, each
stating that all conditions precedent to such action under this Agreement have
been completed and such action is permitted by and complies with the terms
of
this Agreement. No such assignment or delegation shall affect any liability
of
the Master Servicer arising out of acts or omissions prior to the effective
date
thereof.
193
SECTION
7.07. Rights
of
the Depositor in Respect of the Servicer and the Master Servicer.
Each
of
the Master Servicer and the Servicer shall afford (and any Sub-Servicing or
Sub-Contracting Agreement shall provide that each Sub-Servicer or Subcontractor,
as applicable, shall afford) the Depositor and the Trustee, upon reasonable
notice, during normal business hours, access to all records maintained by the
Master Servicer or the Servicer (and any such Sub-Servicer or Subcontractor,
as
applicable) in respect of the Servicer’s rights and obligations hereunder and
access to officers of the Master Servicer or the Servicer (and those of any
such
Sub-Servicer or Subcontractor, as applicable) responsible for such obligations,
and the Master Servicer shall have access to all such records maintained by
the
Servicer and any Sub-Servicers or Subcontractors. Upon request, each of the
Master Servicer and the Servicer shall furnish to the Depositor and the Trustee
its (and any such Sub-Servicer’s or Subcontractor’s) most recent financial
statements and such other information relating to the Master Servicer’s or the
Servicer’s capacity to perform its obligations under this Agreement as it
possesses (and that any such Sub-Servicer or Subcontractor possesses). To the
extent the
Depositor and the Trustee are informed that such
information is not otherwise available to the public, the Depositor and the
Trustee shall not disseminate any information obtained pursuant to the preceding
two sentences without the Master Servicer’s or the Servicer’s written consent,
except as required pursuant to this Agreement or to the extent that it is
appropriate to do so (i) to its legal counsel, auditors, taxing authorities
or
other governmental agencies and the Certificateholders, (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Depositor and the Trustee
or the Trust Fund, and in any case, the Depositor or the Trustee, (iii)
disclosure of any and all information that is or becomes publicly known, or
information obtained by the Trustee from sources other than the Depositor,
the
Servicer or the Master Servicer, (iv) disclosure as required pursuant to this
Agreement or (v) disclosure of any and all information (A) in any preliminary
or
final offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in advance
by the Depositor, the Servicer or the Master Servicer or (B) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Trustee
having a need to know the same, provided that the Trustee advises such recipient
of the confidential nature of the information being disclosed, shall use its
best efforts to assure the confidentiality of any such disseminated non-public
information. Nothing in this Section 7.07 shall limit the obligation of the
Servicer or Master Servicer to comply with any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer or Master Servicer to provide access as provided in this
Section 7.07 as a result of such obligation shall not constitute a breach
of this Section. Nothing in this Section 7.07 shall require the Servicer or
Master Servicer to collect, create, collate or otherwise generate any
information that it does not generate in its usual course of business. Neither
the Servicer nor the Master Servicer shall be required to make copies of or
ship
documents to any party unless provisions have been made for the reimbursement
of
the costs thereof. The Depositor may, but is not obligated to, enforce the
obligations of the Master Servicer or the Servicer under this Agreement, and
may, but is not obligated to, perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer or the Servicer under this
Agreement, or exercise the rights of the Master Servicer or the Servicer under
this Agreement; provided that neither the Master Servicer nor the Servicer
shall
be relieved of any of its obligations under this Agreement, as applicable,
by
virtue of such performance by the Depositor or its designee. The Depositor
shall
not have any responsibility or liability for any action or failure to act by
the
Master Servicer or the Servicer and is not obligated to supervise the
performance of the Master Servicer or the Servicer under this Agreement or
otherwise.
194
SECTION
7.08. Duties
of
the Credit Risk Manager.
For
and
on behalf of the Depositor, the Credit Risk Manager will provide reports and
recommendations concerning certain delinquent and defaulted Mortgage Loans,
and
as to the collection of any Prepayment Charges with respect to the Mortgage
Loans. Such reports and recommendations will be based upon information provided
to the Credit Risk Manager pursuant to the Credit Risk Management Agreements,
and the Credit Risk Manager shall look solely to the Servicer and/or Master
Servicer for all information and data (including loss and delinquency
information and data) relating to the servicing of the related Mortgage Loans.
Upon any termination of the Credit Risk Manager or the appointment of a
successor Credit Risk Manager, the Depositor shall give written notice thereof
to the Servicer, the Master Servicer, the Securities Administrator, the Trustee,
and each Rating Agency. Notwithstanding the foregoing, the termination of the
Credit Risk Manager pursuant to this Section shall not become effective
until the appointment of a successor Credit Risk Manager. The Trustee is hereby
authorized to enter into any Credit Risk Management Agreement necessary to
effect the foregoing.
SECTION
7.09. Limitation
Upon Liability of the Credit Risk Manager.
Neither
the Credit Risk Manager, nor any of its directors, officers, employees, or
agents shall be under any liability to the Trustee, the Certificateholders,
or
the Depositor for any action taken or for refraining from the taking of any
action made in good faith pursuant to this Agreement, in reliance upon
information provided by the Servicer under the related Credit Risk Management
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Credit Risk Manager or any such person against liability
that would otherwise be imposed by reason of willful malfeasance or bad faith
in
its performance of its duties. The Credit Risk Manager and any director,
officer, employee, or agent of the Credit Risk Manager may rely in good faith
on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder, and may rely in good faith
upon
the accuracy of information furnished by the Servicer pursuant to the related
Credit Risk Management Agreement in the performance of its duties thereunder
and
hereunder.
195
SECTION
7.10. Removal
of the Credit Risk Manager.
The
Credit Risk Manager may be removed as Credit Risk Manager by Certificateholders
holding not less than 66 2/3% of the Voting Rights in the Trust Fund, in the
exercise of its or their sole discretion. The Certificateholders shall provide
written notice of the Credit Risk Manager’s removal to the Trustee. Upon receipt
of such notice, the Trustee shall provide written notice to the Credit Risk
Manager of its removal, which shall be effective upon receipt of such notice
by
the Credit Risk Manager, with a copy to the Securities Administrator and the
Master Servicer.
196
ARTICLE
VIII
DEFAULT
SECTION
8.01. Servicer
Events of Default.
(a)“Servicer
Event of Default,” wherever used herein, means with respect to the Servicer any
one of the following events:
(i) any
failure by the Servicer to remit to the Securities Administrator for
distribution to the Certificateholders any payment (other than a P&I Advance
required to be made from its own funds on any Servicer Remittance Date pursuant
to Section 5.03 of this Agreement) required to be made by the Servicer under
the
terms of the Certificates and this Agreement which continues unremedied for
a
period of one (1) Business Day after the date upon which written notice of
such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Securities Administrator, the Depositor or the Trustee (in
which
case notice shall be provided by telecopy), or to the Servicer, the Securities
Administrator, the Depositor and the Trustee by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(ii) any
failure on the part of the Servicer duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Servicer
contained in this Agreement, or the material breach by the Servicer of any
representation and warranty contained in Section 2.05 of this Agreement, which
continues unremedied for a period of thirty (30) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Depositor, the Securities Administrator,
or
the Trustee or to the Servicer, the Depositor, the Securities Administrator,
and
the Trustee by the Holders of Certificates entitled to at least 25% of the
Voting Rights; provided, however, that in the case of a failure that cannot
be
cured within thirty (30) days, the cure period may be extended for an additional
thirty (30) days if the Servicer can demonstrate to the reasonable satisfaction
of the Securities Administrator and Trustee that the Servicer is diligently
pursuing remedial action; or
(iii) a
decree
or order of a court or agency or supervisory authority having jurisdiction
in
the premises in an involuntary case under any present or future federal or
state
bankruptcy, insolvency or similar law or the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed
for a
period of ninety (90) days; or
(iv) 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 it or of or relating to
all
or substantially all of its property; or
197
(v) the
Servicer shall admit in writing its inability to pay its debts generally as
they
become due, file a petition to take advantage of any applicable insolvency
or
reorganization statute, make an assignment for the benefit of its creditors,
or
voluntarily suspend payment of its obligations; or
(vi) failure
by the Servicer to duly perform, within the required time period, its
obligations under Sections 3.17, 3.18 or 3.19; or
(vii) any
failure of the Servicer to make any P&I Advance on any Servicer Remittance
Date required to be made from its own funds pursuant to Section 5.03 which
continues unremedied until 3:00 p.m. New York time on the Business Day
immediately following the Servicer Remittance Date.
If
the
Servicer Event of Default described in clauses (i) through (vi) of this
Section shall occur, then, and in each and every such case, so long as the
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the defaulting Servicer (and to the Depositor if given by the Trustee
or to the Trustee if given by the Depositor) with a copy to the Master Servicer
and each Rating Agency, terminate all of the rights and obligations of the
defaulting Servicer in its capacity as the Servicer under this Agreement, to
the
extent permitted by law, and in and to the related Mortgage Loans and the
proceeds thereof. If the Servicer Event of Default described in clause (vii)
hereof shall occur, the Trustee shall, by notice in writing to the defaulting
Servicer, the Depositor and the Master Servicer, terminate all of the rights
and
obligations of the defaulting Servicer in its capacity as the Servicer under
this Agreement and in and to the related Mortgage Loans and the proceeds
thereof. Subject to Section 8.02 of this Agreement, on or after the receipt
by the defaulting Servicer of such written notice, all authority and power
of
the defaulting Servicer under this Agreement whether with respect to the
Certificates (other than as a Holder of any Certificate) or the related Mortgage
Loans or otherwise, shall pass to and be vested in the Master Servicer, pursuant
to and under this Section, and, without limitation, the Master Servicer is
hereby authorized and empowered, as attorney-in-fact or otherwise, to execute
and deliver, on behalf of and at the expense of the defaulting Servicer, any
and
all documents and other instruments and to do or accomplish all other acts
or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment
of
the related Mortgage Loans and related documents, or otherwise. The defaulting
Servicer agrees promptly (and in any event no later than ten (10) Business
Days
subsequent to such notice) to provide the Master Servicer with all documents
and
records requested by it to enable it to assume the defaulting Servicer’s
functions under this Agreement, and to cooperate with the Master Servicer in
effecting the termination of the defaulting Servicer’s responsibilities and
rights under this Agreement, including, without limitation, the transfer within
one (1) Business Day to the Master Servicer for administration by it of all
cash
amounts which at the time shall be or should have been credited by the
defaulting Servicer to the Collection Account held by or on behalf of the
defaulting Servicer or thereafter be received with respect to the related
Mortgage Loans or any related REO Property (provided, however, that the
defaulting Servicer shall continue to be entitled to receive all amounts accrued
or owing to it under this Agreement on or prior to the date of such termination,
whether in respect of P&I Advances, Servicing Advances, accrued and unpaid
Servicing Fees or otherwise, and shall continue to be entitled to the benefits
of Section 7.03 of this Agreement, notwithstanding any such termination,
with respect to events occurring prior to such termination). Reimbursement
of
unreimbursed P&I Advances, Servicing Advances and accrued and unpaid
Servicing Fees shall be made on a first in, first out (“FIFO”) basis no later
than the Servicer Remittance Date. For purposes of this Section 8.01(a),
the Trustee shall not be deemed to have knowledge of the Servicer Event of
Default unless a Responsible Officer of the Trustee assigned to and working
in
the Trustee’s Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such the Servicer Event of Default
is received by the Trustee at its Corporate Trust Office and such notice
references the Certificates, the Trust or this Agreement. The Trustee shall
promptly notify the Master Servicer and the Rating Agencies of the occurrence
of
the Servicer Event of Default of which it has knowledge as provided
above.
198
The
Master Servicer shall be entitled to be reimbursed by the defaulting Servicer
(or from amounts on deposit in the Distribution Account if the defaulting
Servicer is unable to fulfill its obligations hereunder) for all reasonable
out-of-pocket or third party costs associated with the transfer of servicing
from the defaulting Servicer, including without limitation, any reasonable
out-of-pocket or third party costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation
of
such servicing data as may be required by the Master Servicer to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Master Servicer to service the related Mortgage Loans properly and effectively,
upon presentation of reasonable documentation of such costs and
expenses.
(b)“Master
Servicer Event of Default,” wherever used herein, means any one of the following
events:
(i) any
failure on the part of the Master Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Master Servicer contained in this Agreement, or the breach by the Master
Servicer of any representation and warranty contained in Section 2.04,
which continues unremedied for a period of 30 days after the date on which
written notice of such failure, or as otherwise set forth in this Agreement
requiring the same to be remedied, shall have been given to the Master Servicer
by the Depositor or the Trustee or to the Master Servicer, the Depositor and
the
Trustee by the Holders of Certificates entitled to at least 25% of the Voting
Rights; or
(ii) a
decree
or order of a court or agency or supervisory authority having jurisdiction
in
the premises in an involuntary case under any present or future federal or
state
bankruptcy, insolvency or similar law or the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master Servicer
and such decree or order shall have remained in force undischarged or unstayed
for a period of ninety (90) days; or
(iii) the
Master Servicer shall consent to the appointment of a conservator or receiver
or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to it or of or relating to
all
or substantially all of its property; or
199
(iv) the
Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its
creditors, or voluntarily suspend payment of its obligations; or
(v) failure
by the Master Servicer to duly perform, within the required time period, its
obligations under Sections 4.15, 4.16, 4.17 or 4.18.
If
a
Master Servicer Event of Default shall occur, then, and in each and every such
case, so long as such Master Servicer Event of Default shall not have been
remedied, the Depositor or the Trustee may, and at the written direction of
the
Holders of Certificates entitled to at least 51% of Voting Rights, the Trustee
shall, by notice in writing to the Master Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor) with a copy
to
each Rating Agency, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof.
On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates (other than as a Holder of any Certificate) or
the
Mortgage Loans or otherwise including, without limitation, the compensation
payable to the Master Servicer under this Agreement, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation,
the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise,
to
execute and deliver, on behalf of and at the expense of the Master Servicer,
any
and all documents and other instruments and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment
of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees promptly (and in any event no later than ten Business Days subsequent
to
such notice) to provide the Trustee with all documents and records requested
by
it to enable it to assume the Master Servicer’s functions under this Agreement,
and to cooperate with the Trustee in effecting the termination of the Master
Servicer’s responsibilities and rights under this Agreement (provided, however,
that the Master Servicer shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the date of such
termination and shall continue to be entitled to the benefits of
Section 7.03 of this Agreement, notwithstanding any such termination, with
respect to events occurring prior to such termination). For purposes of this
Section 8.01(b), the Trustee shall not be deemed to have knowledge of a
Master Servicer Event of Default unless a Responsible Officer of the Trustee
assigned to and working in the Trustee’s Corporate Trust Office has actual
knowledge thereof or unless written notice of any event which is in fact such
a
Master Servicer Event of Default is received by the Trustee and such notice
references the Certificates, the Trust or this Agreement. The Trustee shall
promptly notify the Rating Agencies of the occurrence of a Master Servicer
Event
of Default of which it has knowledge as provided above.
On
and
after the time the Master Servicer receives a notice of termination, the Trustee
shall be the successor in all respects to the Master Servicer (and, if
applicable, the Securities Administrator) in its capacity as Master Servicer
(and, if applicable, the Securities Administrator) under this Agreement and
the
transactions set forth or provided for herein, and all the responsibilities,
duties and liabilities relating thereto and arising thereafter shall be assumed
by the Trustee (except for any representations or warranties of the Master
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.03 and the obligation to deposit amounts in respect
of
losses pursuant to Section 3.10) by the terms and provisions hereof including,
without limitation, the Master Servicer’s obligations to make P&I Advances
no later than each Distribution Date pursuant to Section 5.03; provided,
however, that if the Trustee is prohibited by law or regulation from obligating
itself to make advances regarding delinquent mortgage loans, then the Trustee
shall not be obligated to make P&I Advances pursuant to Section 5.03; and
provided further, that any failure to perform such duties or responsibilities
caused by the Master Servicer’s failure to provide information required by
Section 8.01 shall not be considered a default by the Trustee as successor
to
the Master Servicer hereunder and neither the Trustee nor any other successor
master servicer shall be liable for any acts or omissions of the terminated
servicer. As compensation therefor, the Trustee shall be entitled to the Master
Servicing Fee and all funds relating to the Loans, investment earnings on the
Distribution Account and all other remuneration to which the Master Servicer
would have been entitled if it had continued to act hereunder.
200
Notwithstanding
the foregoing, the Trustee may, if it shall be unwilling to continue to act,
or
shall, if it is unable to so act, petition a court of competent jurisdiction
to
appoint, or appoint on its own behalf, any established housing and home finance
institution servicer, master servicer, servicing or mortgage servicing
institution having a net worth of not less than $25,000,000 and meeting such
other standards for a successor master servicer as are set forth in this
Agreement, as the successor to such Master Servicer in the assumption of all
of
the responsibilities, duties or liabilities of a master servicer.
To
the
extent that the costs and expenses of the Trustee related to the termination
of
the Master Servicer, appointment of a successor Master Servicer or the transfer
and assumption of the master servicing by the Trustee (including, without
limitation, (i) all legal costs and expenses and all due diligence costs and
expenses associated with an evaluation of the potential termination of the
Master Servicer as a result of a Master Servicer Event of Default and (ii)
all
costs and expenses associated with the complete transfer of the master
servicing, including all servicing files and all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the successor Master Servicer to correct any errors or insufficiencies in
the
servicing data or otherwise to enable the successor Master Servicer to master
service the Mortgage Loans in accordance with this Agreement) are not fully
and
timely reimbursed by the terminated Master Servicer, the Trustee shall be
entitled to reimbursement of such costs and expenses from the Distribution
Account.
Neither
the Trustee nor any other successor master servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making,
any
distribution hereunder or any portion thereof or any failure to perform, or
any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Master Servicer to deliver or provide, or any
delay
in delivering or providing, any cash, information, documents or records to
it.
201
SECTION
8.02. Master
Servicer to Act; Appointment of Successor.
(a) On
and
after the time the Servicer receives a notice of termination, the Master
Servicer shall be the successor in all respects to the Servicer in its capacity
as the Servicer under this Agreement and the transactions set forth or provided
for herein or therein, and all the responsibilities, duties and liabilities
relating thereto and arising thereafter shall be assumed by the Master Servicer
(except for any representations or warranties of the Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.03 of this Agreement and the obligation to deposit amounts in respect of
losses pursuant to Section 3.10(b) of this Agreement) by the terms and
provisions hereof including, without limitation, the Servicer’s obligations to
make P&I Advances pursuant to Section 5.03 of this Agreement; provided,
however, that if the Master Servicer is prohibited by law or regulation from
obligating itself to make advances regarding delinquent mortgage loans, then
the
Master Servicer shall not be obligated to make P&I Advances pursuant to
Section 5.03 of this Agreement; and provided further, that any failure to
perform such duties or responsibilities caused by the Servicer’s failure to
provide information required by Section 8.01 of this Agreement shall not be
considered a default by the Master Servicer as successor to the Servicer
hereunder; provided, however, that (1) it is understood and acknowledged by
the
parties hereto that there will be a period of transition (not to exceed ninety
(90) days) before the actual servicing functions can be fully transferred to
the
Master Servicer or any successor Servicer appointed in accordance with the
following provisions and (2) any failure to perform such duties or
responsibilities caused by the Servicer’s failure to provide information
required by Section 8.01 of this Agreement shall not be considered a default
by
the Master Servicer as successor to the Servicer. As compensation therefor,
the
Master Servicer shall be entitled to the Servicing Fee and all funds relating
to
the related Mortgage Loans to which the terminated Servicer would have been
entitled if it had continued to act hereunder. Notwithstanding the above and
subject to the immediately following paragraph, the Master Servicer may, if
it
shall be unwilling to so act, or shall, if it is unable to so act promptly
appoint or petition a court of competent jurisdiction to appoint, a Person
that
satisfies the eligibility criteria set forth below as the successor to the
terminated Servicer under this Agreement in the assumption of all or any part
of
the responsibilities, duties or liabilities of the terminated Servicer under
this Agreement.
Notwithstanding
anything herein to the contrary, in no event shall the Trustee or the Master
Servicer be liable for any Servicing Fee or for any differential in the amount
of the Servicing Fee paid hereunder and the amount necessary to induce any
successor Servicer to act as successor Servicer under this Agreement and the
transactions set forth or provided for herein.
Any
successor Servicer appointed under this Agreement must (i) be an established
mortgage loan servicing institution that is a Fannie Mae and Freddie Mac
approved seller/servicer, (ii) be approved by each Rating Agency by a written
confirmation from each Rating Agency that the appointment of such successor
Servicer would not result in the reduction or withdrawal of the then current
ratings of any outstanding Class of Certificates, (iii) have a net worth of
not
less than $25,000,000 and (iv) assume all the responsibilities, duties or
liabilities of the Servicer (other than liabilities of the Servicer hereunder
incurred prior to termination of the Servicer under Section 8.01 herein)
under this Agreement as if originally named as a party to this
Agreement.
202
(b)
(1) All
servicing transfer costs (including, without limitation, servicing transfer
costs of the type described in Section 8.02(a) of this Agreement and
incurred by the Trustee, the Master Servicer and any successor Servicer under
paragraph (b)(2) below) in connection with the termination of the Servicer
shall
be paid by the terminated Servicer upon presentation of reasonable documentation
of such costs, and if such predecessor or initial Servicer, as applicable,
defaults in its obligation to pay such costs, the successor Servicer, the Master
Servicer and the Trustee shall be entitled to reimbursement therefor from the
assets of the Trust Fund.
(2)
No
appointment of a successor to the Servicer under this Agreement shall be
effective until the assumption by the successor of all of the Servicer’s
responsibilities, duties and liabilities hereunder. In connection with such
appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on the
related Mortgage Loans as it and such successor shall agree; provided, however,
that no such compensation shall be in excess of that permitted the Servicer
as
such hereunder. The Depositor, the Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any
such succession. Pending appointment of a successor to the Servicer under this
Agreement, the Master Servicer shall act in such capacity as hereinabove
provided.
SECTION
8.03. Notification
to Certificateholders.
(a) Upon
any
termination of the Master Servicer or the Servicer pursuant to
Section 8.01(a) or (b) of this Agreement, or any appointment of a successor
to the Master Servicer or the Servicer pursuant to Section 8.02 of this
Agreement, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Not
later
than the later of sixty (60) days after the occurrence of any event, which
constitutes or which, with notice or lapse of time or both, would constitute
the
Servicer Event of Default or a Master Servicer Event of Default or five (5)
days
after a Responsible Officer of the Trustee becomes aware of the occurrence
of
such an event, the Trustee shall transmit by mail to all Holders of Certificates
notice of each such occurrence, unless such default or Servicer Event of Default
or Master Servicer Event of Default shall have been cured or
waived.
SECTION
8.04. Waiver
of
Servicer Events of Default.
The
Holders representing at least 66% of the Voting Rights evidenced by all Classes
of Certificates affected by any default, Servicer Event of Default or Master
Servicer Event of Default hereunder may waive such default, Servicer Event
of
Default or Master Servicer Event of Default; provided, however, that the
Servicer Event of Default under clause (i) or (vii) of Section 8.01(a) of
this Agreement may be waived only by all of the Holders of the Regular
Certificates. Upon any such waiver of a default, Servicer Event of Default
or
Master Servicer Event of Default, such default, Servicer Event of Default or
Master Servicer Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose hereunder. No such waiver shall extend
to
any subsequent or other default, Servicer Event of Default or Master Servicer
Event of Default or impair any right consequent thereon except to the extent
expressly so waived.
203
ARTICLE
IX
CONCERNING
THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION
9.01. Duties
of
Trustee and Securities Administrator.
The
Trustee, prior to the occurrence of a Master Servicer Event of Default and
after
the curing or waiver of all Master Servicer Events of Default which may have
occurred, and the Securities Administrator each undertake to perform such duties
and only such duties as are specifically set forth in this Agreement as duties
of the Trustee and the Securities Administrator, respectively. During the
continuance of a Master Servicer Event of Default, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in its exercise as a prudent person would exercise
or
use under the circumstances in the conduct of such person’s own affairs. Any
permissive right of the Trustee enumerated in this Agreement shall not be
construed as a duty.
Each
of
the Trustee and the Securities Administrator, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to it, which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement. If any such
instrument is found not to conform to the requirements of this Agreement in
a
material manner, the Trustee or the Securities Administrator, as the case may
be, shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to its satisfaction, the
Securities Administrator will provide notice to the Trustee thereof and the
Trustee will provide notice to the Certificateholders.
The
Trustee shall promptly remit to the Servicer any complaint, claim, demand,
notice or other document (collectively, the “Notices”) delivered to the Trustee
as a consequence of the assignment of any Mortgage Loan hereunder and relating
to the servicing of the Mortgage Loans; provided than any such notice (i) is
delivered to the Trustee at its Corporate Trust Office, (ii) contains
information sufficient to permit the Trustee to make a determination that the
real property to which such document relates is a Mortgaged Property. The
Trustee shall have no duty hereunder with respect to any Notice it may receive
or which may be alleged to have been delivered to or served upon it unless
such
Notice is delivered to it or served upon it at its Corporate Trust Office and
such Notice contains the information required pursuant to clause (ii) of the
preceding sentence.
No
provision of this Agreement shall be construed to relieve the Trustee or the
Securities Administrator from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however,
that:
(i) Prior
to
the occurrence of a Master Servicer Event of Default, and after the curing
or
waiver of all such Master Servicer Events of Default which may have occurred
with respect to the Trustee and at all times with respect to the Securities
Administrator, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, neither the Trustee nor
the
Securities Administrator shall be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against
the
Trustee or the Securities Administrator and, in the absence of bad faith on
the
part of the Trustee or the Securities Administrator, respectively, the Trustee
or the Securities Administrator, respectively, 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 or the Securities
Administrator, respectively, that conform to the requirements of this
Agreement;
204
(ii) Neither
the Trustee nor the Securities Administrator shall be liable for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of
the Trustee or an officer or officers of the Securities Administrator,
respectively, unless it shall be proved that the Trustee or the Securities
Administrator, respectively, was negligent in ascertaining the pertinent facts;
and
(iii) Neither
the Trustee nor the Securities Administrator shall 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 the Holders of Certificates entitled to at least 25%
of
the Voting Rights relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee or the Securities
Administrator or exercising any trust or power conferred upon the Trustee or
the
Securities Administrator under this Agreement.
SECTION
9.02. Certain
Matters Affecting Trustee and Securities Administrator.
(a) Except
as
otherwise provided in Section 9.01 of this Agreement:
(i) Before
taking any action hereunder, the Trustee and the Securities Administrator may
request and 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, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed by it
to
be genuine and to have been signed or presented by the proper party or
parties;
(ii) The
Trustee and the Securities Administrator may consult with counsel of its
selection and any advice of such counsel or any Opinion of Counsel shall be
full
and complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(iii) Neither
the Trustee nor the Securities Administrator shall be under any obligation
to
exercise any of the trusts or powers vested in it by this Agreement or to
institute, conduct or defend any litigation hereunder or in relation hereto
at
the request, order or direction of any of the Certificateholders, pursuant
to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee or the Securities Administrator, as the case may be,
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of a Master Servicer Event of Default (which has not been cured
or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as
a
prudent person would exercise or use under the circumstances in the conduct
of
such person’s own affairs;
205
(iv) Neither
the Trustee nor the Securities Administrator shall be liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(v) Prior
to
the occurrence of a Master Servicer Event of Default hereunder and after the
curing or waiver of all Master Servicer Events of Default which may have
occurred with respect to the Trustee and at all times with respect to the
Securities Administrator, neither the Trustee nor the Securities Administrator
shall be bound to make any investigation into the facts or matters stated in
any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Certificates entitled to at
least 25% of the Voting Rights; provided, however, that if the payment within
a
reasonable time to the Trustee or the Securities Administrator of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee or the Securities Administrator,
as applicable, not reasonably assured to the Trustee or the Securities
Administrator by such Certificateholders, the Trustee or the Securities
Administrator, as applicable, may require reasonable indemnity satisfactory
to
it against such expense, or liability from such Certificateholders as a
condition to taking any such action;
(vi) The
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
(vii) The
Trustee shall not be liable for any loss resulting from (a) the investment
of
funds held in the Collection Account, (b) the investment of funds held in the
Distribution Account, (c) the investment of funds held in the Reserve Fund
or
(d) the redemption or sale of any such investment as therein
authorized;
(viii) The
Trustee shall not be deemed to have notice of any default, Master Servicer
Event
of Default or Servicer Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event
which
is in fact such a default is received by a Responsible Officer of the Trustee
at
the Corporate Trust Office of the Trustee, and such notice references the
Certificates and this Agreement; and
(ix) The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and
shall be enforceable by, each agent, custodian and other Person employed to
act
hereunder; and
206
(x) Should
the Trustee or the Securities Administrator deem the nature of any action
required on its part to be unclear, the Trustee or the Securities Administrator
may require, prior to such action, that it be provided by the Depositor with
reasonable further instructions.
(b) All
rights of action under this Agreement or under any of the Certificates,
enforceable by the Trustee, may be enforced by it without the possession of
any
of the Certificates, or the production thereof at the trial or other proceeding
relating thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the benefit of all the Holders of
such
Certificates, subject to the provisions of this Agreement.
(c) The
Trustee, in its capacity as Supplemental Interest Trust Trustee pursuant to
the
Swap Agreement, hereby directs the Securities Administrator and the Securities
Administrator is hereby empowered under this Agreement to act on
behalf
of
the
Supplemental Interest Trust Trustee. Any
funds
payable by the Securities Administrator on
behalf
of the Supplemental Interest Trust Trustee and in connection with its
obligations in respect of the
Supplemental Interest Trust under the Swap Agreement, shall be paid from funds
of the Supplemental Interest Trust in accordance with the terms and provisions
of the Swap Agreement. Notwithstanding anything to the contrary contained herein
or in the Swap Agreement, neither
the Supplemental Interest Trust Trustee nor the
Securities Administrator shall
be
required
to
make any payments from its own funds to the Swap Provider under the Swap
Agreement.
(d) None
of
the Securities Administrator, the Master Servicer, the Servicer, the Sponsor,
the Depositor, the Custodian or the Trustee shall be responsible for the acts
or
omissions of the others or the Swap Provider, it being understood that this
Agreement shall not be construed to render those partners joint venturers or
agents of one another.
SECTION
9.03. Trustee
and Securities Administrator not Liable for Certificates or Mortgage
Loans.
The
recitals contained herein and in the Certificates (other than the signature
of
the Securities Administrator, the authentication of the Securities Administrator
on the Certificates, the acknowledgments of the Trustee contained in Article
II
and the representations and warranties of the Trustee in Section 9.12 of
this Agreement) shall be taken as the statements of the Depositor and neither
the Trustee nor the Securities Administrator assumes any responsibility for
their correctness. Neither the Trustee nor the Securities Administrator makes
any representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 9.12 of this
Agreement), the Swap Agreement or of the Certificates (other than the signature
of the Securities Administrator and authentication of the Securities
Administrator on the Certificates) or of any Mortgage Loan or related document.
The Trustee and the Securities Administrator shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Servicer, other
than with respect to the Securities Administrator any funds held by it or on
behalf of the Trustee in accordance with Sections 3.23 and 3.24 of this
Agreement.
207
SECTION
9.04. Trustee
and Securities Administrator May Own Certificates.
Each
of
the Trustee and the Securities Administrator in its individual capacity or
any
other capacity may become the owner or pledgee of Certificates and may transact
business with other interested parties and their Affiliates with the same rights
it would have if it were not Trustee or the Securities
Administrator.
SECTION
9.05. Fees
and
Expenses of Trustee, Custodian and Securities Administrator.
The
fees
of the Trustee and the Securities Administrator hereunder, and of Wells Fargo
as
the Custodian under the Custodial Agreement, shall be paid in accordance with
a
side letter agreement with the Master Servicer and at the sole expense of the
Master Servicer. In addition, the Trustee, the Securities Administrator, the
Custodian and any director, officer, employee or agent of the Trustee, the
Securities Administrator and the Custodian shall be indemnified by the Trust
and
held harmless against any loss, liability or expense (including reasonable
attorney’s fees and expenses) incurred by the Trustee, the Custodian or the
Securities Administrator in connection with any claim or legal action or any
pending or threatened claim or legal action arising out of or in connection
with
the acceptance or administration of its respective obligations and duties under
this Agreement, including the Swap Agreement and any and all other agreements
related hereto, other than any loss, liability or expense (i) solely with
respect to the Trustee, for which the Trustee is indemnified by the Master
Servicer or the Servicer, (ii) that constitutes a specific liability of the
Trustee or the Securities Administrator, as applicable, pursuant to
Section 11.01(g) of this Agreement or (iii) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder by the Trustee or the Securities Administrator,
as applicable, or by reason of reckless disregard of its obligations and duties
hereunder. In no event shall the Trustee, Custodian, Master Servicer or the
Securities Administrator be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if it has been advised of the likelihood of such loss or damage and
regardless of the form of action. The Master Servicer agrees to indemnify the
Trustee, from, and hold the Trustee harmless against, any loss, liability or
expense (including reasonable attorney’s fees and expenses) incurred by the
Trustee by reason of the Master Servicer’s willful misfeasance, bad faith or
gross negligence in the performance of its duties under this Agreement or by
reason of the Master Servicer’s reckless disregard of its obligations and duties
under this Agreement. In addition, the Sponsor agrees to indemnify the Trustee
for, and to hold the Trustee harmless against, any loss, liability or expense
arising out of, or in connection with, the provisions set forth in the last
paragraph of Section 2.01 of this Agreement, including, without limitation,
all costs, liabilities and expenses (including reasonable legal fees and
expenses) of investigating and defending itself against any claim, action or
proceeding, pending or threatened, relating to the provisions of such paragraph.
The indemnities in this Section 9.05 shall survive the termination or
discharge of this Agreement and the resignation or removal of the Master
Servicer, the Trustee, the Securities Administrator or the Custodian. Any
payment under this Section 9.05 made by the Master Servicer to the Trustee
in
respect of the Trustee’s fees or the Master Servicer’s indemnification
obligation to the Trustee shall be from the Master Servicer’s own funds, without
reimbursement from REMIC I therefor.
208
SECTION
9.06. Eligibility
Requirements for Trustee and Securities Administrator.
The
Trustee and the Securities Administrator shall at all times be a corporation
or
an association (other than the Depositor, the Sponsor, the Master Servicer
or
any Affiliate of the foregoing) organized and doing business under the laws
of
any 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 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination
by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of
the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its
most
recent report of conditions so published. In case at any time the Trustee or
the
Securities Administrator, as applicable, shall cease to be eligible in
accordance with the provisions of this Section, the Trustee or the Securities
Administrator, as applicable, shall resign immediately in the manner and with
the effect specified in Section 9.07 of this Agreement.
Additionally,
the Securities Administrator (i) may not be an originator, Master Servicer,
Servicer, the Depositor or an affiliate of the Depositor unless the Securities
Administrator is in an institutional trust department, (ii) must be authorized
to exercise corporate trust powers under the laws of its jurisdiction of
organization, and (iii) must be rated at least "A/F1" by Fitch, if Fitch is
a
Rating Agency, or the equivalent rating by S&P (or such rating acceptable to
Fitch pursuant to a rating confirmation). If no successor securities
administrator shall have been appointed and shall have accepted appointment
within 60 days after Wells Fargo Bank, National Association, as Securities
Administrator, ceases to be the securities administrator pursuant to this
Section 9.06, then the Trustee shall petition any court of competent
jurisdiction, at the expense of the Trust, for the appointment of a successor
securities administrator which satisfies the eligibility criteria set forth
herein. The Trustee shall notify the Rating Agencies of any change of Securities
Administrator.
SECTION
9.07. Resignation
and Removal of Trustee and Securities Administrator.
The
Trustee and the Securities Administrator may at any time resign and be
discharged from the trust hereby created by giving written notice thereof to
the
Depositor, to the Master Servicer, to the Securities Administrator (or the
Trustee, if the Securities Administrator resigns) and to the Certificateholders.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor trustee or successor securities administrator by written instrument,
in duplicate, which instrument shall be delivered to the resigning Trustee
or
Securities Administrator, as applicable, and to the successor trustee or
successor securities administrator, as applicable. A copy of such instrument
shall be delivered to the Certificateholders, the Trustee, the Securities
Administrator and the Master Servicer by the Depositor. If no successor trustee
or successor securities administrator shall have been so appointed and have
accepted appointment within thirty (30) days after the giving of such notice
of
resignation, the resigning Trustee or Securities Administrator, as the case
may
be, may, at the expense of the Trust Fund, petition any court of competent
jurisdiction for the appointment of a successor trustee, successor securities
administrator, Trustee or Securities Administrator, as
applicable.
209
If
at any
time the Trustee or the Securities Administrator shall cease to be eligible
in
accordance with the provisions of Section 9.06 of this Agreement and shall
fail to resign after written request therefor by the Depositor, or if at any
time the Trustee or the Securities Administrator shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or the Securities Administrator or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee or the
Securities Administrator, as applicable and appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.
The
Holders of Certificates entitled to at least 51% of the Voting Rights may at
any
time remove the Trustee or the Securities Administrator and appoint a successor
trustee or successor securities administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to
the
Depositor, one complete set to the Trustee or the Securities Administrator
so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders, the Trustee (in the
case of the removal of the Securities Administrator), the Securities
Administrator (in the case of the removal of the Trustee) and the Master
Servicer by the Depositor.
Any
resignation or removal of the Trustee or the Securities Administrator and
appointment of a successor trustee or successor securities administrator
pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in
Section 9.08.
Notwithstanding
anything to the contrary contained herein, the Master Servicer and the
Securities Administrator shall at all times be the same Person.
SECTION
9.08. Successor
Trustee or Securities Administrator.
Any
successor trustee or successor securities administrator appointed as provided
in
Section 9.07 of this Agreement shall execute, acknowledge and deliver to
the Depositor and its predecessor trustee or predecessor securities
administrator an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor trustee or predecessor securities
administrator shall become effective and such successor trustee or successor
securities administrator 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
or
securities administrator herein. The predecessor trustee or predecessor
securities administrator shall deliver to the successor trustee or successor
securities administrator all Mortgage Loan Documents and related documents
and
statements to the extent held by it hereunder, as well as all monies, held
by it
hereunder, and the Depositor and the predecessor trustee or predecessor
securities administrator shall execute and deliver such instruments and do
such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee or successor securities administrator
all such rights, powers, duties and obligations.
210
No
successor trustee or successor securities administrator shall accept appointment
as provided in this Section unless at the time of such acceptance such
successor trustee or successor securities administrator shall be eligible under
the provisions of Section 9.06 and the appointment of such successor
trustee or successor securities administrator shall not result in a downgrading
of any Class of Certificates by any Rating Agency, as evidenced by a letter
from
each Rating Agency.
Upon
acceptance of appointment by a successor trustee or successor securities
administrator as provided in this Section, the Depositor shall mail notice
of
the succession of such trustee hereunder to all Holders of Certificates at
their
addresses as shown in the Certificate Register. If the Depositor fails to mail
such notice within ten (10) days after acceptance of appointment by the
successor trustee or successor securities administrator, the successor trustee
or successor securities administrator shall cause such notice to be mailed
at
the expense of the Depositor.
SECTION
9.09. Merger
or
Consolidation of Trustee or Securities Administrator.
Any
corporation or association into which the Trustee or the Securities
Administrator may be merged or converted or with which it may be consolidated
or
any corporation or association resulting from any merger, conversion or
consolidation to which the Trustee or the Securities Administrator shall be
a
party, or any corporation or association succeeding to the business of the
Trustee or the Securities Administrator shall be the successor of the Trustee
or
the Securities Administrator hereunder, provided such corporation or association
shall be eligible under the provisions of Section 9.06 of this Agreement,
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
9.10. Appointment
of Co-Trustee or Separate Trustee.
Notwithstanding
any other provisions hereof, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the REMIC I or property
securing the same may at the time be located, the Trustee shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of REMIC
I, and to vest in such Person or Persons, in such capacity, and for the benefit
of the Holders of the Certificates, such title to REMIC I, or any part thereof,
and, subject to the other provisions of this Section 9.10, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary
or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet
the terms of eligibility as a successor trustee under Section 9.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
211
In
the
case of any appointment of a co-trustee or separate trustee pursuant to this
Section 9.10 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular
act
or acts are to be performed by the Trustee (whether as Trustee hereunder or
as
successor to a defaulting Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to REMIC
I or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any
notice, request or other writing given to the Trustee shall be deemed to have
been given to each of the then separate trustees and co-trustees, as effectively
as if given to each of them. Every instrument appointing any separate trustee
or
co-trustee shall refer to this Agreement and the conditions of this Article
IX.
Each separate trustee and co-trustee, upon its acceptance of the trust
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Trustee, or separately,
as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any
separate trustee or co-trustee may, at any time, constitute the Trustee, its
agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement
on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee or co-trustee.
SECTION
9.11. Appointment
of Office or Agency.
The
Certificates may be surrendered for registration of transfer or exchange at
the
Securities Administrator’s office located at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota55479, and presented for final distribution at the
Corporate Trust Office of the Securities Administrator where notices and demands
to or upon the Securities Administrator in respect of the Certificates and
this
Agreement may be served.
SECTION
9.12. Representations
and Warranties.
212
(a) The
Trustee hereby represents and warrants to the Master Servicer, the Securities
Administrator, the Servicer and the Depositor as applicable, as of the Closing
Date, that:
(i) It
is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States of America.
(ii) The
execution and delivery of this Agreement by it, and the performance and
compliance with the terms of this Agreement by it, will not violate its articles
of association or bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in
the
breach of, any material agreement or other instrument to which it is a party
or
which is applicable to it or any of its assets.
(iii) It
has
the full power and authority to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized the execution, delivery
and
performance of this Agreement, and has duly executed and delivered this
Agreement.
(iv) This
Agreement, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a valid, legal and binding obligation of it,
enforceable against it in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, receivership, reorganization, moratorium
and
other laws affecting the enforcement of creditors’ rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(v) It
is not
in violation of, and its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not constitute
a violation of, any law, any order or decree of any court or arbiter, or any
order, regulation or demand of any federal, state or local governmental or
regulatory authority, which violation, in its good faith and reasonable
judgment, is likely to affect materially and adversely either the ability of
it
to perform its obligations under this Agreement or its financial
condition.
(vi) No
litigation is pending or, to the best of its knowledge, threatened against
it,
which would prohibit it from entering into this Agreement or, in its good faith
reasonable judgment, is likely to materially and adversely affect either the
ability of it to perform its obligations under this Agreement or its financial
condition.
(b) The
Trustee hereby represents and warrants to the Sponsor and the Depositor, for
the
benefit of each of the Certificateholders, that as of the Closing
Date:
(i) There
are
no affiliations relating to the Trustee of a type that are described under
Item
1119(a) of Regulation AB; and
(ii) There
are
no legal proceedings pending or contemplated, including legal proceedings
pending or contemplated by governmental authorities, against the Trustee that
could be material to the Certificateholders.
213
ARTICLE
X
TERMINATION
SECTION
10.01. Termination
Upon Repurchase or Liquidation of All Mortgage Loans.
(a) Subject
to Section 10.02 of this Agreement, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer,
the
Securities Administrator, the Servicer and the Trustee (other than the
obligations of the Master Servicer to the Trustee pursuant to Section 9.05
of
this Agreement and of the Servicer to make remittances to the Securities
Administrator and the Securities Administrator to make payments in respect
of
the REMIC I Regular Interests, REMIC II Regular Interests or the Classes of
Certificates as hereinafter set forth) shall terminate upon payment to the
Certificateholders and the deposit of all amounts held by or on behalf of the
Trustee and required hereunder to be so paid or deposited on the Distribution
Date coinciding with or following the earlier to occur of (i) the purchase
by
the Master Servicer of all Mortgage Loans and each REO Property remaining in
REMIC I and (ii) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in REMIC
I;
provided, however, that in no event shall the trust created hereby continue
beyond the earlier of (i) the expiration of 21 years from the death of the
last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof and (ii)
the
Last Scheduled Distribution Date. The purchase by the Master Servicer of all
Mortgage Loans and each REO Property remaining in REMIC I shall be at a price
(the “Termination Price”) equal to the sum of (i) the greater of (A) the
aggregate Purchase Price of all the Mortgage Loans included in REMIC I, plus
the
appraised value of each REO Property, if any, included in REMIC I, such
appraisal to be conducted by an appraiser mutually agreed upon by the Master
Servicer and the Trustee in their reasonable discretion and (B) the aggregate
fair market value of all of the assets of REMIC I (as determined by the Master
Servicer and the Trustee, as of the close of business on the third Business
Day
next preceding the date upon which notice of any such termination is furnished
to Certificateholders pursuant to the third paragraph of this Section 10.01),
(ii) any amounts due and owing to the Swap Provider under the Swap Agreement
as
of the termination date, plus (iii) any amounts due the Servicer and the Master
Servicer in respect of unpaid Servicing Fees, Master Servicing Fees and
outstanding P&I Advances and Servicing Advances.
(b) The
Master Servicer shall have the right to purchase all of the Mortgage Loans
and
each REO Property remaining in REMIC I pursuant to clause (i) of the preceding
paragraph no later than the Determination Date in the month immediately
preceding the Distribution Date on which the Certificates will be retired;
provided, however, that the Master Servicer may elect to purchase all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause
(i)
above only if the aggregate Scheduled Principal Balance of the Mortgage Loans
and each REO Property remaining in the Trust Fund at the time of such election
is reduced to less than or equal to 10% of the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the Cut-off Date. By acceptance of the
Residual Certificates, the Holder of the Residual Certificates agrees, in
connection with any termination hereunder, to assign and transfer any portion
of
the Termination Price in excess of par, and to the extent received in respect
of
such termination, to pay any such amounts to the Holders of the Class CE
Certificates.
214
(c) Notice
of
the liquidation of the Certificates shall be given promptly by the Securities
Administrator by letter to the Certificateholders mailed (a) in the event such
notice is given in connection with the purchase of the Mortgage Loans and each
REO Property by the Master Servicer, not earlier than the 15th day and not
later
than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such
final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and the final payment in respect of the REMIC I Regular Interests or the
Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Securities Administrator therein designated,
(ii) the amount of any such final payment, (iii) that no interest shall accrue
in respect of the REMIC I Regular Interests or Certificates from and after
the
Interest Accrual Period relating to the final Distribution Date therefor and
(iv) 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 of the Securities Administrator. In the event such
notice is given in connection with the purchase of all of the Mortgage Loans
and
each REO Property remaining in REMIC I by the Master Servicer, the Master
Servicer shall deliver to the Securities Administrator for deposit in the
Distribution Account not later than the Business Day prior to the Distribution
Date on which the final distribution on the Certificates an amount in
immediately available funds equal to the above-described Termination Price.
The
Securities Administrator shall remit to the Servicer, the Master Servicer,
the
Trustee and the Custodian from such funds deposited in the Distribution Account
(i) any amounts which the Servicer would be permitted to withdraw and retain
from the Collection Account pursuant to Section 3.09 of this Agreement, as
if
such funds had been deposited therein (including all unpaid Servicing Fees,
Master Servicing Fees and all outstanding P&I Advances and Servicing
Advances) and (ii) any other amounts otherwise payable by the Securities
Administrator to the Master Servicer, the Trustee, the Custodian and the
Servicer from amounts on deposit in the Distribution Account pursuant to the
terms of this Agreement prior to making any final distributions pursuant to
Section 10.01(d) below. Upon certification to the Trustee by the Securities
Administrator of the making of such final deposit, the Trustee shall promptly
release or cause to be released to the Master Servicer the Mortgage Files for
the remaining Mortgage Loans, and Trustee shall execute all assignments,
endorsements and other instruments delivered to it and necessary to effectuate
such transfer.
(d) Upon
presentation of the Certificates by the Certificateholders on the final
Distribution Date, the Securities Administrator shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in accordance with
Section 5.01 in respect of the Certificates so presented and surrendered.
Any funds not distributed to any Holder or Holders of Certificates being retired
on such Distribution Date because of the failure of such Holder or Holders
to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
If any Certificates as to which notice has been given pursuant to this
Section 10.01 shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Securities Administrator
shall mail a second notice to the remaining non-tendering Certificateholders
to
surrender their Certificates for cancellation in order to receive the final
distribution with respect thereto. If within one year after the second notice
all such Certificates shall not have been surrendered for cancellation, the
Securities Administrator shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender
of
their Certificates. The costs and expenses of maintaining the funds in trust
and
of contacting such Certificateholders shall be paid out of the assets remaining
in the trust funds. If within one (1) year after the final notice any such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall pay to the Depositor all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease.
No
interest shall accrue or be payable to any Certificateholder on any amount
held
in trust by the Securities Administrator as a result of such Certificateholder’s
failure to surrender its Certificate(s) on the final Distribution Date for
final
payment thereof in accordance with this Section 10.01. Any such amounts
held in trust by the Securities Administrator shall be held uninvested in an
Eligible Account.
(a) In
the
event that the Master Servicer purchases all the Mortgage Loans and each REO
Property or the final payment on or other liquidation of the last Mortgage
Loan
or REO Property remaining in REMIC I pursuant to Section 10.01, the Trust
Fund shall be terminated in accordance with the following additional
requirements:
(i) The
Securities Administrator shall specify the first day in the 90-day liquidation
period in a statement attached to each Trust REMIC’s final Tax Return pursuant
to Treasury regulation Section 1.860F-1 and shall satisfy all requirements
of a qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of Counsel obtained by and
at
the expense of the Master Servicer;
(ii) During
such 90-day liquidation period and, at or prior to the time of making of the
final payment on the Certificates, the Trustee shall sell all of the assets
of
REMIC I to the Master Servicer for cash; and
(iii) At
the
time of the making of the final payment on the Certificates, the Securities
Administrator shall distribute or credit, or cause to be distributed or
credited, to the Holders of the Residual Certificates all cash on hand in the
Trust Fund (other than cash retained to meet claims), and the Trust Fund shall
terminate at that time.
(b) At
the
expense of the Master Servicer (or, if the Trust Fund is being terminated as
a
result of the occurrence of the event described in clause (ii) of the first
paragraph of Section 10.01, at the expense of the Trust Fund), the Master
Servicer shall prepare or cause to be prepared the documentation required in
connection with the adoption of a plan of liquidation of each Trust REMIC
pursuant to this Section 10.02.
(c) By
their
acceptance of Certificates, the Holders thereof hereby agree to authorize the
Securities Administrator to specify the 90-day liquidation period for each
Trust
REMIC, which authorization shall be binding upon all successor
Certificateholders.
216
ARTICLE
XI
REMIC
PROVISIONS
SECTION
11.01. REMIC
Administration.
(a) The
Securities Administrator shall elect to treat each Trust REMIC as a REMIC under
the Code and, if necessary, under applicable state law. Each such election
will
be made by the Securities Administrator on Form 1066 or other appropriate
federal tax or information return or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect
of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
“residual interests” in REMIC I. For the purposes of the REMIC election in
respect of REMIC II, the REMIC II Regular Interests shall be designated as
the
Regular Interests in REMIC II and the Class R-II Interest shall be designated
as
the “residual interests” in REMIC II. The Class A Certificates, the Mezzanine
Certificates, the Class P Certificates, the Class IO Interest and the Class
CE
Certificates (exclusive of any right to receive payments from or obligation
to
make payments to the Reserve Fund or the Supplemental Interest Trust) shall
be
designated as the Regular Interests in REMIC III and the Class R-III Interest
shall be designated as the Residual Interests in REMIC III. The Trustee shall
not permit the creation of any “interests” in each Trust REMIC (within the
meaning of Section 860G of the Code) other than the REMIC I Regular
Interests, the REMIC II Regular Interests, the Class IO Interest and the
interests represented by the Certificates.
(b) The
Closing Date is hereby designated as the “Startup Day” of each Trust REMIC
within the meaning of Section 860G(a)(9) of the Code.
(c) The
Securities Administrator shall be reimbursed for any and all expenses relating
to any tax audit of the Trust Fund (including, but not limited to, any
professional fees or any administrative or judicial proceedings with respect
to
each Trust REMIC that involve the Internal Revenue Service or state tax
authorities), including the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Securities Administrator, as agent
for
each Trust REMIC’s tax matters person shall (i) act on behalf of the Trust Fund
in relation to any tax matter or controversy involving any Trust REMIC and
(ii)
represent the Trust Fund in any administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority with respect
thereto. The holder of the largest Percentage Interest of each Class of Residual
Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint
the
Securities Administrator or an Affiliate as its agent to perform all of the
duties of the tax matters person for the Trust Fund.
(d) The
Securities Administrator shall prepare and file and the Trustee shall sign
all
of the Tax Returns in respect of each REMIC created hereunder. The expenses
of
preparing and filing such returns shall be borne by the Securities Administrator
without any right of reimbursement therefor.
217
(e) The
Securities Administrator shall perform on behalf of each Trust REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Securities Administrator shall provide (i) to any
Transferor of a Residual Certificate such information as is necessary for the
application of any tax relating to the transfer of a Residual Certificate to
any
Person who is not a Permitted Transferee upon receipt of additional reasonable
compensation, (ii) to the Certificateholders such information or reports as
are
required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service
the
name, title, address and telephone number of the person who will serve as the
representative of each Trust REMIC. The Depositor shall provide or cause to
be
provided to the Securities Administrator, within ten (10) days after the Closing
Date, all information or data that the Securities Administrator reasonably
determines to be relevant for tax purposes as to the valuations and issue prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) To
the
extent in the control of the Trustee or the Securities Administrator, each
such
Person (i) shall take such action and shall cause each REMIC created hereunder
to take such action as shall be necessary to create or maintain the status
thereof as a REMIC under the REMIC Provisions, (ii) shall not take any action,
cause the Trust Fund to take any action or fail to take (or fail to cause to
be
taken) any action that, under the REMIC Provisions, if taken or not taken,
as
the case may be, could (A) endanger the status of each Trust REMIC as a REMIC
or
(B) result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
forth in Section 860G(d) of the Code) (either such event, an “Adverse REMIC
Event”) unless such action or inaction is permitted under this Agreement or the
Trustee and the Securities Administrator have received an Opinion of Counsel,
addressed to the them (at the expense of the party seeking to take such action
but in no event at the expense of the Trustee or the Securities Administrator)
to the effect that the contemplated action will not, with respect to any Trust
REMIC, endanger such status or result in the imposition of such a tax, nor
(iii)
shall the Securities Administrator take or fail to take any action (whether
or
not authorized hereunder) as to which the Trustee has advised it in writing
that
it has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action; provided that the Securities
Administrator may conclusively rely on such Opinion of Counsel and shall incur
no liability for its action or failure to act in accordance with such Opinion
of
Counsel. In addition, prior to taking any action with respect to any Trust
REMIC
or the respective assets of each, or causing any Trust REMIC to take any action,
which is not contemplated under the terms of this Agreement, the Securities
Administrator will consult with the Trustee or its designee, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur
with
respect to any Trust REMIC, and the Securities Administrator shall not take
any
such action or cause any Trust REMIC to take any such action as to which the
Trustee has advised it in writing that an Adverse REMIC Event could occur.
The
Trustee may consult with counsel (and conclusively rely upon the advice of
such
counsel) to make such written advice, and the cost of same shall be borne by
the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee.
218
(g) In
the
event that any tax is imposed on “prohibited transactions” of any REMIC created
hereunder as defined in Section 860F(a)(2) of the Code, on the “net income
from foreclosure property” of such REMIC as defined in Section 860G(c) of
the Code, on any contributions to any such REMIC after the Startup Day therefor
pursuant to Section 860G(d) of the Code, or any other tax is imposed by the
Code or any applicable provisions of state or local tax laws, such tax shall
be
charged (i) to the Trustee pursuant to Section 11.03 of this Agreement, if
such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article XI, (ii) to the Securities Administrator pursuant
to Section 11.03, if such tax arises out of or results from a breach by the
Securities Administrator of any of its obligations under this Article XI, (iii)
to the Master Servicer pursuant to Section 11.03 of this Agreement, if such
tax arises out of or results from a breach by the Master Servicer of any of
its
obligations under Article IV or under this Article XI, (iv) to the Servicer
pursuant to Section 11.03 of this Agreement, if such tax arises out of or
results from a breach by the Servicer of any of its obligations under Article
III or under this Article XI, or (v) in all other cases, against amounts on
deposit in the Distribution Account and shall be paid by withdrawal
therefrom.
(h) The
Securities Administrator shall, for federal income tax purposes, maintain books
and records with respect to each Trust REMIC on a calendar year and on an
accrual basis.
(i) Following
the Startup Day, neither the Securities Administrator nor the Trustee shall
accept any contributions of assets to any Trust REMIC other than in connection
with any Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03 unless it shall have received an Opinion of Counsel to the
effect that the inclusion of such assets in the Trust Fund will not cause the
related REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding or subject such REMIC to any tax under the REMIC Provisions
or
other applicable provisions of federal, state and local law or
ordinances.
(j) Neither
the Trustee nor the Securities Administrator shall knowingly enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services nor permit either REMIC to receive any income from assets other
than “qualified mortgages” as defined in Section 860G(a)(3) of the Code or
“permitted investments” as defined in Section 860G(a)(5) of the
Code.
(k) The
Securities Administrator shall apply for an employer identification number
with
the Internal Revenue Service via a Form SS-4 or other comparable method for
each
REMIC. In connection with the foregoing, the Securities Administrator shall
provide the name and address of the person who can be contacted to obtain
information required to be reported to the holders of Regular Interests in
each
REMIC as required by IRS Form 8811.
SECTION
11.02. Prohibited
Transactions and Activities.
None
of
the Depositor, the Servicer, the Securities Administrator, the Master Servicer
or the Trustee shall sell, dispose of or substitute for any of the Mortgage
Loans (except in connection with (i) the foreclosure of a Mortgage Loan,
including but not limited to, the acquisition or sale of a Mortgaged Property
acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii)
the termination of REMIC I pursuant to Article X of this Agreement, (iv) a
substitution pursuant to Article II of this Agreement or (v) a purchase of
Mortgage Loans pursuant to Article II of this Agreement), nor acquire any assets
for any Trust REMIC (other than REO Property acquired in respect of a defaulted
Mortgage Loan), nor sell or dispose of any investments in the Collection Account
or the Distribution Account for gain, nor accept any contributions to any Trust
REMIC after the Closing Date (other than a Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03), unless it has received an
Opinion of Counsel, addressed to the Trustee and the Securities Administrator
(at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of
the
Trustee) that such sale, disposition, substitution, acquisition or contribution
will not (a) affect adversely the status of any Trust REMIC as a REMIC or (b)
cause any Trust REMIC to be subject to a tax on “prohibited transactions” or
“contributions” pursuant to the REMIC Provisions.
219
SECTION
11.03. Indemnification.
(a) The
Trustee agrees to be liable for any taxes and costs incurred by the Trust Fund,
the Depositor, the Master Servicer, the Securities Administrator or the Servicer
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer, the Securities
Administrator or the Servicer as a result of the Trustee’s failure to perform
its covenants set forth in this Article XI in accordance with the standard
of
care of the Trustee set forth in this Agreement.
(b) The
Servicer agrees to indemnify the Trust Fund, the Depositor, the Master Servicer,
the Securities Administrator and the Trustee for any taxes and costs including,
without limitation, any reasonable attorneys’ fees imposed on or incurred by the
Trust Fund, the Depositor, the Master Servicer, the Securities Administrator
or
the Trustee, as a result of the Servicer’s failure to perform its covenants set
forth in Article III in accordance with the standard of care of the Servicer
set
forth in this Agreement.
(c) The
Master Servicer agrees to indemnify the Trust Fund, the Depositor, the Servicer
and the Trustee for any taxes and costs including, without limitation, any
reasonable attorneys’ fees imposed on or incurred by the Trust Fund, the
Depositor, the Servicer or the Trustee, as a result of the Master Servicer’s
failure to perform its covenants set forth in Article IV in accordance with
the
standard of care of the Master Servicer set forth in this
Agreement.
(d) The
Securities Administrator agrees to be liable for any taxes and costs incurred
by
the Trust Fund, the Depositor, the Servicer or the Trustee including any
reasonable attorneys’ fees imposed on or incurred by the Trust Fund, the
Depositor, the Servicer or the Trustee as a result of the Securities
Administrator’s failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Securities Administrator set forth
in this Agreement.
220
ARTICLE
XII
MISCELLANEOUS
PROVISIONS
SECTION
12.01. Amendment.
This
Agreement may be amended from time to time by the Depositor, the Servicer,
the
Master Servicer, the Securities Administrator and the Trustee, with the consent
of the Swap Provider (which consent shall not be unreasonably withheld) but
without the consent of any of the Certificateholders, (i) to cure any ambiguity
or defect, (ii) to correct, modify or supplement any provisions herein
(including to give effect to the expectations of Certificateholders), (iii)
to
ensure compliance with Regulation AB, or (iv) to make any other provisions
with
respect to matters or questions arising under this Agreement which shall not
be
inconsistent with the provisions of this Agreement and that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect in any material respect the interests of any Certificateholder; provided
that any such amendment shall be deemed not to adversely affect in any material
respect the interests of the Certificateholders and no such Opinion of Counsel
shall be required if the Person requesting such amendment obtains a letter
from
each Rating Agency stating that such amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates. No amendment shall be deemed to adversely affect in any material
respect the interests of any Certificateholder who shall have consented thereto,
and no Opinion of Counsel shall be required to address the effect of any such
amendment on any such consenting Certificateholder.
This
Agreement may also be amended from time to time by the Depositor, the Servicer,
the Master Servicer, the Securities Administrator and the Trustee with the
consent of the Swap Provider (which consent shall not be unreasonably withheld)
and the Holders of Certificates entitled to at least 66% of the Voting Rights
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed
on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without
the
consent of the Holders of Certificates of such Class evidencing at least 66%
of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the
name of the Depositor or the Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates. Without
limiting the generality of the foregoing, any amendment to this Agreement
required in connection with the compliance with or the clarification of any
reporting obligations described in Section 5.06 hereof shall not require
the consent of any Certificateholder and without the need for any Opinion of
Counsel or Rating Agency confirmation.
221
Notwithstanding
any contrary provision of this Agreement, the Trustee shall not consent to
any
amendment to this Agreement unless it shall have first received an Opinion
of
Counsel to the effect that such amendment is permitted hereunder and will not
result in the imposition of any tax on any Trust REMIC pursuant to the REMIC
Provisions or cause any Trust REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding and that such amendment is authorized
or
permitted by this Agreement.
Promptly
after the execution of any such amendment the Trustee shall furnish a copy
of
such amendment to each Certificateholder.
It
shall
not be necessary for the consent of Certificateholders under this
Section 12.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.
The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
The
cost
of any Opinion of Counsel to be delivered pursuant to this Section 12.01
shall be borne by the Person seeking the related amendment, but in no event
shall such Opinion of Counsel be an expense of the Trustee.
The
Trustee may, but shall not be obligated to enter into any amendment pursuant
to
this Section that affects its rights, duties and immunities under this
Agreement or otherwise.
SECTION
12.02. Recordation
of Agreement; Counterparts.
To
the
extent permitted by applicable law, this Agreement is subject to recordation
in
all appropriate public offices for real property records in all the counties
or
other comparable jurisdictions in which any or all of the properties subject
to
the Mortgages are situated, and in any other appropriate public recording office
or elsewhere, such recordation to be effected by the Depositor at the expense
of
the Certificateholders, but only upon direction of the Trustee accompanied
by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.
For
the
purpose of facilitating the recordation of this Agreement as herein provided
and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same
instrument.
SECTION
12.03. 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
for
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 any 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.
222
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 unless also the Holders of Certificates
entitled to at least 25% of the Voting Rights shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name
as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to
be
incurred therein or thereby, and the Trustee, for 15 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 is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder. and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatsoever by virtue of any provision of
this
Agreement to affect, disturb or prejudice the rights of the Holders of any
other
of such Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit
of
all Certificateholders. For the protection and enforcement of the provisions
of
this Section, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
SECTION
12.04. 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 without regard to conflicts of laws
principles thereof other than Section 5-1401 of the New York General Obligations
Law which shall govern.
SECTION
12.05. Notices.
All
directions, demands and notices hereunder shall be in writing and shall be
deemed to have been duly given when received if sent by facsimile, receipt
confirmed, if personally delivered at or mailed by first class mail, postage
prepaid, or by express delivery service or delivered in any other manner
specified herein, to (a) in the case of the Depositor, ACE Securities Corp.,
AMACAR GROUP, 6525 Morrison Boulevard, Suite 318, Charlotte, North Carolina28211, Attention: Juliana Johnson (telecopy number: (704) 365-1362), with a
copy
to Deutsche Bank Securities, Inc., 60 Wall Street, New York, New York,
Attention: Legal Department (telecopy number: (212) 797-4561),or such other
address or telecopy number as may hereafter be furnished to the Servicer, the
Master Servicer, the Securities Administrator and the Trustee in writing by
the
Depositor, (b) in the case of the Master Servicer and the Securities
Administrator, P.O. Box 98, Columbia, Maryland21046 and for overnight delivery
to 9062 Old Annapolis Road, Columbia, Maryland21045, Attention: Ace Securities
Corp., 2006-FM1 (telecopy number: (410) 715-2380), or such other address or
telecopy number as may hereafter be furnished to the Trustee, the Depositor
and
the Servicer in writing by the Master Servicer or the Securities Administrator,
(c) in the case of the Trustee, at the Corporate Trust Office or such other
address or telecopy number as the Trustee may hereafter be furnish to the
Servicer, the Master Servicer, the Securities Administrator and the Depositor
in
writing by the Trustee and (d) in the case of the Servicer, Fremont
Investment & Loan, 2727 E. Imperial Hwy, Brea, California92821,
Attention: Emilia Lara (telecopy number: (714) 431-1228, or such other address
or telecopy number as may hereafter be furnished to the Trustee, the Master
Servicer, the Securities Administrator and the Depositor in writing by the
Servicer. Any notice required or permitted to be given to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given when mailed, whether or not the Certificateholder receives such
notice. A copy of any notice required to be telecopied hereunder also shall
be
mailed to the appropriate party in the manner set forth above.
223
SECTION
12.06. Severability
of Provisions.
If
any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way
affect the validity or enforceability of the other provisions of this Agreement
or of the Certificates or the rights of the Holders thereof.
SECTION
12.07. Notice
to
Rating Agencies.
The
Trustee shall use its best efforts promptly to provide notice to the Rating
Agencies with respect to each of the following of which a Responsible Officer
has actual knowledge:
1. Any
material change or amendment to this Agreement;
2. The
occurrence of any Servicer Event of Default or Master Servicer Event of Default
that has not been cured or waived;
3. The
resignation or termination of the Servicer, the Master Servicer or the
Trustee;
4. The
repurchase or substitution of Mortgage Loans pursuant to or as contemplated
by
Section 2.03 of this Agreement;
5. The
final
payment to the Holders of any Class of Certificates; and
6. Any
change in the location of the Distribution Account.
In
addition, the Securities Administrator shall promptly make available to each
Rating Agency copies of each report to Certificateholders described in
Section 5.02 of this Agreement.
224
The
Servicer shall make available to each Rating Agency copies of the
following:
7. Each
Annual Statement of Compliance described in Section 3.17 of this Agreement;
and
8. Each
Assessment of Compliance and Attestation Report described in Section 3.18
of this Agreement.
Any
such
notice pursuant to this Section 12.07 shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service to Standard &
Poor’s, a division of the McGraw-Hill Companies, Inc., 55 Water Street, NewYork, New York10041; and to Moody’s Investors Service, Inc., 99 Church Street,
New York, New York10007, or such other addresses as the Rating Agencies may
designate in writing to the parties hereto.
SECTION
12.08. Article
and Section References.
All
article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.
SECTION
12.09. Grant
of
Security Interest.
It
is the
express intent of the parties hereto that the conveyance of the Mortgage Loans
by the Depositor to the Trustee, on behalf of the Trust and for the benefit
of
the Certificateholders, be, and be construed as, a sale of the Mortgage Loans
by
the Depositor and not a pledge of the Mortgage Loans to secure a debt or other
obligation of the Depositor. However, in the event that, notwithstanding the
aforementioned intent of the parties, the Mortgage Loans are held to be property
of the Depositor, then, (a) it is the express intent of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the
Trustee, on behalf of the Trust and for the benefit of the Certificateholders,
to secure a debt or other obligation of the Depositor and (b)(1) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles
8
and 9 of the Uniform Commercial Code as in effect from time to time in the
State
of New York; (2) the conveyance provided for in Section 2.01 shall be
deemed to be a grant by the Depositor to the Trustee, on behalf of the Trust
and
for the benefit of the Certificateholders, of a security interest in all of
the
Depositor’s right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary,
of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3)
the
obligations secured by such security agreement shall be deemed to be all of
the
Depositor’s obligations under this Agreement, including the obligation to
provide to the Certificateholders the benefits of this Agreement relating to
the
Mortgage Loans and the Trust Fund; and (4) notifications to persons holding
such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts
or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee, on
behalf of the Trust and for the benefit of the Certificateholders, a security
interest in the Mortgage Loans and all other property described in clause (2)
of
the preceding sentence, for the purpose of securing to the Trustee the
performance by the Depositor of the obligations described in clause (3) of
the
preceding sentence. Notwithstanding the foregoing, the parties hereto intend
the
conveyance pursuant to Section 2.01 to be a true, absolute and
unconditional sale of the Mortgage Loans and assets constituting the Trust
Fund
by the Depositor to the Trustee, on behalf of the Trust and for the benefit
of
the Certificateholders.
225
SECTION
12.10. Survival
of Indemnification.
Any
and
all indemnities to be provided by any party to this Agreement shall survive
the
termination and resignation of any party hereto and the termination of this
Agreement.
SECTION
12.11. Intention
of the Parties and Interpretation.
Each
of
the parties acknowledges and agrees that the purpose of Sections 3.17, 3.18,
3.19, 4.15, 4.16, 4.17, 4.18 and 5.06 of this Agreement is to facilitate
compliance by the Sponsor, the Master Servicer, the Securities Administrator
and
the Depositor with the provisions of Regulation AB promulgated by the SEC under
the Exchange Act (17 C.F.R. §§ 229.1100 - 229.1123), as such may be amended from
time to time and subject to clarification and interpretive advice as may be
issued by the staff of the SEC from time to time. Therefore, each of the parties
agrees that (a) the obligations of the parties hereunder shall be interpreted
in
such a manner as to accomplish that purpose, (b) 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, (c)
the
parties shall comply with requests made by the Master Servicer, Securities
Administrator, Sponsor or the Depositor for delivery of additional or different
information as the Master Servicer, Securities Administrator, Sponsor or the
Depositor may determine in good faith is necessary to comply with the provisions
of Regulation AB.
SECTION
12.12. Indemnification.
Each
of
the Depositor, Master Servicer, Securities Administrator, Servicer and any
Servicing Function Participant engaged by such party, respectively, shall
indemnify and hold harmless the Master Servicer, the Servicer (solely with
respect to subsection (c)), the Securities Administrator and the Depositor,
respectively, and each of its directors, officers, employees, agents, and
affiliates from and against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments and
other
costs and expenses arising out of or based upon (a) any breach by such party
of
any if its obligations under hereunder, including particularly its obligations
to provide any Assessment of Compliance, Attestation Report, Compliance
Statement or any information, data or materials required to be included in
any
1934 Act report, (b) any material misstatement or omission in any information,
data or materials provided by such party (or, in the case of the Securities
Administrator or Master Servicer, any material misstatement or material omission
in (i) any Compliance Statement, Assessment of Compliance or Attestation Report
delivered by it, or by any Servicing Function Participant engaged by it,
pursuant to this Agreement, or (ii) any Additional Form 10-D Disclosure,
Additional Form 10-K Disclosure or Form 8-K Disclosure concerning the Master
Servicer or the Securities Administrator), or (c) the negligence, bad faith
or
willful misconduct of such indemnifying party in connection with its performance
hereunder. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Master Servicer, the Servicer, the Securities
Administrator or the Depositor, as the case may be, then each such party agrees
that it shall contribute to the amount paid or payable by the Master Servicer,
the Servicer, the Securities Administrator or the Depositor, as applicable,
as a
result of any claims, losses, damages or liabilities incurred by such party
in
such proportion as is appropriate to reflect the relative fault of the
indemnified party on the one hand and the indemnifying party on the other.
This
indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
226
SECTION
12.13. Swap
Provider as a Third Party Beneficiary.
The
Swap
Provider
shall be
deemed a third party beneficiary of this Agreement to the same extent as if
it
were a party hereto, and shall have the right to enforce the provisions of
this
Agreement.
227
IN WITNESS WHEREOF, the Depositor, the Servicer, the Master Servicer, the
Securities Administrator and the Trustee have caused their names to be signed
hereto by their respective officers thereunto duly authorized, in each case
as
of the day and year first above written.
ACE
SECURITIES CORP.,
as Depositor
By:
Name:
Title:
By:
Name:
Title:
FREMONT
INVESTMENT & LOAN
as Servicer
By:
Name:
Title:
HSBC
BANK USA, NATIONAL ASSOCIATION
not in its individual capacity but solely as
Trustee
By:
Name:
Title:
WELLS
FARGO BANK, N.A.
as Master Servicer and Securities
Administrator
By:
Name:
Title:
Acknowledged
and Agreed for purposes of Section 9.05:
DB STRUCTURED PRODUCTS,
INC
By:
Name:
Title:
By:
Name:
Title:
Acknowledged
and Agreed for purposes of Section 7.08, 7.09 and
7.10:
CLAYTON FIXED
INCOME SERVICES
INC.
By:
Name:
Title:
STATE
OF
)
)
ss.:
COUNTY
OF
)
On
the
___ day of August 2006, before me, a notary public in and for said State,
personally appeared _____________________ known to me to be a
_____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
____________________________________
Notary
Public
[Notarial Seal]
My
commission
expires
STATE
OF
)
)
ss.:
COUNTY
OF
)
On
the
___ day of August 2006, before me, a notary public in and for said State,
personally appeared _____________________ known to me to be a
_____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
____________________________________
Notary
Public
[Notarial Seal]
My
commission
expires
STATE
OF
)
)
ss.:
COUNTY
OF
)
On
the
___ day of August 2006, before me, a notary public in and for said State,
personally appeared _____________________ known to me to be a
_____________________ of Wells Fargo Bank, National Association, one of the
national banking associations that executed the within instrument, and also
known to me to be the person who executed it on behalf of said entity, and
acknowledged to me that entity executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
____________________________________
Notary
Public
[Notarial Seal]
My
commission
expires
STATE
OF
)
)
ss.:
COUNTY
OF
)
On
the
___ day of August 2006, before me, a notary public in and for said State,
personally appeared _____________________ known to me to be a
_____________________ of Fremont Investment & Loan, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
____________________________________
Notary
Public
[Notarial Seal]
My
commission
expires
STATE
OF
)
)
ss.:
COUNTY
OF
)
On
the
___ day of August 2006, before me, a notary public in and for said State,
personally appeared _____________________ known to me to be a
_____________________ of HSBC Bank USA, National Association, one of the
national banking associations that executed the within instrument, and also
known to me to be the person who executed it on behalf of said national banking
association, and acknowledged to me that such national banking association
executed the within instrument.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
____________________________________
Notary
Public
[Notarial Seal]
My
commission
expires
EXHIBIT
A-1
FORM
OF
CLASS A-[1][2A][2B][2C][2D] CERTIFICATE
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS 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”).
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
PRIOR
TO THE TERMINATION OF THE SUPPLEMENTAL INTEREST TRUST, ANY PERSON ACQUIRING
THIS
CERTIFICATE SHALL BE DEEMED TO HAVE MADE THE REPRESENTATIONS IN SECTION 6.02(c)
OF THE POOLING AND SERVICING AGREEMENT.
A-1-1
Series
2006-FM1, Class A-[1][2A][2B][2C][2D]
Aggregate
Certificate Principal Balance of the Class A-[1][2A][2B][2C][2D]
Certificates as of the Issue Date: $_____________
Pass-Through
Rate: Variable
Denomination:
$____________
Date
of Pooling and Servicing Agreement and Cut-off Date: August 1,2006
DISTRIBUTIONS
IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE
MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE
PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE
AS
THE DENOMINATION OF THIS CERTIFICATE.
ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-FM1
ASSET
BACKED PASS-THROUGH CERTIFICATE
evidencing
a beneficial ownership interest in a Trust Fund (the “Trust Fund”) consisting
primarily of a pool of conventional one- to four-family, first and second lien,
fixed and adjustable-rate mortgage loans (the “Mortgage Loans”) formed and sold
by
ACE
SECURITIES CORP.
THIS
CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE SECURITIES
CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE
UNITED STATES.
This
certifies that ________________ is the registered owner of a Percentage Interest
(obtained by dividing the denomination of this Certificate by the aggregate
Certificate Principal Balance of the Class A-[1][2A][2B][2C][2D] Certificates
as
of the Issue Date) in that certain beneficial ownership interest evidenced
by
all of the Class A-[1][2A][2B][2C][2D] Certificates in REMIC III created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
“Agreement”), among ACE Securities Corp., as depositor (hereinafter called the
“Depositor”, which term includes any successor entity under the Agreement),
Wells Fargo Bank, N.A. as master servicer (the “Master Servicer”) and securities
administrator (the “Securities Administrator”), Fremont Investment & Loan as
servicer (the “Servicer”) and HSBC Bank USA, 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
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
A-1-2
Pursuant
to the terms of the Agreement, distributions will be made on the 25th
day of
each month or, if such 25th
day is
not a Business Day, the Business Day immediately following such 25th
day (a
“Distribution Date”), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered on the Business
Day
immediately preceding such Distribution Date (the “Record Date”), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to the Holders of Class
A-[1][2A][2B][2C][2D] Certificates on such Distribution Date pursuant to the
Agreement.
All
distributions to the Holder of this Certificate under the Agreement will be
made
or caused to be made by the Securities Administrator by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Securities Administrator in writing
at
least five (5) Business Days prior to the Record Date immediately prior to
such
Distribution Date and is the registered owner of Class A-[1][2A][2B][2C][2D]
Certificates the aggregate initial Certificate Principal Balance of which is
in
excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A-[1][2A][2B][2C][2D]
Certificates, or otherwise by check mailed by first class mail to the address
of
the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on
this
Certificate will be made after due notice by the Securities Administrator of
the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Securities Administrator
for that purpose as provided in the Agreement.
The
Pass-Through Rate applicable to the calculation of interest payable with respect
to this Certificate on any Distribution Date shall be a rate per annum equal
to
the lesser of (i) One-Month LIBOR plus [_____]%, in the case of each
Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired
in
respect thereof) remaining in the Trust Fund is reduced to less than or equal
to
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus [_____]%, in the case of any Distribution Date
thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This
Certificate is one of a duly authorized issue of Certificates designated as
Asset Backed Pass-Through Certificate of the Series specified on the face hereof
(herein called the “Certificates”) and representing a Percentage Interest in the
Class of Certificates specified on the face hereof equal to the denomination
specified on the face hereof divided by the aggregate Certificate Principal
Balance of the Class of Certificates specified on the face hereof.
The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and payments received pursuant to
the
Swap Agreement, all as more specifically set forth herein and in the Agreement.
As provided in the Agreement, withdrawals from the Collection Account and the
Distribution Account may be made from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement
of
advances made, or certain expenses incurred, with respect to the Mortgage Loans.
A-1-3
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Depositor,
the
Master Servicer, the Trustee, the Securities Administrator, the Servicer and
the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer, the Trustee, the Securities Administrator and
the Servicer with the consent of the Swap Provider and the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent
by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
upon
surrender of this Certificate for registration of transfer at the offices or
agencies appointed by the Securities Administrator as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or
transferees.
Prior
to
the termination of the Supplemental Interest Trust, any transferee of this
Certificate shall be deemed to make the representations in Section 6.02(c)
of
the Agreement.
The
Certificates are issuable in fully registered form only without coupons in
Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No
service charge will be made for any such registration of transfer or exchange
of
Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in
connection with any transfer or exchange of Certificates.
The
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer and any agent of the Depositor, the Master Servicer, the Trustee,
the
Securities Administrator or the Servicer may treat the Person in whose name
this
Certificate is registered as the owner hereof for all purposes, and none of
the
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer nor any such agent shall be affected by notice to the
contrary.
The
obligations created by the Agreement and the Trust Fund created thereby shall
terminate upon payment to the Certificateholders of all amounts held by the
Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of
any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Scheduled Principal Balance of
the
Mortgage Loans (and properties acquired in respect thereof) at the time of
purchase being less than or equal to 10% of the aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date.
A-1-4
The
recitals contained herein shall be taken as statements of the Depositor and
neither the Trustee nor the Securities Administrator assumes any responsibility
for their correctness.
Unless
the certificate of authentication hereon has been executed by the Securities
Administrator, by manual signature, this Certificate shall not be entitled
to
any benefit under the Agreement or be valid for any purpose.
A-1-5
IN
WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be
duly executed.
Dated:
WELLS FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class A-[1][2A][2B][2C][2D] Certificates referred to in the
within-mentioned Agreement.
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Signatory
A-1-6
ABBREVIATIONS
The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN
COM -
as
tenants in common
UNIF
GIFT MIN ACT -
Custodian
(Cust)
(Minor)
under
Uniform Gifts
to
Minors Act
TEN
ENT -
as
tenants by the entireties
_________________
(State)
JT
TEN -
as
joint tenants with right
if
survivorship and not as
tenants
in common
Additional
abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
(Please
print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a
Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificate and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I
(we)
further direct the Securities Administrator to issue a new Certificate of a
like
Percentage Interest and Class to the above named assignee and deliver such
Certificate
to the following address:
______________________________________________________________________________________________
This
information is provided by
____________________________________________________________________________________________________________
assignee
named above, or
_______________________________________________________________________________________________________________________
its
agent.
A-1-7
EXHIBIT
A-2
FORM
OF
CLASS M-[1][2][3][4][5][6][7][8][9] CERTIFICATE
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS 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”).
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS
CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES [[,/AND] CLASS M-1
CERTIFICATES [,/AND] CLASS M-2 CERTIFICATES[,/AND] CLASS M-3 CERTIFICATES
[,/AND] CLASS M-4 CERTIFICATES [,/AND] CLASS M-5 CERTIFICATES [,/AND] CLASS
M-6
CERTIFICATES [,/AND] CLASS M-7 CERTIFICATES [,/AND] CLASS M-8 CERTIFICATES
TO
THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
ANY
TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO MAKE THE REPRESENTATIONS
SET
FORTH IN SECTION 6.02(c) OF THE AGREEMENT REFERRED TO
HEREIN.
THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED
IN
THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF
THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL
BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES
ADMINISTRATOR NAMED HEREIN.
A-2-1
Series
2006-FM1, Class M-[1][2][3][4][5][6][7][8][9]
Aggregate
Certificate Principal Balance of the Class M-[1][2][3][4][5][6][7][8][9]
Certificates as of the Issue Date: $______________
ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-FM1
ASSET
BACKED PASS-THROUGH CERTIFICATE
evidencing
a beneficial ownership interest in a Trust Fund (the “Trust Fund”) consisting
primarily of a pool of conventional one- to four-family, first and second lien,
fixed and adjustable-rate mortgage loans (the “Mortgage Loans”) formed and sold
by
ACE
SECURITIES CORP.
THIS
CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE SECURITIES
CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE
UNITED STATES.
This
certifies that _____________________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class
M-[1][2][3][4][5][6][7][8][9] Certificates as of the Issue Date) in that certain
beneficial ownership interest evidenced by of all the Class
M-[1][2][3][4][5][6][7][8][9] Certificates in REMIC III created pursuant to
a
Pooling and Servicing Agreement, dated as specified above (the “Agreement”),
among ACE Securities Corp., as depositor (hereinafter called the “Depositor”,
which term includes any successor entity under the Agreement), Wells Fargo
Bank,
N.A. as master servicer (the “Master Servicer”) and securities administrator
(the “Securities Administrator”), Fremont Investment & Loan as servicer (the
“Servicer”) and HSBC Bank USA, 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 issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
A-2-2
Pursuant
to the terms of the Agreement, distributions will be made on the 25th
day of
each month or, if such 25th
day is
not a Business Day, the Business Day immediately following such 25th
day (a
“Distribution Date”), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered on the Business
Day
immediately preceding such Distribution Date (the “Record Date”), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to the Holders of Class
M-[1][2][3][4][5][6][7][8][9] Certificates on such Distribution Date pursuant
to
the Agreement.
All
distributions to the Holder of this Certificate under the Agreement will be
made
or caused to be made by the Securities Administrator by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Securities Administrator in writing
at
least five (5) Business Days prior to the Record Date immediately prior to
such
Distribution Date and is the registered owner of Class
M-[1][2][3][4][5][6][7][8][9] Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or
(ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
M-[1][2][3][4][5][6][7][8][9] Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name
and
address shall appear on the Certificate Register. Notwithstanding the above,
the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the
Agreement.
The
Pass-Through Rate applicable to the calculation of interest payable with respect
to this Certificate on any Distribution Date shall equal a rate per annum equal
to the lesser of (i) One-Month LIBOR plus [____]% , in the case of each
Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired
in
respect thereof) remaining in the Trust Fund is reduced to less than or equal
to
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus [____]%, in the case of any Distribution Date
thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This
Certificate is one of a duly authorized issue of Certificates designated as
Asset Backed Pass-Through Certificate of the Series specified on the face hereof
(herein called the “Certificates”) and representing a Percentage Interest in the
Class of Certificates specified on the face hereof equal to the denomination
specified on the face hereof divided by the aggregate Certificate Principal
Balance of the Class of Certificates specified on the face hereof.
The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and payments received pursuant to
the
Swap Agreement, all as more specifically set forth herein and in the Agreement.
As provided in the Agreement, withdrawals from the Collection Account and the
Distribution Account may be made from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement
of
advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
A-2-3
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Depositor,
the
Master Servicer, the Trustee, the Securities Administrator, the Servicer and
the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer, the Trustee, the Securities Administrator and
the Servicer with the consent of the Swap Provider and the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent
by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
upon
surrender of this Certificate for registration of transfer at the offices or
agencies appointed by the Securities Administrator as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or
transferees.
The
Certificates are issuable in fully registered form only without coupons in
Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
Any
transferee of this Certificate shall be deemed to make the representations
set
forth in Section 6.02(c) of the Agreement.
No
service charge will be made for any such registration of transfer or exchange
of
Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in
connection with any transfer or exchange of Certificates.
The
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer and any agent of the Depositor, the Master Servicer, the Trustee,
the
Securities Administrator or the Servicer may treat the Person in whose name
this
Certificate is registered as the owner hereof for all purposes, and none of
the
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer nor any such agent shall be affected by notice to the
contrary.
A-2-4
The
obligations created by the Agreement and the Trust Fund created thereby shall
terminate upon payment to the Certificateholders of all amounts held by the
Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of
any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Scheduled Principal Balance of
the
Mortgage Loans (and properties acquired in respect thereof) at the time of
purchase being less than or equal to 10% of the aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date.
The
recitals contained herein shall be taken as statements of the Depositor and
neither the Trustee nor the Securities Administrator assume any responsibility
for their correctness.
Unless
the certificate of authentication hereon has been executed by the Securities
Administrator by manual signature, this Certificate shall not be entitled to
any
benefit under the Agreement or be valid for any purpose.
A-2-5
IN
WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be
duly executed.
Dated:
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class M-[1][2][3][4][5][6][7][8][9] Certificates referred to in
the
within-mentioned Agreement.
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Signatory
A-2-6
ABBREVIATIONS
The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN
COM -
as
tenants in common
UNIF
GIFT MIN ACT -
Custodian
(Cust)
(Minor)
under
Uniform Gifts
to
Minors Act
TEN
ENT -
as
tenants by the entireties
________________
(State)
JT
TEN -
as
joint tenants with right
if
survivorship and not as
tenants
in common
Additional
abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
(Please
print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a
Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer
of
such interest to assignee on the Certificate Register of the Trust
Fund.
I
(we)
further direct the Securities Administrator to issue a new Certificate of a
like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________________________________________
This
information is provided by
_______________________________________________________________________________________________________
assignee
named above, or
___________________________________________________________________________________________________________
its
agent.
A-2-8
EXHIBIT
A-3
FORM
OF
CLASS M-[10][11] CERTIFICATE
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS 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”).
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS
CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, CLASS M-1 CERTIFICATES,
CLASS M-2 CERTIFICATES, CLASS M-3 CERTIFICATES, CLASS M-4 CERTIFICATES, CLASS
M-5 CERTIFICATES, CLASS M-6 CERTIFICATES, CLASS M-7 CERTIFICATES, CLASS M-8
CERTIFICATES [,/AND] CLASS M-9 CERTIFICATES [AND] CLASS M-10 CERTIFICATES TO
THE
EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED
IN
THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF
THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL
BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES
ADMINISTRATOR NAMED HEREIN.
THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES
LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS
CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN
COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED
STATES WITHIN THE MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE
ACT
(“REGULATION S”), OR (2) WITHIN THE UNITED STATES TO (A) “QUALIFIED
INSTITUTIONAL BUYERS” WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE 144A
UNDER THE ACT (“RULE 144A”) OR (B) TO INSTITUTIONAL INVESTORS THAT ARE
“ACCREDITED INVESTORS” WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF
“REGULATION D” UNDER THE ACT.
A-3-1
[THIS
CERTIFICATE IS A REGULATION S TEMPORARY GLOBAL CERTIFICATE FOR PURPOSES OF
REGULATION S UNDER THE ACT. PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER
OF
(I) THE COMMENCEMENT OF THE OFFERING OF THE OFFERED CERTIFICATES AND (II) THE
CLOSING DATE, THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT.]
[NO
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL CERTIFICATE SHALL BE
ENTITLED TO RECEIVE PAYMENTS OF PRINCIPAL OR INTEREST HEREIN UNLESS THE REQUIRED
CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE AGREEMENT (AS
DEFINED HEREIN).]
[THE
HOLDER OF THIS REGULATION S PERMANENT GLOBAL CERTIFICATE BY ITS ACCEPTANCE
HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE WITHIN
THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
ACT)
PRIOR TO THE DATE WHICH IS THE LATER OF (I) 40 DAYS AFTER THE LATER OF THE
CLOSING DATE AND (II) THE DATE ON WHICH THE REQUISITE CERTIFICATIONS ARE DUE
TO
AND PROVIDED TO THE TRUSTEE AND SECURITIES ADMINISTRATOR PURSUANT TO THE
AGREEMENT (AS DEFINED BELOW), EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT.]
NO
TRANSFER OF THIS CERTIFICATE TO A PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR SECTION 4975 OF THE CODE, ANY
PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY SUCH PLAN OR ANY PERSON
USING “PLAN ASSETS” TO ACQUIRE THIS CERTIFICATE SHALL BE MADE EXCEPT IN
ACCORDANCE WITH SECTION 6.02(c) OF THE AGREEMENT REFERRED TO
HEREIN.
A-3-2
Series
2006-FM1, Class M-[10][11]
Aggregate
Certificate Principal Balance of the Class M-[10][11] Certificates
as of
the Issue
ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-FM1
ASSET
BACKED PASS-THROUGH CERTIFICATE
evidencing
a beneficial ownership interest in a Trust Fund (the “Trust Fund”) consisting
primarily of a pool of conventional one- to four-family, first and second lien,
fixed and adjustable-rate mortgage loans (the “Mortgage Loans”) formed and sold
by
ACE
SECURITIES CORP.
THIS
CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE SECURITIES
CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE
UNITED STATES.
This
certifies that _____________________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class M-[10][11] Certificates
as
of the Issue Date) in that certain beneficial ownership interest evidenced
by of
all the Class M-[10][11] Certificates in REMIC III created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the “Agreement”), among ACE
Securities Corp., as depositor (hereinafter called the “Depositor”, which term
includes any successor entity under the Agreement), Wells Fargo Bank, N.A.
as
master servicer (the “Master Servicer”) and securities administrator (the
“Securities Administrator”), Fremont Investment & Loan as servicer (the
“Servicer”) and HSBC Bank USA, 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 issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
A-3-3
Pursuant
to the terms of the Agreement, distributions will be made on the 25th
day of
each month or, if such 25th
day is
not a Business Day, the Business Day immediately following such 25th
day (a
“Distribution Date”), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered on the Business
Day
immediately preceding such Distribution Date (the “Record Date”), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to the Holders of Class M-[10][11]
Certificates on such Distribution Date pursuant to the Agreement.
All
distributions to the Holder of this Certificate under the Agreement will be
made
or caused to be made by the Securities Administrator by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Securities Administrator in writing
at
least five (5) Business Days prior to the Record Date immediately prior to
such
Distribution Date and is the registered owner of Class M-[10][11] Certificates
the aggregate initial Certificate Principal Balance of which is in excess of
the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class M-[10][11] Certificates, or otherwise by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Securities Administrator of the pendency of such distribution
and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Securities Administrator for that purpose as provided in the
Agreement.
The
Pass-Through Rate applicable to the calculation of interest payable with respect
to this Certificate on any Distribution Date shall equal a rate per annum equal
to the lesser of (i) One-Month LIBOR plus [____]% , in the case of each
Distribution Date through and including the Distribution Date on which the
aggregate principal balance of the Mortgage Loans (and properties acquired
in
respect thereof) remaining in the Trust Fund is reduced to less than or equal
to
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus [____]%, in the case of any Distribution Date
thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This
Certificate is one of a duly authorized issue of Certificates designated as
Asset Backed Pass-Through Certificate of the Series specified on the face hereof
(herein called the “Certificates”) and representing a Percentage Interest in the
Class of Certificates specified on the face hereof equal to the denomination
specified on the face hereof divided by the aggregate Certificate Principal
Balance of the Class of Certificates specified on the face hereof.
The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and payments received pursuant to
the
Swap Agreement, all as more specifically set forth herein and in the Agreement.
As provided in the Agreement, withdrawals from the Collection Account and the
Distribution Account may be made from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement
of
advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
A-3-4
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Depositor,
the
Master Servicer, the Trustee, the Securities Administrator, the Servicer and
the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer, the Trustee, the Securities Administrator and
the Servicer with the consent of the Swap Provider and the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent
by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
upon
surrender of this Certificate for registration of transfer at the offices or
agencies appointed by the Securities Administrator as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or
transferees.
The
Certificates are issuable in fully registered form only without coupons in
Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No
transfer of this Certificate shall be made unless the transfer is made pursuant
to an effective registration statement under the Act, and an effective
registration or qualification under applicable state securities laws, or is
made
in a transaction that does not require such registration or qualification.
In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon
Rule
144A or Regulation S under the Act, written certifications from the Holder
of
the Certificate desiring to effect the transfer, and from such Holder’s
prospective transferee, substantially in the forms attached to the Agreement
as
Exhibit B-1, (ii) if such transfer is purportedly being made in reliance upon
Rule 501(a) under the Act, written certifications from the Holder of the
Certificate desiring to effect the transfer and from such Holder’s prospective
transferee, substantially in the form attached to the Agreement as Exhibit
B-2
and (iii) in all other cases, an Opinion of Counsel satisfactory to it that
such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee, the Master Servicer or the Securities Administrator in their respective
capacities as such), together with copies of the written certification(s) of
the
Holder of the Certificate desiring to effect the transfer and/or such Holder’s
prospective transferee upon which such Opinion of Counsel is based. None of
the
Depositor, the Trustee or the Securities Administrator is obligated to register
or qualify the Class of Certificates specified on the face hereof under the
Act
or any other securities law or to take any action not otherwise required under
the Agreement to permit the transfer of such Certificates without registration
or qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
A-3-5
No
transfer of this Certificate to a Plan subject to ERISA or Section 4975 of
the
Code, any Person acting, directly or indirectly, on behalf of any such Plan
or
any Person using “Plan Assets” to acquire this Certificate shall be made except
in accordance with Section 6.02(c) of the Agreement.
No
service charge will be made for any such registration of transfer or exchange
of
Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in
connection with any transfer or exchange of Certificates.
The
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer and any agent of the Depositor, the Master Servicer, the Trustee,
the
Securities Administrator or the Servicer may treat the Person in whose name
this
Certificate is registered as the owner hereof for all purposes, and none of
the
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer nor any such agent shall be affected by notice to the
contrary.
The
obligations created by the Agreement and the Trust Fund created thereby shall
terminate upon payment to the Certificateholders of all amounts held by the
Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of
any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Scheduled Principal Balance of
the
Mortgage Loans (and properties acquired in respect thereof) at the time of
purchase being less than or equal to 10% of the aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date.
The
recitals contained herein shall be taken as statements of the Depositor and
neither the Trustee nor the Securities Administrator assume any responsibility
for their correctness.
Unless
the certificate of authentication hereon has been executed by the Securities
Administrator by manual signature, this Certificate shall not be entitled to
any
benefit under the Agreement or be valid for any purpose.
A-3-6
IN
WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be
duly executed.
Dated:
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class M-[10][11] Certificates referred to in the within-mentioned
Agreement.
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Signatory
A-3-7
ABBREVIATIONS
The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN
COM -
as
tenants in common
UNIF
GIFT MIN ACT -
Custodian
(Cust)
(Minor)
under
Uniform Gifts
to
Minors Act
TEN
ENT -
as
tenants by the entireties
________________
(State)
JT
TEN -
as
joint tenants with right
if
survivorship and not as
tenants
in common
Additional
abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
(Please
print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a
Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer
of
such interest to assignee on the Certificate Register of the Trust
Fund.
I
(we)
further direct the Securities Administrator to issue a new Certificate of a
like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _____________________________
This
information is provided
by__________________________________________________________________________
assignee
named above,
or_______________________________________________________________________________
its
agent.
A-3-9
EXHIBIT
A-4
FORM
OF
CLASS CE CERTIFICATE
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS 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 IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE MEZZANINE
CERTIFICATES TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN.
THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER
HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH
THE
ACT AND OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE ACT (“REGULATION S”),
OR (2) WITHIN THE UNITED STATES TO (A) “QUALIFIED INSTITUTIONAL BUYERS” WITHIN
THE MEANING OF AND IN COMPLIANCE WITH RULE 144A UNDER THE ACT (“RULE 144A”) OR
(B) TO INSTITUTIONAL INVESTORS THAT ARE “ACCREDITED INVESTORS” WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF “REGULATION D” UNDER THE
ACT.
NO
TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(c) OF THE
AGREEMENT.
A-4-1
Series
2006-FM1, Class CE
Aggregate
Certificate Principal Balance of the Class CE Certificates as of
the Issue
Date: $_____________
Pass-Through
Rate: Variable
Denomination:
$_________________
Cut-off
Date and date of Pooling and Servicing Agreement: August 1,2006
ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-FM1
ASSET
BACKED PASS-THROUGH CERTIFICATE
evidencing
a beneficial ownership interest in a Trust Fund (the “Trust Fund”) consisting
primarily of a pool of conventional one- to four-family, first and second lien,
fixed and adjustable-rate mortgage loans (the “Mortgage Loans”) formed and sold
by
ACE
SECURITIES CORP.
THIS
CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE SECURITIES
CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE
UNITED STATES.
This
certifies that ________________ is the registered owner of a Percentage Interest
(obtained by dividing the denomination of this Certificate by the aggregate
Certificate Principal Balance of the Class CE Certificates as of the Issue
Date)
in that certain beneficial ownership interest evidenced by all of the Class
CE
Certificates in REMIC III created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the “Agreement”), among ACE Securities Corp., as
depositor (hereinafter called the “Depositor,” which term includes any successor
entity under the Agreement), Wells Fargo Bank, N.A. as master servicer (the
“Master Servicer”) and securities administrator (the “Securities
Administrator”), Fremont Investment & Loan as servicer (the “Servicer”) and
HSBC Bank USA, 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 issued under and is subject
to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
A-4-2
Interest
on this Certificate will accrue during the month prior to the month in which
a
Distribution Date (as hereinafter defined) occurs on the Notional Amount (as
defined in the Agreement) hereof at a per annum rate equal to the applicable
Pass-Through Rate as set forth in the Agreement. Pursuant to the terms of the
Agreement, distributions will be made on the 25th
day of
each month or, if such 25th
day is
not a Business Day, the Business Day immediately following such 25th
day (a
“Distribution Date”), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered on the last Business
Day of the calendar month immediately preceding the month in which the related
Distribution Date occurs (the “Record Date”), in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.
All
distributions to the Holder of this Certificate under the Agreement will be
made
or caused to be made by the Securities Administrator by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Securities Administrator in writing
at
least five (5) Business Days prior to the Record Date immediately prior to
such
Distribution Date and is the registered owner of Class CE Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class CE Certificates, or otherwise by check mailed
by
first class mail to the address of the Person entitled thereto, as such name
and
address shall appear on the Certificate Register. Notwithstanding the above,
the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the
Agreement.
This
Certificate is one of a duly authorized issue of Certificates designated as
Asset Backed Pass-Through Certificate of the Series specified on the face hereof
(herein called the “Certificates”) and representing a Percentage Interest in the
Class of Certificates specified on the face hereof equal to the denomination
specified on the face hereof divided by the aggregate Certificate Principal
Balance of the Class of Certificates specified on the face hereof.
The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. As provided in the Agreement, withdrawals from
the
Collection Account and the Distribution Account may be made from time to time
for purposes other than distributions to Certificateholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Depositor,
the
Master Servicer, the Trustee, the Securities Administrator, the Servicer and
the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer, the Trustee, the Securities Administrator and
the Servicer with the consent of the Swap Provider and the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent
by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-4-3
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
upon
surrender of this Certificate for registration of transfer at the offices or
agencies appointed by the Securities Administrator as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or
transferees.
No
transfer of this Certificate shall be made unless the transfer is made pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the “1933 Act”), and an effective registration or qualification under
applicable state securities laws, or is made in a transaction that does not
require such registration or qualification. In the event that such a transfer
of
this Certificate is to be made without registration or qualification, the
Securities Administrator shall require receipt of (i) if such transfer is
purportedly being made in reliance upon Rule 144A or Regulation S under the
1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder’s prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, (ii) if
such transfer is purportedly being made in reliance upon Rule 501(a) under
the
1933 Act, written certifications from the Holder of the Certificate desiring
to
effect the transfer and from such Holder’s prospective transferee, substantially
in the form attached to the Agreement as Exhibit B-2 and (iii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall
not
be an expense of the Trust Fund or of the Depositor, the Trustee, the Master
Servicer or the Securities Administrator in their respective capacities as
such), together with copies of the written certification(s) of the Holder of
the
Certificate desiring to effect the transfer and/or such Holder’s prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Securities Administrator is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or
any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration
or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No
transfer of this Certificate shall be made except in accordance with Section
6.02(c) of the Agreement.
The
Certificates are issuable in fully registered form only without coupons in
Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange of Certificates,
but the Securities Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.
A-4-4
The
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer and any agent of the Depositor, the Master Servicer, the Trustee,
the
Securities Administrator or the Servicer may treat the Person in whose name
this
Certificate is registered as the owner hereof for all purposes, and none of
the
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer nor any such agent shall be affected by notice to the
contrary.
The
obligations created by the Agreement and the Trust Fund created thereby shall
terminate upon payment to the Certificateholders of all amounts held by the
Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of
any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Scheduled Principal Balance of
the
Mortgage Loans (and properties acquired in respect thereof) at the time of
purchase being less than or equal to 10% of the aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date.
The
recitals contained herein shall be taken as statements of the Depositor and
neither the Trustee nor the Securities Administrator assume any responsibility
for their correctness.
Unless
the certificate of authentication hereon has been executed by the Securities
Administrator, by manual signature, this Certificate shall not be entitled
to
any benefit under the Agreement or be valid for any purpose.
A-4-5
IN
WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be
duly executed.
Dated:
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class CE Certificates referred to in the within-mentioned
Agreement.
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
A-4-6
ABBREVIATIONS
The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN
COM -
as
tenants in common
UNIF
GIFT MIN ACT -
Custodian
(Cust)
(Minor)
under
Uniform Gifts
to
Minors Act
TEN
ENT -
as
tenants by the entireties
________________
(State)
JT
TEN -
as
joint tenants with right
if
survivorship and not as
tenants
in common
Additional
abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
(Please
print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a
Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer
of
such interest to assignee on the Certificate Register of the Trust
Fund.
I
(we)
further direct the Securities Administrator to issue a new Certificate of
a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _____________________________
This
information is provided
by___________________________________________________________________
assignee
named above,
or_______________________________________________________________________________
its
agent.
A-4-8
EXHIBIT
A-5
FORM
OF
CLASS P CERTIFICATE
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES,
THIS CERTIFICATE IS 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 MENDED (THE “CODE”).
THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER
HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH
THE
ACT AND OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE ACT (“REGULATION S”),
OR (2) WITHIN THE UNITED STATES TO (A) “QUALIFIED INSTITUTIONAL BUYERS” WITHIN
THE MEANING OF AND IN COMPLIANCE WITH RULE 144A UNDER THE ACT (“RULE 144A”) OR
(B) TO INSTITUTIONAL INVESTORS THAT ARE “ACCREDITED INVESTORS” WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF “REGULATION D” UNDER THE
ACT.
NO
TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(c) OF THE
AGREEMENT.
A-5-1
Series
2006-FM1, Class P
Aggregate
Certificate Principal Balance of the Class P Certificates as of the
Issue
Date: $100.00
Cut-off
Date and date of Pooling and Servicing Agreement: August 1,2006
ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-FM1
ASSET
BACKED PASS-THROUGH CERTIFICATE
evidencing
a beneficial ownership interest in a Trust Fund (the “Trust Fund”) consisting
primarily of a pool of conventional one- to four-family, first and second lien,
fixed and adjustable-rate mortgage loans (the “Mortgage Loans”) formed and sold
by
ACE
SECURITIES CORP.
THIS
CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE SECURITIES
CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE
UNITED STATES.
This
certifies that____________________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class P Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all
of
the Class P Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the “Agreement”), among ACE
Securities Corp., as depositor (hereinafter called the “Depositor”, which term
includes any successor entity under the Agreement), Wells Fargo Bank, N.A.
as
master servicer (the “Master Servicer”) and securities administrator (the
“Securities Administrator”), Fremont Investment & Loan as servicer (the
“Servicer”) and HSBC Bank USA, 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 issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
A-5-2
Pursuant
to the terms of the Agreement, distributions will be made on the 25th
day of
each month or, if such 25th
day is
not a Business Day, the Business Day immediately following such 25th
day (a
“Distribution Date”), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered on the last Business
Day of the calendar month immediately preceding the month in which the related
Distribution Date occurs (the “Record Date”), in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.
All
distributions to the Holder of this Certificate under the Agreement will be
made
or caused to be made by the Securities Administrator by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Securities Administrator in writing
at
least five (5) Business Days prior to the Record Date immediately prior to
such
Distribution Date and is the registered owner of Class P Certificates the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class P Certificates, or otherwise by check mailed
by
first class mail to the address of the Person entitled thereto, as such name
and
address shall appear on the Certificate Register. Notwithstanding the above,
the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the
Agreement.
This
Certificate is one of a duly authorized issue of Certificates designated as
Asset Backed Pass-Through Certificate of the Series specified on the face hereof
(herein called the “Certificates”) and representing a Percentage Interest in the
Class of Certificates specified on the face hereof equal to the denomination
specified on the face hereof divided by the aggregate Certificate Principal
Balance of the Class of Certificates specified on the face hereof.
The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. As provided in the Agreement, withdrawals from
the
Collection Account and the Distribution Account may be made from time to time
for purposes other than distributions to Certificateholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Depositor,
the
Master Servicer, the Trustee, the Securities Administrator, the Servicer and
the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer, the Trustee, the Securities Administrator and
the Servicer with the consent of the Swap Provider and the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent
by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-5-3
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
upon
surrender of this Certificate for registration of transfer at the offices or
agencies appointed by the Securities Administrator as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or
transferees.
No
transfer of this Certificate shall be made unless the transfer is made pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the “1933 Act”), and an effective registration or qualification under
applicable state securities laws, or is made in a transaction that does not
require such registration or qualification. In the event that such a transfer
of
this Certificate is to be made without registration or qualification, the
Securities Administrator shall require receipt of (i) if such transfer is
purportedly being made in reliance upon Rule 144A or Regulation S under the
1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder’s prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, (ii) if
such transfer is purportedly being made in reliance upon Rule 501(a) under
the
1933 Act, written certifications from the Holder of the Certificate desiring
to
effect the transfer and from such Holder’s prospective transferee, substantially
in the form attached to the Agreement as Exhibit B-2 and (iii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall
not
be an expense of the Trust Fund or of the Depositor, the Trustee, the Master
Servicer or the Securities Administrator in their respective capacities as
such), together with copies of the written certification(s) of the Holder of
the
Certificate desiring to effect the transfer and/or such Holder’s prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Securities Administrator is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or
any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration
or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No
transfer of this Certificate shall be made except in accordance with Section
6.02(c) of the Agreement.
The
Certificates are issuable in fully registered form only without coupons in
Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange of Certificates,
but the Securities Administrator may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.
A-5-4
The
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer and any agent of the Depositor, the Master Servicer, the Trustee,
the
Securities Administrator or the Servicer may treat the Person in whose name
this
Certificate is registered as the owner hereof for all purposes, and none of
the
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer nor any such agent shall be affected by notice to the
contrary.
The
obligations created by the Agreement and the Trust Fund created thereby shall
terminate upon payment to the Certificateholders of all amounts held by the
Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of
any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Scheduled Principal Balance of
the
Mortgage Loans (and properties acquired in respect thereof) at the time of
purchase being less than or equal to 10% of the aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date.
The
recitals contained herein shall be taken as statements of the Depositor and
neither the Trustee nor the Securities Administrator assume any responsibility
for their correctness.
Unless
the certificate of authentication hereon has been executed by the Securities
Administrator, by manual signature, this Certificate shall not be entitled
to
any benefit under the Agreement or be valid for any purpose.
A-5-5
IN
WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be
duly executed.
Dated:
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class P Certificates referred to in the within-mentioned
Agreement.
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
A-5-6
ABBREVIATIONS
The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN
COM -
as
tenants in common
UNIF
GIFT MIN ACT -
Custodian
(Cust)
(Minor)
under
Uniform Gifts
to
Minors Act
TEN
ENT -
as
tenants by the entireties
________________
(State)
JT
TEN -
as
joint tenants with right
if
survivorship and not as
tenants
in common
Additional
abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
(Please
print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a
Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer
of
such interest to assignee on the Certificate Register of the Trust
Fund.
I
(we)
further direct the Securities Administrator to issue a new Certificate of
a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _____________________________
This
information is provided
by____________________________________________________________________
assignee
named above,
or_______________________________________________________________________________
its
agent.
A-5-8
EXHIBIT
A-6
FORM
OF
CLASS R CERTIFICATE
THIS
CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
PERSON.
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES,
THIS CERTIFICATE REPRESENTS THE SOLE “RESIDUAL INTEREST” IN EACH “REAL ESTATE
MORTGAGE INVESTMENT CONDUIT” (“REMIC”), AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS
AMENDED (THE “CODE”).
ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT REFERRED TO
HEREIN.
THIS
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 REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD
OR
TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT
AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.02 OF THE AGREEMENT.
ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF
THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE SECURITIES
ADMINISTRATOR THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF
ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED
IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER
1 OF
THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
511
OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE
CODE
(ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL
HEREINAFTER BE REFERRED TO AS A “DISQUALIFIED ORGANIZATION”) OR (4) AN AGENT OF
A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE
THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF
ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED
ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION
SHALL
BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL
NOT
BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER
OF
THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO
THE
PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 6.02(d) OF THE
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION
IS
PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS
CERTIFICATE.
A-6-1
ANY
PERSON ACQUIRING A CERTIFICATE DIRECTLY OR INDIRECTLY BY, ON BEHALF OF, OR
WITH
PLAN ASSETS OF AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT
IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, SHALL BE DEEMED
TO HAVE MADE THE REPRESENTATIONS OR PROVIDED THE OPINION OF COUNSEL IN SECTION
6.02(c) OF THE POOLING AND SERVICING AGREEMENT.
A-6-2
Series
2006-FM1, Class R
Aggregate
Percentage Interest of the Class R Certificates as of the Issue Date:
100.00%
ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-FM1
ASSET
BACKED PASS-THROUGH CERTIFICATE
evidencing
a beneficial ownership interest in a Trust Fund (the “Trust Fund”) consisting
primarily of a pool of conventional one- to four-family, first and second lien,
fixed and adjustable-rate mortgage loans (the “Mortgage Loans”) formed and sold
by
ACE
SECURITIES CORP.
THIS
CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE SECURITIES
CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE
UNITED STATES.
This
certifies that _______________ is the registered owner of a Percentage Interest
set forth above in that certain beneficial ownership interest evidenced by
all
of the Class R Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the “Agreement”), among ACE
Securities Corp., as depositor (hereinafter called the “Depositor”, which term
includes any successor entity under the Agreement), Wells Fargo Bank, N.A.
as
master servicer (the “Master Servicer”) and securities administrator (the
“Securities Administrator”), Fremont Investment & Loan as servicer (the
“Servicer”) and HSBC Bank USA, 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 issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant
to the terms of the Agreement, distributions will be made on the 25th day of
each month or, if such 25th day is not a Business Day, the Business Day
immediately following (a “Distribution Date”), commencing on the First
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the calendar month immediately
preceding the month in which the related Distribution Date occurs (the “Record
Date”), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders
of
Class R Certificates on such Distribution Date pursuant to the
Agreement.
A-6-3
All
distributions to the Holder of this Certificate under the Agreement will be
made
or caused to be made by the Securities Administrator by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Securities Administrator in writing
at
least five (5) Business Days prior to the Record Date immediately prior to
such
Distribution Date and is the registered owner of Class R Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Securities Administrator of the pendency
of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Securities Administrator for that
purpose as provided in the Agreement.
This
Certificate is one of a duly authorized issue of Certificates designated as
Asset Backed Pass-Through Certificate of the Series specified on the face hereof
(herein called the “Certificates”) and representing the Percentage Interest in
the Class of Certificates specified on the face hereof.
The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. As provided in the Agreement, withdrawals from
the
Collection Account and the Distribution Account may be made from time to time
for purposes other than distributions to Certificateholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Depositor,
the
Master Servicer, the Trustee, the Securities Administrator, the Servicer and
the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer, the Trustee, the Securities Administrator and
the Servicer with the consent of the Swap Provider and the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent
by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register
upon
surrender of this Certificate for registration of transfer at the offices or
agencies appointed by the Securities Administrator as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by, the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or
transferees.
A-6-4
The
Certificates are issuable in fully registered form only without coupons in
Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No
transfer of this Certificate shall be made unless the transfer is made pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the “1933 Act”), and an effective registration or qualification under
applicable state securities laws, or is made in a transaction that does not
require such registration or qualification. In the event that such a transfer
of
this Certificate is to be made without registration or qualification, the
Securities Administrator shall require receipt of (i) if such transfer is
purportedly being made in reliance upon Rule 144A under the 1933 Act, written
certifications from the Holder of the Certificate desiring to effect the
transfer, and from such Holder’s prospective transferee, substantially in the
forms attached to the Agreement as Exhibit B-1, and (ii) in all other cases,
an
Opinion of Counsel satisfactory to it that such transfer may be made without
such registration or qualification (which Opinion of Counsel shall not be an
expense of the Trust Fund or of the Depositor, the Trustee, the Master Servicer
or the Securities Administrator in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder’s prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Securities Administrator is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or
any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration
or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No
transfer of this Certificate shall be made except in accordance with Section
6.02 of the Agreement.
Prior
to
registration of any transfer, sale or other disposition of this Certificate,
the
proposed transferee shall provide to the Securities Administrator (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as
representing the beneficial ownership of the residual interests in each of
REMIC
I, REMIC II and REMIC III, (B) it will include in its income a pro
rata
share of
the net income of the Trust Fund and that such income may be an “excess
inclusion,” as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects
to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall
be
deemed to be of no legal force or effect whatsoever and such Person shall not
be
deemed to be a Certificateholder for any purpose, including, but not limited
to,
the receipt of distributions in respect of this Certificate.
A-6-5
The
Holder of this Certificate, by its acceptance hereof, shall be deemed to have
consented to the provisions of Section 6.02 of the Agreement and to any
amendment of the Agreement deemed necessary by counsel of the Depositor to
ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause any portion of the
Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon any
REMIC.
No
service charge will be made for any such registration of transfer or exchange
of
Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in
connection with any transfer or exchange of Certificates.
The
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer and any agent of the Depositor, the Master Servicer, the Trustee,
the
Securities Administrator or the Servicer may treat the Person in whose name
this
Certificate is registered as the owner hereof for all purposes, and none of
the
Depositor, the Master Servicer, the Trustee, the Securities Administrator,
the
Servicer nor any such agent shall be affected by notice to the
contrary.
The
obligations created by the Agreement and the Trust Fund created thereby shall
terminate upon payment to the Certificateholders of all amounts held by the
Securities Administrator and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of
any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Scheduled Principal Balance of
the
Mortgage Loans (and properties acquired in respect thereof) at the time of
purchase being less than or equal to 10% of the aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date.
The
recitals contained herein shall be taken as statements of the Depositor and
neither the Trustee nor the Securities Administrator assume any responsibility
for their correctness.
A-6-6
Unless
the certificate of authentication hereon has been executed by the Securities
Administrator, by manual signature, this Certificate shall not be entitled
to
any benefit under the Agreement or be valid for any purpose.
A-6-7
IN
WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be
duly executed.
Dated:
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Officer
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class R Certificates referred to in the within-mentioned
Agreement.
WELLS
FARGO BANK, N.A.
as
Securities Administrator
By:
Authorized
Signatory
A-6-8
ABBREVIATIONS
The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN
COM -
as
tenants in common
UNIF
GIFT MIN ACT -
Custodian
(Cust)
(Minor)
under
Uniform Gifts
to
Minors Act
TEN
ENT -
as
tenants by the entireties
________________
(State)
JT
TEN -
as
joint tenants with right
if
survivorship and not as
tenants
in common
Additional
abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
(Please
print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a
Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer
of
such interest to assignee on the Certificate Register of the Trust
Fund.
I
(we)
further direct the Securities Administrator to issue a new Certificate of
a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _____________________________
ACE
Securities Corp. Home Equity Loan Trust, Series 2006-FM1 Asset Backed
Pass-Through Certificates [Class
M-10,] [Class M-11,] [Class CE,] [Class P] and [Class R]
Certificates
Ladies
and Gentlemen:
In
connection with the transfer by ______________________ (the “Transferor”) to
___________________ (the “Transferee”) of the captioned asset backed
pass-through certificates (the “Certificates”), the Transferor hereby certifies
as follows:
Neither
the Transferor nor anyone acting on its behalf has (a) offered, pledged, sold,
disposed of or otherwise transferred any Certificate, any interest in any
Certificate or any other similar security to any person in any manner, (b)
has
solicited 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) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate
or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner,
(e)
has taken any other action, that (in the case of each of subclauses (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933, as amended (the “1933 Act”), or would render the
disposition of any Certificate a violation of Section 5 of the 1933 Act or
any
state securities law or would require registration or qualification pursuant
thereto. The Transferor will not act, nor has it authorized or will it authorize
any person to act, in any manner set forth in the foregoing sentence with
respect to any Certificate. The Transferor will not sell or otherwise transfer
any of the Certificates, except in compliance with the provisions of that
certain Pooling and Servicing Agreement, dated as of August 1, 2006, among
ACE
Securities Corp. as Depositor, Wells Fargo Bank, N.A. as Master Servicer and
Securities Administrator, Fremont Investment & Loan as Servicer and HSBC
Bank USA, National Association as Trustee (the “Pooling and Servicing
Agreement”), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.
B-1-1
Capitalized
terms used but not defined herein shall have the meanings assigned thereto
in
the Pooling and Servicing Agreement.
In
connection with the purchase from ______________________________ (the
“Transferor”) on the date hereof of the captioned asset backed pass-through
certificates (the “Certificates”), (the “Transferee”) hereby certifies as
follows:
1. The
Transferee is a “qualified institutional buyer” as that term is defined in Rule
144A (“Rule 144A”) under the Securities Act of 1933 (the “1933 Act”) and has
completed either of the forms of certification to that effect attached hereto
as
Annex 1 or Annex 2. The Transferee is aware that the sale to it is being made
in
reliance on Rule 144A. The Transferee is acquiring the Certificates for its
own
account or for the account of a qualified institutional buyer, and understands
that such Certificate may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the 1933
Act.
2. The
Transferee has been furnished with all information regarding (a) the
Certificates and distributions thereon, (b) the nature, performance and
servicing of the Mortgage Loans, (c) the Pooling and Servicing Agreement
referred to below, and (d) any credit enhancement mechanism associated with
the
Certificates, that it has requested.
3. The
Transferee: (a) is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security
Act
of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code of
1986, as amended (the “Code”) (each, a “Plan”), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with “plan
assets” of any Plan within the meaning of the Department of Labor (“DOL”)
regulation at 29 C.F.R. § 2510.3-101 or (b) has provided the Securities
Administrator with an opinion of counsel on which the Trustee, the Depositor,
the Master Servicer, the Securities Administrator and the Servicer may rely,
acceptable to and in form and substance satisfactory to the Securities
Administrator to the effect that the purchase of Certificates is permissible
under applicable law, will not constitute or result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code and will not subject the
Trust Fund, the Trustee, the Depositor, the Master Servicer, the Securities
Administrator or the Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in the Pooling and Servicing Agreement.
B-1-3
In
addition, the Transferee hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Trustee, the Securities Administrator, the
Master Servicer and the Servicer that the Transferee will not transfer such
Certificates to any Plan or person unless such Plan or person meets the
requirements set forth in paragraph 3 above.
All
capitalized terms used but not otherwise defined herein have the respective
meanings assigned thereto in the Pooling and Servicing Agreement, dated as
of
August 1, 2006, among ACE Securities Corp. as Depositor, Wells Fargo Bank,
N.A.
as Master Servicer and Securities Administrator, Fremont Investment & Loan
as Servicer and HSBC Bank USA, National Association as Trustee, pursuant to
which the Certificates were issued.
[TRANSFEREE]
By:
Name:
Title:
B-1-4
ANNEX
1 TO EXHIBIT B-1
QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For
Transferees Other Than Registered Investment Companies]
The
undersigned hereby certifies as follows to [name of Transferor] (the
“Transferor”) and Wells Fargo Bank, N.A., as Securities Administrator, with
respect to the asset backed pass-through certificates (the “Certificates”)
described in the Transferee Certificate to which this certification relates
and
to which this certification is an Annex:
1. As
indicated below, the undersigned is the President, Chief Financial Officer,
Senior Vice President or other executive officer of the entity purchasing the
Certificates (the “Transferee”).
2. In
connection with purchases by the Transferee, the Transferee is a “qualified
institutional buyer” as that term is defined in Rule 144A under the Securities
Act of 1933 (“Rule 144A”) because (i) the Transferee owned and/or invested on a
discretionary basis $________________1
in
securities (except for the excluded securities referred to below) as of the
end
of the Transferee’s most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in
the
category marked below.
___
Corporation,
etc.
The Transferee is a corporation (other than a bank, savings and loan
association or similar institution), Massachusetts or similar business
trust, partnership, or any organization described in Section 501(c)(3)
of
the Internal Revenue Code of 1986.
___
Bank.
The Transferee (a) is a national bank or banking institution organized
under the laws of any State, territory or the District of Columbia,
the
business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official
or is a
foreign bank or equivalent institution, and (b) has an audited net
worth
of at least $25,000,000 as demonstrated in its latest annual financial
statements, a
copy of which is attached hereto.
___
Savings
and Loan.
The Transferee (a) is a savings and loan association, building and
loan
association, cooperative bank, homestead association or similar
institution, which is supervised and examined by a State or Federal
authority having supervision over any such institutions or is a foreign
savings and loan association or equivalent institution and (b) has
an
audited net worth of at least $25,000,000 as demonstrated in its
latest
annual financial statements, a
copy of which is attached hereto.
1
Transferee
must own and/or invest on a discretionary basis at least $100,000,000
in
securities unless Transferee is a dealer, and, in that case, Transferee
must own and/or invest on a discretionary basis at least $10,000,000
in
securities.
B-1-5
___
Broker-dealer.
The Transferee is a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
___
Insurance
Company.
The Transferee is an insurance company whose primary and predominant
business activity is the writing of insurance or the reinsuring of
risks
underwritten by insurance companies and which is subject to supervision
by
the insurance commissioner or a similar official or agency of a State,
territory or the District of Columbia.
___
State
or Local Plan.
The Transferee 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 Transferee is an employee benefit plan within the meaning of
Title I
of the Employee Retirement Income Security Act of 1974.
___
Investment
Advisor.
The Transferee is an investment advisor registered under the Investment
Advisers Act of 1940.
3. The
term
“securities”
as
used
herein does
not include
(i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee,
if
the Transferee 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 Transferee, the Transferee used the cost of
such
securities to the Transferee and did not include any of the securities referred
to in the preceding paragraph. Further, in determining such aggregate amount,
the Transferee may have included securities owned by subsidiaries of the
Transferee, but only if such subsidiaries are consolidated with the Transferee
in its financial statements prepared in accordance with generally accepted
accounting principles and if the investments of such subsidiaries are managed
under the Transferee’s direction. However, such securities were not included if
the Transferee is a majority-owned, consolidated subsidiary of another
enterprise and the Transferee is not itself a reporting company under the
Securities Exchange Act of 1934.
5. The
Transferee acknowledges that it is familiar with Rule 144A and understands
that
the Transferor 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 Transferee may be in reliance on Rule 144A.
___
___
Will
the Transferee be purchasing the Certificates
Yes
No
only
for the Transferee’s own account?
B-1-6
6. If
the
answer to the foregoing question is “no”, the Transferee agrees that, in
connection with any purchase of securities sold to the Transferee for the
account of a third party (including any separate account) in reliance on Rule
144A, the Transferee will only purchase for the account of a third party that
at
the time is a “qualified institutional buyer” within the meaning of Rule 144A.
In addition, the Transferee agrees that the Transferee will not purchase
securities for a third party unless the Transferee has obtained a current
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently meets
the definition of “qualified institutional buyer” set forth in Rule
144A.
7. The
Transferee 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 Transferee’s purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Transferee is a bank or savings and loan as provided above,
the
Transferee agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
Dated:
Print
Name of Transferee
By:
Name:
Title:
B-1-7
ANNEX
2 TO EXHIBIT B-1
QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For
Transferees That Are Registered Investment Companies]
The
undersigned hereby certifies as follows to [name of Transferor] (the
“Transferor”) and Wells Fargo Bank, N.A., as Securities Administrator, with
respect to the asset backed pass-through certificates (the “Certificates”)
described in the Transferee Certificate to which this certification relates
and
to which this certification is an Annex:
1. As
indicated below, the undersigned is the President, Chief Financial Officer
or
Senior Vice President of the entity purchasing the Certificates (the
“Transferee”) or, if the Transferee is a “qualified institutional buyer” as that
term is defined in Rule 144A under the Securities Act of 1933 (“Rule 144A”)
because the Transferee is part of a Family of Investment Companies (as defined
below), is such an officer of the investment adviser (the
“Adviser”).
2. In
connection with purchases by the Transferee, the Transferee is a “qualified
institutional buyer” as defined in Rule 144A because (i) the Transferee is an
investment company registered under the Investment Company Act of 1940, and
(ii)
as marked below, the Transferee alone, or the Transferee’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 Transferee’s most recent
fiscal year. For purposes of determining the amount of securities owned by
the
Transferee or the Transferee’s Family of Investment Companies, the cost of such
securities was used.
___
The
Transferee owned $________________________ in securities (other than
the
excluded securities referred to below) as of the end of the Transferee’s
most recent fiscal year (such amount being calculated in accordance
with
Rule 144A).
___
The
Transferee 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 Transferee’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
Transferee or are part of the Transferee’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.
B-1-8
5. The
Transferee is familiar with Rule 144A and understands that the parties to which
this certification is being made are relying and will continue to rely on the
statements made herein because one or more sales to the Transferee will be
in
reliance on Rule 144A. In addition, the Transferee will only purchase for the
Transferee’s own account.
6. The
undersigned will notify the parties to which this certification is made of
any
changes in the information and conclusions herein. Until such notice, the
Transferee’s purchase of the Certificates will constitute a reaffirmation of
this certification by the undersigned as of the date of such
purchase.
Dated:
Print
Name of Transferee or Advisor
By:
Name:
Title:
IF
AN ADVISER:
Print
Name of Transferee
B-1-9
FORM
OF
TRANSFEREE REPRESENTATION LETTER
The
undersigned hereby certifies on behalf of the purchaser named below (the
“Purchaser”) as follows:
1. I
am an
executive officer of the Purchaser.
2. The
Purchaser is a “qualified institutional buyer”, as defined in Rule 144A, (“Rule
144A”) under the Securities Act of 1933, as amended.
3. As
of the
date specified below (which is not earlier than the last day of the Purchaser’s
most recent fiscal year), the amount of “securities”, computed for purposes of
Rule 144A, owned and invested on a discretionary basis by the Purchaser was
in
excess of $100,000,000.
ACE
Securities Corp. Home Equity Loan Trust, Series 2006-FM1 Asset Backed
Pass-Through Certificates, Class M-10, Class M-11, Class CE Certificates
and/or Class P
Certificates
Ladies
and Gentlemen:
Reference
is hereby made to the Pooling and Servicing Agreement (the “Agreement”), dated
as of August 1, 2006, among ACE Securities Corp. (the “Depositor”), Wells Fargo
Bank, N.A., as master servicer and securities administrator (the “Master
Servicer”) , Fremont Investment & Loan, as servicer (the “Servicer”) and
HSBC Bank USA, National Association, as trustee (the “Trustee”). Capitalized
terms used herein but not defined herein shall have the meanings assigned
thereto in the Agreement.
This
letter relates to U.S. $[__________] Certificate Principal Balance of Class
[M-10][M-11][CE][P] Certificates (the “Certificates”) which are held in the name
of [name of transferor] (the “Transferor”) to effect the transfer of the
Certificates to a person who wishes to take delivery thereof in the form of
an
equivalent beneficial interest [name of transferee] (the
“Transferee”).
In
connection with such request, the Transferor hereby certifies that such transfer
has been effected in accordance with the transfer restrictions set forth in
the
Agreement relating to the Certificates and that the following additional
requirements (if applicable) were satisfied:
(a) the
offer
of the Certificates was not made to a person in the United States;
(b) at
the
time the buy order was originated, the Transferee was outside the United States
or the Transferor and any person acting on its behalf reasonably believed that
the Transferee was outside the United States;
(c) no
directed selling efforts were made in contravention of the requirements of
Rule
903(b) or 904(b) of Regulation S, as applicable;
(d) the
transfer or exchange is not part of a plan or scheme to evade the registration
requirements of the Securities Act;
B-1-11
(e) the
Transferee is not a U.S. Person, as defined in Regulation S under the Securities
Act;
(f) the
transfer was made in accordance with the applicable provisions of Rule 903(b)(2)
or (3) or Rule 904(b)(1), as the case may be; and
(g) the
Transferee understands that the Certificates have not been and will not be
registered under the Securities Act, that any offers, sales or deliveries of
the
Certificates purchased by the Transferee in the United States or to U.S. persons
prior to the date that is 40 days after the later of (i) the commencement of
the
offering of the Certificates and (ii) the Closing Date, may constitute a
violation of United States law, and that (x) distributions of principal and
interest and (y) the exchange of beneficial interests in a Temporary Regulation
S Global Certificate for beneficial interests in the related Permanent
Regulation S Global Certificate, in each case, will be made in respect of such
Certificates only following the delivery by the Holder of a certification of
non-U.S. beneficial ownership, at the times and in the manner set forth in
the
Agreement.
B-1-12
You
are
entitled to rely upon this letter and are irrevocably authorized to produce
this
letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered
hereby.
In
connection with the transfer by ________________ (the “Transferor”) to
__________________________ (the “Transferee”) of the captioned asset backed
pass-through certificates (the “Certificates”), the Transferor hereby certifies
as follows:
Neither
the Seller nor anyone acting on its behalf has (a) offered, pledged, sold,
disposed of or otherwise transferred any Certificate, any interest in any
Certificate or any other similar security to any person in any manner, (b)
has
solicited 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) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate
or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner,
or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the “Act’), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act, in
any
manner set forth in the foregoing sentence with respect to any Certificate.
The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing
Agreement.
In
connection with the transfer by ______________________ (the “Transferor”) to
__________________________ (the “Transferee”) of the captioned asset backed
pass-through certificates (the “Certificates”), the Transferee hereby certifies
as follows:
1. The
Transferee understands that (a) the Certificates have not been and will not
be
registered or qualified under the Securities Act of 1933, as amended (the “Act”)
or any state securities law, (b) the Depositor is not required to so register
or
qualify the Certificates, (c) the Certificates may be resold only if registered
and qualified pursuant to the provisions of the Act or any state securities
law,
or if an exemption from such registration and qualification is available, (d)
the Pooling and Servicing Agreement contains restrictions regarding the transfer
of the Certificates and (e) the Certificates will bear a legend to the foregoing
effect.
2. The
Transferee is acquiring the Certificates for its own account for investment
only
and not with a view to or for sale in connection with any distribution thereof
in any manner that would violate the Act or any applicable state securities
laws.
3. The
Transferee is (a) 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) able to bear the economic risks of such an investment and
(c)
an “accredited investor” within the meaning of Rule 501(a) promulgated pursuant
to the Act.
4. The
Transferee has been furnished with, and has had an opportunity to review (a)
a
copy of the Pooling and Servicing Agreement and (b) such other information
concerning the Certificates, the Mortgage Loans and the Depositor as has been
requested by the Transferee from the Depositor or the Transferor and is relevant
to the Transferee’s decision to purchase the Certificates. The Transferee has
had any questions arising from such review answered by the Depositor or the
Transferor to the satisfaction of the Transferee.
B-2-2
5. The
Transferee has not and will not nor has it authorized or 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 of 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 (as to any of (a) through (e) above)
would constitute a distribution of any Certificate under the Act, that would
render the disposition of any Certificate a violation of Section 5 of the 1933
Act or any state securities law, or that would require registration or
qualification pursuant thereto. The Transferee will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions
of
the Pooling and Servicing Agreement.
6. The
Transferee: (a) is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security
Act
of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code of
1986, as amended (the “Code”) (each, a “Plan”), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with “plan
assets” of any Plan within the meaning of the Department of Labor (“DOL”)
regulation at 29 C.F.R. § 2510.3-101 or (b) (1) for certificates other than the
Class M-10 Certificates or Class M-11 Certificates, has provided the Securities
Administrator with an opinion of counsel on which the Depositor, the Master
Servicer, the Securities Administrator, the Trustee and the Servicer may rely,
acceptable to and in form and substance satisfactory to the Securities
Administrator to the effect that the purchase of Certificates is permissible
under applicable law, will not constitute or result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code and will not subject the
Trust Fund, the Trustee, the Master Servicer, the Securities Administrator,
the
Depositor or the Servicer to any obligation or liability (including obligations
or liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement or (2) for Class M-10
Certificates and Class M-11 Certificates, represents the requirements of Section
6.02(c) of the Pooling and Servicing Agreement are met.
In
addition, the Transferee hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Trustee, the Securities Administrator, the
Master Servicer and the Servicer that the Transferee will not transfer such
Certificates to any Plan or person unless such Plan or person meets the
requirements set forth in paragraph 6 above.
Very
truly yours,
By:
Name:
Title:
B-2-3
EXHIBIT
B-3
TRANSFER
AFFIDAVIT AND AGREEMENT
STATE
OF NEW YORK
)
)
ss.:
COUNTY
OF NEW YORK
)
___________________________
being duly sworn, deposes, represents and warrants as follows:
1.
I
am a _____________________ of _______________________________ (the
“Owner”) a corporation duly organized and existing under the laws of
_________________________, the record owner of ACE Securities Corp.
Home
Equity Loan Trust, Series 2006-FM1 Asset Backed Pass-Through Certificates,
Class R Certificates (the “Class R Certificates”), on behalf of whom I
make this affidavit and agreement. Capitalized terms used but not
defined
herein have the respective meanings assigned thereto in the Pooling
and
Servicing Agreement pursuant to which the Class R Certificates were
issued.
2.
The
Owner (i) is and will be a “Permitted Transferee” as of
____________________. ____ and (ii) is acquiring the Class R Certificates
for its own account or for the account of another Owner from which
it has
received an affidavit in substantially the same form as this affidavit.
A
“Permitted Transferee” is any person other than a “disqualified
organization” or a possession of the United States. For this purpose, a
“disqualified organization” means the United States, any state or
political subdivision thereof, any agency or instrumentality of any
of the
foregoing (other than an instrumentality all of the activities of
which
are subject to tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of whose board of directors is not selected
by any
such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government
or organization, any real electric or telephone cooperative, or any
organization (other than certain farmers’ cooperatives) that is generally
exempt from federal income tax unless such organization is subject
to the
tax on unrelated business taxable
income.
3.
The
Owner is aware (i) of the tax that would be imposed on transfers
of the
Class R Certificates to disqualified organizations under the Internal
Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after April 31, 1988; (ii) that such tax would be on
the
transferor or, if such transfer is through an agent (which person
includes
a broker, nominee or middleman) for a non-Permitted Transferee, on
the
agent; (iii) that the person otherwise liable for the tax shall be
relieved of liability for the tax if the transferee furnishes to
such
person an affidavit that the transferee is a Permitted Transferee
and, at
the time of transfer, such person does not have actual knowledge
that the
affidavit is false; and (iv) that each of the Class R Certificates
may be
a “noneconomic residual interest” within the meaning of proposed Treasury
regulations promulgated under the Code and that the transferor of
a
“noneconomic residual interest” will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or collection
of
tax.
B-3-1
4.
The
Owner is aware of the tax imposed on a “pass-through entity” holding the
Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder
of an
interest in such entity. (For this purpose, a “pass-through entity”
includes a regulated investment company, a real estate investment
trust or
common trust fund, a partnership, trust or estate, and certain
cooperatives.)
5.
The
Owner is aware that the Securities Administrator will not register
the
transfer of any Class R Certificate unless the transferee, or the
transferee’s agent, delivers to the Securities Administrator, among other
things, an affidavit in substantially the same form as this affidavit.
The
Owner expressly agrees that it will not consummate any such transfer
if it
knows or believes that any of the representations contained in such
affidavit and agreement are false.
6.
The
Owner consents to any additional restrictions or arrangements that
shall
be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be
owned,
directly or indirectly, by an Owner that is a Permitted
Transferee.
7.
The
Owner’s taxpayer identification number is
________________.
8.
The
Owner has reviewed the restrictions set forth on the face of the
Class R
Certificates and the provisions of Section 6.02(d) of the Pooling
and
Servicing Agreement under which the Class R Certificates were issued
(in
particular, clauses (iii)(A) and (iii)(B) of Section 6.02(d) which
authorize the Securities Administrator to deliver payments to a person
other than the Owner and negotiate a mandatory sale by the Securities
Administrator in the event that the Owner holds such Certificate
in
violation of Section 6.02(d)); and that the Owner expressly agrees
to be
bound by and to comply with such restrictions and
provisions.
9.
The
Owner is not acquiring and will not transfer the Class R Certificates
in
order to impede the assessment or collection of any
tax.
10.
The
Owner anticipates that it will, so long as it holds the Class R
Certificates, have sufficient assets to pay any taxes owed by the
holder
of such Class R Certificates, and hereby represents to and for the
benefit
of the person from whom it acquired the Class R Certificates that
the
Owner intends to pay taxes associated with holding such Class R
Certificates as they become due, fully understanding that it may
incur tax
liabilities in excess of any cash flows generated by the Class R
Certificates.
11.
The
Owner has no present knowledge that it may become insolvent or subject
to
a bankruptcy proceeding for so long as it holds the Class R
Certificates.
B-3-2
12.
The
Owner has no present knowledge or expectation that it will be unable
to
pay any United States taxes owed by it so long as any of the Certificates
remain outstanding.
13.
The
Owner is not acquiring the Class R Certificates with the intent to
transfer the Class R Certificates to any person or entity that will
not
have sufficient assets to pay any taxes owed by the holder of such
Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain
outstanding.
14.
The
Owner will, in connection with any transfer that it makes of the
Class R
Certificates, obtain from its transferee the representations required
by
Section 6.02(d) of the Pooling and Servicing Agreement under which
the
Class R Certificate were issued and will not consummate any such
transfer
if it knows, or knows facts that should lead it to believe, that
any such
representations are false.
15.
The
Owner will, in connection with any transfer that it makes of the
Class R
Certificates, deliver to the Securities Administrator an affidavit,
which
represents and warrants that it is not transferring the Class R
Certificates to impede the assessment or collection of any tax and
that it
has no actual knowledge that the proposed transferee: (i) has insufficient
assets to pay any taxes owed by such transferee as holder of the
Class R
Certificates; (ii) may become insolvent or subject to a bankruptcy
proceeding for so long as the Class R Certificates remains outstanding;
and (iii) is not a “Permitted
Transferee”.
16.
The
Owner is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in, or under the
laws of,
the United States or any political subdivision thereof, or an estate
or
trust whose income from sources without the United States may be
included
in gross income for United States federal income tax purposes regardless
of its connection with the conduct of a trade or business within
the
United States.
17.
The
Owner of the Class R Certificate, hereby agrees that in the event
that the
Trust Fund created by the Pooling and Servicing Agreement is terminated
pursuant to Section 10.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class CE Certificates and Class P
Certificates any amounts in excess of par received in connection
with such
termination. Accordingly, in the event of such termination, the Securities
Administrator is hereby authorized to withhold any such amounts in
excess
of par and to pay such amounts directly to the Holders of the Class
CE
Certificates and Class P Certificates. This agreement shall bind
and be
enforceable against any successor, transferee or assigned of the
undersigned in the Class R Certificate. In connection with any transfer
of
the Class R Certificate, the Owner shall obtain an agreement substantially
similar to this clause from any subsequent
owner.
B-3-3
IN
WITNESS WHEREOF, the Owner has caused this instrument to be executed on its
behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of
_________________, ____.
[OWNER]
By:
Name:
Title:
[Vice] President
ATTEST:
By:
Name:
Title:
[Assistant] Secretary
Personally
appeared before me the above-named __________________, known or proved to me
to
be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the
Owner.
Subscribed
and sworn before me this ______________ day of __________,
____.
Notary
Public
County
of _____________________________
State
of _______________________________
My
Commission expires:
B-3-4
FORM
OF
TRANSFEROR AFFIDAVIT
STATE
OF NEW YORK
)
)
ss.:
COUNTY
OF NEW YORK
)
_________________________,
being duly sworn, deposes, represents and warrants as follows:
1. I
am
a ____________________
of _________________________ (the “Owner”), a corporation duly organized and
existing under the laws of _____________, on behalf of whom I make this
affidavit.
2. The
Owner
is not transferring the Class R Certificates (the “Residual Certificates”) to
impede the assessment or collection of any tax.
3. The
Owner
has no actual knowledge that the Person that is the proposed transferee (the
“Purchaser”) of the Residual Certificates: (i) has insufficient assets to pay
any taxes owed by such proposed transferee as holder of the Residual
Certificates; (ii) may become insolvent or subject to a bankruptcy proceeding
for so long as the Residual Certificates remain outstanding and (iii) is not
a
Permitted Transferee.
4. The
Owner
understands that the Purchaser has delivered to the Trustee or a transfer
affidavit and agreement in the form attached to the Pooling and Servicing
Agreement as Exhibit B-2. The Owner does not know or believe that any
representation contained therein is false.
5. At
the
time of transfer, the Owner has conducted a reasonable investigation of the
financial condition of the Purchaser as contemplated by Treasury Regulations
Section 1.860E-1(c)(4)(i) and, as a result of that investigation, the Owner
has
determined that the Purchaser has historically paid its debts as they became
due
and has found no significant evidence to indicate that the Purchaser will not
continue to pay its debts as they become due in the future. The Owner
understands that the transfer of a Residual Certificate may not be respected
for
United States income tax purposes (and the Owner may continue to be liable
for
United States income taxes associated therewith) unless the Owner has conducted
such an investigation.
6. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them
in
the Pooling and Servicing Agreement.
B-3-5
IN
WITNESS WHEREOF, the Owner has caused this instrument to be executed on its
behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of
________________, ____.
[OWNER]
By:
Name:
Title:
[Vice] President
ATTEST:
By:
Name:
Title:
[Assistant] Secretary
Personally
appeared before me the above-named _________________, known or proved to me
to
be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the
Owner.
Subscribed
and sworn before me this ______ day of _____________, ____.
Notary
Public
County
of _____________________________
State
of _______________________________
My
Commission expires:
B-3-6
EXHIBIT
C
BACK-UP
CERTIFICATION
Re: __________
(the “Trust”)
Mortgage
Pass-Through Certificates, Series 2006-FM1
I,
[identify the certifying individual], certify to ACE Securities Corp. (the
“Depositor”), HSBC Bank USA, National Association (the “Trustee”) and Wells
Fargo Bank, National Association (the “Master Servicer”), and their respective
officers, directors and affiliates, and with the knowledge and intent that
they
will rely upon this certification, that:
(1) I
have
reviewed the servicer compliance statement of the Company provided in accordance
with Item 1123 of Regulation AB (the “Compliance Statement”), the report on
assessment of the Company’s compliance with the servicing criteria set forth in
Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided in accordance
with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing
Assessment”), the registered public accounting firm’s attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act
and
Section 1122(b) of Regulation AB (the “Attestation
Report”), and all servicing reports, officer’s certificates and other
information relating to the servicing of the Mortgage Loans by the Company
during 200[ ] that were delivered by the Company to the Master Servicer pursuant
to the Agreement (collectively, the “Company Servicing
Information”);
(2) Based
on
my knowledge, the Company Servicing Information, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements made, in the light of the circumstances under
which such statements were made, not misleading with respect to the period
of
time covered by the Company Servicing Information;
(3) Based
on
my knowledge, all of the Company Servicing Information required to be provided
by the Company under the Agreement has been provided to the Master
Servicer;
(4) I
am
responsible for reviewing the activities performed by the Company as servicer
under the Agreement, and based on my knowledge and the compliance review
conducted in preparing the Compliance Statement and except as disclosed in
the
Compliance Statement, the Servicing Assessment or the Attestation Report, the
Company has fulfilled its obligations under the Agreement in all material
respects; and
(5) The
Compliance Statement required to be delivered by the Company pursuant to the
Agreement, and the Servicing Assessment and Attestation Report required to
be
provided by the Company and by any Subservicer or Subcontractor pursuant to
the
Agreement, have been provided to the Master Servicer. Any material instances
of
noncompliance described in such reports have been disclosed to the Master
Servicer. Any material instance of noncompliance with the Servicing Criteria
has
been disclosed in such reports.
C-1
Capitalized
terms used and not otherwise defined herein have the meanings assigned thereto
in the Pooling and Servicing Agreement (the “Agreement”), dated as of August 1,2006, among ACE Securities Corp. as Depositor, Wells Fargo Bank, N.A. as Master
Servicer and Securities Administrator, Fremont Investment & Loan as Servicer
and HSBC Bank USA, National Association as Trustee.
KNOW
ALL
MEN BY THESE PRESENTS, that ________________, having its principal place of
business at ____________________, as Trustee (the “Trustee”) pursuant to that
Pooling and Servicing Agreement among ___________________ (the “Depositor”),
Wells Fargo Bank, N.A., as Master Servicer and Securities Administrator, Fremont
Investment & Loan, as servicer, and the Trustee, dated as of August 1, 2006
(the “Pooling and Servicing Agreement”), hereby constitutes and appoints Fremont
Investment & Loan (the “Servicer”), by and through the Servicer’s officers,
the Trustee’s true and lawful Attorney-in-Fact, in the Trustee’s name, place and
stead and for the Trustee’s benefit, in connection with all mortgage loans
serviced by the Servicer pursuant to the Pooling and Servicing Agreement for
the
purpose of performing all acts and executing all documents in the name of the
Trustee as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the “Mortgages” and the “Deeds of Trust”,
respectively) and promissory notes secured thereby (the “Mortgage Notes”) for
which the undersigned is acting as Trustee for various certificateholders
(whether the undersigned is named therein as mortgagee or beneficiary or has
become mortgagee by virtue of endorsement of the Mortgage Note secured by any
such Mortgage or Deed of Trust) and for which the Servicer is acting as
servicer, all subject to the terms of the Pooling and Servicing Agreement and
Servicing Agreement.
This
appointment shall apply to the following enumerated transactions
only:
1.
The
modification or re-recording of a Mortgage or Deed of Trust, where
said
modification or re-recordings is for the purpose of correcting
the
Mortgage or Deed of Trust to conform same to the original intent
of the
parties thereto or to correct title errors discovered after such
title
insurance was issued and said modification or re-recording, in
either
instance, does not adversely affect the lien of the Mortgage or
Deed of
Trust as insured.
2.
The
subordination of the lien of a Mortgage or Deed of Trust to an
easement in
favor of a public utility company of a government agency or unit
with
powers of eminent domain; this section shall include, without limitation,
the execution of partial satisfactions/releases, partial reconveyances
or
the execution or requests to trustees to accomplish
same.
D-1
3.
The
conveyance of the properties to the mortgage insurer, or the closing
of
the title to the property to be acquired as real estate owned,
or
conveyance of title to real estate
owned.
4.
The
completion of loan assumption
agreements.
5.
The
full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage
Note.
6.
The
assignment of any Mortgage or Deed of Trust and the related Mortgage
Note,
in connection with the repurchase of the mortgage loan secured
and
evidenced thereby.
7.
The
full assignment of a Mortgage or Deed of Trust upon payment and
discharge
of all sums secured thereby in conjunction with the refinancing
thereof,
including, without limitation, the assignment of the related Mortgage
Note.
8.
With
respect to a Mortgage or Deed of Trust, the foreclosure, the taking
of a
deed in lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such
foreclosure, including, without limitation, any and all of the
following
acts:
a.
the
substitution of trustee(s) serving under a Deed of Trust, in accordance
with state law and the Deed of
Trust;
b.
the
preparation and issuance of statements of breach or
non-performance;
c.
the
preparation and filing of notices of default and/or notices of
sale;
d.
the
cancellation/rescission of notices of default and/or notices of
sale;
e.
the
taking of a deed in lieu of foreclosure;
and
f.
the
preparation and execution of such other documents and performance
of such
other actions as may be necessary under the terms of the Mortgage,
Deed of
Trust or state law to expeditiously complete said transactions in
paragraphs 8.a. through 8.e.,
above.
The
undersigned gives said Attorney-in-Fact full power and authority to execute
such
instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby
does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
D-2
Third
parties without actual notice may rely upon the exercise of the power granted
under this Limited Power of Attorney; and may be satisfied that this Limited
Power of Attorney shall continue in full force and effect and has not been
revoked unless an instrument of revocation has been made in writing by the
undersigned.
IN
WITNESS WHEREOF, ________________ as Trustee pursuant to that Pooling and
Servicing Agreement among the Depositor, Wells Fargo Bank, National Association,
Wells Fargo, Fremont Investment & Loan and the Trustee, dated as of
___________ 1, 200__ (_____________ Asset Backed Certificates, Series
200__-___), has caused its corporate seal to be hereto affixed and these
presents to be signed and acknowledged in its name and behalf by ____________
its duly elected and authorized Vice President this _________ day of _________,
200__.
as
Trustee for _____ Asset
Backed
Certificates, Series 200__-___
By:
STATE
OF _____________
COUNTY
OF ___________
On
_______________, 200__, before me, the undersigned, a Notary Public in and
for
said state, personally appeared ____________, Vice President of
____________________ as Trustee for ___________ Asset Backed Certificates,
Series 200__-___, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
that same in his/her authorized capacity, and that by his/her signature on
the
instrument the entity upon behalf of which the person acted and executed the
instrument.
WITNESS
my hand and official seal.
(SEAL)
Notary
Public
My
Commission Expires
_________________
D-3
EXHIBIT
E
SERVICING
CRITERIA
SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The
assessment of compliance to be delivered by [the Servicer][the Master Servicer]
[Name of Subservicer] shall address, at a minimum, the criteria identified
as
below as “Relevant Servicing Criteria”:
SERVICING
CRITERIA
RELEVANT
SERVICING CRITERIA
Reference
Criteria
General
Servicing Considerations
1122(d)(1)(i)
Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements.
X
1122(d)(1)(ii)
If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
X
1122(d)(1)(iii)
Any
requirements in the transaction agreements to maintain a back-up
servicer
for the mortgage loans are maintained.
X
1122(d)(1)(iv)
A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
X
Cash
Collection and Administration
1122(d)(2)(i)
Payments
on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business
days
following receipt, or such other number of days specified in the
transaction agreements.
X
1122(d)(2)(ii)
Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
X
1122(d)(2)(iii)
Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction
agreements.
X
1122(d)(2)(iv)
The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
X
1122(d)(2)(v)
Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
Act.
X
1122(d)(2)(vi)
Unissued
checks are safeguarded so as to prevent unauthorized
access.
X
E-1
SERVICING
CRITERIA
RELEVANT
SERVICING CRITERIA
Reference
Criteria
1122(d)(2)(vii)
Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than the person who prepared
the
reconciliation; and (D) contain explanations for reconciling items.
These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
X
Investor
Remittances and Reporting
1122(d)(3)(i)
Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors’ or the trustee’s records as to the total unpaid principal
balance and number of mortgage loans serviced by the
Servicer.
X
1122(d)(3)(ii)
Amounts
due to investors are allocated and remitted in accordance with timeframes,
distribution priority and other terms set forth in the transaction
agreements.
X
1122(d)(3)(iii)
Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
X
1122(d)(3)(iv)
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank
statements.
X
Pool
Asset Administration
1122(d)(4)(i)
Collateral
or security on mortgage loans is maintained as required by the transaction
agreements or related mortgage loan documents.
X
1122(d)(4)(ii)
Mortgage
loan and related documents are safeguarded as required by the transaction
agreements
1122(d)(4)(iii)
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
X
1122(d)(4)(iv)
Payments
on mortgage loans, including any payoffs, made in accordance with
the
related mortgage loan documents are posted to the Servicer’s obligor
records maintained no more than two business days after receipt,
or such
other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
X
1122(d)(4)(v)
The
Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal
balance.
X
1122(d)(4)(vi)
Changes
with respect to the terms or status of an obligor's mortgage loans
(e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
X
1122(d)(4)(vii)
Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
agreements.
X
E-2
SERVICING
CRITERIA
RELEVANT
SERVICING CRITERIA
Reference
Criteria
1122(d)(4)(viii)
Records
documenting collection efforts are maintained during the period a
mortgage
loan is delinquent in accordance with the transaction agreements.
Such
records are maintained on at least a monthly basis, or such other
period
specified in the transaction agreements, and describe the entity’s
activities in monitoring delinquent mortgage loans including, for
example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
unemployment).
X
1122(d)(4)(ix)
Adjustments
to interest rates or rates of return for mortgage loans with variable
rates are computed based on the related mortgage loan
documents.
X
1122(d)(4)(x)
Regarding
any funds held in trust for an obligor (such as escrow accounts):
(A) such
funds are analyzed, in accordance with the obligor’s mortgage loan
documents, on at least an annual basis, or such other period specified
in
the transaction agreements; (B) interest on such funds is paid, or
credited, to obligors in accordance with applicable mortgage loan
documents and state laws; and (C) such funds are returned to the
obligor
within 30 calendar days of full repayment of the related mortgage
loans,
or such other number of days specified in the transaction
agreements.
X
1122(d)(4)(xi)
Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
X
1122(d)(4)(xii)
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
X
1122(d)(4)(xiii)
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
X
1122(d)(4)(xiv)
Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
X
1122(d)(4)(xv)
Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
[NAME
OF
SERVICER][MASTER SERVICER] [NAME OF SUBSERVICER]
Date: _________________________________
By:
Name:
________________________________
Title:
________________________________
E-3
Schedule
1122 (Pooling and Servicing Agreement)
Assessments
of Compliance and Attestation Reports Servicing Criteria2
Reg.
AB Item 1122(d) Servicing Criteria
Depositor
Seller
Servicer
Trustee
Custodian
Paying
Agent
Master
Servicer
Securities
Administrator
(1)General
Servicing Considerations
(i)
monitoring
performance or other triggers and events of default
X
X
X
(ii)
monitoring
performance of vendors of activities outsourced
X
X
(iii)
maintenance
of back-up servicer for pool assets
(iv)
fidelity
bond and E&O policies in effect
X
X
(2)Cash
Collection and Administration
(i)
timing
of deposits to custodial account
X
X
X
X
(ii)
wire
transfers to investors by authorized personnel
X
X
X
(iii)
advances
or guarantees made, reviewed and approved as required
X
X
(iv)
accounts
maintained as required
X
X
X
X
(v)
accounts
at federally insured depository institutions
X
X
X
X
(vi) unissued
checks safeguarded
X
X
X
*
The
descriptions of the Item 1122(d) servicing criteria use key words
and
phrases and are not verbatim recitations of the servicing criteria.
Refer
to Regulation AB, Item 1122 for a full description of servicing
criteria.
E-4
Reg.
AB Item 1122(d) Servicing Criteria
Depositor
Seller
Servicer
Trustee
Custodian
Paying
Agent
Master
Servicer
Securities
Administrator
(vii) monthly
reconciliations of accounts
X
X
X
X
(3)Investor
Remittances and Reporting
(i) investor
reports
X
X
X
(ii) remittances
X
X
X
(iii) proper
posting of distributions
X
X
X
(iv) reconciliation
of remittances and payment statements
X
X
X
X
(4)Pool
Asset Administration
(i) maintenance
of pool collateral
X
X
(ii) safeguarding
of pool assets/documents
X
X
(iii) additions,
removals and substitutions of pool assets
X
X
(iv) posting
and allocation of pool asset payments to pool assets
X
(v) reconciliation
of servicer records
X
(vi) modifications
or other changes to terms of pool assets
X
(vii) loss
mitigation and recovery actions
X
(viii)
records regarding collection efforts
X
(ix) adjustments
to variable interest rates on pool assets
X
E-5
Reg.
AB Item 1122(d) Servicing Criteria
Depositor
Seller
Servicer
Trustee
Custodian
Paying
Agent
Master
Servicer
Securities
Administrator
(x) matters
relating to funds held in trust for obligors
X
(xi) payments
made on behalf of obligors (such as for taxes or
insurance)
X
(xii) late
payment penalties with respect to payments made on behalf of obligors
X
(xiii)
records with respect to payments made on behalf of
obligors
X
(xiv) recognition
and recording of delinquencies, charge-offs and uncollectible
accounts
X
X
(xv) maintenance
of external credit enhancement or other support
X
E-6
EXHIBIT
F
MORTGAGE
LOAN PURCHASE AGREEMENT
F-1
MORTGAGE
LOAN PURCHASE AGREEMENT
This
is a
Mortgage Loan Purchase Agreement (this “Agreement”), dated August 25, 2006,
between DB Structured Products, Inc., a Delaware corporation (the “Seller”) and
ACE Securities Corp., a Delaware corporation (the “Purchaser”).
Preliminary
Statement
The
Seller intends to sell the Mortgage Loans (as hereinafter identified) to
the
Purchaser on the terms and subject to the conditions set forth in this
Agreement. The Purchaser intends to deposit the Mortgage Loans into a mortgage
pool comprising the Trust Fund. The Trust Fund will be evidenced by a single
series of mortgage pass-through certificates designated as ACE Securities
Corp.
Home Equity Loan Trust, Series 2006-FM1, Asset Backed Pass-Through Certificates
(the “Certificates”). The Certificates will consist of nineteen classes of
certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement for ACE Securities Corp. Home Equity Loan Trust, Series
2006-FM1, Asset Backed Pass-Through Certificates, dated as of August 1, 2006
(the “Pooling and Servicing Agreement”), among the Purchaser as depositor, Wells
Fargo Bank, National Association as master servicer (the “Master Servicer”) and
securities administrator (the “Securities Administrator”), HSBC Bank USA,
National Association as trustee (the “Trustee”) and Fremont Investment &
Loan (the “Servicer”). The Purchaser will sell the Class A-1 Certificates ,
Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates (collectively,
the “Class A Certificates”), the Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8 and Class M-9 Certificates
(collectively, the “Public Mezzanine Certificates”) to Deutsche Bank Securities
Inc. (“DBSI”), pursuant to the Second Amended and Restated Underwriting
Agreement, dated as of June 24, 1999, as amended and restated to and including
January 25, 2006, between the Purchaser and DBSI, and the Terms Agreement,
dated
August 17, 2006 (collectively, the “Underwriting Agreement”), between the
Purchaser and DBSI. The
Purchaser will sell the Class M-10 and M-11 Certificates to DBSI pursuant
to the
Purchase Agreement dated as of August 21, 2006 between Purchaser and DBSI.
Capitalized
terms used but not defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.
The
parties hereto agree as follows:
SECTION
1.Agreement
to Purchase.
The
Seller hereby sells, and the Purchaser hereby purchases, on August 25, 2006
(the
“Closing Date”), certain conventional, one- to four-family, fixed-rate and
adjustable-rate, residential, first and second lien, residential mortgage
loans
(the “Mortgage Loans”), having an aggregate principal balance as of the close of
business on August 1, 2006 (the “Cut-off Date”) of approximately $1,451,859,623
the “Closing Balance”), after giving effect to all payments due on the Mortgage
Loans on or before the Cut-off Date, whether or not received, including the
right to any Prepayment Charges payable by the related Mortgagors in connection
with any Principal Prepayments on the Mortgage Loans, but excluding the rights
to the servicing of the Mortgage Loans, which are owned by Fremont Investment
& Loan (the “Servicing Rights”).
SECTION
2.Mortgage
Loan Schedule.
The
Purchaser and the Seller have agreed upon which of the mortgage loans owned
by
the Seller are to be purchased by the Purchaser pursuant to this Agreement
and
the Seller will prepare or cause to be prepared on or prior to the Closing
Date
a final schedule (the “Closing Schedule”) that shall describe such Mortgage
Loans and set forth all of the Mortgage Loans to be purchased under this
Agreement, including the Prepayment Charges. The Closing Schedule will conform
to the requirements set forth in this Agreement and to the definition of
“Mortgage Loan Schedule” under the Pooling and Servicing Agreement.
SECTION
3.Consideration.
(a) In
consideration for the Mortgage Loans to be purchased hereunder, the Purchaser
shall, as described in Section 8, (i) pay to or upon the order of the Seller
in
immediately available funds an amount (the “Purchase Price”) equal to (i)
$________*1
and (ii)
a 100% interest in the Class CE, Class P and Class R Certificates (collectively
the “DB Certificates”). The DB Certificates shall be in the name of “Deutsche
Bank Securities Inc.”
(b) The
Purchaser or any assignee, transferee or designee of the Purchaser shall
be
entitled to all scheduled payments of principal due after the Cut-off Date,
all
other payments of principal due and collected after the Cut-off Date, and
all
payments of interest on the Mortgage Loans allocable to the period after
the
Cut-off Date. All scheduled payments of principal and interest due on or
before
the Cut-off Date and collected after the Cut-off Date shall belong to the
Seller.
(c) Pursuant
to the Pooling and Servicing Agreement, the Purchaser will assign all of
its
right, title and interest in and to the Mortgage Loans, together with its
rights
under this Agreement, to the Trustee for the benefit of the
Certificateholders.
SECTION
4.Transfer
of the Mortgage Loans.
(a)Possession
of Mortgage Files.
The
Seller does hereby sell to the Purchaser, without recourse but subject to
the
terms of this Agreement, all of its right, title and interest in, to and
under
the Mortgage Loans, including the related Prepayment Charges, but excluding
the
Servicing Rights. The contents of each Mortgage File not delivered to the
Purchaser or to any assignee, transferee or designee of the Purchaser on
or
prior to the Closing Date are and shall be held in trust by the Seller for
the
benefit of the Purchaser or any assignee, transferee or designee of the
Purchaser. Upon the sale of the Mortgage Loans, the ownership of each Mortgage
Note, the related Mortgage and the other contents of the related Mortgage
File
is vested in the Purchaser and the ownership of all records and documents
with
respect to the related Mortgage Loan prepared by or that come into the
possession of the Seller on or after the Closing Date shall immediately vest
in
the Purchaser and shall be delivered immediately to the Purchaser or as
otherwise directed by the Purchaser.
* Please
contact the Mortgage Loan Seller for this information.
-2-
(b)Delivery
of Mortgage Loan Documents.
The
Seller will, on or prior to the Closing Date, deliver or cause to be delivered
to the Purchaser or any assignee, transferee or designee of the Purchaser
each
of the following documents for each Mortgage Loan:
(i) the
original Mortgage Note, including any riders thereto, endorsed in blank,
with
all prior and intervening endorsements showing a complete chain of endorsement
from the originator to the Person so endorsing to the Trustee;
(ii) the
original Mortgage or a certified copy thereof, including any riders thereto,
with evidence of recording thereon, and the original recorded power of attorney,
if the Mortgage was executed pursuant to a power of attorney, with evidence
of
recording thereon, and in the case of each MOM Loan, the original Mortgage,
noting the presence of the MIN of the Loan and either language indicating
that
the Mortgage Loan is a MOM Loan or if the Mortgage Loan was not a MOM Loan
at
origination, the original Mortgage and the assignment thereof to MERS®, with
evidence of recording indicated thereon;
(iii) an
original Assignment of Mortgage executed in blank;
(iv) the
original recorded Assignment or Assignments of the Mortgage, or a certified
copy
or copies thereof, showing a complete chain of assignment from the originator
to
the last Person assigning the Mortgage;
(v) the
original or copies of each assumption, modification, written assurance or
substitution agreement, if any;
(vi) the
original lender’s title insurance policy, together with all endorsements or
riders that were issued with or subsequent to the issuance of such policy,
insuring the priority of the Mortgage as a first lien or second lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor;
(vii) the
original of any guarantee executed in connection with the Mortgage Note,
if any;
and
(viii) the
original of any security agreement, chattel mortgage or equivalent document
executed in connection with the Mortgage, if any.
Notwithstanding
anything to the contrary contained in this Section 4, with respect to a maximum
of approximately 1.00% of the Mortgage Loans, by aggregate principal balance
of
the Mortgage Loans as of the Cut-off Date, if any original Mortgage Note
referred to in Section 4(b)(i) above cannot be located, the obligations of
the
Seller to deliver such documents shall be deemed to be satisfied upon delivery
to the Purchaser or any assignee, transferee or designee of the Purchaser
of a
photocopy of such Mortgage Note, if available, with a lost note affidavit
substantially in the form of Exhibit 1 attached hereto. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Purchaser
or
any assignee, transferee or designee of the Purchaser is subsequently located,
such original Mortgage Note shall be delivered to the Purchaser or any assignee,
transferee or designee of the Purchaser within three (3) Business Days; and
if
any document referred to in Section 4(b)(ii) or 4(b)(iv) above has been
submitted for recording but either (x) has not been returned from the applicable
public recording office or (y) has been lost or such public recording office
has
retained the original of such document, the obligations of the Seller hereunder
shall be deemed to have been satisfied upon delivery to the Purchaser or
any
assignee, transferee or designee of the Purchaser promptly upon receipt thereof
by or on behalf of the Seller of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original.
-3-
In
the
event that the original lender’s title insurance policy has not yet been issued,
the Seller shall deliver to the Purchaser or any assignee, transferee or
designee of the Purchaser a written commitment or interim binder or preliminary
report of title issued by the title insurance or escrow company. The Seller
shall deliver such original title insurance policy to the Purchaser or any
assignee, transferee or designee of the Purchaser promptly upon receipt by
the
Seller, if any.
Each
original document relating to a Mortgage Loan which is not delivered to the
Purchaser or its assignee, transferee or designee, if held by the Seller,
shall
be so held for the benefit of the Purchaser, its assignee, transferee or
designee.
In
connection with the assignment of any Mortgage Loan registered on the MERS®
System, the Seller further agrees that it will cause, at the Seller’s own
expense, within 30 days after the Closing Date, the MERS® System to indicate
that such Mortgage Loans have been assigned by the Seller to the Purchaser
and
by the Purchaser to the Trustee in accordance with this Agreement for the
benefit of the Certificateholders by including (or deleting, in the case
of
Mortgage Loans which are repurchased in accordance with this Agreement) in
such
computer files (a) the code in the field which identifies the specific Trustee
and (b) the code in the field “Pool Field” which identifies the series of the
Certificates issued in connection with such Mortgage Loans. The Seller further
agrees that it will not, and will not permit the Servicer or the Master Servicer
to alter the codes referenced in this paragraph with respect to any Mortgage
Loan during the term of this Agreement unless and until such Mortgage Loan
is
repurchased in accordance with the terms of this Agreement or the Pooling
and
Servicing Agreement.
(c)Acceptance
of Mortgage Loans.
The
documents delivered pursuant to Section 4(b) hereof shall be reviewed by
the
Purchaser or any assignee, transferee or designee of the Purchaser at any
time
before or after the Closing Date (and with respect to each document permitted
to
be delivered after the Closing Date, within seven days of its delivery) to
ascertain that all required documents have been executed and received and
that
such documents relate to the Mortgage Loans identified on the Closing
Schedule.
(d)Transfer
of Interest in Agreements.
The
Purchaser has the right to assign its interest under this Agreement, in whole
or
in part, to the Trustee, as may be required to effect the purposes of the
Pooling and Servicing Agreement, without the consent of the Seller, and the
assignee shall succeed to the rights and obligations hereunder of the Purchaser.
Any expense reasonably incurred by or on behalf of the Purchaser or the Trustee
in connection with enforcing any obligations of the Seller under this Agreement
will be promptly reimbursed by the Seller.
(e)Examination
of Mortgage Files.
Prior
to the Closing Date, the Seller shall either (i) deliver in escrow to the
Purchaser or to any assignee, transferee or designee of the Purchaser for
examination the Mortgage File pertaining to each Mortgage Loan, or (ii) make
such Mortgage Files available to the Purchaser or to any assignee, transferee
or
designee of the Purchaser for examination. Such examination may be made by
the
Purchaser or the Trustee, and their respective designees, upon reasonable
notice
to the Seller during normal business hours before the Closing Date and within
sixty (60) days after the Closing Date. If any such person makes such
examination prior to the Closing Date and identifies any Mortgage Loans that
do
not conform to the requirements of the Purchaser as described in this Agreement,
such Mortgage Loans shall be deleted from the Closing Schedule. The
Purchaser may, at its option and without notice to the Seller, purchase all
or
part of the Mortgage Loans without conducting any partial or complete
examination. The fact that the Purchaser or any person has conducted
or has failed to conduct any partial or complete examination of the Mortgage
Files shall not affect the rights of the Purchaser or any assignee, transferee
or designee of the Purchaser to demand repurchase or other relief as provided
herein or under the Pooling and Servicing Agreement.
-4-
SECTION
5.Representations,
Warranties and Covenants of the Seller.
The
Seller hereby represents and warrants to the Purchaser, as of the date hereof
and as of the Closing Date, and covenants, that:
(i) The
Seller is a Delaware corporation with full corporate power and authority
to
conduct its business as presently conducted by it to the extent material
to the
consummation of the transactions contemplated herein. The Agreement has been
duly authorized, executed and delivered by the Seller. The Seller had the
full
corporate power and authority to own the Mortgage Loans and to transfer and
convey the Mortgage Loans to the Purchaser and has the full corporate power
and
authority to execute and deliver, engage in the transactions contemplated
by,
and perform and observe the terms and conditions of this Agreement;
(ii) The
Seller has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Purchaser, constitutes
a legal, valid and binding obligation of the Seller, enforceable against
it in
accordance with its terms except as the enforceability thereof may be limited
by
bankruptcy, insolvency or reorganization or by general principles of
equity;
(iii) The
execution, delivery and performance of this Agreement by the Seller (x) does
not
conflict and will not conflict with, does not breach and will not result
in a
breach of and does not constitute and will not constitute a default (or an
event, which with notice or lapse of time or both, would constitute a default)
under (A) any terms or provisions of the organizational documents of the
Seller,
(B) any term or provision of any material agreement, contract, instrument
or
indenture, to which the Seller is a party or by which the Seller or any of
its
property is bound, or (C) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Seller or any of its property and (y) does not create or impose
and
will not result in the creation or imposition of any lien, charge or encumbrance
(other than any created hereby in favor of the Purchaser and its assignees)
which would have a material adverse effect upon the Mortgage Loans or any
documents or instruments evidencing or securing the Mortgage Loans;
-5-
(iv) No
consent, approval, authorization or order of, registration or filing with,
or
notice on behalf of the Seller to any governmental authority or court is
required, under federal laws or the laws of the State of New York, for the
execution, delivery and performance by the Seller of, or compliance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution
of
the Certificates;
(v) The
Seller is not in violation of, and the execution and delivery of this Agreement
by the Seller and its performance and compliance with the terms of this
Agreement will not constitute a violation with respect to, any order or decree
of any court or any order or regulation of any federal, state, municipal
or
governmental agency having jurisdiction over the Seller or its assets, which
violation might have consequences that would materially and adversely affect
the
condition (financial or otherwise) or the operation of the Seller or its
assets
or might have consequences that would materially and adversely affect the
performance of its obligations and duties hereunder;
(vi) The
Seller does not believe, nor does it have any reason or cause to believe,
that
it cannot perform each and every covenant contained in this
Agreement;
(vii) Immediately
prior to the sale of the Mortgage Loans to the Purchaser as herein contemplated,
the Seller was the owner of the related Mortgage and the indebtedness evidenced
by the related Mortgage Note, and, upon the payment to the Seller of the
Purchase Price, in the event that the Seller retains or has retained record
title, the Seller shall retain such record title to each Mortgage, each related
Mortgage Note and the related Mortgage Files with respect thereto in trust
for
the Purchaser as the owner thereof from and after the date hereof;
(viii) There
are
no actions or proceedings against, or investigations known to it of, the
Seller
before any court, administrative or other tribunal (A) that might prohibit
its
entering into this Agreement, (B) seeking to prevent the sale of the Mortgage
Loans by the Seller or the consummation of the transactions contemplated
by this
Agreement or (C) that might prohibit or materially and adversely affect the
performance by the Seller of its obligations under, or validity or
enforceability of, this Agreement;
(ix) The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Seller, and the transfer, assignment and
conveyance of the Mortgage Notes and the Mortgages by the Seller pursuant
to
this Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any relevant jurisdiction, except any as may have
been
complied with;
(x) The
Seller has not dealt with any broker, investment banker, agent or other person,
except for the Purchaser or any of its affiliates, that may be entitled to
any
commission or compensation in connection with the sale of the Mortgage Loans
(except that an entity that previously financed the Seller’s ownership of the
Mortgage Loans may be entitled to a fee to release its security interest
in the
Mortgage Loans, which fee shall have been paid and which security interest
shall
have been released on or prior to the Closing Date);
-6-
(xi) There
is
no litigation currently pending or, to the best of the Seller’s knowledge
without independent investigation, threatened against the Seller that would
reasonably be expected to adversely affect the transfer of the Mortgage Loans,
the issuance of the Certificates or the execution, delivery, performance
or
enforceability of this Agreement, or that would result in a material adverse
change in the financial condition of the Seller; and
(xii) The
information set forth in the applicable part of the Closing Schedule relating
to
the existence of a Prepayment Charge is complete, true and correct in all
material respects at the date or dates respecting which such information
is
furnished and each Prepayment Charge is permissible and enforceable in
accordance with its terms upon the mortgagor’s full and voluntary principal
prepayment under applicable law, except to the extent that: (1) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors’ rights; (2) the
collectability thereof may be limited due to acceleration in connection with
a
foreclosure or other involuntary prepayment; or (3) subsequent changes in
applicable law may limit or prohibit enforceability thereof under applicable
law.
SECTION
6.Representations
and Warranties of the Seller Relating to the Mortgage Loans.
The
Seller hereby represents and warrants to the Purchaser that as to each Mortgage
Loan as of the Closing Date:
(i) Information
provided to the Rating Agencies, including the loan level detail, is true
and
correct according to the Rating Agency requirements;
(ii) No
error,
omission, misrepresentation, fraud or similar occurrence with respect to
a
Mortgage Loan has taken place on the part of any person involved in the
origination of the Mortgage Loan, including without limitation, the Mortgagor,
any appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;
(iii) Except
as
set forth on the Closing Schedule, all payments required to be made prior
to the
Cut-off Date with respect to each Mortgage Loan have been made;
(iv) [Reserved];
(v) There
are
no delinquent taxes, assessment liens or insurance premiums affecting the
related Mortgaged Property;
(vi) The
terms
of the Mortgage Note and the Mortgage have not been materially impaired,
waived,
altered or modified in any respect, except by written instruments, recorded
in
the applicable public recording office if necessary to maintain the lien
priority of the Mortgage. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required
by
the related policy. No Mortgagor has been released, in whole or in part,
except
in connection with an assumption agreement (approved by the title insurer
to the
extent required by the policy) and which assumption agreement has been delivered
to the Trustee;
-7-
(vii) The
Mortgaged Property is insured against loss by fire and hazards of extended
coverage (excluding earthquake insurance) in an amount which is at least
equal
to the lesser of (i) the amount necessary to compensate for any damage or
loss
to the improvements which are a part of such property on a replacement cost
basis or (ii) the outstanding principal balance of the Mortgage Loan. If
the
Mortgaged Property is in an area identified on a flood hazard map or flood
insurance rate map issued by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available),
a
flood insurance policy meeting the requirements of the current guidelines
of the
Federal Insurance Administration is in effect. All such insurance policies
contain a standard mortgagee clause naming the originator of the Mortgage
Loan,
its successors and assigns as mortgagee and the Seller has not engaged in
any
act or omission which would impair the coverage of any such insurance policies.
Except as may be limited by applicable law, 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 Mortgagor’s cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Each
Mortgage Loan and the related Prepayment Charge, if any, complied in all
material respects with any and all requirements of any federal, state or
local
law including, without limitation, usury, truth in lending, anti-predatory
lending, real estate settlement procedures, consumer credit protection, equal
credit opportunity, fair housing or disclosure laws applicable to the
origination and servicing of the Mortgage Loans and the consummation of the
transactions contemplated hereby will not involve the violation of any such
laws;
(ix) The
Mortgage has not been satisfied, cancelled, subordinated (other than with
respect to second lien Mortgage Loans, the subordination to the first lien)
or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument
been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release;
(x) The
Mortgage Note and the related Mortgage are genuine and each is the legal,
valid
and binding obligation of the maker thereof, insured under the related title
policy, and enforceable in accordance with its terms, except to the extent
that
the enforceability thereof may be limited by a bankruptcy, insolvency or
reorganization;
(xi) The
Mortgage Note and the related Mortgage are genuine and each is the legal,
valid
and binding obligation of the maker thereof, enforceable in accordance with
its
terms, subject to bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors’ rights generally;
-8-
(xii) The
Seller is the sole legal, beneficial and equitable owner of the Mortgage
Note
and the Mortgage and has the full right to convey, transfer and sell the
Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
lien
(other than with respect to second lien Mortgage Loans, the subordination
to the
related first lien), pledge, charge, claim or security interest and immediately
upon the sale, assignment and endorsement of the Mortgage Loans from the
Seller
to the Purchaser, the Purchaser shall have good and indefeasible title
to and be
the sole legal owner of the Mortgage Loans subject only to any encumbrance,
equity, lien, pledge, charge, claim or security interest arising out of
the
Purchaser’s actions;
(xiii) Unless
the Mortgaged Property is located in the State of Iowa and an attorney’s
certificate and/or a certificate of title guaranty has been obtained, each
Mortgage Loan is covered by a valid and binding American Land Title Association
lender’s title insurance policy issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located. No
claims
have been filed under such lender’s title insurance policy, and the Seller has
not done, by act or omission, anything that would impair the coverage of
the
lender’s title insurance policy;
(xiv) There
is
no material default, breach, violation event or event of acceleration existing
under the Mortgage or the Mortgage Note and no event which, with the passage
of
time or with notice and the expiration of any grace or cure period, would
constitute a material default, breach, violation or event of acceleration,
and
the Seller has not, nor has its predecessors, waived any material default,
breach, violation or event of acceleration;
(xv) There
are
no mechanics’ or similar liens or claims which have been filed for work, labor
or material provided to the related Mortgaged Property prior to the origination
of the Mortgage Loan which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage, except as may be disclosed in the
related title policy;
(xvi) Except
with respect to approximately 10.86% of the Mortgage Loans by aggregate
principal balance as of the Cut-off Date, which are interest-only loans and
approximately 41.66% of the Mortgage Loans by aggregate principal balance
as of
the Cut-off Date, which are balloon loans, each Mortgage Note is payable
on the
first day of each month in equal monthly installments of principal and interest
(subject to adjustment in the case of the adjustable rate Mortgage Loans),
with
interest calculated on a 30/360 basis and payable in arrears, sufficient
to
amortize the Mortgage Loan fully by the stated maturity date over an original
term from commencement of amortization to not more than 30 years and no Mortgage
Loan permits negative amortization;
(xvii) The
servicing practices used in connection with the servicing of the Mortgage
Loans
have been in all respects reasonable and customary in the mortgage servicing
industry of like mortgage loan servicers, servicing similar subprime mortgage
loans originated in the same jurisdiction as the Mortgaged
Property;
(xviii) At
the
time of origination of the Mortgage Loan there was no proceeding pending
for the
total or partial condemnation of the Mortgaged Property and, as of the date
such
Mortgage Loan was purchased by the Purchaser, to the best of the Purchaser’s
knowledge there is no proceeding pending for the total or partial condemnation
of the Mortgaged Property;
-9-
(xix) The
Mortgage and related Mortgage Note contain 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, (a) in the case of a Mortgage designated as
a deed
of trust, by trustee’s sale, and (b) otherwise by judicial
foreclosure;
(xx) The
Mortgage Note is not and has not been secured by any collateral except the
lien
of the related Mortgage referred to in subsection (x) above;
(xxi) In
the
event the Mortgage constitutes a deed of trust, a trustee, duly qualified
under
applicable law to serve as such, has been properly designated and currently
so
serves and is named in the Mortgage, and no fees or expenses are or will
become
payable by the Seller to the trustee under the deed of trust, except in
connection with a trustee’s sale after default by the Mortgagor;
(xxii) The
Mortgage Note and the Mortgage are not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will
the
operation of any of the terms of the Mortgage Note and/or the Mortgage, or
the
exercise of any right thereunder, render the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, subject to bankruptcy, insolvency, moratorium, receivership
and
other similar laws relating to creditors’ rights generally;
(xxiii) The
Mortgage Loans were underwritten in accordance with the originator’s
underwriting guidelines in effect at the time the Mortgage Loans were originated
(the “Applicable Underwriting Guidelines”), except with respect to certain of
those Mortgage Loans which had compensating factors permitting a deviation
from
the Applicable Underwriting Guidelines;
(xxiv) The
Mortgaged Property is free of material damage and waste, excepting therefrom
any
Mortgage Loan subject to an escrow withhold as shown on the Closing
Schedule;
(xxv) All
of
the improvements which were included in determining the appraised value of
the
Mortgaged Property lie wholly within the Mortgaged Property’s boundary lines and
no improvements on adjoining properties encroach upon the Mortgaged Property,
excepting therefrom: (i) any encroachment insured against in the lender’s title
insurance policy identified in subsection (xiii), (ii) any encroachment
generally acceptable to subprime mortgage loan originators doing business
in the
same jurisdiction as the Mortgaged Property, and (iii) any encroachment which
does not materially interfere with the benefits of the security intended
to be
provided by such Mortgage;
-10-
(xxvi) All
parties to the Mortgage Note had the legal capacity to execute the Mortgage
Note
and the Mortgage, and the Mortgage Note and the Mortgage have been duly executed
by such parties;
(xxvii) To
the
best of the Seller’s knowledge, at the time of origination of the Mortgage Loan,
no appraised improvement located on or being part of the Mortgaged Property
was
in violation of any applicable zoning law or regulation and all inspections,
licenses and certificates required in connection with the origination of
any
Mortgage Loan with respect to the occupancy of the Mortgaged Property, have
been
made or obtained from the appropriate authorities;
(xxviii) No
Mortgagor has notified the Seller of any relief requested or allowed under
the
Servicemembers Civil Relief Act;
(xxix) All
parties which have held an interest in the Mortgage Loan are (or during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the state wherein the
Mortgaged Property is located, (2) organized under the laws of such state,
(3)
qualified to do business in such state, (4) a federal savings and loan
association or national bank, (5) not doing business in such state, or (6)
exempt from the applicable licensing requirements of such state;
(xxx) The
Mortgage File contains an appraisal of the related Mortgaged Property which
was
made prior to the approval of the Mortgage Loan by a qualified appraiser,
duly
appointed by the related originator and was made in accordance with the
Financial Institutions Reform, Recovery, and Enforcement Act of
1989;
(xxxi) Except
as
may otherwise be limited by applicable law, the Mortgage contains a provision
for the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the Mortgagee thereunder;
(xxxii) The
Mortgage Loan does not contain any provision which would constitute a “buydown”
provision and pursuant to which Monthly Payments are paid or partially paid
with
funds deposited in a separate account established by the related originator,
the
Mortgagor or anyone on behalf of the Mortgagor, or paid by any source other
than
the Mortgagor. The Mortgage Loan is not a “graduated payment mortgage loan” and
the Mortgage loan does not have a shared appreciation or other contingent
interest feature;
(xxxiii) To
the
best of the Seller’s knowledge there is no action or proceeding directly
involving the Mortgaged Property presently pending in which compliance with
any
environmental law, rule or regulation is at issue and the Seller has received
no
notice of any condition at the Mortgaged Property which is reasonably likely
to
give rise to an action or proceeding in which compliance with any environmental
law, rule or regulation is at issue;
(xxxiv) Each
Mortgage Loan is an obligation which is principally secured by an interest
in
real property within the meaning of Treasury Regulation section
1.860G-2(a);
-11-
(xxxv) Each
Mortgage Loan (a) is directly secured by a first or second lien on, and consists
of a single parcel of, real property with a detached one-to-four family
residence erected thereon or an individual condominium unit in a condominium
project, or an individual unit in a planned unit development (“PUD”). Any unit
in a PUD or condominium project conforms to the requirements of the Applicable
Underwriting Guidelines regarding such dwellings. No residence or dwelling
is a
mobile home or a manufactured dwelling unless it is a manufactured dwelling,
which is permanently affixed to a foundation and treated as “real estate” under
applicable law. No Mortgaged Property is used for commercial purposes. Mortgaged
Properties which contain a home office shall not be considered as being used
for
commercial purposes as long as the Mortgaged Property has not been altered
for
commercial purposes and is not storing any chemicals or raw materials other
than
those commonly used for homeowner repair, maintenance and/or household
purposes;
(xxxvi) The
Mortgage Interest Rate with respect to the Adjustable Rate Mortgage Loans
is
subject to adjustment at the time and in the amounts as are set forth in
the
related Mortgage Note;
(xxxvii) No
Mortgage Loan contains a provision whereby the Mortgagor can convert an
Adjustable Rate Mortgage Loan into a Fixed Rate Mortgage Loan;
(xxxviii)
With
respect to each Group I Mortgage Loan, no borrower obtained a prepaid
single-premium credit-life, credit-disability, credit unemployment or credit
property insurance policy in connection with the origination of such Group
I
Mortgage Loan;
(xxxix) With
respect to each Group I Mortgage Loan that has a prepayment penalty feature,
each such prepayment penalty is enforceable and will be enforced by the
originator, as servicer of the Group I Mortgage Loan, for the benefit of
the
Purchaser, and each prepayment penalty is permitted pursuant to federal,
state
and local law. Each such prepayment penalty is in an amount equal to the
maximum
amount permitted under applicable law and no such prepayment penalty may
be
imposed for a term in excess of three (3) years. With respect to any Group
I
Mortgage Loan that contains a provision permitting imposition of a prepayment
penalty upon a prepayment prior to maturity: (i) prior to the loan’s
origination, the Mortgagor agreed to such prepayment penalty in exchange
for a
monetary benefit, including but not limited to a rate or fee reduction, (ii)
originator has available programs that offered the option of obtaining a
mortgage loan that did not require payment of such a prepayment penalty and
prior to the Mortgage Loan’s origination, the Mortgage Loan was available to the
Mortgagor with and without the prepayment penalty, (iii) the prepayment penalty
was disclosed to the borrower in the loan documents pursuant to applicable
state
and federal law, and (iv) notwithstanding the
terms
of the Group I Mortgage Loan or any
state
or federal law to the contrary, the servicer will not impose such prepayment
penalty in any instance when the mortgage debt is accelerated as the result
of
the Mortgagor’s default in making the loan payments;
-12-
(xl) No
Mortgage Loan is (a) subject to, covered by or in violation of the provisions
of
the Home Ownership and Equity Protection Act of 1994, as amended (“HOEPA”), or
has an “annual percentage rate” or “total points and fees” payable by the
borrower (as each such term is defined under HOEPA) that equal or exceed
the
applicable thresholds defined under HOEPA (Section 32 of Regulation Z, 12
C.F.R.
Section 226.32(a)(1)(i) and (ii)), (b) a “high cost”, “covered” (except with
respect to purchase money “covered loans” under the New Jersey Home Ownership
Security Act of 2002), “abusive”, “predatory”, “home loan”, “Oklahoma Section
10” or “high risk” mortgage loan (or a similarly designated loan using different
terminology) under any federal, state or local law, including without
limitation, the provisions of the Georgia Fair Lending Act, New York Banking
Law, Section 6-1, the Arkansas Home Loan Protection Act, effective as of
June14, 2003, Kentucky State Statute KRS 360.100, effective as of June 25, 2003,
the
New Jersey Home Ownership Security Act of 2002 (the “NJ Act”), the New Mexico
Home Loan Protection Act (N.M. Stat. Ann. §§ 58-21A-1 et seq.), the Illinois
High-Risk Home Loan Act (815 Ill. Comp. Stat. 137/1 et seq.), the Oklahoma
Home
Ownership and Equity Protection Act, Nevada Assembly Bill No. 284, effective
as
of Oct. 1, 2003, the Minnesota Residential Mortgage Originator and Servicer
Licensing Act (MN Stat. §58.137), the South Carolina High-Cost and Consumer Home
Loans Act, effective January 1, 2004, the Massachusetts Predatory Home Loan
Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or any
other statute or regulation providing assignee liability to holders of such
mortgage loans, or (c) subject to or in violation of any such or comparable
federal, state or local statutes or regulations;
(xli) No
Mortgage Loan originated or modified on or after October 1, 2002 and prior
to
March 7, 2003 is secured by a Mortgaged Property located in the State of
Georgia. There is no such Mortgage Loan underlying the Certificate that was
originated on or after March 7, 2003, which is a “high cost home loan” as
defined under the Georgia Fair Lending Act;
(xlii) [Reserved];
(xliii) [Reserved];
(xliv) There
is
no Mortgage Loan that (a) is secured by property located in the State of
Kentucky; (b) was originated on or after June 24, 2003, and (c) which is
a “high
cost home loan” as defined under Kentucky State Statute KRS 360.100, effective
as of June 24, 2003;
(xlv) There
is
no Mortgage Loan that (a) is secured by property located in the State of
Arkansas, (b) has a note date on or after July 16, 2003, and (c) which is
a
“high cost home loan” as defined under the Arkansas Home Loan Protection Act,
effective as of July 16, 2003;
(xlvi) The
Servicer for each Group I Mortgage Loan has fully furnished, and will fully
furnish, in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and unfavorable)
on its borrower credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis;
(xlvii) The
original principal balance of each Group I Mortgage Loan which is secured
by a
first or second lien on the related Mortgaged Property is within Freddie
Mac’s
dollar amount limits for conforming one-to-four family mortgage loans;
-13-
(xlviii) No
Mortgage Loan is a “High-Cost Home Loan” as defined in the New Jersey Home
Ownership Act effective November 27, 2003 (N.J.S.A. 46:10B-22 et seq.);
(xlix) No
Mortgage Loan is a “High-Cost Home Loan” as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004 (N.M. Stat. Ann. §§ 58-21A-1 et
seq.);
(l) No
Mortgage Loan is a “High-Risk Home Loan” as defined in the Illinois High-Risk
Home Loan Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et
seq.);
(li) [Reserved];
(lii) [Reserved];
(liii) No
Mortgage Loan is a “High Cost” loan as defined under the New York Banking Law
Section 6L, effective as of April 1, 2003;
(liv) No
Mortgage Loan is a “home loan” in the state of Nevada;
(lv) No
Mortgage Loan is a “Section 10 mortgage loan” as defined in Oklahoma House Bill
1574;
(lvi) With
respect to any Group I Mortgage Loan originated on or after August 1, 2004,
neither the related Mortgage nor the related Mortgage Note requires the borrower
to submit to arbitration to resolve any dispute arising out of or relating
in
any way to the Mortgage Loan transaction;
(lvii) No
Mortgage Loan is a High Cost Loan or Covered Loan, as applicable (as such
terms
are defined in the then current Standard & Poor’s LEVELS®
Glossary
which is now Version 5.7 Revised, Appendix E (attached hereto as Exhibit
2)) and
no Mortgage Loan originated or modified on or after October 1, 2002 and prior
to
March 7, 2003 is secured by a Mortgaged Property located in the State of
Georgia
(lviii) No
Mortgage Loan is a “High-Cost Home Mortgage Loan” as defined in the
Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004
(Mass. Ann. Laws Ch. 183C);
(lix) [Reserved];
(lx) [Reserved];
(lxi) The
methodology used in underwriting the extension of credit for each Group I
Mortgage Loan employs objective mathematical principles which relate the
Mortgagor’s income, assets and liabilities to the proposed payment and such
underwriting methodology does not rely on the extent of the Mortgagor’s equity
in the collateral as the principal determining factor in approving such credit
extension. Such underwriting methodology confirmed that at the time of
origination (application/approval) the Mortgagor had a reasonable ability
to
make timely payments on the Group I Mortgage Loan;
-14-
(lxii) [Reserved];
(lxiii) [Reserved];
(lxiv) With
respect to any Group I Mortgage Loans that are manufactured housing, upon
the
origination of each such Group I Mortgage Loan the manufactured housing unit
either: (i) will be the principal residence of the borrower or (ii) will
be
classified as real property under applicable state law;
(lxv) [Reserved];
(lxvi) With
respect to any Mortgage Loan that is secured by a second lien on the related
Mortgaged Property, either (i) no consent for the Mortgage Loan is required
by
the holder of any related senior lien or (ii) such consent has been obtained
and
is contained in the Mortgage File;
(lxvii) Each
Mortgagor of a Group I Mortgage Loan was assigned the highest credit grade
available with respect to a mortgage loan product offered by such Group I
Mortgage Loan’s originator, taking into account credit history, debt to income
ratio and loan requirements of such Mortgagor of such Group I Mortgage
Loan;
(lxviii) With
respect to a Mortgage Loan which is a second lien, as of the date hereof,
the
Seller has not received a notice of default of a senior lien on the related
Mortgaged Property which has not been cured;
(lxix) With
respect to a Group I Mortgage Loan which is a second lien, (a) such second
lien
Group I Mortgage Loan is secured by a one- to four-family residence that
is the
principal residence of the Mortgagor, (b) the origination amount for such
second
lien Group I Mortgage Loan did not exceed one-half of the one-unit limitation
set forth by Freddie Mac for first lien mortgage loans, without regard to
the
number of units, and (c) the aggregate original principal balance for the
first
lien and the second lien mortgage Loan do not exceed Freddie Mac’s applicable
loan limits for first lien mortgage loans for properties of the same type
as the
related Mortgaged Property;
(lxx) No
borrower under a
Group I
Mortgage Loan was charged “points and fees” in an amount greater than
(a)
$1,000 or (b) 5%
of the
principal amount of such
Group I
Mortgage Loan, whichever is greater. For purposes of this representation,
“points and fees” (x) include origination, underwriting, broker and finder’s
fees and charges that the lender imposed as a condition of making the mortgage
loan, whether they are paid to the lender or a third party; and (y) exclude
bona
fide discount points, fees paid for actual services rendered in connection
with
the origination of the mortgage (such as attorneys’ fees, notaries fees and fees
paid for property appraisals, credit reports, surveys, title examinations
and
extracts, flood and tax certifications, and home inspections); the cost of
mortgage insurance or credit-risk price adjustments; the costs of title,
hazard,
and flood insurance policies; state and local transfer taxes or fees; escrow
deposits for the future payment of taxes and insurance premiums; and other
miscellaneous fees and charges, which miscellaneous fee and charges, in total,
do not exceed 0.25 percent of the loan amount;
-15-
(lxxi) No
selection procedures were used by the Seller that identified the Mortgage
Loans
as being less desirable or valuable than other comparable mortgage loans
in the
Seller’s portfolio;
(lxxii) The
information set forth in the Closing Schedule is true and correct in all
material respects as of the Cut-off Date; and
(lxxiii) No
Mortgage Loan is secured in whole or in part by the interest of the Mortgagor
as
a lessee under a ground lease of the related Mortgaged Property.
SECTION
7.Repurchase
Obligation for Defective Documentation and for Breach of Representation and
Warranty.
(a) The
representations and warranties contained in Section 6 shall not be impaired
by
any review and examination of loan files or other documents evidencing or
relating to the Mortgage Loans or any failure on the part of the Seller or
the
Purchaser to review or examine such documents and shall inure to the benefit
of
any assignee, transferee or designee of the Purchaser, including the Trustee
for
the benefit of the Certificateholders. With respect to the representations
and
warranties contained herein as to which the Seller has no knowledge, if it
is
discovered that the substance of any such representation and warranty was
inaccurate as of the date such representation and warranty was made or deemed
to
be made, and such inaccuracy materially and adversely affects the value of
the
related Mortgage Loan or the interest therein of the Purchaser or the
Purchaser’s assignee, transferee or designee, then notwithstanding the lack of
knowledge by the Seller with respect to the substance of such representation
and
warranty being inaccurate at the time the representation and warranty was
made,
the Seller shall take such action described in the following paragraph in
respect of such Mortgage Loan. Notwithstanding anything to the contrary
contained herein, any breach of a representation or warranty contained in
clauses (viii), (xxxviii), (xxxix), (xl), (xli), (xlvi), (xlvii), (lvi),
(lvii),
(lxi), (lxiv), (lxvii), (lxix) and/or (lxx) of Section 6 above, shall be
automatically deemed to affect materially and adversely the interests of
the
Purchaser or the Purchaser’s assignee, transferee or designee.
Upon
discovery by the Seller, the Purchaser or any assignee, transferee or designee
of the Purchaser of any materially defective document in, or that any material
document was not transferred by the Seller, as listed on a Custodian’s
preliminary exception report, as described in the Custodial Agreement, as
part
of any Mortgage File, or of a breach of any of the representations and
warranties contained in Section 6 that materially and adversely affects the
value of any Mortgage Loan or the interest therein of the Purchaser or the
Purchaser’s assignee, transferee or designee, the party discovering such breach
shall give prompt written notice to the Seller. Within sixty (60) days of
its
discovery or its receipt of notice of any such missing documentation that
was
not transferred by the Seller as described above, or of materially defective
documentation, or any such breach of a representation and warranty, the Seller
promptly shall deliver such missing document or cure such defect or breach
in
all material respects or, in the event the Seller cannot deliver such missing
document or cannot cure such defect or breach, the Seller shall, within ninety
(90) days of its discovery or receipt of notice of any such missing or
materially defective documentation or of any such breach of a representation
and
warranty, either (i) repurchase the affected Mortgage Loan at the Purchase
Price
(as such term is defined in the Pooling and Servicing Agreement) or (ii)
pursuant to the provisions of the Pooling and Servicing Agreement, cause
the
removal of such Mortgage Loan from the Trust Fund and substitute one or more
Qualified Substitute Mortgage Loans. The Seller shall amend the Closing Schedule
to reflect the withdrawal of such Mortgage Loan from the terms of this Agreement
and the Pooling and Servicing Agreement. The Seller shall deliver to the
Purchaser such amended Closing Schedule and shall deliver such other documents
as are required by this Agreement or the Pooling and Servicing Agreement
within
five (5) days of any such amendment. Any repurchase pursuant to this Section
7(a) shall be accomplished by transfer to an account designated by the Purchaser
of the amount of the Purchase Price in accordance with Section 2.03 of the
Pooling and Servicing Agreement. Any repurchase required by this Section
shall
be made in a manner consistent with Section 2.03 of the Pooling and Servicing
Agreement.
-16-
(b) If
the
representation made by the Seller in Section 5(xii) is breached, the Seller
shall not have the right or obligation to cure, substitute or repurchase
the
affected Mortgage Loan but shall remit to the Servicer for deposit in the
Collection Account, prior to the next succeeding Servicer Remittance Date,
the
amount of the Prepayment Charge indicated on the applicable part of the Closing
Schedule to be due from the Mortgagor in the circumstances less any amount
collected and remitted to the Servicer for deposit into the Collection
Account.
(c) It
is
understood and agreed that the obligations of the Seller set forth in this
Section 7 to cure or repurchase a defective Mortgage Loan (and to make payments
pursuant to Section 7(b)) constitute the sole remedies of the Purchaser against
the Seller respecting a missing document or a breach of the representations
and
warranties contained in Section 5(xii) or Section 6.
SECTION
8.Closing;
Payment for the Mortgage Loans. The
closing of the purchase and sale of the Mortgage Loans, shall be held at
the New
York City office of Thacher Proffitt & Wood LLP
at 10:00
a.m. New York City time on the Closing Date.
The
closing shall be subject to each of the following conditions:
(a) All
of
the representations and warranties of the Seller under this Agreement shall
be
true and correct in all material respects as of the date as of which they
are
made and no event shall have occurred which, with notice or the passage of
time,
would constitute a default under this Agreement;
(b) The
Purchaser shall have received, or the attorneys of the Purchaser shall have
received in escrow (to be released from escrow at the time of closing), all
closing documents as specified in Section 9 of this Agreement, in such forms
as
are agreed upon and acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required pursuant to the respective
terms thereof;
(c) The
Seller shall have delivered or caused to be delivered and released to the
Purchaser or to its designee, all documents (including without limitation,
the
Mortgage Loans) required to be so delivered by the Purchaser pursuant to
Section
2.01 of the Pooling and Servicing Agreement; and
-17-
(d) All
other
terms and conditions of this Agreement and the Pooling and Servicing Agreement
shall have been complied with.
Subject
to the foregoing conditions, the Purchaser shall deliver or cause to be
delivered to the Seller on the Closing Date, against delivery and release
by the
Seller to the Trustee of all documents required pursuant to the Pooling and
Servicing Agreement, the consideration for the Mortgage Loans as specified
in
Section 3 of this Agreement.
SECTION
9.Closing
Documents.
Without
limiting the generality of Section 8 hereof, the closing shall be subject
to
delivery of each of the following documents:
(a) An
Officers’ Certificate of the Seller, dated the Closing Date, upon which the
Purchaser and DBSI may rely with respect to certain facts regarding the sale
of
the Mortgage Loans by the Seller to the Purchaser;
(b) An
Opinion of Counsel of the Seller, dated the Closing Date and addressed to
the
Purchaser and DBSI;
(c) Such
opinions of counsel as the Rating Agencies or the Trustee may request in
connection with the sale of the Mortgage Loans by the Seller to the Purchaser
or
the Seller’s execution and delivery of, or performance under, this Agreement;
and
(d) Such
further information, certificates, opinions and documents as the Purchaser
or
DBSI may reasonably request.
SECTION
10.Costs.
The
Seller shall pay (or shall reimburse the Purchaser or any other Person to
the
extent that the Purchaser or such other Person shall pay) all costs and expenses
incurred in connection with the transfer and delivery of the Mortgage Loans,
including without limitation, fees for title policy endorsements and
continuations, the fees and expenses of the Seller’s accountants and attorneys,
the costs and expenses incurred in connection with producing the Servicer’s loan
loss, foreclosure and delinquency experience, and the costs and expenses
incurred in connection with obtaining the documents referred to in Sections
9(a), 9(b) and 9(c), the costs and expenses of printing (or otherwise
reproducing) and delivering this Agreement, the Pooling and Servicing Agreement,
the Certificates, the prospectus and prospectus supplement, and any private
placement memorandum relating to the Certificates and other related documents,
the initial fees, costs and expenses of the Trustee, the fees and expenses
of
the Purchaser’s counsel in connection with the preparation of all documents
relating to the securitization of the Mortgage Loans, the filing fee charged
by
the Securities and Exchange Commission for registration of the Certificates
and
the fees charged by any rating agency to rate the Certificates. All
other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such expense.
SECTION
11.Servicing.
The
Mortgage Loans will be master serviced by the Master Servicer under the Pooling
and Servicing Agreement and serviced by the Servicer, on behalf of the Trust,
and the Seller has represented to the Purchaser that such Mortgage Loans
are not
subject to any other servicing agreements with third parties. Neither
the Purchaser nor any affiliate of the Purchaser is servicing the Mortgage
Loans
under any such servicing agreement and, accordingly, neither the Purchaser
nor
any affiliate of the Purchaser is entitled to receive any fee for releasing
the
Mortgage Loans from any such servicing agreement. The Seller shall
arrange for the orderly transfer of such servicing to the
Servicer. For so long as the Master Servicer master services the
Mortgage Loans and the Servicer services the Mortgage Loans, the Master Servicer
shall be entitled to the master servicing compensation and the Servicer shall
be
entitled to its Servicing Fee and such other payments as provided for under
the
terms of the Pooling and Servicing Agreement, as applicable.
-18-
SECTION
12.Mandatory
Delivery; Grant of Security Interest. The
sale and delivery on the Closing Date of the Mortgage Loans (exclusive of
the
Servicing Rights) described on the Closing Schedule in accordance with the
terms
and conditions of this Agreement is mandatory. It is specifically
understood and agreed that each Mortgage Loan is unique and identifiable
on the
date hereof and that an award of money damages would be insufficient to
compensate the Purchaser for the losses and damages incurred by the Purchaser
in
the event of the Seller’s failure to deliver the Mortgage Loans on or before the
Closing Date. The Seller hereby grants to the Purchaser a lien on and
a continuing security interest in the Seller’s interest in each Mortgage Loan
and each document and instrument evidencing each such Mortgage Loan to secure
the performance by the Seller of its obligation hereunder, and the Seller
agrees
that it holds such Mortgage Loans in custody for the Purchaser, subject to
the
Purchaser’s (i) right, prior to the Closing Date, to reject any Mortgage Loan to
the extent permitted by this Agreement and (ii) obligation to deliver or
cause
to be delivered the consideration for the Mortgage Loans pursuant to Section
8
hereof. Any Mortgage Loans rejected by the Purchaser shall
concurrently therewith be released from the security interest created
hereby. All rights and remedies of the Purchaser under this Agreement
are distinct from, and cumulative with, any other rights or remedies under
this
Agreement or afforded by law or equity and all such rights and remedies may
be
exercised concurrently, independently or successively.
Notwithstanding
the foregoing, if on the Closing Date, each of the conditions set forth in
Section 8 hereof shall have been satisfied and the Purchaser shall not have
paid
or caused to be paid the Purchase Price, or any such condition shall not
have
been waived or satisfied and the Purchaser determines not to pay or cause
to be
paid the Purchase Price, the Purchaser shall immediately effect the redelivery
of the Mortgage Loans, if delivery to the Purchaser has occurred, and the
security interest created by this Section 12 shall be deemed to have been
released.
SECTION
13.Notices. All
demands, notices and communications hereunder shall be in writing and shall
be
deemed to have been duly given if personally delivered to or mailed by
registered mail, postage prepaid, or transmitted by fax and, receipt of which
is
confirmed by telephone, if to the Purchaser, addressed to the Purchaser at
6525
Morrison Boulevard, Suite 318, Charlotte, North Carolina28211, fax: (704)
365-1362, Attention: Doris Hearn, or such other address as may hereafter
be
furnished to the Seller in writing by the Purchaser; and if to the Seller,
addressed to the Seller at 60 Wall Street, New York, New York10005, fax:
(212)
250-2740, Attention: Michael Commaroto, or to such other address as
the Seller may designate in writing to the Purchaser.
-19-
SECTION
14.Severability
of Provisions. Any
part, provision, representation or warranty of this Agreement that is prohibited
or that is held to be void or unenforceable shall be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of
this Agreement that is prohibited or unenforceable or is held to be void
or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the
remaining provisions hereof, and any such prohibition or unenforceability
in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law
which
prohibits or renders void or unenforceable any provision hereof.
SECTION
15.Agreement
of Parties. The
Seller and the Purchaser each agree to execute and deliver such instruments
and
take such actions as either of the others may, from time to time, reasonably
request in order to effectuate the purpose and to carry out the terms of
this
Agreement and the Pooling and Servicing Agreement.
SECTION
16.Survival. The
Seller agrees that the representations, warranties and agreements made by
it
herein and in any certificate or other instrument delivered pursuant hereto
shall be deemed to be relied upon by the Purchaser, notwithstanding any
investigation heretofore or hereafter made by the Purchaser or on its behalf,
and that the representations, warranties and agreements made by the Seller
herein or in any such certificate or other instrument shall survive the delivery
of and payment for the Mortgage Loans and shall continue in full force and
effect, notwithstanding any restrictive or qualified endorsement on the Mortgage
Notes and notwithstanding subsequent termination of this Agreement, the Pooling
and Servicing Agreement or the Trust Fund.
SECTION
17.GOVERNING
LAW.THIS
AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS
(EXCLUDING THE CHOICE OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF NEW
YORK.THE
PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION
18.Miscellaneous.
This
Agreement may be executed in two or more counterparts, each of which when
so
executed and delivered shall be an original, but all of which together shall
constitute one and the same instrument. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement supersedes all prior
agreements and understandings relating to the subject matter
hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge
or
termination is sought. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
-20-
It
is the
express intent of the parties hereto that the conveyance of the Mortgage
Loans
by the Seller to the Purchaser as provided in Section 4 hereof be, and be
construed as, a sale of the Mortgage Loans by the Seller to the Purchaser
and
not as a pledge of the Mortgage Loans by the Seller to the Purchaser to secure
a
debt or other obligation of the Seller. However, in the event that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans
are
held to be property of the Seller, then (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by
the
Seller to the Purchaser to secure a debt or other obligation of the Seller
and
(b) (1) this Agreement shall also be deemed to be a security agreement within
the meaning of Articles 8 and 9 of the New York Uniform Commercial Code;
(2) the
conveyance provided for in Section 4 hereof shall be deemed to be a grant
by the
Seller to the Purchaser of a security interest in all of the Seller’s right,
title and interest in and to the Mortgage Loans and all amounts payable to
the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account whether in the form of cash, instruments, securities
or other property; (3) the possession by the Purchaser or its agent of Mortgage
Notes, the related Mortgages and such other items of property that constitute
instruments, money, negotiable documents or chattel paper shall be deemed
to be
“possession by the secured party” for purposes of perfecting the security
interest pursuant to Section 9-305 of the New York Uniform Commercial Code;
and
(4) notifications to persons holding such property and acknowledgments, receipts
or confirmations from persons holding such property shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Purchaser for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Purchaser pursuant to Section 4(d) hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser shall, to the extent consistent with
this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans,
such
security interest would be deemed to be a perfected security interest of
first
priority under applicable law and will be maintained as such throughout the
term
of this Agreement and the Pooling and Servicing Agreement.
SECTION
19.Third
Party Beneficiary. The
parties hereto acknowledge and agree that DBSI and each of its respective
successors and assigns shall have all the rights of a third-party beneficiary
in
respect of Section 12 of this Agreement and shall be entitled to rely upon
and
directly enforce the provisions of Section 12 of this
Agreement.
-21-
IN
WITNESS WHEREOF, the Purchaser and the Seller have caused their names to
be
signed by their respective officers thereunto duly authorized as of the date
first above written.
DB
STRUCTURED PRODUCTS, INC.
By:
Name:
Title:
By:
Name:
Title:
ACE
SECURITIES CORP.
By:
Name:
Title:
By:
Name:
Title:
EXHIBIT
1
Loan
#:
_______
Borrower:
_____
LOST
NOTE
AFFIDAVIT
I,
as
_____________________ of ____________________, a _______________ am authorized
to make this Affidavit on behalf of __________________ (the “Seller”). In
connection with the administration of the Mortgage Loans held by
______________________, a _______________ [corporation] as Seller on behalf
of
____________________ (the “Purchaser”), _______________________ (the
“Deponent”), being duly sworn, deposes and says that:
1. The
Seller’s address is:
________________________________________
________________________________________
________________________________________
2. The
Seller previously delivered to the Purchaser a signed Initial Certification
with
respect to such Mortgage and/or Assignment of Mortgage;
3. Such
Mortgage Note and/or Assignment of Mortgage was assigned or sold to the
Purchaser by __________________, a pursuant to the terms and provisions of
a
Mortgage Loan Purchase Agreement dated as of _____________;
4. Such
Mortgage Note and/or Assignment of Mortgage is not outstanding pursuant to
a
request for release of Documents;
5. Aforesaid
Mortgage Note and/or Assignment of Mortgage (the “Original”) has been
lost;
6. Deponent
has made or caused to be made a diligent search for the Original and has
been
unable to find or recover same;
7. The
Seller was the Seller of the Original at the time of the loss; and
8. Deponent
agrees that, if said Original should ever come into Seller’s possession, custody
or power, Seller will immediately and without consideration surrender the
Original to the Purchaser.
9. Attached
hereto is a true and correct copy of (i) the Note, endorsed in blank by the
Mortgagee and (ii) the Mortgage or Deed of Trust (strike one) which secures
the
Note, which Mortgage or Deed of Trust is recorded in the county where the
property is located.
10. Deponent
hereby agrees that the Seller (a) shall indemnify and hold harmless the
Purchaser, its successors and assigns, against any loss, liability or damage,
including reasonable attorney’s fees, resulting from the unavailability of any
Notes, including but not limited to any loss, liability or damage arising
from
(i) any false statement contained in this Affidavit, (ii) any claim of any
party
that purchased a mortgage loan evidenced by the Lost Note or any interest
in
such mortgage loan, (iii) any claim of any borrower with respect to the
existence of terms of a mortgage loan evidenced by the Lost Note on the related
property to the fact that the mortgage loan is not evidenced by an original
note
and (iv) the issuance of a new instrument in lieu thereof (items (i) through
(iv) above hereinafter referred to as the “Losses”) and (b) if required by any
Rating Agency in connection with placing such Lost Note into a Pass-Through
Transfer, shall obtain a surety from an insurer acceptable to the applicable
Rating Agency to cover any Losses with respect to such Lost Note.
11. This
Affidavit is intended to be relied upon by the Purchaser, its successors
and
assigns. Seller represents and warrants that is has the authority to perform
its
obligations under this Affidavit of Lost Note.
Executed
this _ day of _______, 200_.
By:
Name:
Title:
On
this
__ day of ______, 200_, before me appeared ______________________ to me
personally known, who being duly sworn did say that he is the
_______________________ of ____________________, a ______________________
and
that said Affidavit of Lost Note was signed and sealed on behalf of such
corporation and said acknowledged this instrument to be the free act and
deed of
said entity.
APPENDIX
E — Standard & Poor’s Predatory Lending Categories
Standard
& Poor’s has categorized loans governed by anti-predatory lending laws in
the Jurisdictions listed below into three categories based upon a combination
of
factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note
that
certain loans classified by the relevant statute as Covered are included
in
Standard & Poor’s High Cost Loan Category because they included thresholds
and tests that are typical of what is generally considered High Cost by the
industry.
Standard
& Poor’s High Cost Loan Categorization
State/Jurisdiction
Name
of Anti-Predatory Lending Law/Effective Date
Category
under Applicable Anti-Predatory Lending Law
Arkansas
Home
Loan Protection Act, Ark. Code
Ann. §§ 23-53-101 et
seq.
As
to
each item described below, the entity indicated as the Responsible Party shall
be primarily responsible for reporting the information to the party identified
as responsible for preparing the Securities Exchange Act Reports pursuant to
Section 5.06(a)(ii).
Under
Item 1 of Form 10-D: a) items marked “monthly statement” are required to be
included in the periodic Distribution Date statement under Section 5.02,
provided by the Securities Administrator based on information received from
the
Master Servicer; and b) items marked “Form 10-D report” are required to be in
the Form 10-D report but not the monthly statement, provided by the party
indicated. Information under all other Items of Form 10-D is to be included
in
the Form 10-D report.
Form
Item
Description
Servicers
Master
Servicer
Securities
Administrator
Custodian
Trustee
Depositor
Sponsor
10-D
Must
be filed within 15 days of the distribution date for the asset-backed
securities.
1
Distribution
and Pool Performance Information
Item
1121(a) - Distribution and Pool Performance Information
(1)
Any applicable record dates, accrual dates, determination dates for
calculating distributions and actual distribution dates for the
distribution period.
X
(monthly
Statement)
(2)
Cash flows received and the sources thereof for distributions, fees
and
expenses.
X
(monthly
Statement)
(3)
Calculated amounts and distribution of the flow of funds for the
period
itemized by type and priority of payment, including:
X
(monthly
Statement)
(i)
Fees or expenses accrued and paid, with an identification of the
general
purpose of such fees and the party receiving such fees or
expenses.
X
(monthly
Statement)
(ii)
Payments accrued or paid with respect to enhancement or other support
identified in Item 1114 of Regulation AB (such as insurance premiums
or
other enhancement maintenance fees), with an identification of the
general
purpose of such payments and the party receiving such
payments.
X
(monthly
Statement)
(iii)
Principal, interest and other distributions accrued and paid on the
asset-backed securities by type and by class or series and any principal
or interest shortfalls or carryovers.
X
(monthly
Statement)
(iv)
The amount of excess cash flow or excess spread and the disposition
of
excess cash flow.
X
(monthly
Statement)
(4)
Beginning and ending principal balances of the asset-backed
securities.
X
(monthly
Statement)
(5)
Interest rates applicable to the pool assets and the asset-backed
securities, as applicable. Consider providing interest rate information
for pool assets in appropriate distributional groups or incremental
ranges.
X
(monthly
Statement)
(6)
Beginning and ending balances of transaction accounts, such as reserve
accounts, and material account activity during the period.
X
(monthly
Statement)
(7)
Any amounts drawn on any credit enhancement or other support identified
in
Item 1114 of Regulation AB, as applicable, and the amount of coverage
remaining under any such enhancement, if known and
applicable.
X
(monthly
Statement)
(8)
Number and amount of pool assets at the beginning and ending of each
period, and updated pool composition information, such as weighted
average
coupon, weighted average remaining term, pool factors and prepayment
amounts.
X
(monthly
Statement)
Updated
pool composition information fields to be as specified by Depositor
from
time to time
(9)
Delinquency and loss information for the period.
X
X
X
(monthly
Statement)
In
addition, describe any material changes to the information specified
in
Item 1100(b)(5) of Regulation AB regarding the pool assets.
(methodology)
X
X
(10)
Information on the amount, terms and general purpose of any advances
made
or reimbursed during the period, including the general use of funds
advanced and the general source of funds for reimbursements.
X
X
X
(monthly
Statement)
(11)
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.
X
X
X
(monthly
Statement)
(12)
Material breaches of pool asset representations or warranties or
transaction covenants.
X
X
X
(13)
Information on ratio, coverage or other tests used for determining
any
early amortization, liquidation or other performance trigger and
whether
the trigger was met.
X
(monthly
Statement)
(14)
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 or revolving
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.
X
X
X
Disclose
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.
X
Item
1121(b) - Pre-Funding or Revolving Period Information
Updated
pool information as required under Item 1121(b).
X
2
Legal
Proceedings
Item
1117 - Legal proceedings pending against the following entities,
or their
respective property, that is material to Certificateholders, including
proceedings known to be contemplated by governmental
authorities:
Sponsor
(Seller)
X
Depositor
X
Trustee
X
Issuing
entity
X
Master
Servicer, affiliated Servicer, other Servicer servicing 20% or more
of
pool assets at time of report, other material servicers
X
X
Securities
Administrator
X
Originator
of 20% or more of pool assets as of the Cut-off Date
X
Custodian
X
3
Sales
of Securities and Use of Proceeds
Information
from Item 2(a) of Part II of Form 10-Q:
With
respect to any sale of securities by the sponsor, depositor or issuing
entity, that are backed by the same asset pool or are otherwise issued
by
the issuing entity, whether or not registered, provide the sales
and use
of proceeds information in Item 701 of Regulation S-K. Pricing information
can be omitted if securities were not registered.
X
4
Defaults
Upon Senior Securities
Information
from Item 3 of Part II of Form 10-Q:
Report
the occurrence of any Event of Default (after expiration of any grace
period and provision of any required notice)
X
X
5
Submission
of Matters to a Vote of Security Holders
Requesting
required financial information or effecting incorporation by
reference
X
*This
information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the
Items.
8
Other
Information
Disclose
any information required to be reported on Form 8-K during the period
covered by the Form 10-D but not reported
The Responsible Party for the applicable Form 8-K item as indicated
below.
9
Exhibits
Distribution
report
X
Exhibits
required by Item 601 of Regulation S-K, such as material
agreements
X
G-1
Form
Item
Description
Servicers
Master
Servicer
Securities
Administrator
Custodian
Trustee
Depositor
Sponsor
8-K
Must
be filed within four business days of an event reportable on Form
8-K.
1.01
Entry
into a Material Definitive Agreement
Disclosure
is required regarding entry into or amendment of any definitive agreement
that is material to the securitization, even if depositor is not
a party.
Note:
disclosure not required as to definitive agreements that are fully
disclosed in the prospectus
X
X
X
(if Master Servicer is not a party)
X
(if Master Servicer is not a party)
X
(if Master Servicer is not a party)
X
(if Master Servicer is not a party)
1.02
Termination
of a Material Definitive Agreement
X
X
X
(if Master Servicer is not a party)
X
(if Master Servicer is not a party)
X
(if Master Servicer is not a party)
X
(if Master Servicer is not a party)
Disclosure
is required regarding termination of any definitive agreement that
is
material to the securitization (other than expiration in accordance
with
its terms), even if depositor is not a party.
Disclosure
is required regarding the bankruptcy or receivership, if known to
the
Master Servicer, with respect to any of the following:
Sponsor
(Seller), Depositor, Master Servicer, affiliated Servicer, other
Servicer
servicing 20% or more of pool assets at time of report, other material
servicers, Certificate Administrator, Trustee, significant obligor,
credit
enhancer (10% or more), derivatives counterparty, Custodian
X
X
X
X
X
X
X
2.04
Triggering
Events that Accelerate or Increase a Direct Financial Obligation
or an
Obligation under an Off-Balance Sheet Arrangement
Includes
an early amortization, performance trigger or other event, including
event
of default, that would materially alter the payment priority/distribution
of cash flows/amortization schedule.
Disclosure
will be made of events other than waterfall triggers which are disclosed
in the 5.02 statement
X
X
3.03
Material
Modification to Rights of Security Holders
Disclosure
is required of any material modification to documents defining the
rights
of Certificateholders, including the Pooling and Servicing
Agreement
Disclosure
is required of any amendment “to the governing documents of the issuing
entity”
X
X
5.06
Change
in Shell Company Status
[Not
applicable to ABS issuers]
X
6.01
ABS
Informational and Computational Material
[Not
included in reports to be filed under Section 3.18]
X
6.02
Change
of Servicer or Trustee
Requires
disclosure of any removal, replacement, substitution or addition
of any
master servicer, affiliated servicer, other servicer servicing 10%
or more
of pool assets at time of report, other material servicers, certificate
administrator or trustee.
X
X
X
X
X
Reg
AB disclosure about any new servicer (from entity appointing new
servicer)
or trustee (from Depositor) is also required.
X
X
X
6.03
Change
in Credit Enhancement or Other External Support
Covers
termination of any enhancement in manner other than by its terms,
the
addition of an enhancement, or a material change in the enhancement
provided. Applies to external credit enhancements as well as derivatives.
X
X
X
Reg
AB disclosure about any new enhancement provider is also
required
X
6.04
Failure
to Make a Required Distribution
X
X
6.05
Securities
Act Updating Disclosure
If
any material pool characteristic differs by 5% or more at the time
of
issuance of the securities from the description in the final prospectus,
provide updated Reg AB disclosure about the actual asset
pool.
X
If
there are any new servicers or originators required to be disclosed
under
Regulation AB as a result of the foregoing, provide the information
called
for in Items 1108 and 1110 respectively.
X
7.01
Regulation
FD Disclosure
X
X
X
X
X
X
8.01
Other
Events
Any
event, with respect to which information is not otherwise called
for in
Form 8-K, that the registrant deems of importance to security
holders.
X
9.01
Financial
Statements and Exhibits
The Responsible Party applicable to reportable
event.
G-2
Form
Item
Description
Servicers
Master
Servicer
Securities
Administrator
Custodian
Trustee
Depositor
Sponsor
10-K
Must
be filed within 90 days of the fiscal year end for the
registrant.
9B
Other
Information
Disclose
any information required to be reported on Form 8-K during the fourth
quarter covered by the Form 10-K but not reported
The Responsible Party for the applicable Form 8-K as indicated
above.
15
Exhibits
and Financial Statement Schedules
Item
1112(b) -Significant
Obligor Financial Information
X
X
Item
1114(b)(2) - Credit Enhancement Provider Financial
Information
Determining
applicable disclosure threshold
X
Requesting
required financial information or effecting incorporation by
reference
X
Item
1115(b) - Derivative Counterparty Financial Information
Determining
current maximum probable exposure
X
Determining
current significance percentage
X
Requesting
required financial information or effecting incorporation by
reference
X
Item
1117 - Legal proceedings pending against the following entities,
or their
respective property, that is material to Certificateholders, including
proceedings known to be contemplated by governmental
authorities:
Sponsor
(Seller)
X
Depositor
X
Trustee
X
Issuing
entity
X
Master
Servicer, affiliated Servicer, other Servicer servicing 20% or more
of
pool assets at time of report, other material servicers
X
X
Securities
Administrator
X
Originator
of 20% or more of pool assets as of the Cut-off Date
X
X
Custodian
X
Item
1119 - Affiliations and relationships between the following entities,
or
their respective affiliates, that are material to
Certificateholders:
Sponsor
(Seller)
X
Depositor
X
Trustee
X
with respect to 1119(a) affiliations only
Master
Servicer, affiliated Servicer, other Servicer servicing 20% or more
of
pool assets at time of report, other material servicers
X
X
Securities
Administrator
X
Originator
X
X
Custodian
X
(with respect to affiliations only)
Credit
Enhancer/Support Provider
X
X
Significant
Obligor
X
X
Item
1122 - Assessment of Compliance with Servicing Criteria
X
X
X
X
Item
1123 - Servicer Compliance Statement
X
X
G-3
EXHIBIT
H
ADDITIONAL
DISCLOSURE NOTIFICATION
**SENT
VIA FAX TO [_XXX)XXX-XXXX] AND VIA EMAIL TO [_________________] AND VIA
OVERNIGHT MAIL TO THE ADDRESS IMMEDIATELY BELOW:
Wells
Fargo Bank, N.A. as Securities Administrator
RE:
**
Additional Form [10-D][10-K][8-K] Disclosure** Required
Ladies
and Gentlemen:
In
accordance with Section [__] of the Pooling and Servicing Agreement, dated
as of [________] [__], 2006 among [_____________], as [______], [_____________],
as [______], [_____________], as [______] and [_____________], as [______],
the
undersigned, as [______], hereby notifies you that certain events have come
to
our attention that [will] [may] need to be disclosed on Form
[10-D][10-K][8-K].
Description
of Additional Form [10-D][10-K][8-K] Disclosure:
List
of any Attachments hereto to be included in the Additional Form
[10-D][10-K][8-K] Disclosure:
Any
inquiries related to this notification should be directed to [_____________],
phone number: [______]; email address: [_________________].
HSBC
Bank USA, National Association, not in its individual capacity,
but solely
as trustee for the supplemental interest trust created pursuant
to the
Pooling and Servicing Agreement, with respect to the ACE Securities
Corp.
Home Equity Loan Trust, Series 2006-FM1 Asset Backed Pass Through
Certificates.
The
purpose of this letter agreement (“Agreement”) is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the “Transaction”) between Deutsche Bank AG (“DBAG”) and HSBC Bank USA,
National Association, not individually, but solely as trustee of the
Supplemental Interest Trust (“Counterparty”) created under the Pooling and
Servicing Agreement, dated and effective as of August 1,
2006,
among Ace Securities Corp., as Depositor, Fremont Investment & Loan, as
Servicer, Wells Fargo Bank, National Association, as Master Servicer and
Securities Administrator, and HSBC Bank USA, National Association, as Trustee
(the “Pooling and Servicing Agreement”). This Agreement, which evidences a
complete and binding agreement between you and us to enter into the Transaction
on the terms set forth below, constitutes a “Confirmation” as referred to in the
“ISDA Form Master Agreement” (as defined below), as well as a “Schedule” as
referred to in the ISDA Form Master Agreement.
1. This
Agreement is subject to the 2000
ISDA Definitions (the
“Definitions”), as published by the International Swaps and Derivatives
Association, Inc. (“ISDA”). Any
reference to a “Swap Transaction” in the Definitions is deemed to be a reference
to a “Transaction” for purposes of this Agreement, and any reference to a
“Transaction” in this Agreement is deemed to be a reference to a “Swap
Transaction” for purposes of the Definitions. You
and
we have agreed to enter into this Agreement in lieu of negotiating a Schedule
to
the 1992 ISDA Master Agreement (Multicurrency—Cross Border) form (the “ISDA Form
Master Agreement”) but, rather, an ISDA Form Master Agreement shall be deemed to
have been executed by you and us on the date we entered into the Transaction.
For avoidance of doubt, the Transaction described herein shall be the sole
Transaction governed by such ISDA Form Master Agreement. In the event of
any
inconsistency between the provisions of this Agreement and the Definitions
or
the ISDA Form Master Agreement, this Agreement shall prevail for purposes
of the
Transaction. Each term capitalized but not defined herein shall have the
meaning
attributed thereto in the Pooling and Servicing Agreement.
2. The
terms
of the particular Transaction to which this Confirmation relates are as
follows:
Notional
Amount:
With
respect to any Calculation Period, the lesser of (i) the aggregate
Certificate Principal Balance of the Class A Certificates, Mezzanine
Certificates and Class CE Certificates on the day immediately preceding
the related Floating Rate Payer Payment Date, and (ii) the amount
set
forth on Schedule I attached hereto for such Calculation
Period.
May25, 2013, subject to adjustment in accordance with the Following
Business
Day Convention; provided, however, that for the purpose of determining
the
final Fixed Rate Payer Period End Date, Termination Date shall
be subject
to No Adjustment
Fixed
Amounts:
Fixed
Rate Payer:
Counterparty
Fixed
Rate Payer Period End Dates:
The
25th day of each month, commencing September 25, 2006, through
and
including the Termination Date, subject to no
adjustment.
Fixed
Rate Payer Payment Dates:
Early
Payment shall be applicable. Each Fixed Rate Payer Payment Date
shall be
one Business Day prior to the related Fixed Rate Payer Period End
Date.
Fixed
Rate:
5.48750%
Fixed
Rate Day Count Fraction:
30/360
Floating
Amounts:
Floating
Rate Payer:
DBAG
Floating
Rate Payer Period End Dates:
The
25th day of each month, commencing September 25, 2006, through
and
including the Termination Date, subject
to adjustment
in accordance with the Following Business Day
Convention.
Floating
Rate Payer Payment Dates:
Early
Payment shall be applicable. Each Floating Rate Payer Payment Date
shall
be one Business Day prior to the related Floating Rate Payer Period
End
Date.
Floating
Rate Option:
USD-LIBOR-BBA
Designated
Maturity:
1
month
Spread:
None
Floating
Rate Day Count Fraction:
Actual/360
Reset
Dates:
The
first day of each Calculation Period
Compounding:
Inapplicable
Calculation
Agent:
DBAG
Business
Days:
New
York
2
3.
Additional
Provisions:
Each
party hereto is hereby advised and acknowledges that the other party has
engaged
in (or refrained from engaging in) substantial financial transactions and
has
taken (or refrained from taking) other material actions in reliance upon
the
entry by the parties into the Transaction being entered into on the terms
and
conditions set forth herein and in the Confirmation relating to such
Transaction, as applicable.
4.
Provisions
Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
1)
The
parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form Master
Agreement will apply to any Transaction.
2)
Termination
Provisions.
Subject
to the provisions of paragraph 13 below, for purposes of the ISDA Form Master
Agreement:
(a)“Specified
Entity” is not applicable to DBAG or Counterparty for any purpose.
(b) The
“Breach of Agreement” provisions of Section 5(a)(ii) will not apply to DBAG or
Counterparty.
(c) The
“Credit Support Default” provisions of Section 5(a)(iii) will not apply to
Counterparty and will apply to DBAG if DBAG has obtained a guarantee or other
contingent agreement or posted collateral pursuant to paragraph 12
below.
(d) The
“Misrepresentation” provisions of Section 5(a)(iv) will not apply to DBAG or
Counterparty.
(e)“Specified
Transaction” is not applicable to DBAG or Counterparty for any purpose, and,
accordingly, Section 5(a)(v) shall not apply to DBAG or
Counterparty.
(f) The
“Cross Default” provisions of Section 5(a)(vi) will not apply to DBAG or to
Counterparty.
(g) The
“Bankruptcy” provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(h) The
“Merger Without Assumption” provisions of Section 5(a)(viii) will not apply to
Counterparty.
(i) The
“Tax
Event Upon Merger” provisions of Section 5(b)(iii) will not apply to DBAG as
Burdened Party.
(j) The
“Credit Event Upon Merger” provisions of Section 5(b)(iv) will not apply to DBAG
or to Counterparty.
(k) The
“Automatic Early Termination” provision of Section 6(a) will not apply to DBAG
or to Counterparty.
(l) Payments
on Early Termination. For the purpose of Section 6(e) of the ISDA Form Master
Agreement:
(i) Market
Quotation will apply.
(ii) The
Second Method will apply.
(m)“Termination
Currency” means United States Dollars.
3
3)
Tax
Representations.
Payer
Representations. For the purpose of Section 3(e) of the
ISDA Form Master
Agreement, DBAG and Counterparty make the following
representations:
It
is not required by any applicable law, as modified by the practice
of any
relevant governmental revenue authority, of any Relevant Jurisdiction
to
make any deduction or withholding for or on account of any Tax
from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e)
of
the
ISDA Form Master
Agreement) to be made by it to the other party under this Agreement.
In
making this representation, it may rely on (i) the accuracy of
any
representations made by the other party pursuant to Section 3(f)
of
the
ISDA Form Master
Agreement, (ii) the satisfaction of the agreement contained in
Section
4(a)(i) or 4(a)(iii) of the
ISDA Form Master
Agreement and the accuracy and effectiveness of any document provided
by
the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the
ISDA Form Master
Agreement and (iii) the satisfaction of the agreement of the other
party
contained in Section 4(d) of the
ISDA Form Master
Agreement, provided that it shall not be a breach of this representation
where reliance is placed on clause (ii) and the other party does
not
deliver a form or document under Section 4(a)(iii) by reason of
material
prejudice of its legal or commercial
position.
Payee
Representations. For the purpose of Section 3 (f) of the
ISDA Form Master
Agreement, DBAG and Counterparty make the following
representations:
(i) DBAG
represents that it
is a
“foreign person” within the meaning of the applicable U.S. Treasury Regulations
concerning information reporting and backup withholding tax (as in effect
on
January 1, 2001), unless DBAG provides written notice to Counterparty that
it is
no longer a foreign person. In respect of this Transaction it enters into
through an office or discretionary agent in the United States or which otherwise
is allocated for United States federal income tax purposes to such United
States
trade or business, each payment received or to be received by it under such
Transaction will be effectively connected with its conduct of a trade or
business in the United States.
(ii)
Counterparty
represents that it is trustee for the Supplement Interest Trust created
under
the Pooling and Servicing Agreement.
4)
The
ISDA Form Master Agreement is hereby amended as follows:
The
word
“third” shall be replaced by the word “second” in the third line of Section
5(a)(i) of the ISDA Form Master Agreement;
5)
Documents
to be Delivered.
For the
purpose of Section 4(a)(i) and (ii) of the ISDA Form Master Agreement, each
party agrees to deliver the following documents, as applicable:
(1) Tax
forms, documents, or certificates to be delivered are:
Party
required to deliver document
Form/Document/
Certificate
Date
by which to be
delivered
DBAG
and
the
Counterparty
Any
document required or reasonably requested to allow the other party
to make
payments under this Agreement without any deduction or withholding
for or
on the account of any Tax or with such deduction or withholding
at a
reduced rate
Promptly
after the earlier of (i) reasonable demand by either party or (ii)
learning that such form or document is
required
4
Party
required to deliver document
Form/Document/
Certificate
Date
by which to be
delivered
Covered
by Section 3(d) Representation
(2) Other
documents to be delivered are:
DBAG
and
the
Counterparty
Any
documents required by the receiving party to evidence the authority
of the
delivering party or its Credit Support Provider, if any, for it
to execute
and deliver this Agreement, any Confirmation, and any Credit Support
Documents to which it is a party, and to evidence the authority
of the
delivering party or its Credit Support Provider to perform its
obligations
under this Agreement, such Confirmation and/or Credit Support Document,
as
the case may be
Upon
the execution and delivery of this Agreement and such Confirmation
Yes
DBAG
and
the
Counterparty
A
certificate of an authorized officer of the party, as to the incumbency
and authority of the respective officers of the party signing this
Agreement, any relevant Credit Support Document, or any Confirmation,
as
the case may be
Upon
the execution and delivery of this Agreement and such
Confirmation
Yes
6)
Miscellaneous
(a)
Address
for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Addresses
for notices or communications to DBAG:
Addresses
for notices to DBAG under Sections 5 or 6 (other than notices under Section
5(a)(i)) shall be sent to:
Deutsche
Bank AG, Head Office
Taunusanlage
12
60262
Frankfurt
GERMANY
Attention:
Legal Department
Telex
No:
411836 or 416731 or 41233
Answerback: DBF-D
All
other
notices to DBAG shall be sent directly to the Office through which DBAG is
acting for the relevant Transaction, using the address and contact particulars
specified in the Confirmation of that Transaction or otherwise
notified.
Address
for notices or communications to the Counterparty:
Offices.
The provisions of Section 10(a) will not apply to this
Agreement.
(d)
Multibranch
Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement:
DBAG
is
not a Multibranch Party.
The
Counterparty is not a Multibranch
Party.
(e)
Calculation
Agent. The Calculation Agent is
DBAG.
(f)
Credit
Support Document.
DBAG:
Not
applicable, except for any guarantee, contingent agreement or credit support
annex delivered pursuant to paragraph 12 below.
The
Counterparty: Not
Applicable
(g)
Credit
Support Provider.
DBAG: Not
Applicable for so long as no Credit Support Document is delivered under
paragraph 12 below, otherwise, the party that is the primary obligor under
the
Credit Support Document.
The
Counterparty:
Not
Applicable
(h)
Governing
Law. The
parties to this Agreement hereby agree that the law of the State of New York
shall govern their rights and duties in whole without regard to conflict
of law
provisions thereof other than New York General Obligations Law Sections 5-1401
and 5-1402.
(i)
Severability. If
any
term, provision, covenant, or condition of this Agreement, or the application
thereof to any party or circumstance, shall be held to be invalid or
unenforceable (in whole or in part) for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force
and
effect as if this Agreement had been executed with the invalid or unenforceable
portion eliminated, so long as this Agreement as so modified continues to
express, without material change, the original intentions of the parties
as to
the subject matter of this Agreement and the deletion of such portion of
this
Agreement will not substantially impair the respective benefits or expectations
of the parties.
The
parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid
or
enforceable term, provision, covenant or condition, the economic effect of
which
comes as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
6
(j)
Consent
to Recording.
Each
party hereto consents to the monitoring or recording, at any time and from
time
to time, by the other party of any and all communications between officers
or
employees of the parties, waives any further notice of such monitoring or
recording, and agrees to notify its officers and employees of such monitoring
or
recording.
(k)
Waiver
of
Jury Trial. Each
party waives any right it may have to a trial by jury in respect of any
Proceedings relating to this Agreement or any Credit Support Document.
(l)
Trustee
Capacity. It is expressly understood and agreed by the parties hereto that
insofar as this Confirmation is executed by the Trustee (i) this Confirmation
is
executed and delivered by HSBC
Bank
USA, National Association not
in
its individual capacity but solely as trustee for the Supplemental Interest
Trust created under the Pooling and Servicing Agreement referred to in this
Confirmation in the exercise of the powers and authority conferred and invested
in it thereunder (ii) each of the representations, undertakings and agreements
herein made on behalf of the Supplemental Interest Trust is made and intended
not as personal representations, undertakings and agreements by HSBC Bank
USA,
National Association but is made and intended for the purposes of binding
only
the Supplement Interest Trust, (iii) nothing herein contained shall be construed
as creating any liability on the part of HSBC Bank USA, National Association,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto, (iv) under no circumstances shall HSBC Bank USA, National Association
in
its individual capacity be personally liable for the payment of any indebtedness
or expenses or be personally liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken under this Confirmation
or any other related documents, and (v) the parties hereto acknowledge and
agree
that under (a) the Pooling and Servicing Agreement, and (b) this Agreement,
the
Securities Administrator may act for Counterparty hereunder, and DBAG hereby
acknowledges and agrees that it will, unless otherwise directed by the
Supplemental Interest Trust Trustee or the Securities Administrator, make
all
payments hereunder to the account specified below. DBAG shall be entitled
to
rely, shall be fully protected in relying, and shall incur no liability from
relying in good faith, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile or telephone message,
statement or other document or conversation believed by it to be genuine
and
correct and to have been signed, sent or made by the Securities Administrator.
(m)
Proceedings.
DBAG
shall not institute against or cause any other person to institute against,
or
join any other person in instituting against the Counterparty, the Supplemental
Interest Trust or any trust created pursuant to the Pooling and Servicing
Agreement any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law for a period of one year and one day (or, if longer, the applicable
preference period) following payment in full of the Certificates and any
notes
backed by the Certificates (the “Notes”). This provision will survive the
termination of this Agreement.
(n)
DBAG
hereby agrees that, notwithstanding any provision of this agreement to the
contrary, Counterparty’s obligations to pay any amounts owing under this
Agreement shall be subject to Section 5.01 of the Pooling and Servicing
Agreement and DBAG’s right to receive payment of such amounts shall be subject
to Section 5.01 of the Pooling and Servicing Agreement. This provision will
survive the termination of this Agreement.
7)
“Affiliate.” DBAG and Counterparty shall be deemed to have no Affiliates for
purposes of this Agreement, including for purposes of Section 6(b)(ii). This
provision will survive the termination of this Agreement.
8)
Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the
end thereof the following subsection (g):
“(g)Relationship
Between Parties.
Each
party represents to the other party on each date when it enters into a
Transaction that:--
(1)
Nonreliance.
It is
not relying on any statement or representation of the other party regarding
the
Transaction (whether written or oral), other than the representations expressly
made in this Agreement or the Confirmation in respect of that Transaction.
7
(2)
Evaluation
and Understanding.
(i)
DBAG
is acting for its own account and HSBC Bank USA, National Association is
acting
as trustee for the Supplemental Interest Trust created under the Pooling
and
Servicing Agreement and not for its own account. Each party has the capacity
to
evaluate (internally or through independent professional advice) the Transaction
and has made its own decision to enter into the Transaction;
(ii)
It
understands the terms, conditions and risks of the Transaction and is willing
and able to accept those terms and conditions and to assume those risks,
financially and otherwise; and
(3) Purpose.
It is an “eligible swap participant” as such term is defined in Section
35.1(b)(2) of the regulations (17 C.F.R 35) promulgated under, and an “eligible
contract participant” as defined in Section 1(a)(12) of, the Commodity Exchange
Act, as amended, and it is entering into the Transaction for the purposes
of
managing its borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business.
(4) Status
of Parties.
The
other party is not acting as an agent, fiduciary or advisor for it in respect
of
the Transaction.”
9)
Set-off.
Notwithstanding any provision of this Agreement or any other existing or
future
agreement, each party irrevocably waives any and all rights it may have to
set
off, net, recoup or otherwise withhold or suspend or condition payment or
performance of any obligation between it and the other party hereunder against
any obligation between it and the other party under any other agreements.
The
provisions for Set-off set forth in Section 6(e) of the Agreement shall not
apply for purposes of this Transaction.
10)
Transfer,
Amendment and Assignment.
No
transfer, amendment, waiver, supplement, assignment or other modification
of
this Transaction shall be permitted by either party unless each of the Swap
Rating Agencies (defined below), including Standard & Poor’s Ratings
Service, a division of The McGraw-Hill Companies, Inc. (“S&P”) and Moody’s
Investors Service, Inc. (“Moody’s”) has been provided notice of the same and
confirms in writing (including by facsimile transmission) that it will not
downgrade, qualify, withdraw or otherwise modify its then-current rating
of the
Certificates or any Notes.
11)
Additional
Termination Events.
The
following Additional Termination Events will apply, in each case with respect
Counterparty as the sole Affected Party (unless otherwise provided
below):
(i)
DBAG
fails to comply with the Rating Agency Downgrade provisions as set forth
in
Section 12 below. For all purposes of this Agreement, DBAG shall be the sole
Affected Party with respect to the occurrence of a Termination Event described
in this Section 11(i).
(ii)
With
respect to Counterparty only, any amendment to the Pooling and Servicing
Agreement which materially adversely affects any of DBAG’s rights thereunder is
made without prior written consent of DBAG, where such consent is required
under
the Pooling and Servicing Agreement.
(iii)
If
the
Trustee is unable to pay the Class A Certificates any related Accrued
Certificate Interest or any amount in respect of ultimate payment of principal
required to be paid pursuant to the terms of the Pooling and Servicing Agreement
or fails or admits in writing its inability to pay such interest amounts
or such
ultimate principal amount to the Class A Certificates as such amounts become
due.
(iv)
If,
at any time, the Master Servicer purchases the Mortgage Loans and
related
REO Properties pursuant to Section 10.01 of the Pooling and Servicing
Agreement (an “Optional Termination”), an Additional Termination Event
shall have occurred with respect to Counterparty and each of DBAG
and
Counterparty shall be an Affected Party with respect to such Additional
Termination Event; provided, however, that notwithstanding Section
6(b)(iv) of the ISDA Form Master Agreement, both DBAG and Counterparty
shall have the right to designate an Early Termination Date in
respect of
this Additional Termination Event.
8
If
such
an Additional Termination Event occurs then the definition of Notional Amount
shall be deleted in its entirety and replaced with the following: “With respect
to each Calculation Period the Notional Amount as set forth in Schedule I
attached hereto multiplied by a factor. The factor will be set at the time
of
the Optional Termination to be the quotient of (i) the Notional Amount
immediately prior to the Optional Termination divided by (ii) the Notional
Amount set forth in Schedule I for the period immediately prior to the Optional
Termination.”;
(v)
If,
upon
the occurrence of a Swap Disclosure Event (as defined in Part 13 below) DBAG
has
not, within 10 days after such Swap Disclosure Event complied with any of
the
provisions set forth in Part 13(iii) below, then an Additional Termination
Event
shall have occurred with respect to DBAG and DBAG shall be the sole Affected
Party with respect to such Additional Termination Event.
12)
Rating
Agency Downgrade.
In
the
event that (i) DBAG’s short-term unsecured and unsubordinated debt rating is
reduced below “A-1” by S&P or (ii) if DBAG has both a long-term credit
rating and a short-term credit rating from Moody’s, and either its long-term
unsecured and unsubordinated debt rating is reduced below “A2” by Moody’s or its
short-term credit rating is reduced below “P1” by Moody’s, or if DBAG has only a
long-term credit rating and its long-term unsecured and unsubordinated debt
rating is reduced below “Aa3” by Moody’s (and together with S&P, the “Swap
Rating Agencies”, and such rating thresholds, “Approved Rating Thresholds”),
then within 30 days after such rating withdrawal or downgrade, DBAG shall,
subject to the Rating Agency Condition and at its own expense, either (i)
cause
another entity to replace DBAG as party to this Agreement that meets or exceeds
the Approved Rating Thresholds on terms substantially similar to this Agreement,
(ii) obtain a guaranty of, or a contingent agreement of another person with
the
Approved Rating Thresholds, to honor, DBAG’s obligations under this Agreement,
(iii) post collateral which will be sufficient to restore the immediately
prior
ratings of the Certificates and any Notes, or (iv) establish any other
arrangement satisfactory to the Swap Rating Agencies, which will be sufficient
to restore the immediately prior ratings of the Certificates and any Notes.
In
the event that DBAG’s long-term unsecured and unsubordinated debt rating is
withdrawn or reduced below “BBB-” or its short-term unsecured and unsubordinated
debt rating is withdrawn or reduced below “A-3” by S&P, then within 10 days
after such rating withdrawal or downgrade, DBAG shall, subject to the Rating
Agency Condition and at its own expense, either (i) cause another entity
to
replace DBAG as party to this Agreement that meets or exceeds the Approved
Rating Thresholds on terms substantially similar to this Agreement or (ii)
obtain a guaranty of, or a contingent agreement of another person with the
Approved Rating Thresholds, to honor, DBAG’s obligations under this Agreement.
For purposes of this provision, “Rating Agency Condition” means, with respect to
any particular proposed act or omission to act hereunder that the party acting
or failing to act must consult with each of the Swap Rating Agencies then
providing a rating of the Certificates and any Notes and receive from each
of
the Swap Rating Agencies a prior written confirmation that the proposed action
or inaction would not cause a downgrade or withdrawal of the then-current
rating
of the Certificates or any Note.
13)
Compliance
with Regulation AB.
(i)
DBAG
agrees and acknowledges that Ace Securities Corp. (“ACE”) is required under
Regulation AB under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (“Regulation AB”), to
disclose certain financial information regarding DBAG or its group of affiliated
entities, if applicable, depending on the aggregate “significant percentage” of
this Agreement and any other derivative contracts between DBAG or its group
of
affiliated entities, if applicable, and Counterparty, as calculated from
time to
time in accordance with Item 1115 of Regulation AB.
(ii)
It
shall
be a swap disclosure event (“Swap Disclosure Event”) if, on any Business Day
after the date hereof, ACE requests from DBAG the applicable financial
information described in Item 1115 of Regulation AB (such request to be based
on
a reasonable determination by ACE, in good faith, that such information is
required under Regulation AB) (the “Swap Financial Disclosure”).
(iii)
Upon
the
occurrence of a Swap Disclosure Event, DBAG, at its own expense, shall (1)(a)
either (i) provide to ACE the current Swap Financial Disclosure in an
EDGAR-compatible format (for example, such information may be provided in
Microsoft Word® or Microsoft Excel® format but not in .pdf format) or (ii)
provide written consent to ACE to incorporation by reference of such current
Swap Financial Disclosure as is filed with the Securities and Exchange
Commission in the Exchange Act Reports of ACE, (b) if applicable, cause its
outside accounting firm to provide its consent to filing or incorporation
by
reference in the Exchange Act Reports of ACE of such accounting firm’s report
relating to their audits of such current Swap Financial Disclosure, and (c)
provide to ACE any updated Swap Financial Disclosure with respect to DBAG
or any
entity that consolidates DBAG within five days of the release of any such
updated Swap Financial Disclosure; (2) secure another entity to replace DBAG
as
party to this Agreement on terms substantially similar to this Agreement
which
entity (or a guarantor therefore) meets or exceeds the Approved Rating
Thresholds and which satisfies the Rating Agency Condition and which entity
complies with the requirements of Item 1115 of Regulation AB, including
providing the information contemplated by Part 13(iii)(1) above, or (3) obtain
a
guaranty of the DBAG’s obligations under this Agreement from an affiliate of the
DBAG, subject to the Rating Agency Condition, that complies with the financial
information disclosure requirements of Item 1115 of Regulation AB, including
providing the information contemplated by Part 13(iii)(1) above, such that
disclosure provided in respect of the affiliate will satisfy any disclosure
requirements applicable to the DBAG, and cause such affiliate to provide
Swap
Financial Disclosure. If permitted by Regulation AB, any required Swap Financial
Disclosure may be provided by incorporation by reference from reports filed
pursuant to the Exchange Act.
9
(iv)
DBAG
and
the primary obligor under any Credit Support Document agree that, in the
event
that DBAG provides Swap Financial Disclosure to ACE in accordance with Part
13(iii)(a) or causes its affiliate to provide Swap Financial Disclosure to
ACE
in accordance with Part 13(iii)(c), DBAG and such primary obligor will indemnify
and hold harmless ACE, its respective directors or officers and any person
controlling ACE, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of
a
material fact contained in such Swap Financial Disclosure or caused by any
omission or alleged omission to state in such Swap Financial Disclosure a
material fact, when considered in conjunction with any other information
regarding Party A or the derivative instrument being written by Party A in
the
final prospectus for ACE Securities Corp. Home Equity Loan Trust, Series
2006-FM1 Asset Backed Pass Through Certificates, required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading.
14)
Third
Party Beneficiary.
ACE
shall be an express third party beneficiary of this Agreement as if a party
hereto to the extent of ACE’s rights explicitly specified herein.
15)
Deduction
or Withholding for Tax.
The
provisions of Section 2(d)(i)(4) and 2(d)(ii) of the ISDA Form Master Agreement
shall not apply to Counterparty and Counterparty shall not be required to
pay
any additional amounts referred to therein.
16)
Non-Recourse.
Notwithstanding any provision herein or in the ISDA Form Master Agreement
to the
contrary, the obligations of Counterparty hereunder are limited recourse
obligations of Counterparty, payable solely from the Supplemental Interest
Trust
and the proceeds thereof, in accordance with the terms of the Pooling and
Servicing Agreement. In the event that the Supplemental Interest Trust and
proceeds thereof should be insufficient to satisfy all claims outstanding
and
following the realization of the Supplemental Interest Trust and the proceeds
thereof, any claims against or obligations of Counterparty under the ISDA
Form
Master Agreement or any other confirmation thereunder still outstanding shall
be
extinguished and thereafter not revive. Counterparty shall not have liability
for any failure or delay in making a payment hereunder to DBAG due to any
failure or delay in receiving amount in the Supplemental Interest Trust from
the
Trust created pursuant to the Pooling and Servicing Agreement.
10
5. Account
Details:
Account
Details for DBAG:
Deutsche
Bank Trust Company Americas,
New
York
Acct#
01
473
969
Swift
Code: BKTRUS33
Reference:
N503602N
Account
Details for Counterparty:
Wells
Fargo Bank, NA
ABA
#
121000248
Account
Name: SAS Clearing
Account
#
3970771416
FFC
to:
50940702, ACE 2006-FM1 Supplemental Interest Trust Account
6. Offices:
The
Office of DBAG for this Transaction is New York
7.Please
confirm that the foregoing correctly sets forth the terms of our agreement
by
having an authorized officer sign this Confirmation and return it via facsimile
to:
This
message will be the only form of Confirmation dispatched by us. If you wish
to
exchange hard copy forms of this Confirmation, please contact
us.
11
Yours
sincerely,
DEUTSCHE
BANK AG - New York Branch
By: __________________________________
Name: __________________________________
Title: Authorized
Signatory
By: __________________________________
Name: __________________________________
Title: Authorized
Signatory
Confirmed
as of the date first written above:
HSBC
Bank
USA, National Association, not in its individual capacity, but solely as
trustee
for the Supplemental Interest Trust, with respect to the ACE Securities Corp.
Home Equity Loan Trust, Series 2006-FM1 Asset Backed Pass Through
Certificates.
By: __________________________________
Name: __________________________________
Title: __________________________________
12
SCHEDULE
I
(With
respect to each Fixed Rate Payer Period End Date, each date below is subject
to
No Adjustment, and with respect to each Floating Rate Payer Period End Date,
each date below is subject to adjustment in accordance with the Following
Business Day Convention.)
The
Loss
Mit Type
field
should show the approved Loss Mitigation Code as follows:
·
ASUM- Approved
Assumption
·
BAP-
Borrower
Assistance Program
·
CO- Charge
Off
·
DIL-
Deed-in-Lieu
·
FFA-
Formal
Forbearance Agreement
·
MOD-
Loan
Modification
·
PRE-
Pre-Sale
·
SS-
Short
Sale
·
MISC-
Anything
else approved by the PMI or Pool
Insurer
NOTE:
Wells
Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply Wells Fargo
Bank
with a description of each of the Loss Mitigation Types prior to sending the
file.
The
Occupant
Code
field
should show the current status of the property code as follows:
·
Mortgagor
·
Tenant
·
Unknown
·
Vacant
The
Property
Condition
field
should show the last reported condition of the property as follows:
·
Damaged
·
Excellent
·
Fair
·
Gone
·
Good
·
Poor
·
Special
Hazard
·
Unknown
Exhibit
2:Standard
File Codes - Delinquency Reporting, Continued
The
FNMA
Delinquent Reason Code
field
should show the Reason for Delinquency as follows:
Delinquency
Code
Delinquency
Description
001
FNMA-Death
of principal mortgagor
002
FNMA-Illness
of principal mortgagor
003
FNMA-Illness
of mortgagor’s family member
004
FNMA-Death
of mortgagor’s family member
005
FNMA-Marital
difficulties
006
FNMA-Curtailment
of income
007
FNMA-Excessive
Obligation
008
FNMA-Abandonment
of property
009
FNMA-Distant
employee transfer
011
FNMA-Property
problem
012
FNMA-Inability
to sell property
013
FNMA-Inability
to rent property
014
FNMA-Military
Service
015
FNMA-Other
016
FNMA-Unemployment
017
FNMA-Business
failure
019
FNMA-Casualty
loss
022
FNMA-Energy
environment costs
023
FNMA-Servicing
problems
026
FNMA-Payment
adjustment
027
FNMA-Payment
dispute
029
FNMA-Transfer
of ownership pending
030
FNMA-Fraud
031
FNMA-Unable
to contact borrower
INC
FNMA-Incarceration
Exhibit
2:Standard
File Codes - Delinquency Reporting, Continued
The
FNMA
Delinquent Status Code
field
should show the Status of Default as follows:
Status
Code
Status
Description
09
Forbearance
17
Pre-foreclosure
Sale Closing Plan Accepted
24
Government
Seizure
26
Refinance
27
Assumption
28
Modification
29
Charge-Off
30
Third
Party Sale
31
Probate
32
Military
Indulgence
43
Foreclosure
Started
44
Deed-in-Lieu
Started
49
Assignment
Completed
61
Second
Lien Considerations
62
Veteran’s
Affairs-No Bid
63
Veteran’s
Affairs-Refund
64
Veteran’s
Affairs-Buydown
65
Chapter
7 Bankruptcy
66
Chapter
11 Bankruptcy
67
Chapter
13 Bankruptcy
Exhibit
:Calculation
of Realized Loss/Gain Form 332- Instruction Sheet
NOTE:
Do not net or combine items. Show all expenses individually and all credits
as
separate line items. Claim packages are due on the remittance report date.
Late
submissions may result in claims not being passed until the following month.
The
Servicer is responsible to remit all funds pending loss approval and /or
resolution of any disputed items.
1.
2. The
numbers on the 332 form correspond with the numbers listed below.
Liquidation
and Acquisition Expenses:
1.
The
Actual Unpaid Principal Balance of the Mortgage Loan. For documentation,
an Amortization Schedule from date of default through liquidation
breaking
out the net interest and servicing fees advanced is
required.
2.
The
Total Interest Due less the aggregate amount of servicing fee that
would
have been earned if all delinquent payments had been made as agreed.
For
documentation, an Amortization Schedule from date of default through
liquidation breaking out the net interest and servicing fees advanced
is
required.
3.
Accrued
Servicing Fees based upon the Scheduled Principal Balance of the
Mortgage
Loan as calculated on a monthly basis. For documentation, an Amortization
Schedule from date of default through liquidation breaking out the
net
interest and servicing fees advanced is
required.
4-12.
Complete
as applicable. Required
documentation:
*
For
taxes and insurance advances - see page 2 of 332 form - breakdown required
showing period of
coverage, base tax, interest, penalty. Advances prior to default require
evidence of servicer efforts to recover advances.
*
For
escrow advances - complete payment history
(to
calculate advances from last positive escrow balance forward)
*
Other
expenses - copies of corporate advance history showing all payments
*
REO
repairs > $1500 require explanation
*
REO
repairs >$3000 require evidence of at least 2 bids.
*
Short
Sale or Charge Off require P&L supporting the decision and
WFB’s approved Officer Certificate
*
Unusual
or extraordinary items may require further documentation.
13.
The
total of lines 1 through 12.
3.
Credits:
14-21.
Complete
as applicable. Required
documentation:
*
Copy of
the HUD 1 from the REO sale. If a 3rd
Party
Sale, bid instructions and Escrow
Agent / Attorney
Letter
of
Proceeds
Breakdown.
*
Copy of
EOB for any MI or gov't guarantee
*
All
other credits need to be clearly defined on the 332 form
22.
The
total of lines 14 through 21.
Please
Note: For
HUD/VA loans, use line (18a) for Part A/Initial proceeds and line (18b) for
Part
B/Supplemental proceeds.
Total
Realized Loss (or Amount of Any Gain)
23.
The
total derived from subtracting line 22 from 13. If the amount represents
a
realized gain, show
the amount in parenthesis (
).
Exhibit
3A:Calculation
of Realized Loss/Gain Form 332
The
standard FNMA numeric code used to indicate the default/delinquent
status
of a particular loan.
INT_ADJ_AMT
The
amount of the interest adjustment as reported by the
Servicer.
2
No
commas(,) or dollar signs ($)
11
SOLDIER_SAILOR_ADJ_AMT
The
Soldier and Sailor Adjustment amount, if applicable.
2
No
commas(,) or dollar signs ($)
11
NON_ADV_LOAN_AMT
The
Non Recoverable Loan Amount, if applicable.
2
No
commas(,) or dollar signs ($)
11
LOAN_LOSS_AMT
The
amount the Servicer is passing as a loss, if applicable.
2
No
commas(,) or dollar signs ($)
11
SCHED_BEG_PRIN_BAL
The
scheduled outstanding principal amount due at the beginning of the
cycle
date to be passed through to investors.
2
No
commas(,) or dollar signs ($)
11
SCHED_END_PRIN_BAL
The
scheduled principal balance due to investors at the end of a processing
cycle.
2
No
commas(,) or dollar signs ($)
11
SCHED_PRIN_AMT
The
scheduled principal amount as reported by the Servicer for the current
cycle -- only applicable for Scheduled/Scheduled Loans.
2
No
commas(,) or dollar signs ($)
11
SCHED_NET_INT
The
scheduled gross interest amount less the service fee amount for the
current cycle as reported by the Servicer -- only applicable for
Scheduled/Scheduled Loans.
2
No
commas(,) or dollar signs ($)
11
ACTL_PRIN_AMT
The
actual principal amount collected by the Servicer for the current
reporting cycle -- only applicable for Actual/Actual
Loans.
2
No
commas(,) or dollar signs ($)
11
Standard
File Layout - Master Servicing
ACTL_NET_INT
The
actual gross interest amount less the service fee amount for the
current
reporting cycle as reported by the Servicer -- only applicable for
Actual/Actual Loans.
2
No
commas(,) or dollar signs ($)
11
PREPAY_PENALTY_
AMT
The
penalty amount received when a borrower prepays on his loan as reported
by
the Servicer.
2
No
commas(,) or dollar signs ($)
11
PREPAY_PENALTY_
WAIVED
The
prepayment penalty amount for the loan waived by the
servicer.
2
No
commas(,) or dollar signs ($)
11
MOD_DATE
The
Effective Payment Date of the Modification for the loan.
MM/DD/YYYY
10
MOD_TYPE
The
Modification Type.
Varchar
- value can be alpha or numeric
30
DELINQ_P&I_ADVANCE_AMT
The
current outstanding principal and interest advances made by
Servicer.
2
No
commas(,) or dollar signs ($)
11
SCHEDULE
6
DATA
REQUIREMENTS OF SERVICING ADVANCES INCURRED PRIOR TO CUT-OFF DATE
[LOAN
NUMBER]
[PRE-CUT-OFF
DATE ADVANCE AMOUNT]
[PROVIDED
UPON REQUEST]
Dates Referenced Herein and Documents Incorporated by Reference
