EXECUTION COPY
RESIDENTIAL ASSET SECURITIES CORPORATION,
Depositor,
RESIDENTIAL FUNDING COMPANY, LLC,
Master Servicer,
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of October 27, 2006
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS9
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................7
Section 1.01. Definitions.............................................7
Section 1.02. Determination of LIBOR.................................68
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.69
Section 2.01. Conveyance of Mortgage Loans...........................69
Section 2.02. Acceptance by Trustee..................................72
Section 2.03. Representations, Warranties and Covenants of the Master Servicer
and the Depositor......................................73
Section 2.04. Representations and Warranties of Sellers..............75
Section 2.05. Execution and Authentication of Certificates; Conveyance of
Uncertificated REMIC Regular Interests.................77
Section 2.06. Purposes and Powers of the Trust.......................77
Section 2.07. Agreement Regarding Ability to Disclose................78
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..................78
Section 3.01. Master Servicer to Act as Servicer.....................78
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' Obligations.80
Section 3.03. Successor Subservicers.................................81
Section 3.04. Liability of the Master Servicer.......................82
Section 3.05. No Contractual Relationship Between Subservicer and Trustee or
Certificateholders.....................................82
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee
82
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account......................................82
Section 3.08. Subservicing Accounts; Servicing Accounts..............85
Section 3.09. Access to Certain Documentation and Information Regarding the
Mortgage Loans.........................................86
Section 3.10. Permitted Withdrawals from the Custodial Account.......86
Section 3.11. Maintenance of Primary Insurance Coverage..............88
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage
88
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Certain Assignments........................90
Section 3.14. Realization Upon Defaulted Mortgage Loans..............91
Section 3.15. Trustee to Cooperate; Release of Custodial Files.......93
Section 3.16. Servicing and Other Compensation; Compensating Interest94
Section 3.17. Reports to the Trustee and the Depositor...............95
Section 3.18. Annual Statement as to Compliance and Servicing
Assessment ............................................96
Section 3.19. Annual Independent Public Accountants' Servicing Report96
Section 3.20. Right of the Depositor in Respect of the Master Servicer96
Section 3.21. [Reserved].............................................97
Section 3.22. Advance Facility.......................................97
Section 3.23. Special Servicing.....................................100
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS.................................101
Section 4.01. Certificate Account...................................101
Section 4.02. Distributions.........................................102
Section 4.03. Statements to Certificateholders; Statements to Rating Agencies;
Exchange Act Reporting................................106
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer.......................109
Section 4.05. Allocation of Realized Losses.........................111
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property .............................................112
Section 4.07. Optional Purchase of Defaulted Mortgage Loans.........113
Section 4.08. [Reserved]............................................113
Section 4.09. [Reserved]............................................113
Section 4.10. Swap Agreement........................................113
ARTICLE V THE CERTIFICATES...............................................115
Section 5.01. The Certificates......................................115
Section 5.02. Registration of Transfer and Exchange of Certificates.117
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.....121
Section 5.04. Persons Deemed Owners.................................121
Section 5.05. Appointment of Paying Agent...........................121
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER..........................122
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicer .............................................122
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer;
Assignment of Rights and Delegation of Duties by Master
Servicer .............................................122
Section 6.03. Limitation on Liability of the Depositor, the Master Servicer
and Others............................................123
Section 6.04. Depositor and Master Servicer Not to Resign...........123
ARTICLE VII DEFAULT........................................................124
Section 7.01. Events of Default.....................................124
Section 7.02. Trustee or Depositor to Act; Appointment of Successor.125
Section 7.03. Notification to Certificateholders....................126
Section 7.04. Waiver of Events of Default...........................127
ARTICLE VIII CONCERNING THE TRUSTEE ...............................127
Section 8.01. Duties of Trustee.....................................127
Section 8.02. Certain Matters Affecting the Trustee.................128
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.130
Section 8.04. Trustee May Own Certificates..........................130
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.......................................130
Section 8.06. Eligibility Requirements for Trustee..................131
Section 8.07. Resignation and Removal of the Trustee................131
Section 8.08. Successor Trustee.....................................132
Section 8.09. Merger or Consolidation of Trustee....................132
Section 8.10. Appointment of Co-Trustee or Separate Trustee.........132
Section 8.11. Appointment of the Custodian..........................133
Section 8.12. Appointment of Office or Agency.......................134
Section 8.13. DTC Letter of Representations.........................134
Section 8.14. Swap Agreement........................................134
ARTICLE IX TERMINATION....................................................134
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage
Loans ................................................134
Section 9.02. Additional Termination Requirements...................138
ARTICLE X REMIC PROVISIONS...............................................139
Section 10.01. REMIC Administration..................................139
Section 10.02. Master Servicer, REMIC Administrator and Trustee
Indemnification ......................................142
ARTICLE XI MISCELLANEOUS PROVISIONS.......................................143
Section 11.01. Amendment.............................................143
Section 11.02. Recordation of Agreement; Counterparts................145
Section 11.03. Limitation on Rights of Certificateholders............145
Section 11.04. Governing Law.........................................146
Section 11.05. Notices...............................................146
Section 11.06. Notices to Rating Agencies............................146
Section 11.07. Severability of Provisions............................147
Section 11.08. Supplemental Provisions for Resecuritization..........147
Section 11.09. Third-Party Beneficiary...............................148
Section 11.10. Tax Treatment.........................................148
ARTICLE XII COMPLIANCE WITH REGULATION AB..................................148
Section 12.01. Intent of Parties; Reasonableness.....................148
Section 12.02. Additional Representations and Warranties of the Trustee149
Section 12.03. Information to be Provided by the Trustee.............149
Section 12.04. Report on Assessment of Compliance and Attestation....150
Section 12.05. Indemnification; Remedies.............................150
Exhibit A Form of Class A Certificate....................................A-1
Exhibit B Form of Class M Certificate....................................B-1
Exhibit C Form of Class SB Certificate...................................C-1
Exhibit D Form of Class R Certificate....................................D-1
Exhibit E Form of Custodial Agreement....................................E-1
Exhibit F-1 Group I Loan Schedule........................................F-1-1
Exhibit F-2 Group II Loan Schedule.......................................F-2-1
Exhibit G Form of Request for Release....................................G-1
Exhibit H-1 Form of Transfer Affidavit and Agreement.....................H-1-1
Exhibit H-2 Form of Transferor Certificate...............................H-2-1
Exhibit I Form of Investor Representation Letter.........................I-1
Exhibit J Form of Transferor Representation Letter.......................J-1
Exhibit K Text of Amendment to Pooling and Servicing Agreement Pursuant to
Section 11.01(e) for a Limited Guaranty........................K-1
Exhibit L Form of Limited Guaranty.......................................L-1
Exhibit M Form of Lender Certification for Assignment of Mortgage Loan...M-1
Exhibit N Form of Rule 144A Investment Representation Letter.............N-1
Exhibit O Swap Agreement.................................................O-1
Exhibit P Form of ERISA Letter...........................................P-1
Exhibit Q SB-AM Swap Agreement...........................................Q-1
Exhibit R Assignment Agreement...........................................R-1
Exhibit S Servicing Criteria.............................................S-1
Exhibit T-1 Form of 10-K Certification...................................T-1-1
Exhibit T-2 Form of Back-Up Certification................................T-2-1
Exhibit U Information to be Provided by the Master Servicer to the Rating Agencies
Relating to Reportable Modified Mortgage Loans.................U-1
Exhibit V Form of Certificate to be Given by Certificate Owner..........V-1
Exhibit W Form of Certificate to be Given by Euroclear or Cedel.........W-1
This Pooling and Servicing Agreement, effective as of October 27, 2006, among
RESIDENTIAL ASSET SECURITIES CORPORATION, as the depositor (together with its permitted
successors and assigns, the "Depositor"), RESIDENTIAL FUNDING COMPANY, LLC, as master
servicer (together with its permitted successors and assigns, the "Master Servicer"), and
U.S. BANK NATIONAL ASSOCIATION, a banking association organized under the laws of the
United States, as trustee and supplemental interest trust trustee (together with its
permitted successors and assigns, the "Trustee" and the "Supplemental Interest Trust
Trustee", respectively).
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage asset-backed pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in sixteen Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Mortgage Loans (as
defined herein) and certain other related assets.
REMIC I
As provided herein, the REMIC Administrator will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other related assets
(exclusive of the Supplemental Interest Trust Account and the Swap Agreement) subject to
this Agreement as a real estate mortgage investment conduit (a "REMIC") for federal income
tax purposes, and such segregated pool of assets will be designated as "REMIC I."
Component I of the Class R Certificates will represent the sole Class of "residual
interests" in REMIC I for purposes of the REMIC Provisions (as defined herein) under
federal income tax law. The following table irrevocably sets forth the designation,
remittance rate (the "Uncertificated REMIC I Pass-Through Rate") and initial Uncertificated
Principal Balance for each of the "regular interests" in REMIC I (the "REMIC I Regular
Interests"). The "latest possible maturity date" (determined solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) for each REMIC I Regular
Interest shall be the Maturity Date. None of the REMIC I Regular Interests will be
certificated.
Uncertificated
REMIC I
Pass-Through Initial Uncertificated
Designation Rate Principal Balance
I-1-A Variable(1) $3,508,242.225
I-2-A Variable(1) $5,142,221.255
I-3-A Variable(1) $6,790,264.820
I-4-A Variable(1) $8,440,239.210
I-5-A Variable(1) $10,079,353.190
I-6-A Variable(1) $11,694,272.815
I-7-A Variable(1) $13,271,253.435
I-8-A Variable(1) $14,795,460.570
I-9-A Variable(1) $16,203,148.840
I-10-A Variable(1) $17,139,392.770
I-11-A Variable(1) $17,657,903.735
I-12-A Variable(1) $17,012,885.250
I-13-A Variable(1) $16,391,072.010
I-14-A Variable(1) $15,792,247.075
I-15-A Variable(1) $15,215,552.550
I-16-A Variable(1) $14,660,162.795
I-17-A Variable(1) $14,125,283.205
I-18-A Variable(1) $13,610,149.040
I-19-A Variable(1) $13,123,521.755
I-20-A Variable(1) $12,682,750.125
I-21-A Variable(1) $14,469,173.560
I-22-A Variable(1) $20,922,912.195
I-23-A Variable(1) $19,409,039.605
I-24-A Variable(1) $17,980,837.165
I-25-A Variable(1) $16,671,626.535
I-26-A Variable(1) $14,301,213.280
I-27-A Variable(1) $9,593,930.600
I-28-A Variable(1) $9,183,143.625
I-29-A Variable(1) $8,792,703.190
I-30-A Variable(1) $8,418,955.455
I-31-A Variable(1) $8,062,188.765
I-32-A Variable(1) $7,721,069.690
I-33-A Variable(1) $7,394,893.840
I-34-A Variable(1) $7,082,959.720
I-35-A Variable(1) $6,783,285.065
I-36-A Variable(1) $6,494,508.680
I-37-A Variable(1) $6,222,148.245
I-38-A Variable(1) $5,961,639.485
I-39-A Variable(1) $5,712,452.800
I-40-A Variable(1) $5,474,081.570
I-41-A Variable(1) $5,245,943.850
I-42-A Variable(1) $5,027,555.430
I-43-A Variable(1) $4,818,855.600
I-44-A Variable(1) $4,619,167.880
I-45-A Variable(1) $4,428,091.705
I-46-A Variable(1) $4,245,240.560
I-47-A Variable(1) $4,070,184.605
I-48-A Variable(1) $3,902,673.115
I-49-A Variable(1) $3,742,398.890
I-50-A Variable(1) $3,588,988.925
I-51-A Variable(1) $3,442,139.855
I-52-A Variable(1) $3,301,561.655
I-53-A Variable(1) $3,166,978.580
I-54-A Variable(1) $3,038,126.100
I-55-A Variable(1) $2,914,752.000
I-56-A Variable(1) $2,796,615.470
I-57-A Variable(1) $2,683,485.370
I-58-A Variable(1) $2,575,143.910
I-59-A Variable(1) $2,472,802.365
I-60-A Variable(1) $62,331,230.720
I-1-B Variable(1) $3,508,242.225
I-2-B Variable(1) $5,142,221.255
I-3-B Variable(1) $6,790,264.820
I-4-B Variable(1) $8,440,239.210
I-5-B Variable(1) $10,079,353.190
I-6-B Variable(1) $11,694,272.815
I-7-B Variable(1) $13,271,253.435
I-8-B Variable(1) $14,795,460.570
I-9-B Variable(1) $16,203,148.840
I-10-B Variable(1) $17,139,392.770
I-11-B Variable(1) $17,657,903.735
I-12-B Variable(1) $17,012,885.250
I-13-B Variable(1) $16,391,072.010
I-14-B Variable(1) $15,792,247.075
I-15-B Variable(1) $15,215,552.550
I-16-B Variable(1) $14,660,162.795
I-17-B Variable(1) $14,125,283.205
I-18-B Variable(1) $13,610,149.040
I-19-B Variable(1) $13,123,521.755
I-20-B Variable(1) $12,682,750.125
I-21-B Variable(1) $14,469,173.560
I-22-B Variable(1) $20,922,912.195
I-23-B Variable(1) $19,409,039.605
I-24-B Variable(1) $17,980,837.165
I-25-B Variable(1) $16,671,626.535
I-26-B Variable(1) $14,301,213.280
I-27-B Variable(1) $9,593,930.600
I-28-B Variable(1) $9,183,143.625
I-29-B Variable(1) $8,792,703.190
I-30-B Variable(1) $8,418,955.455
I-31-B Variable(1) $8,062,188.765
I-32-B Variable(1) $7,721,069.690
I-33-B Variable(1) $7,394,893.840
I-34-B Variable(1) $7,082,959.720
I-35-B Variable(1) $6,783,285.065
I-36-B Variable(1) $6,494,508.680
I-37-B Variable(1) $6,222,148.245
I-38-B Variable(1) $5,961,639.485
I-39-B Variable(1) $5,712,452.800
I-40-B Variable(1) $5,474,081.570
I-41-B Variable(1) $5,245,943.850
I-42-B Variable(1) $5,027,555.430
I-43-B Variable(1) $4,818,855.600
I-44-B Variable(1) $4,619,167.880
I-45-B Variable(1) $4,428,091.705
I-46-B Variable(1) $4,245,240.560
I-47-B Variable(1) $4,070,184.605
I-48-B Variable(1) $3,902,673.115
I-49-B Variable(1) $3,742,398.890
I-50-B Variable(1) $3,588,988.925
I-51-B Variable(1) $3,442,139.855
I-52-B Variable(1) $3,301,561.655
I-53-B Variable(1) $3,166,978.580
I-54-B Variable(1) $3,038,126.100
I-55-B Variable(1) $2,914,752.000
I-56-B Variable(1) $2,796,615.470
I-57-B Variable(1) $2,683,485.370
I-58-B Variable(1) $2,575,143.910
I-59-B Variable(1) $2,472,802.365
I-60-B Variable(1) $62,331,230.720
I Variable(1) $103,871.853
II Variable(1) $19,542.545
A-I Variable(1) $41,220,408.792
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC I Pass-Through Rate.
REMIC II
As provided herein, the REMIC Administrator will make an election 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." Component II of the Class R Certificates will represent the sole Class of
"residual interests" in REMIC II for purposes of the REMIC Provisions (as defined herein)
under federal income tax law. The following table irrevocably sets forth the designation,
remittance rate (the "Uncertificated REMIC II Pass-Through Rate") and initial
Uncertificated Principal Balance for each of the "regular interests" in REMIC II (the
"REMIC II Regular Interests"). The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury regulation Section 1.860G 1(a)(4)(iii)) for each REMIC II
Regular Interest shall be the Maturity Date. None of the REMIC II Regular Interests will
be certificated.
Uncertificated
REMIC II Initial Uncertificated
Designation Pass-Through Rate Principal Balance
Y-1 Variable(1) $519,355.26
Y-2 Variable(1) $97,712.72
Z-1 Variable(1) $1,038,199,171.27
Z-2 Variable(1) $195,327,736.59
LT-IO Variable(1) (2)
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC II Pass-Through Rate.
(2) REMIC II Regular Interest LT-IO will not have an Uncertificated Principal Balance but
will accrue interest on its uncertificated notional amount calculated in accordance with
the definition of "Uncertificated Notional Amount" herein.
REMIC III
As provided herein, the REMIC Administrator will make an election 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." Component III of the Class R Certificates will represent the sole Class of
"residual interests" in REMIC III for purposes of the REMIC Provisions (as defined herein)
under federal income tax law. The following table irrevocably sets forth the designation,
remittance rate (the "Uncertificated REMIC III Pass-Through Rate") and initial
Uncertificated Principal Balance for each of the "regular interests" in REMIC III (the
"REMIC III Regular Interests"). The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) for each REMIC III
Regular Interest shall be the Maturity Date. None of the REMIC III Regular Interests will
be certificated.
Uncertificated
REMIC III Initial Uncertificated
Designation Pass-Through Rate Principal Balance
LT1 Variable(1) $1,038,027,675.28
LT2 Variable(1) $36,247.71
LT3 0.00% $67,624.14
LT4 Variable(1) $67,624.14
LT5 Variable(1) $195,295,260.45
LT6 Variable(1) $6,608.96
LT7 0.00% $12,933.59
LT8 Variable(1) $12,933.59
LT-Y1 Variable(1) $519,355.26
LT-Y2 Variable(1) $97,712.72
LT-IO Variable(1) (2)
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC III Pass-Through
Rate.
(2) REMIC III Regular Interest LT-IO will not have an Uncertificated Principal Balance
but will accrue interest on its uncertificated notional amount calculated in accordance
with the definition of "Uncertificated Notional Amount" herein.
REMIC IV
As provided herein, the REMIC Administrator will elect to treat the segregated pool
of assets consisting of the REMIC III Regular Interests as a REMIC for federal income tax
purposes, and such segregated pool of assets will be designated as REMIC IV. Component IV
of the Class R Certificates will represent the sole Class of "residual interests" in REMIC
IV for purposes of the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designation, Pass-Through Rate, aggregate Initial Certificate
Principal Balance, certain features, month of Final Scheduled Distribution Date and initial
ratings for each Class of Certificates comprising the interests representing "regular
interests" in REMIC IV. The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii)) for each of REMIC
IV Regular Interest shall be the Maturity Date.
Month of
Final
Aggregate Initial Scheduled
Pass-Through Certificate Distribution
Designation Type Rate Principal Balance Features Date
S&P Xxxxx'x Fitch
Clas A-I-1 Regular(1) Adjustable(2)(3) Senior/Adjustable April 2030 AAA Aaa AAA
$ 376,471,000.00 Rate
Class A-I-2 Regular(1) Adjustable(2)(3) Senior/Adjustable January 2034 AAA Aaa AAA
$ 164,849,000.00 Rate
Class A-I-3 Regular(1) Adjustable(2)(3) Senior/Adjustable September 2036 AAA Aaa AAA
$ 153,889,000.00 Rate
Class A-I-4 Regular(1) Adjustable(2)(3) Senior/Adjustable November 2036 AAA Aaa AAA
$ 119,666,000.00 Rate
Class A-II Regular(1) Adjustable(2)(3) Senior/Adjustable November 2036 AAA Aaa AAA
$ 153,311,000.00 Rate
Class M-1S Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 AA+ Aa1 AA+
$ 47,515,000.00 Rate
Class M-2S Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 AA Aa2 AA
$ 41,960,000.00 Rate
Class M-3S Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 AA Aa3 AA-
$ 25,300,000.00 Rate
Class M-4 Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 AA- A1 A+
$ 22,832,000.00 Rate
Class M-5 Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 A+ A2 A
$ 22,215,000.00 Rate
Class M-6 Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 A A3 A-
$ 20,363,000.00 Rate
Class M-7 Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 BBB+ Baa1 BBB+
$ 20,363,000.00 Rate
Class M-8 Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 2036 BBB Baa2 BBB
$ 14,810,000.00 Rate
Class M-9 Regular(1) Adjustable(2)(3) Mezzanine/Adjustable November 0000 XXX- Xxx0 XXX-
$ 13,575,000.00 Rate
Class SB Regular (4) Subordinate N/A N/R N/R
(4) $ 37,024,975.84
IO Regular (6) (7) Interest Only N/R N/R
(5)
___________________
(1) This Class of Certificates represents ownership of a REMIC IV Regular Interest
together with (i) certain rights to payments to be made from amounts received under the
Swap Agreement which will be deemed made for federal income tax purposes outside of
REMIC IV by the holder of the Class SB Certificates as the owner of the Swap Agreement
and (ii) the obligation to pay the Class IO Distribution Amount. Any amount distributed
on this Class of Certificates on any Distribution Date in excess of the amount
distributable on the related REMIC IV Regular Interest on such Distribution Date shall
be treated for federal income tax purposes as having been paid from the Supplemental
Interest Trust Account and any amount distributable on such REMIC IV Regular Interest on
such Distribution Date in excess of the amount distributable on such Class of
Certificates on such Distribution Date shall be treated as having been paid to the
Supplemental Interest Trust Account, all pursuant to and as further provided in
Section 4.10 hereof.
(2) The REMIC IV Regular Interests ownership of which is represented by the Class A
Certificates and the Class M Certificates, will accrue interest at a per annum rate
equal to LIBOR plus the applicable Margin, each subject to a payment cap as described in
the definition of "Pass-Through Rate" and the provisions for the payment of Basis Risk
Shortfalls herein, which payments will not be part of the entitlement of the REMIC IV
Regular Interests related to such Certificates.
(3) The Class A Certificates and Class M Certificates will also entitle their holders to
certain payments from the Holder of the Class SB Certificates from amounts to which the
related REMIC IV Regular Interest is entitled and from amounts received under the Swap
Agreement, which will not be a part of their ownership of the REMIC IV Regular Interests.
(4) The Class SB Certificates will accrue interest as described in the definition of
Accrued Certificate Interest. The Class SB Certificates will not accrue interest on
their Certificate Principal Balance. The Class SB Certificates will be comprised of two
REMIC IV Regular Interests, a principal only Regular Interest designated SB-PO and an
interest only Regular Interest designated SB-IO, which will be entitled to distributions
as set forth herein. The rights of the Holder of the Class SB Certificates to payments
from the Swap Agreement shall be outside and apart from its rights under the REMIC IV
Regular Interests SB-IO and SB-PO.
(5) REMIC IV Regular Interest IO will be held as an asset of the Supplemental Interest
Trust Account established by the Trustee and will be treated for federal income tax
purposes as owned by the holder of the Class SB Certificates.
(6) For federal income tax purposes, REMIC IV Regular Interest IO will not have a
Pass-Through Rate, but will be entitled to 100% of the amounts distributed on REMIC III
Regular Interest LT-IO.
(7) For federal income tax purposes, REMIC IV Regular Interest IO will not have an
Uncertificated Principal Balance, but will have a notional amount equal to the
Uncertificated Notional Amount of REMIC III Regular Interest LT-IO.
In consideration of the mutual agreements herein contained, the Depositor, the Master
Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
Whenever used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the meanings specified in this Article.
Accrued Certificate Interest: With respect to each Distribution Date and each
Class of Class A Certificates and Class M Certificates, an amount equal to the interest
accrued during the related Interest Accrual Period on the Certificate Principal Balance
thereof immediately prior to such Distribution Date at the related Pass-Through Rate for
that Distribution Date.
The amount of Accrued Certificate Interest on each Class of Certificates shall be
reduced by the amount of Prepayment Interest Shortfalls on the related Mortgage Loans
during the prior calendar month to the extent not covered by Compensating Interest pursuant
to Section 3.16, and by Relief Act Shortfalls on the related Mortgage Loans during the
related Due Period. The portion of any Prepayment Interest Shortfalls or Relief Act
Shortfalls allocated to the Class A Certificates will be based upon the related Senior
Percentage of all such reductions with respect to the related Mortgage Loans, such
reductions will be allocated among the related Class A Certificates, pro rata, on the basis
of Accrued Certificate Interest payable on such Distribution Date absent such reductions,
with the remainder of such reductions allocated among the Holders of all Classes of Class M
Certificates, pro rata, on the basis of Accrued Certificate Interest payable on such
Distribution Date absent such reductions.
Accrued Certificate Interest for any Distribution Date shall further be reduced by
the interest portion of Realized Losses allocated to any Class of Certificates pursuant to
Section 4.05.
Accrued Certificate Interest shall accrue on the basis of a 360-day year and the
actual number of days in the related Interest Accrual Period.
With respect to each Distribution Date and the Class SB Certificates, interest
accrued during the preceding Interest Accrual Period at the related Pass-Through Rate on
the Uncertificated Notional Amount as specified in the definition of Pass-Through Rate,
immediately prior to such Distribution Date, reduced by any interest shortfalls with
respect to the Mortgage Loans, including Prepayment Interest Shortfalls to the extent not
covered by Compensating Interest pursuant to Section 3.16 or by Excess Cash Flow pursuant
to Section 4.02(c)(v) and (vi). Accrued Certificate Interest on the Class SB Certificates
shall accrue on the basis of a 360-day year and the actual number of days in the related
Interest Accrual Period.
Adjusted Available Distribution Amount: With respect to any Distribution Date, the
Available Distribution Amount increased by the excess, if any, of the Net Swap Payment owed
to the Swap Counterparty over the amount distributable on such Distribution Date in respect
of REMIC IV Regular Interest IO.
Adjusted Mortgage Rate: With respect to any Mortgage Loan and any date of
determination, the Mortgage Rate borne by the related Mortgage Note, less the rate at which
the related Subservicing Fee accrues.
Adjustment Date: With respect to each adjustable-rate Mortgage Loan, each date set
forth in the related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.
Adjusted Strip Rate: With respect to any Distribution Date, a per annum rate equal
to the excess, if any, of the Uncertificated REMIC I Pass-Through Rate for REMIC I Regular
Interest A-I over the weighted average of (v) with respect to REMIC I Regular Interests
ending with the designation "B," the weighted average of the Uncertificated REMIC I
Pass-Through Rates for such REMIC I Regular Interests, weighted on the basis of the
Uncertificated Principal Balance of such REMIC I Regular Interests for each such
Distribution Date, (w) with respect to REMIC I Regular Interest A-I, the Uncertificated
REMIC I Pass-Through Rate for such REMIC I Regular Interest, (x) with respect to REMIC I
Regular Interest I, the Uncertificated REMIC I Pass-Through Rate for such REMIC I Regular
Interest, (y) with respect to REMIC I Regular Interest II, the Uncertificated REMIC I
Pass-Through Rate for such REMIC I Regular Interest, and (z) 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 Principal Balance of each such
REMIC I Regular Interest for each such Distribution Date:
Distribution REMIC I Regular
Date Interest Rate
1 I-1-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
2 I-2-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A Uncertificated REMIC I Pass-Through Rate
3 I-3-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A and I-2-A Uncertificated REMIC I Pass-Through Rate
4 I-4-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-3-A Uncertificated REMIC I Pass-Through Rate
5 I-5-A through I-44-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-4-A Uncertificated REMIC I Pass-Through Rate
6 I-6-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-5-A Uncertificated REMIC I Pass-Through Rate
7 I-7-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-6-A Uncertificated REMIC I Pass-Through Rate
8 I-8-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-7-A Uncertificated REMIC I Pass-Through Rate
9 I-9-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-8-A Uncertificated REMIC I Pass-Through Rate
10 I-10-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-9-A Uncertificated REMIC I Pass-Through Rate
11 I-11-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-10-A Uncertificated REMIC I Pass-Through Rate
12 I-12-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-11-A Uncertificated REMIC I Pass-Through Rate
13 I-13-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-12-A Uncertificated REMIC I Pass-Through Rate
14 I-14-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-13-A Uncertificated REMIC I Pass-Through Rate
15 I-15-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-14-A Uncertificated REMIC I Pass-Through Rate
16 I-16-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-15-A Uncertificated REMIC I Pass-Through Rate
17 I-17-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-16-A Uncertificated REMIC I Pass-Through Rate
18 I-18-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-17-A Uncertificated REMIC I Pass-Through Rate
19 I-19-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-18-A Uncertificated REMIC I Pass-Through Rate
20 I-20-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-19-A Uncertificated REMIC I Pass-Through Rate
21 I-21-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-20-A Uncertificated REMIC I Pass-Through Rate
22 I-22-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-21-A Uncertificated REMIC I Pass-Through Rate
23 I-23-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-22-A Uncertificated REMIC I Pass-Through Rate
24 I-24-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-23-A Uncertificated REMIC I Pass-Through Rate
25 I-25-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-24-A Uncertificated REMIC I Pass-Through Rate
26 I-26-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-25-A Uncertificated REMIC I Pass-Through Rate
27 I-27-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-26-A Uncertificated REMIC I Pass-Through Rate
28 I-28-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-27-A Uncertificated REMIC I Pass-Through Rate
29 I-29-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-28-A Uncertificated REMIC I Pass-Through Rate
30 I-30-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-29-A Uncertificated REMIC I Pass-Through Rate
31 I-31-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-30-A Uncertificated REMIC I Pass-Through Rate
32 I-32-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-31-A Uncertificated REMIC I Pass-Through Rate
33 I-33-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-32-A Uncertificated REMIC I Pass-Through Rate
34 I-34-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-33-A Uncertificated REMIC I Pass-Through Rate
35 I-35-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-34-A Uncertificated REMIC I Pass-Through Rate
36 I-36-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-35-A Uncertificated REMIC I Pass-Through Rate
37 I-37-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-36-A Uncertificated REMIC I Pass-Through Rate
38 I-38-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-37-A Uncertificated REMIC I Pass-Through Rate
39 I-39-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-38-A Uncertificated REMIC I Pass-Through Rate
40 I-40-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-39-A Uncertificated REMIC I Pass-Through Rate
41 I-41-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-40-A Uncertificated REMIC I Pass-Through Rate
42 I-42-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-41-A Uncertificated REMIC I Pass-Through Rate
43 I-43-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-42-A Uncertificated REMIC I Pass-Through Rate
44 I-44-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-43-A Uncertificated REMIC I Pass-Through Rate
45 I-45-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-44-A Uncertificated REMIC I Pass-Through Rate
46 I-46-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-45-A Uncertificated REMIC I Pass-Through Rate
47 I-47-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-46-A Uncertificated REMIC I Pass-Through Rate
48 I-48-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-47-A Uncertificated REMIC I Pass-Through Rate
49 I-49-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-48-A Uncertificated REMIC I Pass-Through Rate
50 I-50-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-49-A Uncertificated REMIC I Pass-Through Rate
51 I-51-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-50-A Uncertificated REMIC I Pass-Through Rate
52 I-52-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-51-A Uncertificated REMIC I Pass-Through Rate
53 I-53-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-52-A Uncertificated REMIC I Pass-Through Rate
54 I-54-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-53-A Uncertificated REMIC I Pass-Through Rate
55 I-55-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-54-A Uncertificated REMIC I Pass-Through Rate
56 I-56-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-55-A Uncertificated REMIC I Pass-Through Rate
57 I-57-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-56-A Uncertificated REMIC I Pass-Through Rate
58 I-58-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-57-A Uncertificated REMIC I Pass-Through Rate
59 I-59-A through I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-58-A Uncertificated REMIC I Pass-Through Rate
60 I-60-A 2 multiplied by Swap LIBOR, subject to a
maximum rate of Uncertificated REMIC I
Pass-Through Rate
I-1-A through I-59-A Uncertificated REMIC I Pass-Through Rate
Thereafter I-1-A through I-60-A Uncertificated REMIC I Pass-Through Rate
Advance: With respect to any Mortgage Loan, any advance made by the Master Servicer,
pursuant to Section 4.04.
Affected Party: As defined in the Swap Agreement.
Affiliate: With respect to any Person, any other Person controlling, controlled by
or under common control with such first Person. For the purposes of this definition,
"control" 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.
Agreement: This Pooling and Servicing Agreement and all amendments hereof and
supplements hereto.
Amount Held for Future Distribution: With respect to any Distribution Date, the
total of the amounts held in the Custodial Account at the close of business on the
preceding Determination Date on account of (i) Liquidation Proceeds, Subsequent Recoveries,
Insurance Proceeds, REO Proceeds, Principal Prepayments, Mortgage Loan purchases made
pursuant to Section 2.02, 2.03, 2.04 or 4.07 and Mortgage Loan substitutions made pursuant
to Section 2.03 or 2.04 received or made in the month of such Distribution Date (other than
such Liquidation Proceeds, Subsequent Recoveries, Insurance Proceeds, REO Proceeds and
purchases of Mortgage Loans that the Master Servicer has deemed to have been received in
the preceding month in accordance with Section 3.07(b)) and (ii) payments which represent
early receipt of scheduled payments of principal and interest due on a date or dates
subsequent to the Due Date in the related Due Period.
Appraised Value: With respect to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the time of the
origination of the related Mortgage Loan, and (ii) the sales price of the Mortgaged
Property at such time of origination, except in the case of a Mortgaged Property securing a
refinanced or modified Mortgage Loan as to which it is either the appraised value based
upon the appraisal made at the time of origination of the loan which was refinanced or
modified or the appraised value determined in an appraisal at the time of refinancing or
modification, as the case may be.
Assignment: An assignment of the Mortgage, notice of transfer or equivalent
instrument, in recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the Mortgage Loan to
the Trustee for the benefit of Certificateholders, 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
and accompanied by an Opinion of Counsel to that effect.
Assignment Agreement: The Assignment and Assumption Agreement, dated the Closing
Date, between Residential Funding and the Depositor relating to the transfer and assignment
of the Mortgage Loans, attached hereto as Exhibit R.
Available Distribution Amount: With respect to any Distribution Date, an amount equal
to (a) the sum of (i) the amount relating to the Mortgage Loans on deposit in the Custodial
Account as of the close of business on the immediately preceding Determination Date,
including any Subsequent Recoveries, and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans, (ii) the amount of
any Advance made on the immediately preceding Certificate Account Deposit Date with respect
to the Mortgage Loans, (iii) any amount deposited in the Certificate Account on the related
Certificate Account Deposit Date pursuant to the second paragraph of Section 3.12(a) in
respect of the Mortgage Loans, (iv) any amount that the Master Servicer is not permitted to
withdraw from the Custodial Account pursuant to Section 3.16(e) in respect of the Mortgage
Loans, and (v) any amount deposited in the Certificate Account pursuant to Section 4.07 or
9.01 in respect of the Mortgage Loans, reduced by (b) the sum as of the close of business
on the immediately preceding Determination Date of (x) the Amount Held for Future
Distribution with respect to the Mortgage Loans, (y) amounts permitted to be withdrawn by
the Master Servicer from the Custodial Account in respect of the Mortgage Loans pursuant to
clauses (ii)-(x), inclusive, of Section 3.10(a) and (z) any Net Swap Payments required to
be made to the Swap Counterparty and Swap Termination Payments not due to a Swap
Counterparty Trigger Event for such Distribution Date.
Balloon Loan: Each of the Mortgage Loans having an original term to maturity that is
shorter than the related amortization term.
Balloon Payment: With respect to any Balloon Loan, the related Monthly Payment
payable on the stated maturity date of such Balloon Loan.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basis Risk Shortfalls: The Group I Basis Risk Shortfalls, Group II Basis Risk
Shortfalls and Class M Basis Risk Shortfalls, as applicable.
Book-Entry Certificate: Any Certificate registered in the name of the Depository or
its nominee.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which
banking institutions in the State of California, the State of Minnesota, the State of
Texas, the State of New York or the State of Illinois (and such other state or states in
which the Custodial Account or the Certificate Account are at the time located) are
required or authorized by law or executive order to be closed.
Calendar Quarter: A Calendar Quarter shall consist of one of the following time
periods in any given year: January 1 through March 31, April 1 through June 30, July 1
through September 30, and October 1 through December 31.
Capitalization Reimbursement Amount: With respect to any Distribution Date, the
amount of Advances or Servicing Advances that were added to the Stated Principal Balance of
the Mortgage Loans during the prior calendar month and reimbursed to the Master Servicer or
Subservicer on or prior to such Distribution Date pursuant to Section 3.10(a)(vii).
Cash Liquidation: With respect to any defaulted Mortgage Loan other than a Mortgage
Loan as to which an REO Acquisition occurred, a determination by the Master Servicer that
it has received all Insurance Proceeds, Liquidation Proceeds and other payments or cash
recoveries which the Master Servicer reasonably and in good faith expects to be finally
recoverable with respect to such Mortgage Loan.
Certificate: Any Class A Certificate, Class M Certificate, Class SB Certificate or
Class R Certificate.
Certificate Account: The account or accounts created and maintained pursuant to
Section 4.01, which shall be entitled "U.S. Bank National Association, as trustee, in trust
for the registered holders of Residential Asset Securities Corporation, Home Equity
Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS9" and which account shall
be held for the benefit of the Certificateholders and which must be an Eligible Account.
Certificate Account Deposit Date: With respect to any Distribution Date, the
Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate is registered in
the Certificate Register, except that neither a Disqualified Organization nor a Non-United
States Person shall be a holder of a Class R Certificate for any purpose hereof. Solely
for the purpose of giving any consent or direction pursuant to this Agreement, any
Certificate, other than a Class R Certificate, registered in the name of the Depositor, the
Master Servicer or any Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest or Voting Rights evidenced thereby shall not be
taken into account in determining whether the requisite amount of Percentage Interests or
Voting Rights necessary to effect any such consent or direction has been obtained. 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 shall be required to recognize as a "Holder" or "Certificateholder" only
the Person in whose name a Certificate is registered in the Certificate Register.
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 an indirect
participating brokerage firm for which a Depository Participant acts as agent, if any, and
otherwise on the books of a Depository Participant, if any, and otherwise on the books of
the Depository.
Certificate Principal Balance: With respect to any Class A Certificate or Class M
Certificate, on any date of determination, an amount equal to (i) the Initial Certificate
Principal Balance of such Certificate as specified on the face thereof, minus (ii) the sum
of (x) the aggregate of all amounts previously distributed with respect to such Certificate
(or any predecessor Certificate) and applied to reduce the Certificate Principal Balance
thereof pursuant to Section 4.02(c) and (y) the aggregate of all reductions in Certificate
Principal Balance deemed to have occurred in connection with Realized Losses which were
previously allocated to such Certificate (or any predecessor Certificate) pursuant to
Section 4.05; provided, that with respect to any Distribution Date, the Certificate
Principal Balances of (i) the Class A I or Class M Certificates will be increased, in each
case to the extent of Realized Losses previously allocated thereto and remaining
unreimbursed, by the Subsequent Recovery Allocation Amount for Loan Group I in the
following order of priority: first to the Class A-I Certificates, pro rata, and then to
the Class M-1S, Class M-2S, Class M-3S, Class M-4, Class M-5, Class M-6, Class M-7, Class
M-8 and Class M-9 Certificates, in that order and (ii) the Class A-II or Class M
Certificates will be increased, in each case to the extent of Realized Losses previously
allocated thereto and remaining unreimbursed, by the Subsequent Recovery Allocation Amount
for Loan Group II in the following order of priority: to the Class A-II, Class M-1S, Class
M-2S, Class M-3S, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 and Class M-9
Certificates, in that order. With respect to any Class SB Certificate, on any date of
determination, an amount equal to the Percentage Interest evidenced by such Certificate
multiplied by an amount equal to (i) the excess, if any, of (A) the then aggregate Stated
Principal Balance of the Mortgage Loans over (B) the then aggregate Certificate Principal
Balance of the Class A Certificates and Class M Certificates then outstanding, which
represents the sum of (i) the Initial Principal Balance of REMIC IV Regular Interest SB-PO,
as reduced by Realized Losses allocated thereto and payments deemed made thereon, and (ii)
accrued and unpaid interest on REMIC IV Regular Interest SB-IO, as reduced by Realized
Losses allocated thereto. The Class R Certificates will not have a Certificate Principal
Balance.
Certificate Register and Certificate Registrar: The register maintained and the
registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates or uncertificated interests bearing the
same designation.
Class A-I-1 Margin: 0.070% per annum, and on any Distribution Date on or after the
second Distribution Date after the first possible Optional Termination Date, 0.140% per
annum.
Class A-I-2 Certificate: Any one of the Class A-I-2 Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit A, senior to the Class M Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing (i) an interest designated as
a "regular interest" in REMIC IV for purposes of the REMIC Provisions, (ii) the right to
receive payments under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class A-I-2 Margin: Initially, 0.120% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.240% per annum.
Class A-I-3 Certificate: Any one of the Class A-I-3 Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit A, senior to the Class M Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing (i) an interest designated as
a "regular interest" in REMIC IV for purposes of the REMIC Provisions, (ii) the right to
receive payments under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount..
Class A-I-3 Margin: Initially, 0.160% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.320% per annum.
Class A-I-4 Certificate: Any one of the Class A-I-4 Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit A, senior to the Class M Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing (i) an interest designated as
a "regular interest" in REMIC IV for purposes of the REMIC Provisions, (ii) the right to
receive payments under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class A-I-4 Margin: Initially, 0.250% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.500% per annum.
Class A-I Certificates: Collectively, the Class A-I-1 Certificates, Class A-I-2
Certificates, Class A-I-3 Certificates and Class A-I-4 Certificates.
Class A-I Interest Remittance Amount: With respect to any Distribution Date, the
portion of the Available Distribution Amount for that Distribution Date attributable to
interest received or advanced with respect to the Group I Loans, as adjusted to reflect the
pro rata portion of any net swap payments or Swap Termination Payments not due to a Swap
Counterparty Trigger Event allocable to Loan Group I.
Class A-II Certificate: Any one of the Class Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit A, senior to the Class Certificates, Class SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses in respect of Group II
Loans as set forth in Section 4.05, and evidencing an interest designated as a "regular
interest" in REMIC IV for purposes of the REMIC Provisions.
Class A-II Margin: Initially, 0.140% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.280% per annum.
Class A-II Interest Remittance Amount: With respect to any Distribution Date, the
portion of the Available Distribution Amount for that Distribution Date attributable to
interest received or advanced with respect to the Group II Loans, as adjusted to reflect
the pro rata portion of any net swap payments or Swap Termination Payments not due to a
Swap Counterparty Trigger Event allocable to Loan Group II.
Class A Certificates: Collectively, the Class A-I Certificates and Class A-II
Certificates.
Class A Interest Distribution Priority: With respect to each Class of Class A
Certificates and any Distribution Date, the amount available for payment of Accrued
Certificate Interest thereon for that Distribution Date plus Accrued Certificate Interest
thereon remaining unpaid from any prior Distribution Date, in the amounts and priority as
follows:
(i) first, concurrently, to the Class A-I Certificates, pro rata, from the Class A-I
Interest Remittance Amount, and to the Class A-II Certificates, from the
Class A-II Interest Remittance Amount;
(ii) second, to the Class A-I Certificates, pro rata, from the remaining Class A-II
Interest Remittance Amount, or to the Class A-II Certificates, from the
remaining Class A-I Interest Remittance Amount, as needed after taking into
account any distributions in respect of interest on the Class A Certificates
made in first above;
(iii) third, concurrently, to the Class A-I Certificates, pro rata, from the Principal
Remittance Amount related to Loan Group I, and to the Class A-II Certificates,
from the Principal Remittance Amount related to Loan Group II, as needed after
taking into account any distributions in respect of interest on the Class A
Certificates made in first and second above; and
(iv) fourth, to the Class A-I Certificates, pro rata, from the remaining Principal
Remittance Amount related to Loan Group II, or to the Class A-II Certificates,
from the remaining Principal Remittance Amount related to Loan Group I, as
needed after taking into account any distributions in respect of interest on
the Class A Certificates made in first, second and third above.
Class A Principal Distribution Amount: With respect to any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in
effect for that Distribution Date, the Principal Distribution Amount for that Distribution
Date or (b) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i)...the Principal Distribution Amount for that Distribution Date; and
(ii)..the excess, if any, of (A) the aggregate Certificate Principal Balance of
the Class A Certificates immediately prior to that Distribution Date over (B) the lesser of
(x) the product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class A-I-1 Certificate: Any one of the Class A-I-1 Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit A, senior to the Class M Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses in respect
of Group I Loans as set forth in Section 4.05, and evidencing (i) an interest designated as
a "regular interest" in REMIC IV for purposes of the REMIC Provisions, (ii) the right to
receive payments under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class M-1S Certificate: Any one of the Class M-1S Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit B, senior to the Class M-2S Certificates, Class M-3S Certificates, Class
M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates,
Class M-8 Certificates, Class M-9 Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses as set
forth in Section 4.05, and evidencing (i) an interest designated as a "regular interest" in
REMIC IV for purposes of the REMIC Provisions, (ii) the right to receive payments under the
Swap Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-1S Margin: Initially, 0.250% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.375% per annum.
Class M-2S Certificate: Any one of the Class M-2S Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit B, senior to the Class M-3S Certificates, Class M-4 Certificates,
Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates, Class M-9 Certificates, Class SB Certificates and Class R Certificates with
respect to distributions and the allocation of Realized Losses as set forth in
Section 4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions, (ii) the right to receive payments under the Swap
Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-2S Margin: Initially, 0.320% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.480% per annum.
Class M-3S Certificate: Any one of the Class M-3S Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit B-1, senior to the Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates, Class SB Certificates and Class R Certificates with respect to distributions
and the allocation of Realized Losses as set forth in Section 4.05, and evidencing (i) an
interest designated as a "regular interest" in REMIC IV for purposes of the REMIC
Provisions, (ii) the right to receive payments under the Swap Agreement and (iii) the
obligation to pay the Class IO Distribution Amount.
Class M-3S Margin: Initially, 0.350% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.525% per annum.
Class M-4 Certificate: Any one of the Class M-4 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B, senior to the Class M-5 Certificates, Class M-6 Certificates, Class M-7
Certificates, Class M-8 Certificates, Class M-9 Certificates, Class SB Certificates and
Class R Certificates with respect to distributions and the allocation of Realized Losses as
set forth in Section 4.05, and evidencing (i) an interest designated as a "regular
interest" in REMIC IV for purposes of the REMIC Provisions, (ii) the right to receive
payments under the Swap Agreement and (iii) the obligation to pay the Class IO Distribution
Amount.
Class M-4 Margin: Initially, 0.390% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.585% per annum.
Class M-4 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount and
Sequential Class M Principal Distribution Amount or (b) on or after the Stepdown Date if a
Trigger Event is not in effect for that Distribution Date, the lesser of:
(i)...the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount and Sequential Class M
Principal Distribution Amount; and
(ii)..the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1S Certificates, Class M-2S
Certificates and Class M-3S Certificates (after taking into account the payment of the
Class A Principal Distribution Amount and Sequential Class M Principal Distribution Amount
for that Distribution Date) and (2) the Certificate Principal Balance of the Class M-4
Certificates immediately prior to that Distribution Date over (B) the lesser of (x) the
product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-5 Certificate: Any one of the Class M-5 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B, senior to the Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates, Class M-9 Certificates, Class SB Certificates and Class R Certificates with
respect to distributions and the allocation of Realized Losses as set forth in
Section 4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC IV
for purposes of the REMIC Provisions, (ii) the right to receive payments under the Swap
Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-5 Margin: Initially, 0.420% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.630% per annum.
Class M-5 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Sequential Class M Principal Distribution Amount and the Class M-4 Principal Distribution
Amount or (b) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i)...the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Sequential Class M
Principal Distribution Amount and the Class M-4 Principal Distribution Amount; and
(ii)..the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1S Certificates, Class M-2S
Certificates, Class M-3S Certificates and Class M-4 Certificates (after taking into account
the payment of the Class A Principal Distribution Amount, the Sequential Class M Principal
Distribution Amount and the Class M-4 Principal Distribution Amount for that Distribution
Date) and (2) the Certificate Principal Balance of the Class M-5 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1) the
applicable Subordination Percentage and (2) the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that Distribution Date
and (y) the excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
after giving effect to distributions to be made on that Distribution Date, over the
Overcollateralization Floor.
Class M-6 Certificate: Any one of the Class M-6 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B, senior to the Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates, Class SB Certificates and Class R Certificates with respect to distributions
and the allocation of Realized Losses as set forth in Section 4.05, and evidencing (i) an
interest designated as a "regular interest" in REMIC IV for purposes of the REMIC
Provisions, (ii) the right to receive payments under the Swap Agreement and (iii) the
obligation to pay the Class IO Distribution Amount.
Class M-6 Margin: Initially, 0.480% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.720% per annum.
Class M-6 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Sequential Class M Principal Distribution Amount, the Class M-4 Principal Distribution
Amount and the Class M-5 Principal Distribution Amount or (b) on or after the Stepdown Date
if a Trigger Event is not in effect for that Distribution Date, the lesser of:
(i)...the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Sequential Class M
Principal Distribution Amount, the Class M-4 Principal Distribution Amount and the
Class M-5 Principal Distribution Amount; and
(ii)..the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1S Certificates, Class M-2S
Certificates, Class M-3S Certificates, Class M-4 Certificates and Class M-5 Certificates
(after taking into account the payment of the Class A Principal Distribution Amount, the
Sequential Class M Principal Distribution Amount, the Class M-4 Principal Distribution
Amount and the Class M-5 Principal Distribution Amount for that Distribution Date) and (2)
the Certificate Principal Balance of the Class M-6 Certificates immediately prior to that
Distribution Date over (B) the lesser of (x) the product of (1) the applicable
Subordination Percentage and (2) the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution Date and (y) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans after
giving effect to distributions to be made on that Distribution Date, over the
Overcollateralization Floor.
Class M-7 Certificate: Any one of the Class M-7 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B, senior to the Class M-8 Certificates, Class M-9 Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the allocation of
Realized Losses as set forth in Section 4.05, and evidencing (i) an interest designated as
a "regular interest" in REMIC IV for purposes of the REMIC Provisions, (ii) the right to
receive payments under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class M-7 Margin: Initially, 0.900% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
1.350% per annum.
Class M-7 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Sequential Class M Principal Distribution Amount, the Class M-4 Principal Distribution
Amount, the Class M-5 Principal Distribution Amount and the Class M-6 Principal
Distribution Amount or (b) on or after the Stepdown Date if a Trigger Event is not in
effect for that Distribution Date, the lesser of:
(i)...the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Sequential Class M
Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount and the Class M-6 Principal Distribution Amount; and
(ii)..the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1S Certificates, Class M-2S
Certificates, Class M-3S Certificates, Class M-4 Certificates, Class M-5 Certificates and
Class M-6 Certificates (after taking into account the payment of the Class A Principal
Distribution Amount, the Sequential Class M Principal Distribution Amount, the Class M-4
Principal Distribution Amount, the Class M-5 Principal Distribution Amount and the
Class M-6 Principal Distribution Amount for that Distribution Date) and (2) the Certificate
Principal Balance of the Class M-7 Certificates immediately prior to that Distribution Date
over (B) the lesser of (x) the product of (1) the applicable Subordination Percentage and
(2) the aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date and (y) the excess, if any, of the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date, over the Overcollateralization Floor.
Class M-8 Certificate: Any one of the Class M-8 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B, senior to the Class M-9 Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses as set
forth in Section 4.05, and evidencing (i) an interest designated as a "regular interest" in
REMIC IV for purposes of the REMIC Provisions, (ii) the right to receive payments under the
Swap Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-8 Margin: Initially, 1.450% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
2.175% per annum.
Class M-8 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Sequential Class M Principal Distribution Amount, the Class M-4 Principal Distribution
Amount, the Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution
Amount and the Class M-7 Principal Distribution Amount or (b) on or after the Stepdown Date
if a Trigger Event is not in effect for that Distribution Date, the lesser of:
(i)...the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Sequential Class M
Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount, Class M-6 Principal Distribution Amount and the Class M-7
Principal Distribution Amount; and
(ii)..the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1S Certificates, Class M-2S
Certificates, Class M-3S Certificates, Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates and Class M-7 Certificates (after taking into account the payment of
the Class A Principal Distribution Amount, the Sequential Class M Principal Distribution
Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal Distribution
Amount, Class M-6 Principal Distribution Amount and the Class M-7 Principal Distribution
Amount for that Distribution Date) and (2) the Certificate Principal Balance of the
Class M-8 Certificates immediately prior to that Distribution Date over (B) the lesser of
(x) the product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-9 Certificate: Any one of the Class M-9 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B, senior to the Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section 4.05, and
evidencing (i) an interest designated as a "regular interest" in REMIC IV for purposes of
the REMIC Provisions, (ii) the right to receive payments under the Swap Agreement and (iii)
the obligation to pay the Class IO Distribution Amount.
Class M-9 Margin: Initially, 2.500% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
3.750% per annum.
Class M-9 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Sequential Class M Principal Distribution Amount, the Class M-4 Principal Distribution
Amount, the Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution
Amount, the Class M-7 Principal Distribution Amount and the Class M-8 Principal
Distribution Amount or (b) on or after the Stepdown Date if a Trigger Event is not in
effect for that Distribution Date, the lesser of:
(i)...the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Sequential Class M
Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount, Class M-6 Principal Distribution Amount, Class M-7 Principal
Distribution Amount and the Class M-8 Principal Distribution Amount; and
(ii)..the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1S Certificates, Class M-2S
Certificates, Class M-3S Certificates, Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates, Class M-7 Certificates and Class M-8 Certificates (after taking
into account the payment of the Class A Principal Distribution Amount, the Sequential Class
M Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5
Principal Distribution Amount, Class M-6 Principal Distribution Amount, Class M-7 Principal
Distribution Amount and the Class M-8 Principal Distribution Amount for that Distribution
Date) and (2) the Certificate Principal Balance of the Class M-9 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1) the
applicable Subordination Percentage and (2) the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to distributions to be made on that Distribution Date
and (y) the excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
after giving effect to distributions to be made on that Distribution Date, over the
Overcollateralization Floor.
Class M Basis Risk Shortfalls: With respect to each Class of Class M Certificates
and any Distribution Date, the sum of (a) with respect to any Distribution Date on which
the Class M Net WAC Cap Rate is used to determine the Pass-Through Rate of such Class, an
amount equal to the excess of (x) Accrued Certificate Interest for such Class calculated at
a per annum rate equal to LIBOR plus the related Margin for such Distribution Date (which
shall not exceed 14.000% per annum), over (y) Accrued Certificate Interest for such Class
calculated using the Class M Net WAC Cap Rate for such Distribution Date, (b) any
shortfalls for such Class calculated pursuant to clause (a) above remaining unpaid from
prior Distribution Dates, and (c) one month's interest on the amount in clause (b) (based
on the number of days in the preceding Interest Accrual Period) at a per annum rate equal
to LIBOR plus the related Margin for such Distribution Date (which shall not exceed 14.000%
per annum).
Class M Certificates: Collectively, the Class M-1S Certificates, Class M-2S
Certificates, Class M-3S 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.
Class M Net WAC Cap Rate: With respect to any Distribution Date and the Class M
Certificates, a per annum rate equal to the weighted average of the Group I Net WAC Cap
Rate for such Distribution Date and the Group II Net WAC Cap Rate for such Distribution
Date, weighted on the basis of the related Subordinate Component, which for tax purposes is
equal to the weighted average of the Uncertificated REMIC II Pass-Through Rates for REMIC
II Regular Interests Y-1 and Y-2.
Class R Certificate: Any one of the Class R Certificates executed by the Trustee and
authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit D and evidencing an interest designated as a "residual interest" in the REMICs for
purposes of the REMIC Provisions. Component I of the Class R Certificates is designated as
the sole class of "residual interest" in REMIC I, Component II of the Class R Certificates
is designated as the sole class of "residual interest" in REMIC II, Component III of the
Class R Certificates is designated as the sole class of "residual interest" in REMIC III
and Component IV of the Class R Certificates is designated as the sole class of "residual
interest" in REMIC IV.
Class SB Certificate: Any one of the Class SB Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit C, subordinate to the Class A Certificates and the Class M Certificates with
respect to distributions and the allocation of Realized Losses as set forth in
Section 4.05, and evidencing an interest comprised of "regular interests" in REMIC IV
together with certain rights to payments under the Swap Agreements for purposes of the
REMIC Provisions.
Clearance System: The Euroclear, Clearstream or both, as applicable.
Clearstream: Clearstream Banking, societe anonyme.
Closing Date: October 27, 2006.
Code: The Internal Revenue Code of 1986.
Commission: The Securities and Exchange Commission.
Compensating Interest: With respect to any Distribution Date, any amount paid by the
Master Servicer in accordance with Section 3.16(f).
Corporate Trust Office: The principal office of the Trustee at which at any
particular time its corporate trust business with respect to this Agreement shall be
administered, which office at the date of the execution of this instrument is located at
U.S. Bank National Association, EP-MN-WS3D, 00 Xxxxxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx
00000, Attn: Structured Finance/RASC 2006-KS9.
Credit Repository: Equifax, Transunion and Experian, or their successors in interest.
Curtailment: Any Principal Prepayment made by a Mortgagor which is not a Principal
Prepayment in Full.
Custodial Account: The custodial account or accounts created and maintained pursuant
to Section 3.07 in the name of a depository institution, as custodian for the holders of
the Certificates, for the holders of certain other interests in mortgage loans serviced or
sold by the Master Servicer and for the Master Servicer, into which the amounts set forth
in Section 3.07 shall be deposited directly. Any such account or accounts shall be an
Eligible Account.
Custodial Agreement: An agreement that may be entered into among the Depositor, the
Master Servicer, the Trustee and a Custodian in substantially the form of Exhibit E hereto.
Custodial File: Any mortgage loan document in the Mortgage File that is required to
be delivered to the Trustee or the Custodian pursuant to Section 2.01(b) of this Agreement.
Custodian: Xxxxx Fargo Bank, N.A., or any successor custodian appointed pursuant to
a Custodial Agreement.
Cut-off Date: October 1, 2006.
Cut-off Date Balance: $1,234,143,975.84.
Cut-off Date Principal Balance: With respect to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all installments of
principal due on or prior thereto (or due in the month of the Cut-off Date), whether or
not received.
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 constituting a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
Defaulting Party: As defined in the Swap Agreement.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less than the then
outstanding indebtedness under the Mortgage Loan, or any reduction in the amount of
principal to be paid in connection with any scheduled Monthly Payment that constitutes a
permanent forgiveness of principal, which valuation or reduction results from a proceeding
under the Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a Qualified
Substitute Mortgage Loan.
Delinquent: As used herein, a Mortgage Loan is considered to be: "30 to 59 days" or
"30 or more days" delinquent when a payment due on any scheduled due date remains unpaid as
of the close of business on the next following monthly scheduled due date; "60 to 89 days"
or "60 or more days" delinquent when a payment due on any scheduled due date remains unpaid
as of the close of business on the second following monthly scheduled due date; and so on.
The determination as to whether a Mortgage Loan falls into these categories is made as of
the close of business on the last business day of each month. For example, a Mortgage Loan
with a payment due on July 1 that remained unpaid as of the close of business on August 31
would then be considered to be 30 to 59 days delinquent. Delinquency information as of the
Cut-off Date is determined and prepared as of the close of business on the last business
day immediately prior to the Cut-off Date.
Depositor: As defined in the preamble hereto.
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(a)(5) 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 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.
Destroyed Mortgage Note: A Mortgage Note the original of which was permanently lost
or destroyed and has not been replaced.
Determination Date: With respect to any Distribution Date, the 20th day (or if such
20th day is not a Business Day, the Business Day immediately following such 20th day) of
the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a "disqualified organization"
under Section 860E(e)(5) of the Code, including, if not otherwise included, 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 Xxxxxxx Mac, a majority of its board of directors is not selected by
such governmental unit), (ii) a 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) and (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code. A Disqualified Organization
also includes any "electing large partnership," as defined in Section 775(a) of the Code
and any other Person so designated by the Trustee based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Class R Certificate by such Person may cause any
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 Class R 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 Date: The 25th day of any month beginning in November 2006 or, if such
25th day is not a Business Day, the Business Day immediately following such 25th day.
DTC Letter: The Letter of Representations, dated October 26, 2006, between the
Trustee, on behalf of the Trust Fund, and the Depository.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the day
during the related Due Period on which the Monthly Payment is due.
Due Period: With respect to any Distribution Date, the calendar month of such
Distribution Date.
Early Termination Date: Shall have the meaning set forth in the Swap Agreement.
Eligible Account: An account that is any of the following: (i) maintained with a
depository institution the debt obligations of which have been rated by each Rating Agency
in its highest rating available, or (ii) an account or accounts in a depository institution
in which such accounts are fully insured to the limits established by the FDIC, provided
that any deposits not so insured shall, to the extent acceptable to each Rating Agency, as
evidenced in writing, be maintained such that (as evidenced by an Opinion of Counsel
delivered to the Trustee and each Rating Agency) the registered Holders of Certificates
have a claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited to Permitted Investments) securing
such funds that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, or (iii) in the case of the
Custodial Account, a trust account or accounts maintained in the corporate trust department
of U.S. Bank National Association, or (iv) in the case of the Certificate Account, a trust
account or accounts maintained in the corporate trust division of U.S. Bank National
Association, or (v) an account or accounts of a depository institution acceptable to each
Rating Agency (as evidenced in writing by each Rating Agency that use of any such account
as the Custodial Account or the Certificate Account will not reduce the rating assigned to
any Class of Certificates by such Rating Agency below the then-current rating assigned to
such Certificates by such Rating Agency).
Eligible Master Servicing Compensation: With respect to any Distribution Date and
each Loan Group, the lesser of (a) one-twelfth of 0.125% of the Stated Principal Balance of
the related Mortgage Loans immediately preceding such Distribution Date and (b) the sum of
the Servicing Fee and all income and gain on amounts held in the Custodial Account and the
Certificate Account and payable to the Certificateholders with respect to such Distribution
Date, in each case with respect to the related Loan Group; provided that for purposes of
this definition the amount of the Servicing Fee will not be reduced pursuant to
Section 7.02(a) except as may be required pursuant to the last sentence of such Section.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Euroclear: Euroclear Bank S.A./N.V.
Event of Default: As defined in Section 7.01.
Excess Cash Flow: With respect to any Distribution Date, an amount equal to the sum
of (A) the excess of (i) the Available Distribution Amount for that Distribution Date over
(ii) the sum of (a) the Interest Distribution Amount for that Distribution Date and (b) the
lesser of (1) the aggregate Certificate Principal Balance of Class A Certificates and the
Class M Certificates immediately prior to such Distribution Date and (2) the Principal
Remittance Amount for that Distribution Date to the extent not applied to pay interest on
the Class A Certificates and the Class M Certificates on such Distribution Date, (B) the
Overcollateralization Reduction Amount, if any, for that Distribution Date and (C) any Net
Swap Payments received by the Supplemental Interest Trust Trustee under the Swap Agreement
for that Distribution Date and deposited in the Supplemental Interest Trust Account
pursuant to Section 4.10(c).
Excess Overcollateralization Amount: With respect to any Distribution Date, the
excess, if any, of (a) the Overcollateralization Amount on such Distribution Date over
(b) the Required Overcollateralization Amount for such Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: With respect to any Mortgage Loan as of any date of determination,
the sum of the applicable Servicing Fee Rate and the per annum rate at which the applicable
Subservicing Fee accrues.
Xxxxxx Xxx: Xxxxxx Xxx, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
Final Distribution Date: The Distribution Date on which the final distribution in
respect of the Certificates will be made pursuant to Section 9.01, which Final Distribution
Date shall in no event be later than the end of the 90-day liquidation period described in
Section 9.02.
Final Scheduled Distribution Date: Solely for purposes of the face of the
Certificates, as follows: with respect to the Class A-I-1 Certificates, the Distribution
Date occurring in April 2030; with respect to the Class A-I-2 Certificates the Distribution
Date occurring in January 2034; with respect to the Class A-I-3 Certificates the
Distribution Date occurring in September 2036; and with respect to the Class A-I-4
Certificates, Class A-II Certificates and each class of the Class M Certificates, the
Distribution Date occurring in November 2036. No event of default under this Agreement
will arise or become applicable solely by reason of the failure to retire the entire
Certificate Principal Balance of any Class of Class A Certificates or Class M Certificates
on or before its Final Scheduled Distribution Date.
Fitch: Fitch Ratings, or its successors in interest.
Fixed Swap Payment: With respect to any Distribution Date on or prior to the
distribution date in October 2011, an amount equal to the product of (x) a fixed rate equal
to 5.21% per annum, (y) the Swap Agreement Notional Balance for that Distribution Date and
(z) a fraction, the numerator of which is (a) 29 for the distribution date in November 2006
and (b) 30 for any distribution date occurring after the distribution date in November
2006, and the denominator of which is 360.
Floating Swap Payment: With respect to any Distribution Date on or prior to the
Distribution Date in October 2011, an amount equal to the product of (x) Swap LIBOR, (y)
the Swap Agreement Notional Balance for that Distribution Date and (z) a fraction, the
numerator of which is equal to the number of days in the related calculation period as
provided in the Swap Agreement and the denominator of which is 360.
Foreclosure Profits: With respect to any Distribution Date or related Determination
Date and any Mortgage Loan, the excess, if any, of Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of all amounts reimbursable therefrom pursuant to
Section 3.10(a)(ii)) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the related Prepayment Period over the sum of
the unpaid principal balance of such Mortgage Loan or REO Property (determined, in the case
of an REO Disposition, in accordance with Section 3.14) plus accrued and unpaid interest at
the Mortgage Rate on such unpaid principal balance from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in which such
Cash Liquidation or REO Disposition occurred.
Form 10-K Certification: As defined in Section 4.03(e).
Xxxxxxx Mac: Xxxxxxx Mac, a corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Gross Margin: With respect to each adjustable-rate Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note and indicated on the Mortgage Loan
Schedule as the "NOTE MARGIN," which percentage is added to the related Index on each
Adjustment Date to determine (subject to rounding in accordance with the related Mortgage
Note, the Periodic Cap, the Maximum Mortgage Rate and the Minimum Mortgage Rate) the
interest rate to be borne by such Mortgage Loan until the next Adjustment Date.
Group: Loan Group I or Loan Group II, as applicable.
Group I Basis Risk Shortfall: With respect to any Class of Class A-I Certificates
and any Distribution Date, an amount equal to the excess of (x) Accrued Certificate
Interest for that Class calculated at a per annum rate (which shall not exceed 14.000% per
annum) equal to LIBOR plus the related Margin for that Distribution Date over (y) Accrued
Certificate Interest for that Class if the Pass-Through Rate for that Distribution Date is
calculated using the Group I Net WAC Cap Rate for that Distribution Date; plus any unpaid
Group I Basis Risk Shortfall from prior Distribution Dates, plus interest thereon to the
extent previously unreimbursed by Excess Cash Flow calculated at a per annum rate (which
shall not exceed 14.000% per annum) equal to LIBOR plus the related Margin for that
Distribution Date.
Group I Loans: The Mortgage Loans designated on the Mortgage Loan Schedule attached
hereto as Exhibit F-1. The Group I Loans relate to the Class A-I Certificates, Class M
Certificates and Class SB Certificates.
Group I Net WAC Cap Rate: With respect to any Distribution Date, a per annum rate
equal to the product of (i) the weighted average of the Net Mortgage Rates (or, if
applicable, the Modified Net Mortgage Rates) on the Group I Loans using the Net Mortgage
Rates (or, if applicable, the Modified Net Mortgage Rates) in effect for the Monthly
Payments due on such Mortgage Loans during the related Due Period, weighted on the basis of
the respective Stated Principal Balances thereof for that Distribution Date and (ii) a
fraction equal to 30 divided by the actual number of days in the related Interest Accrual
Period.
Group I Principal Distribution Amount: For any Distribution Date, the product of
(x) the Class A Principal Distribution Amount for that Distribution Date and (y) a
fraction, the numerator of which is the portion of the Principal Allocation Amount related
to Loan Group I for that Distribution Date and the denominator of which is the Principal
Allocation Amount for all of the Mortgage Loans for that Distribution Date.
Group I REMIC II Net WAC Rate: With respect to any Distribution Date, a per annum
rate equal to the weighted average of the Net Mortgage Rates on the Group I Loans reduced
by the Adjusted Strip Rate.
Group I REMIC III Net WAC Rate: With respect to any Distribution Date, a per annum
rate equal to the weighted average of the Uncertificated REMIC II Pass-Through Rates for
REMIC II Regular Interests Y-1 and Z-1.
Group II Basis Risk Shortfall: With respect to any Class of Class A-II Certificates
and any Distribution Date, an amount equal to the excess of (x) Accrued Certificate
Interest for that Class calculated at a per annum rate (which shall not exceed 14.000% per
annum) equal to LIBOR plus the related Margin for that Distribution Date over (y) Accrued
Certificate Interest for that Class if the Pass-Through Rate for such Distribution Date is
calculated using the Group II Net WAC Cap Rate for that Distribution Date; plus any unpaid
Group II Basis Risk Shortfall from prior Distribution Dates, plus interest thereon to the
extent previously unreimbursed by Excess Cash Flow calculated at a per annum rate (which
shall not exceed 14.000% per annum) equal to LIBOR plus the related Margin for that
Distribution Date.
Group II Loans: The Mortgage Loans designated on the Mortgage Loan Schedule attached
hereto as Exhibit F-2. The Group II Loans relate to the Class A-II Certificates, Class M
Certificates and Class SB Certificates.
Group II Net WAC Cap Rate: With respect to any Distribution Date, a per annum rate
equal to the product of (i) the weighted average of the Net Mortgage Rates (or, if
applicable, the Modified Net Mortgage Rates) on the Group II Loans using the Net Mortgage
Rates (or, if applicable, the Modified Net Mortgage Rates) in effect for the Monthly
Payments due on such Mortgage Loans during the related Due Period, weighted on the basis of
the respective Stated Principal Balances thereof for that Distribution Date and (ii) a
fraction equal to 30 divided by the actual number of days in the related Interest Accrual
Period.
Group II Principal Distribution Amount: For any Distribution Date, the product of
(x) the Class A Principal Distribution Amount for that Distribution Date and (y) a
fraction, the numerator of which is the portion of the Principal Allocation Amount related
to Loan Group II for that Distribution Date and the denominator of which is the Principal
Allocation Amount for all of the Mortgage Loans for that Distribution Date.
Group II REMIC II Net WAC Rate: With respect to any Distribution Date, a per annum
rate equal to the weighted average of the Net Mortgage Rates on the Group II Loans reduced
by the Adjusted Strip Rate.
Group II REMIC III Net WAC Rate: With respect to any Distribution Date, a per annum
rate equal to the weighted average of the Uncertificated REMIC II Pass-Through Rates for
REMIC II Regular Interests Y-2 and Z-2.
HUD: The United States Department of Housing and Urban Development.
Independent: When used with respect to any specified Person, means such a Person who
(i) is in fact independent of the Depositor, the Master Servicer and the Trustee, or any
Affiliate thereof, (ii) does not have any direct financial interest or any material
indirect financial interest in the Depositor, the Master Servicer or the Trustee or in an
Affiliate thereof, and (iii) is not connected with the Depositor, the Master Servicer or
the Trustee as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Index: With respect to any adjustable-rate Mortgage Loan and as to any Adjustment
Date therefor, the related index as stated in the related Mortgage Note.
Initial Certificate Principal Balance: With respect to each Class of Certificates
(other than the Class R Certificates), the Certificate Principal Balance of such Class of
Certificates as of the Closing Date as set forth in the Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant to any
Primary Insurance Policy or any other related insurance policy covering a Mortgage Loan, to
the extent such proceeds are payable to the mortgagee under the Mortgage, any Subservicer,
the Master Servicer or the Trustee and are not applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own account.
Interest Accrual Period: With respect to the Distribution Date in November 2006, the
period commencing the Closing Date and ending on the day preceding the Distribution Date in
November 2006, and with respect to any Distribution Date after the Distribution Date in
November 2006, the period commencing on the Distribution Date in the month immediately
preceding the month in which such Distribution Date occurs and ending on the day preceding
such Distribution Date.
Interest Distribution Amount: For any Distribution Date, the amounts payable
pursuant to Section 4.02(c)(i) and (ii).
Interim Certification: As defined in Section 2.02.
Late Collections: With respect to any Mortgage Loan, all amounts received during any
Due Period, whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections of Monthly
Payments due but delinquent for a previous Due Period and not previously recovered.
LIBOR: With respect to any Distribution Date, the arithmetic mean of the London
interbank offered rate quotations for one-month U.S. Dollar deposits, expressed on a per
annum basis, determined in accordance with Section 1.02.
LIBOR Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions in London, England are required or authorized by law to be
closed.
LIBOR Certificates: Collectively, the Class A Certificates and the Class M
Certificates.
LIBOR Rate Adjustment Date: With respect to each Distribution Date, the second LIBOR
Business Day immediately preceding the commencement of the related Interest Accrual Period.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received by the Master
Servicer in connection with the taking of an entire Mortgaged Property by exercise of the
power of eminent domain or condemnation or in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise, other than
REO Proceeds and Subsequent Recoveries.
Loan Group I: The Mortgage Loans designated on the Mortgage Loan Schedule attached
hereto as Exhibit F-1.
Loan Group II: The Mortgage Loans designated on the Mortgage Loan Schedule attached
hereto as Exhibit F-2.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a percentage, the
numerator of which is the current principal balance of the related Mortgage Loan at the
date of determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Margin: The Class A-I-1 Margin, Class A-I-2 Margin, Class A-I-3 Margin, Class A-I-4
Margin, Class A-II Margin, Class M-1S Margin, Class M-2S Margin, Class M-3S Margin,
Class M-4 Margin, Class M-5 Margin, Class M-6 Margin, Class M-7 Margin, Class M-8 Margin or
Class M-9 Margin, as applicable.
Marker Rate: With respect to the Class SB Certificates or REMIC IV Regular Interest
SB-IO and any Distribution Date, in relation to REMIC III Regular Interests LT1, LT2, LT3,
LT4 and LT-Y1, a per annum rate equal to two (2) times the weighted average of the
Uncertificated REMIC III Pass-Through Rates for REMIC III Regular Interest LT2 and REMIC
III Regular Interest LT3. With respect to the Class SB Certificates or REMIC IV Regular
Interest SB-IO and any Distribution Date, in relation to REMIC III Regular Interests LT5,
LT6, LT7, LT8 and LT-Y2, a per annum rate equal to two (2) times the weighted average of
the Uncertificated REMIC III Pass-Through Rates for REMIC III Regular Interest LT6 and
REMIC III Regular Interest LT7.
Master Servicer: As defined in the preamble hereto.
Maturity Date: With respect to each Class of Certificates representing ownership of
Regular Interests or Uncertificated Regular Interest issued by each of REMIC I, REMIC II,
REMIC III and REMIC IV the latest possible maturity date, solely for purposes of
Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, by which the Certificate Principal
Balance of each such Class of Certificates representing a regular interest in the Trust
Fund would be reduced to zero, which is, for each such regular interest, November 25, 2036,
which is the Distribution Date occurring in the month following the last scheduled monthly
payment of the Mortgage Loans.
Maximum Mortgage Rate: With respect to any adjustable-rate Mortgage Loan, the per
annum rate indicated on the Mortgage Loan Schedule as the "NOTE CEILING," which rate is the
maximum interest rate that may be applicable to such Mortgage Loan at any time during the
life of such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor thereto.
MERS(R)System: The system of recording transfers of Mortgages electronically
maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered with MERS on
the MERS(R)System.
Minimum Mortgage Rate: With respect to any adjustable-rate Mortgage Loan, a per
annum rate equal to the greater of (i) the Note Margin and (ii) the rate indicated on the
Mortgage Loan Schedule as the "NOTE FLOOR," which rate may be applicable to such Mortgage
Loan at any time during the life of such Mortgage Loan.
Modified Mortgage Loan: Any Mortgage Loan that has been the subject of a Servicing
Modification.
Modified Net Mortgage Rate: With respect to any Mortgage Loan that is the subject of
a Servicing Modification, the Net Mortgage Rate minus the rate per annum by which the
Mortgage Rate on such Mortgage Loan was reduced.
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 (including any REO Property) and
the Due Date in any Due Period, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after adjustment,
if any, for Curtailments and for Deficient Valuations occurring prior to such Due Date but
before any adjustment to such amortization schedule by reason of any bankruptcy, other than
a Deficient Valuation, or similar proceeding or any moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the interest
rate on such Mortgage Loan).
Moody's: Xxxxx'x Investors Service, Inc., or its successors in interest.
Mortgage: With respect to each Mortgage Note, the mortgage, deed of trust or other
comparable instrument creating a first or junior lien on an estate in fee simple or
leasehold interest in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to a
particular Mortgage Loan and any additional documents required to be added to the Mortgage
File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the Trustee
pursuant to Section 2.01 as from time to time are held or deemed to be held as a part of
the Trust Fund, the Mortgage Loans originally so held being identified in the initial
Mortgage Loan Schedule, and Qualified Substitute Mortgage Loans held or deemed held as part
of the Trust Fund including, without limitation, each related Mortgage Note, Mortgage and
Mortgage File and all rights appertaining thereto.
Mortgage Loan Schedule: The lists of the Mortgage Loans attached hereto as
Exhibit F-1 and Exhibit F-2 (as amended from time to time to reflect the addition of
Qualified Substitute Mortgage Loans), which lists shall set forth at a minimum the
following information as to each Mortgage Loan:
(i)...the Mortgage Loan identifying number ("RFC LOAN #");
(ii)..[reserved];
(iii).the maturity of the Mortgage Note ("MATURITY DATE," or "MATURITY DT");
(iv)..for the adjustable-rate Mortgage Loans, the Mortgage Rate as of
origination ("ORIG RATE");
(v)...the Mortgage Rate as of the Cut-off Date ("CURR RATE");
(vi)..the Net Mortgage Rate as of the Cut-off Date ("CURR NET");
(vii).the scheduled monthly payment of principal, if any, and interest as of
the Cut-off Date ("ORIGINAL P & I" or "CURRENT P & I");
(viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix)..the Loan-to-Value Ratio at origination ("LTV");
(x)...a code "T," "BT" or "CT" under the column "LN FEATURE," indicating that
the Mortgage Loan is secured by a second or vacation residence (the absence of any such
code means the Mortgage Loan is secured by a primary residence);
(xi)..a code "N" under the column "OCCP CODE," indicating that the Mortgage
Loan is secured by a non-owner occupied residence (the absence of any such code means the
Mortgage Loan is secured by an owner occupied residence);
(xii).for the adjustable-rate Mortgage Loans, the Maximum Mortgage Rate ("NOTE
CEILING");
(xiii) for the adjustable-rate Mortgage Loans, the maximum Net Mortgage
Rate ("NET CEILING");
(xiv).for the adjustable-rate Mortgage Loans, the Note Margin ("NOTE MARGIN");
(xv)..for the adjustable-rate Mortgage Loans, the first Adjustment Date after
the Cut-off Date ("NXT INT CHG DT");
(xvi).for the adjustable-rate Mortgage Loans, the Periodic Cap ("PERIODIC DECR"
or "PERIODIC INCR");
(xvii) [reserved]; and
(xviii) for the adjustable-rate Mortgage Loans, the rounding of the
semi-annual or annual adjustment to the Mortgage Rate ("NOTE METHOD").
Such schedules may consist of multiple reports that collectively set forth all of the
information required.
Mortgage Note: The originally executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan, together with any
modification thereto.
Mortgage Rate: With respect to any Mortgage Loan, the interest rate borne by the
related Mortgage Note, or any modification thereto other than a Servicing Modification.
The Mortgage Rate on the adjustable-rate Mortgage Loans will adjust on each Adjustment Date
to equal the sum (rounded to the nearest multiple of one-eighth of one percent (0.125%) or
up to the nearest one-eighth of one percent, which are indicated by a "U" on the Mortgage
Loan Schedule, except in the case of the adjustable-rate Mortgage Loans indicated by an "X"
on the Mortgage Loan Schedule under the heading "NOTE METHOD"), of the related Index plus
the Note Margin, in each case subject to the applicable Periodic Cap, Maximum Mortgage Rate
and Minimum Mortgage Rate.
Mortgaged Property: The underlying real property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: With respect to any Mortgage Loan as of any date of
determination, a per annum rate equal to the Mortgage Rate for such Mortgage Loan as of
such date minus the related Expense 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 Counterparty or
the Supplemental Interest Trust Trustee, on behalf of the Supplemental Interest Trust,
which net payment shall not take into account any Swap Termination Payment.
Net WAC Cap Rate: The Group I Net WAC Cap Rate, Group II Net WAC Cap Rate or Class M
Net WAC Cap Rate, as applicable.
Non-United States Person: Any Person other than a United States Person.
Nonrecoverable Advance: Any Advance previously made or proposed to be made by the
Master Servicer or Subservicer in respect of a Mortgage Loan (other than a Deleted Mortgage
Loan) which, in the good faith judgment of the Master Servicer, will not, or, in the case
of a proposed Advance, would not, be ultimately recoverable by the Master Servicer from
related Late Collections, Insurance Proceeds, Liquidation Proceeds or REO Proceeds. To the
extent that any Mortgagor is not obligated under the related Mortgage documents to pay or
reimburse any portion of any Servicing Advances that are outstanding with respect to the
related Mortgage Loan as a result of a modification of such Mortgage Loan by the Master
Servicer, which forgives amounts which the Master Servicer or Subservicer had previously
advanced, and the Master Servicer determines that no other source of payment or
reimbursement for such advances is available to it, such Servicing Advances shall be deemed
to be Nonrecoverable Advances. The determination by the Master Servicer that it has made a
Nonrecoverable Advance shall be evidenced by a certificate of a Servicing Officer,
Responsible Officer or Vice President or its equivalent or senior officer of the Master
Servicer, delivered to the Depositor, the Trustee, and the Master Servicer setting forth
such determination, which shall include any other information or reports obtained by the
Master Servicer such as property operating statements, rent rolls, property inspection
reports and engineering reports, which may support such determinations. Notwithstanding
the above, the Trustee shall be entitled to rely upon any determination by the Master
Servicer that any Advance previously made is a Nonrecoverable Advance or that any proposed
Advance, if made, would constitute a Nonrecoverable Advance.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of reference
thereto, is not subject to a Subservicing Agreement.
Note Margin: With respect to each adjustable-rate Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note and indicated on the Mortgage Loan
Schedule as the "NOTE MARGIN," which percentage is added to the Index on each Adjustment
Date to determine (subject to rounding in accordance with the related Mortgage Note, the
Periodic Cap, the Maximum Mortgage Rate and the Minimum Mortgage Rate) the interest rate to
be borne by such adjustable-rate Mortgage Loan until the next Adjustment Date.
Officers' Certificate: A certificate signed by the Chairman of the Board, the
President, a Vice President, Assistant Vice President, Director, Managing Director, the
Treasurer, the Secretary, an Assistant Treasurer or an Assistant Secretary of the Depositor
or the Master Servicer, as the case may be, and delivered to the Trustee, as required by
this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the Trustee and the
Master Servicer and which counsel may be counsel for the Depositor or the Master Servicer,
provided that any Opinion of Counsel (i) referred to in the definition of "Disqualified
Organization" or (ii) relating to the qualification of any REMIC hereunder as a REMIC or
compliance with the REMIC Provisions must, unless otherwise specified, be an opinion of
Independent counsel.
Optional Termination Date: Any Distribution Date on or after which the Stated
Principal Balance (after giving effect to distributions to be made on such Distribution
Date) of the Mortgage Loans is less than 10.00% of the Cut-off Date Balance.
Outstanding Mortgage Loan: With respect to the Due Date in any Due Period, a
Mortgage Loan (including an REO Property) that was not the subject of a Principal
Prepayment in Full, Cash Liquidation or REO Disposition and that was not purchased, deleted
or substituted for prior to such Due Date pursuant to Section 2.02, 2.03, 2.04 or 4.07.
Overcollateralization Amount: With respect to any Distribution Date, the excess, if
any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans before giving
effect to distributions of principal to be made on such Distribution Date over (b) the
aggregate Certificate Principal Balance of the Class A Certificates and the Class M
Certificates immediately prior to such date.
Overcollateralization Floor: An amount equal to the product of 0.50% and the Cut-off
Date Balance.
Overcollateralization Increase Amount: With respect to any Distribution Date, the
lesser of (a) Excess Cash Flow for that Distribution Date (to the extent not used to cover
the amounts described in clauses (iv) and (v) of the definition of Principal Distribution
Amount as of such Distribution Date), and (b) the excess of (1) the Required
Overcollateralization Amount for such Distribution Date over (2) the Overcollateralization
Amount for such Distribution Date.
Overcollateralization Reduction Amount: With respect to any Distribution Date on
which the Excess Overcollateralization Amount is, after taking into account all other
distributions to be made on such Distribution Date, greater than zero, the
Overcollateralization Reduction Amount shall be equal to the lesser of (i) the Excess
Overcollateralization Amount for that Distribution Date and (ii) the Principal Remittance
Amount on such Distribution Date.
Ownership Interest: With respect 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.
Pass-Through Rate: With respect to each Class of Class A Certificates and Class M
Certificates and any Distribution Date, the least of (i) a per annum rate equal to LIBOR
plus the related Margin for such Distribution Date, (ii) 14.000% per annum and (iii) the
related Net WAC Cap Rate for such Distribution Date.
With respect to the Class SB Certificates or REMIC IV Regular Interest SB-IO and any
Distribution Date, a per annum rate equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (i) through
(viii) below, and the denominator of which is the aggregate principal balance of the REMIC
III Regular Interests. For purposes of calculating the Pass-Through Rate for the Class SB
Certificates or REMIC IV Regular Interest SB-IO, the numerator is equal to the sum of the
following components:
(i)...the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT1
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC III Regular Interest LT1;
(ii)..the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT2
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC III Regular Interest LT2;
(iii).the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT4
minus twice the related Marker Rate, applied to a notional amount equal to the
Uncertificated Principal Balance of REMIC III Regular Interest LT4;
(iv)..the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT5
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC III Regular Interest LT5;
(v)...the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT6
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC III Regular Interest LT6;
(vi)..the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT8
minus twice the related Marker Rate, applied to a notional amount equal to the
Uncertificated Principal Balance of REMIC III Regular Interest LT8;
(vii).the Uncertificated Pass-Through Rate for REMIC III Regular Interest LT-Y1
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC III Regular Interest LT-Y1; and
(viii) the Uncertificated Pass-Through Rate for REMIC III Regular Interest
LT-Y2 minus the related Marker Rate, applied to a notional amount equal to the
Uncertificated Principal Balance of REMIC III Regular Interest LT-Y2.
Paying Agent: U.S. Bank National Association or any successor Paying Agent appointed
by the Trustee.
Percentage Interest: With respect to any Class A Certificate or Class M Certificate,
the undivided percentage ownership interest in the related Class evidenced by such
Certificate, which percentage ownership interest shall be equal to the Initial Certificate
Principal Balance thereof divided by the aggregate Initial Certificate Principal Balance of
all of the Certificates of the same Class. The Percentage Interest with respect to a
Class SB Certificate or Class R Certificate shall be stated on the face thereof.
Periodic Cap: With respect to each adjustable-rate Mortgage Loan, the periodic rate
cap that limits the increase or the decrease of the related Mortgage Rate on any Adjustment
Date pursuant to the terms of the related Mortgage Note.
Permitted Investments: One or more of the following:
(i) ..obligations of or guaranteed as to principal and interest by the United
States or any agency or instrumentality thereof when such obligations are backed by the
full faith and credit of the United States;
(ii) .repurchase agreements on obligations specified in clause (i) maturing not
more than one month from the date of acquisition thereof, provided that the unsecured
obligations of the party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an original
maturity of more than 365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof or of any domestic branch of a
foreign depository institution or trust company; provided that the debt obligations of such
depository institution or trust company at the date of acquisition thereof have been rated
by each Rating Agency in its highest short-term rating available; 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 Standard & Poor's if Standard & Poor's is
a Rating Agency;
(iv) .commercial paper and demand notes (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition has been rated by each Rating Agency in its
highest short term rating available; provided that such commercial paper and demand notes
shall have a remaining maturity of not more than 30 days;
(v) ..a money market fund or a qualified investment fund rated by each Rating
Agency in its highest long-term rating available (which may be managed by the Trustee or
one of its Affiliates); and
(vi) .other obligations or securities that are acceptable to each Rating Agency
as a Permitted Investment hereunder and will not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the then-current rating assigned to such
Certificates by such Rating Agency, as evidenced in writing;
provided, however, that no instrument shall be a Permitted Investment if it represents,
either (1) the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments with respect
to such instrument provide a yield to maturity greater than 120% of the yield to maturity
at par of such underlying obligations. References herein to the highest rating available on
unsecured long-term debt shall mean AAA in the case of Standard & Poor's and Aaa in the
case of Moody's, and for purposes of this Agreement, any references herein to the highest
rating available on unsecured commercial paper and short-term debt obligations shall mean
the following: A-1 in the case of Standard & Poor's and P-1 in the case of Moody's;
provided, however, that any Permitted Investment that is a short-term debt obligation rated
A-1 by Standard & Poor's must satisfy the following additional conditions: (i) the total
amount of debt from A-1 issuers must be limited to the investment of monthly principal and
interest payments (assuming fully amortizing collateral); (ii) the total amount of A-1
investments must not represent more than 20% of the aggregate outstanding Certificate
Principal Balance of the Certificates and each investment must not mature beyond 30 days;
(iii) the terms of the debt must have a predetermined fixed dollar amount of principal due
at maturity that cannot vary; and (iv) if the investments may be liquidated prior to their
maturity or are being relied on to meet a certain yield, interest must be tied to a single
interest rate index plus a single fixed spread (if any) and must move proportionately with
that index. Any Permitted Investment may be purchased by or through the Trustee or its
Affiliates.
Permitted Transferee: Any Transferee of a Class R Certificate, other than a
Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
Prepayment Assumption: With respect to the Class A Certificates and the Class M
Certificates, the prepayment assumption to be used for determining the accrual of original
issue discount and premium and market discount on such Certificates for federal income tax
purposes, which (a) with respect to the fixed-rate Mortgage Loans, assumes a constant
prepayment rate of one-tenth of 23% per annum of the then outstanding Stated Principal
Balance of the fixed-rate Mortgage Loans in the first month of the life of such Mortgage
Loans and an additional one-tenth of 23% per annum in each month thereafter until the tenth
month, and beginning in the tenth month and in each month thereafter during the life of the
fixed-rate Mortgage Loans, a constant prepayment rate of 23% per annum each month ("23%
HEP") and (b) with respect to the adjustable-rate Mortgage Loans assumes a prepayment
assumption of 2% of the constant prepayment rate in month one, increasing by approximately
2.545% from month 2 until month 12, a constant prepayment rate of 30% from month 12 to
month 22, a constant prepayment rate of 50% from month 23 to month 27, and a constant
prepayment rate of 35% thereafter, used for determining the accrual of original issue
discount and premium and market discount on the Class A Certificates and Class M
Certificates for federal income tax purposes. The constant prepayment rate assumes that
the stated percentage of the outstanding Stated Principal Balance of the adjustable-rate
Mortgage Loans is prepaid over the course of a year.
Prepayment Interest Shortfall: With respect to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was the subject
of (a) a Principal Prepayment in Full during the related Prepayment Period, an amount equal
to the excess of one month's interest at the related Net Mortgage Rate (or Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan) on the Stated Principal Balance of
such Mortgage Loan over the amount of interest (adjusted to the related Net Mortgage Rate
(or Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in Full or
(b) a Curtailment during the prior calendar month, an amount equal to one month's interest
at the related Net Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified
Mortgage Loan) on the amount of such Curtailment.
Prepayment Period: With respect to any Distribution Date, the calendar month
preceding the month of distribution.
Primary Insurance Policy: Each primary policy of mortgage guaranty insurance as
indicated by a numeric code on the Mortgage Loan Schedule with the exception of code "A23,"
"A34" or "A96" under the column "MI CO CODE."
Principal Allocation Amount: With respect to any Distribution Date, the sum of (a)
the Principal Remittance Amount for that Distribution Date, as adjusted to reflect any net
swap payments or Swap Termination Payments not due to a Swap Counterparty Trigger Event,
(b) any Realized Losses covered by amounts included in clause (iv) of the definition of
Principal Distribution Amount and (c) the aggregate amount of the principal portion of
Realized Losses on the Mortgage Loans in the calendar month preceding that Distribution
Date, to the extent covered by Excess Cash Flow included in clause (v) of the definition of
Principal Distribution Amount; provided, however, that on any Distribution Date on which
there is (i) insufficient Subsequent Recoveries to cover all unpaid Realized Losses on the
Mortgage Loans described in clause (b) above, in determining the Group I Principal
Distribution Amount and the Group II Principal Distribution Amount, Subsequent Recoveries
will be allocated to the Class A-I Certificates and Class A-II Certificates, pro rata,
based on the principal portion of unpaid Realized Losses from prior Distribution Dates on
the Group I Loans and Group II Loans, respectively, and (ii) insufficient Excess Cash Flow
to cover all Realized Losses on the Mortgage Loans described in clause (c) above, in
determining the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount, the Excess Cash Flow remaining after the allocation described in
clause (b) above or (i) of this proviso, as applicable, will be allocated to the Class A-I
Certificates and Class A-II Certificates, pro rata, based on the principal portion of
Realized Losses incurred during the calendar month preceding that Distribution Date on the
Group I Loans and Group II Loans, respectively.
Principal Distribution Amount: With respect to any Distribution Date, the lesser of
(a) the excess of (x) the sum of (A) the Available Distribution Amount and (B) with respect
to clauses (b)(v) and (vi) below, the amounts received by the Supplemental Interest Trust
Trustee under the Swap Agreement for that Distribution Date, over (y) the Interest
Distribution Amount, and (b) the sum of:
(i)...the principal portion of each Monthly Payment received or Advanced with
respect to the related Due Period on each Outstanding Mortgage Loan;
(ii)..the Stated Principal Balance of any Mortgage Loan repurchased during the
related Prepayment Period (or deemed to have been so repurchased in accordance with
Section 3.07(b)) pursuant to Section 2.02, 2.03, 2.04 or 4.07 and the amount of any
shortfall deposited in the Custodial Account in connection with the substitution of a
Deleted Mortgage Loan pursuant to Section 2.03 or 2.04 during the related Prepayment Period;
(iii).the principal portion of all other unscheduled collections, other than
Subsequent Recoveries, on the Mortgage Loans (including, without limitation, Principal
Prepayments in Full, Curtailments, Insurance Proceeds, Liquidation Proceeds and REO
Proceeds) received during the related Prepayment Period (or deemed to have been so
received) to the extent applied by the Master Servicer as recoveries of principal of the
Mortgage Loans pursuant to Section 3.14;
(iv)..the lesser of (1) Subsequent Recoveries for such Distribution Date and
(2) the principal portion of any Realized Losses allocated to any Class of Certificates on
a prior Distribution Date and remaining unpaid;
(v)...the lesser of (1) the Excess Cash Flow for such Distribution Date (to the
extent not used pursuant to clause (iv) of this definition on such Distribution Date) and
(2) the principal portion of any Realized Losses incurred (or deemed to have been incurred)
on any Mortgage Loans in the calendar month preceding such Distribution Date; and
(vi)..the lesser of (1) the Excess Cash Flow for that Distribution Date (to the
extent not used pursuant to clauses (iv) and (v) of this definition on such Distribution
Date) and (2) the Overcollateralization Increase Amount for such Distribution Date;
minus
(vii).(A) the amount of any Overcollateralization Reduction Amount for such
Distribution Date and (B) the amount of any Capitalization Reimbursement Amount for such
Distribution Date.
Principal Prepayment: Any payment of principal or other recovery on a Mortgage Loan,
including a recovery that takes the form of Liquidation Proceeds or Insurance Proceeds,
which is received in advance of its scheduled Due Date and is not accompanied by an amount
as to interest representing scheduled interest on such payment due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor of the
entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date, all amounts
described in clauses (b)(i) through (iii) of the definition of Principal Distribution
Amount for that Distribution Date.
Program Guide: The AlterNet Seller Guide as incorporated into the Residential
Funding Seller Guide for mortgage collateral sellers that participate in Residential
Funding's AlterNet Mortgage Program, and Residential Funding's Servicing Guide and any
other subservicing arrangements which Residential Funding has arranged to accommodate the
servicing of the Mortgage Loans and in each case all supplements and amendments thereto
published by Residential Funding.
Purchase Price: With respect to any Mortgage Loan (or REO Property) required to be
or otherwise purchased on any date pursuant to Section 2.02, 2.03, 2.04 or 4.07, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof plus the principal
portion of any related unreimbursed Advances and (ii) unpaid accrued interest at either (a)
the Adjusted Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified
Mortgage Loan) plus the rate per annum at which the Servicing Fee is calculated, or (b) in
the case of a purchase made by the Master Servicer, at the Net Mortgage Rate (or Modified
Net Mortgage Rate in the case of a Modified Mortgage Loan), in each case on the Stated
Principal Balance thereof to the first day of the month following the month of purchase
from the Due Date to which interest was last paid by the Mortgagor. With respect to any
Mortgage Loan (or REO Property) required to be or otherwise purchased on any date pursuant
to Section 4.08, an amount equal to the greater of (i) the sum of (a) 100% of the Stated
Principal Balance thereof plus the principal portion of any related unreimbursed Advances
of such Mortgage Loan (or REO Property) and (b) unpaid accrued interest at either (1) the
Adjusted Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified Mortgage
Loan) plus the rate per annum at which the Servicing Fee is calculated, or (2) in the case
of a purchase made by the Master Servicer, at the Net Mortgage Rate (or Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan), in each case on the Stated
Principal Balance thereof to the first day of the month following the month of purchase
from the Due Date to which interest was last paid by the Mortgagor, and (ii) the fair
market value of such Mortgage Loan (or REO Property).
Qualified Institutional Buyer: The meaning specified in Rule 144A under the
Securities Act.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by Residential
Funding or the Depositor for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the Trustee, (i) have
an outstanding principal balance, after deduction of the principal portion of the monthly
payment due in the month of substitution (or in the case of a substitution of more than one
Mortgage Loan for a Deleted Mortgage Loan, an aggregate outstanding principal balance,
after such deduction), not in excess of the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by Residential Funding, in the
Custodial Account in the month of substitution); (ii) have a Mortgage Rate and a Net
Mortgage Rate no lower than and not more than 1% per annum higher than the Mortgage Rate
and Net Mortgage Rate, respectively, of the Deleted Mortgage Loan as of the date of
substitution; (iii) have a Loan-to-Value Ratio at the time of substitution no higher than
that of the Deleted Mortgage Loan at the time of substitution; (iv) have a remaining term
to stated maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan; (v) comply with each representation and warranty set forth in
Sections 2.03 and 2.04 hereof and Section 4 of the Assignment Agreement (other than the
representations and warranties set forth therein with respect to the number of loans
(including the related percentage) in excess of zero which meet or do not meet a specified
criteria); (vi) not be 30 days or more Delinquent; (vii) not be subject to the requirements
of HOEPA (as defined in the Assignment Agreement); (viii) have a policy of title insurance,
in the form and amount that is in material compliance with the Program Guide, that was
effective as of the closing of such Mortgage Loan, is valid and binding, and remains in
full force and effect, unless the Mortgage Property is located in the State of Iowa where
an attorney's certificate has been provided as described in the Program Guide; (ix) if the
Deleted Loan is not a Balloon Loan, not be a Balloon Loan; (x) with respect to adjustable
rate Mortgage Loans, have a Mortgage Rate that adjusts with the same frequency and based
upon the same Index as that of the Deleted Mortgage Loan; (xi) with respect to adjustable
rate Mortgage Loans, have a Note Margin not less than that of the Deleted Mortgage Loan;
(xii) with respect to adjustable rate Mortgage Loans, have a Periodic Rate Cap that is
equal to that of the Deleted Mortgage Loan; (xiii) with respect to adjustable rate Mortgage
Loans, have a next Adjustment Date no later than that of the Deleted Mortgage Loan; and
(xiv) be secured by a lien with the same lien priority as the Deleted Mortgage Loan.
Rating Agency: Each of Standard & Poor's, Xxxxx'x and Fitch. If any agency or a
successor is no longer in existence, "Rating Agency" shall be such statistical credit
rating agency, or other comparable Person, designated by the Depositor, notice of which
designation shall be given to the Trustee and the Master Servicer.
Realized Loss: With respect to each Mortgage Loan (or REO Property) as to which a
Cash Liquidation or REO Disposition has occurred, an amount (not less than zero) equal to
(i) the Stated Principal Balance of the Mortgage Loan (or REO Property) as of the date of
Cash Liquidation or REO Disposition, plus (ii) interest (and REO Imputed Interest, if any)
at the Net Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders up to the last day of the month in which the Cash Liquidation (or REO
Disposition) occurred on the Stated Principal Balance of such Mortgage Loan (or REO
Property) outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash Liquidation
(or REO Disposition) occurred, to the extent applied as recoveries of interest at the Net
Mortgage Rate and to principal of the Mortgage Loan, net of the portion thereof
reimbursable to the Master Servicer or any Subservicer with respect to related Advances,
Servicing Advances or other expenses as to which the Master Servicer or Subservicer is
entitled to reimbursement thereunder but which have not been previously reimbursed. With
respect to each Mortgage Loan which is the subject of a Servicing Modification, (a) (1) the
amount by which the interest portion of a Monthly Payment or the principal balance of such
Mortgage Loan was reduced or (2) the sum of any other amounts owing under the Mortgage Loan
that were forgiven and that constitute Servicing Advances that are reimbursable to the
Master Servicer or a Subservicer, and (b) any such amount with respect to a Monthly Payment
that was or would have been due in the month immediately following the month in which a
Principal Prepayment or the Purchase Price of such Mortgage Loan is received or is deemed
to have been received. 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 object of a Debt Service Reduction, the amount of such Debt Service
Reduction. Notwithstanding the above, neither a Deficient Valuation nor a Debt Service
Reduction shall be deemed a Realized Loss hereunder so long as the Master Servicer has
notified the Trustee in writing that the Master Servicer is diligently pursuing any
remedies that may exist in connection with the representations and warranties made
regarding the related Mortgage Loan and either (A) the related Mortgage Loan is not in
default with regard to payments due thereunder or (B) delinquent payments of principal and
interest under the related Mortgage Loan and any premiums on any applicable primary hazard
insurance policy and any related escrow payments in respect of such Mortgage Loan are being
advanced on a current basis by the Master Servicer or a Subservicer, in either case without
giving effect to any Debt Service Reduction.
Realized Losses allocated to the Class SB Certificates shall be allocated first to
REMIC IV Regular Interest SB-IO in reduction of the accrued but unpaid interest thereon
until such accrued and unpaid interest shall have been reduced to zero and then to REMIC IV
Regular Interest SB-PO in reduction of the Principal Balance thereof.
To the extent the Master Servicer receives Subsequent Recoveries with respect to any
Mortgage Loan, the amount of the 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 LIBOR Certificates, the
Business Day immediately preceding such Distribution Date. With respect to each
Distribution Date and the Certificates (other than the LIBOR Certificates), the close of
business on the last Business Day of the month next preceding the month in which the
related Distribution Date occurs, except in the case of the first Record Date which shall
be the Closing Date.
Reference Bank Rate: As defined in Section 1.02.
Regular Interest: Any one of the regular interests in the REMICs.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
ss.ss.229.1100-229.1123, as such may be amended from time to time, and subject to such
clarification and interpretation as have been provided by the Commission in the adopting
release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
1,531 (January 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: Regulation S promulgated under the Securities Act.
Relief Act: The Servicemembers Civil Relief Act, as amended.
Relief Act Shortfalls: Interest shortfalls on the Mortgage Loans resulting from the
Relief Act or similar legislation or regulations.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code. As used herein, the term "REMIC" shall mean REMIC I, REMIC II,
REMIC III or REMIC IV.
REMIC Administrator: Residential Funding Company, LLC. If Residential Funding
Company, LLC is found by a court of competent jurisdiction to no longer be able to fulfill
its obligations as REMIC Administrator under this Agreement the Master Servicer or Trustee
acting as successor Master Servicer shall appoint a successor REMIC Administrator, subject
to assumption of the REMIC Administrator obligations under this Agreement.
REMIC I: The segregated pool of assets subject hereto (exclusive of the Supplemental
Interest Trust Account and the Swap Agreement), constituting a portion of the primary trust
created hereby and to be administered hereunder, with respect to which a separate REMIC
election is to be made, consisting of:
(i)...the Mortgage Loans and the related Mortgage Files;
(ii)..all payments on and collections in respect of the Mortgage Loans due
after the Cut-off Date (other than Monthly Payments due in the month of the Cut-off Date)
as shall be on deposit in the Custodial Account or in the Certificate Account and
identified as belonging to the Trust Fund;
(iii).property which secured a Mortgage Loan and which has been acquired for
the benefit of the Certificateholders by foreclosure or deed in lieu of foreclosure;
(iv)..the hazard insurance policies and Primary Insurance Policies pertaining
to the Mortgage Loans, if any; and
(v) ..all proceeds of clauses (i) through (iv) above.
REMIC I Available Distribution Amount: The Available Distribution Amount increased
by the amount of any Net Swap Payment described in clause (b)(z) thereof.
REMIC I Distribution Amount: For any Distribution Date, the REMIC I Available
Distribution Amount shall be distributed to REMIC II in respect of the REMIC I Regular
Interests and to the Class R Certificateholders in respect of Component I thereof in the
following amounts and priority:
(a)...to each of the REMIC I Regular Interests, pro rata, in an amount equal to
(A) Uncertificated Accrued Interest for such REMIC I Regular Interest for such Distribution
Date, plus (B) any amounts payable in respect thereof remaining unpaid from previous
Distribution Dates;
(b)...to the extent of amounts remaining after the distributions made pursuant
to clause (a) above, payments of principal shall be allocated as follows:
(i) first, to REMIC I Regular Interests I and II, an amount equal to
1/10,000 of such principal payments for the Group I Loans and the Group II Loans,
respectively; provided that the Uncertificated Principal Balances of REMIC I Regular
Interests I and II shall not be reduced below zero;
(i) second, any remainder sequentially to REMIC I Regular Interests
I-1-A and I-1-B through the REMIC I Regular Interests with numerical designations
equal to the number of such Distribution Date (or in the case of any Distribution
Date occurring in or after September 2008, equal to the number of such Distribution
Date less one), starting with the lowest numerical designation until the
Uncertificated Principal Balance of each such REMIC I Regular Interest is reduced to
zero, provided that, for REMIC I Regular Interests with the same numerical
designation, such payments of principal shall be allocated pro rata between such
REMIC I Regular Interests;
(iii) third, any remainder to REMIC I Regular Interest A-I until the
Uncertificated Principal Balance of such REMIC I Regular Interest is reduced to zero;
(iv) fourth, any remainder to the REMIC I Regular Interests remaining
outstanding after the foregoing distributions (other than REMIC I Regular Interests I
and II), starting with the lowest numerical designation until the Uncertificated
Principal Balance of each such REMIC I Regular Interest is reduced to zero, provided
that, for REMIC I Regular Interests with the same numerical designation, such
payments of principal shall be allocated pro rata between such REMIC I Regular
Interests;
(v) fifth, any remainder to REMIC I Regular Interests I and II, pro
rata according to their respective Uncertificated Principal Balances as reduced by
the distributions deemed made pursuant to (i) above, until their respective
Uncertificated Principal Balances are reduced to zero; and
(c)...to the extent of amounts remaining after the distributions made pursuant
to clauses (a) and (b) above, to the Class R Certificates in respect of Component I
thereof, such remaining amount.
REMIC I Realized Losses: Realized Losses on the Mortgage Loans shall be allocated to
the REMIC I Regular Interests as follows: The interest portion of Realized Losses on the
Mortgage Loans shall be allocated among the REMIC I Regular Interests, pro rata, according
to the amount of interest accrued but unpaid thereon, in reduction thereof. Any interest
portion of such Realized Losses in excess of the amount allocated pursuant to the preceding
sentence shall be treated as a principal portion of Realized Losses not attributable to any
specific Mortgage Loan and allocated pursuant to the succeeding sentences. An amount equal
to 1/10,000 of the principal portion of Realized Losses on Group I Loans and Group II Loans
shall be allocated first, on each Distribution Date, to REMIC I Regular Interests I and II,
respectively, provided that the Uncertificated Principal Balances of REMIC I Regular
Interests I and II shall not be reduced below zero. Any remaining principal portion of
Realized Losses on the Mortgage Loans shall be allocated first, on each Distribution Date,
to REMIC I Regular Interest A-I until the Uncertificated Principal Balance of such REMIC I
Regular Interest has been reduced to zero, and thereafter to REMIC I Regular Interest I-1-A
through REMIC I Regular Interest I-60-B, starting with the lowest numerical denomination
until the Uncertificated Principal Balance of 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.
REMIC I Regular Interest. Any of the 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 Uncertificated REMIC I
Pass-Through 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 Principal Balance as set forth in the Preliminary Statement hereto.
The designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.
REMIC II: The segregated pool of assets subject hereto, constituting a portion of
the primary trust created hereby and to be administered hereunder, with respect to which a
separate REMIC election is to be made, consisting of the REMIC I Regular Interests.
REMIC II Available Distribution Amount: For any Distribution Date, the amount
distributed from REMIC I to REMIC II on such Distribution Date in respect of the REMIC I
Regular Interests.
REMIC II Distribution Amount: For any Distribution Date, the REMIC II Available
Distribution Amount shall be distributed to REMIC III in respect of the REMIC II Regular
Interests and to the Class R Certificateholders in respect of Component II thereof in the
following amounts and priority:
(a) To REMIC II Regular Interest LT-IO, in an amount equal to (i) Uncertificated
Accrued Interest for such Regular Interest for such Distribution Date, plus (ii) any
amounts in respect thereof remaining unpaid from previous Distribution Dates;
(b) To the extent of the portion of the REMIC II Available Distribution Amount
related to Loan Group I remaining after payment of the amounts pursuant to paragraph (a) of
this definition of "REMIC II Distribution Amount":
(i)...first, to REMIC II Regular Interests Y-1 and Z-1, concurrently, the
Uncertificated Accrued Interest for such Regular Interests remaining unpaid from previous
Distribution Dates, pro rata according to their respective shares of such unpaid amounts;
(ii)..second, to REMIC II Regular Interests Y-1 and Z-1, concurrently, the
Uncertificated Accrued Interest for such Regular Interests for the current Distribution
Date, pro rata according to their respective Uncertificated Accrued Interest; and
(iii).third, to REMIC II Regular Interests Y-1 and Z-1, the REMIC II Regular
Interest Y-1 Principal Distribution Amount and the REMIC II Regular Interest Z-1 Principal
Distribution Amount, respectively.
(c) To the extent of the portion of the REMIC II Available Distribution Amount
related to Loan Group II remaining after payment of the amounts pursuant to paragraph (a)
of this definition of "REMIC II Distribution Amount":
(i)...first, to REMIC II Regular Interests Y-2 and Z-2, concurrently, the
Uncertificated Accrued Interest for such Regular Interests remaining unpaid from previous
Distribution Dates, pro rata according to their respective shares of such unpaid amounts;
(ii)..second, to REMIC II Regular Interests Y-2 and Z-2, concurrently, the
Uncertificated Accrued Interest for such Regular Interests for the current Distribution
Date, pro rata according to their respective Uncertificated Accrued Interest; and
(iii).third, to REMIC II Regular Interests Y-2 and Z-2, the REMIC II Regular
Interest Y-2 Principal Distribution Amount and the REMIC II Regular Interest Z-2 Principal
Distribution Amount, respectively.
(d) To the extent of the REMIC II Available Distribution Amount for such
Distribution Date remaining after payment of the amounts pursuant to paragraphs (a) through
(c) of this definition of "REMIC II Distribution Amount":
(i)...first, to each of the REMIC II Regular Interests, pro rata according to
the amount of unreimbursed Realized Losses allocable to principal previously allocated to
each such Regular Interest, the aggregate amount of any distributions to the Certificates
as reimbursement of such Realized Losses on such Distribution Date pursuant to clause (ix)
in Section 4.02(c); provided, however, that any amounts distributed pursuant to this
paragraph (d)(i) of this definition of "REMIC II Distribution Amount" shall not cause a
reduction in the Uncertificated Principal Balances of any of the REMIC II Regular
Interests; and
(ii)..second, to the Class R Certificates in respect of Component II thereof,
any remaining amount.
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 Uncertificated REMIC II
Pass-Through 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 Principal 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.
REMIC II Y Principal Reduction Amounts: For any Distribution Date the amounts by
which the Uncertificated Principal Balances of REMIC II Regular Interests Y-1 and Y-2,
respectively, will be reduced on such Distribution Date by the allocation of Realized
Losses and the distribution of principal, determined as follows:
First determine the Group I REMIC II Net WAC Rate and the Group II REMIC II Net WAC
Rate for distributions of interest that will be made on the next succeeding Distribution
Date (for each Loan Group, the "Group Interest Rate" for that Loan Group). The REMIC II Y
Principal Reduction Amounts for REMIC II Regular Interests Y-1 and Y-2 will be determined
pursuant to the "Generic solution for the REMIC II Y Regular Interests" set forth below
(the "Generic Solution") by making the following identifications among the Loan Groups and
their related REMIC II Regular Interests:
A.....Determine which Loan Group has the lower Group Interest Rate. That Loan
Group will be identified with Loan Group AA and the REMIC II Regular Interests related to
that Loan Group will be respectively identified with the REMIC II Regular Interests YAA and
ZAA. The Group Interest Rate for that Loan Group will be identified with J%. If the two
Loan Groups have the same Group Interest Rate pick one for this purpose, subject to the
restriction that each Loan Group may be picked only once in the course of any such
selections pursuant to paragraphs A and B of this definition.
B.....Determine which Loan Group has the higher Group Interest Rate. That Loan
Group will be identified with Loan Group BB and the REMIC II Regular Interests related to
that Group will be respectively identified with the REMIC II Regular Interests YBB and
ZBB. The Group Interest Rate for that Loan Group will be identified with K%. If the two
Loan Groups have the same Group Interest Rate the Loan Group not selected pursuant to
paragraph A, above, will be selected for purposes of this paragraph B.
Second, apply the Generic Solution set forth below to determine the REMIC II Y
Principal Reduction Amounts for the Distribution Date using the identifications made above.
Generic Solution for the REMIC II Y Principal Reduction Amounts: For any
Distribution Date, the amounts by which the Uncertificated Principal Balances of REMIC II
Regular Interests YAA and ZAA, respectively, will be reduced on such Distribution Date by
the allocation of Realized Losses and the distribution of principal, determined as follows:
J% and K% represent the interest rates on Loan Group AA and Loan Group BB
respectively. J% less than K%.
For purposes of the succeeding formulas the following symbols shall have the meanings
set forth below:
PJB = the Loan Group AA Subordinate Component after the allocation of
Realized Losses and distributions of principal on such Distribution Date.
PKB =.the Loan Group BB Subordinate Component after the allocation of Realized
Losses and distributions of principal on such Distribution Date.
R = ..the Class CB Pass-Through Rate = (J%PJB + K%PKB)/(PJB + PKB)
Yj = .the REMIC II Regular Interest YAA Uncertificated Principal Balance after
distributions on the prior Distribution Date.
Yk = .the REMIC II Regular Interest YBB Uncertificated Principal Balance after
distributions on the prior Distribution Date.
(DELTA)Yj = the REMIC II Regular Interest YAA Principal Reduction Amount.
(DELTA)Yk = the REMIC II Regular Interest YBB Principal Reduction Amount.
Zj = .the REMIC II Regular Interest ZAA Uncertificated Principal Balance after
distributions on the prior Distribution Date.
Zk = .the REMIC II Regular Interest ZBB Uncertificated Principal Balance after
distributions on the prior Distribution Date.
(DELTA)Zj = the REMIC II Regular Interest ZAA Principal Reduction Amount.
= (DELTA)Pj - (DELTA)Yj
(DELTA)Zk = the REMIC II Regular Interest ZBB Principal Reduction Amount.
= (DELTA)Pk - (DELTA)Yk
Pj = .the aggregate Uncertificated Principal Balance of REMIC II Regular
Interests YAA and ZAA after distributions on the prior Distribution Date, which is equal to
the aggregate principal balance of the Group AA Loans.
Pk = .the aggregate Uncertificated Principal Balance of REMIC II Regular
Interests YBB and ZBB after distributions on the prior Distribution Date, which is equal to
the aggregate principal balance of the Group BB Loans.
(DELTA)Pj = the aggregate principal reduction resulting on such Distribution
Date on the Group AA Loans as a result of principal distributions (exclusive of any amounts
distributed pursuant to clauses (d)(i) or (d)(ii) of the definition of REMIC II
Distribution Amount) to be made and Realized Losses to be allocated on such Distribution
Date, if applicable, which is equal to the aggregate of the REMIC II Regular Interest YAA
Principal Reduction Amount and the REMIC II Regular Interest ZAA Principal Reduction Amount.
(DELTA)Pk= the aggregate principal reduction resulting on such Distribution
Date on the Group BB Loans as a result of principal distributions (exclusive of any amounts
distributed pursuant to clauses (d)(i) or (d)(ii) of the definition of REMIC II
Distribution Amount) to be made and realized losses to be allocated on such Distribution
Date, which is equal to the aggregate of the REMIC II Regular Interest YBB Principal
Reduction Amount and the REMIC II Regular Interest ZBB Principal Reduction Amount.
(alpha) = .0005
(gamma) = (R - J%)/(K% - R). (gamma) is a non-negative number unless its
denominator is zero, in which event it is undefined.
If (gamma) is zero, (DELTA)Yk = Yk and (DELTA)Yj = (Yj/Pj)(DELTA)Pj.
If (gamma) is undefined, (DELTA)Yj = Yj, (DELTA)Yk = (Yk/Pk)(DELTA)Pk. if
denominator
In the remaining situations, (DELTA)Yk and (DELTA)Yj shall be defined as
follows:
1. If Yk - (alpha)(Pk - (DELTA)Pk) => 0, Yj- (alpha)(Pj - (DELTA)Pj) => 0, and (gamma)
(Pj - (DELTA)Pj) <(Pk - (DELTA)Pk), (DELTA)Yk = Yk - (alpha)(gamma) (Pj - (DELTA)Pj)
and (DELTA)Yj = Yj - (alpha)(Pj - (DELTA)Pj).
2. If Yk - (alpha)(Pk - (DELTA)Pk) => 0, Yj - (alpha)(Pj - (DELTA)Pj) => 0, and (gamma)
(Pj - (DELTA)Pj) => (Pk - (DELTA)Pk), (DELTA)Yk = Yk - (alpha)(Pk - (DELTA)Pk) and
(DELTA)Yj = Yj - ((alpha)/(gamma))(Pk - (DELTA)Pk).
3. If Yk - (alpha)(Pk - (DELTA)Pk) < 0, Yj - (alpha)(Pj - (DELTA)Pj) => 0, and
Yj - (alpha)(Pj - (DELTA)Pj) => Yj - (Yk/(gamma)), (DELTA)Yk = Yk - (alpha)(gamma)
(Pj - (DELTA)Pj) and (DELTA)Yj = Yj - (alpha)(Pj - (DELTA)Pj).
4. If Yk - (alpha)(Pk - (DELTA)Pk) < 0, Yj - (Yk/(gamma)) => 0, and
Yj - (alpha)(Pj - (DELTA)Pj) <= Yj - (Yk/(gamma)), (DELTA)Yk = 0 and
(DELTA)Yj = Yj - (Yk/(gamma)).
5. If Yj - (alpha)(Pj - (DELTA)Pj) < 0, Yj - (Yk/(gamma)) < 0, and
Yk - (alpha)(Pk - (DELTA)Pk) <= Yk - ((gamma)Yj), (DELTA)Yk = Yk - ((gamma)Yj) and
(DELTA)Yj = 0.
6. If Yj - (alpha)(Pj - (DELTA)Pj) < 0, Yk - (alpha)(Pk - (DELTA)Pk) => 0, and
Yk - (alpha)(Pk - (DELTA)Pk) => Yk - ((gamma)Yj),
(DELTA)Yk = Yk - (alpha)(Pk - (DELTA)Pk) and
(DELTA)Yj = Yj - ((alpha)/(gamma))(Pk - (DELTA)Pk).
The purpose of the foregoing definitional provisions together with the related
provisions allocating Realized Losses and defining the REMIC II Regular Interest Y-1 and
Y-2 and REMIC II Regular Interest Z-1 and Z-2 Principal Distribution Amounts is to
accomplish the following goals in the following order of priority:
1. Making the ratio of Yk to Yj equal to (gamma) after taking account of the allocation
Realized Losses and the distributions that will be made through end of the Distribution
Date to which such provisions relate and assuring that the Principal Reduction Amounts
for each of the REMIC II Regular Interests is greater than or equal to zero for such
Distribution Date;
2. Making (i) the REMIC II Regular Interest YAA Uncertificated Principal Balance less
than or equal to 0.0005 of the sum of the Uncertificated Principal Balances for REMIC II
Regular Interest YAA and REMIC II Regular Interest ZAA and (ii) the REMIC II Regular
Interest YBB Uncertificated Principal Balances less than or equal to 0.0005 of the sum
of the Uncertificated Principal Balances for REMIC II Regular Interest YBB and REMIC II
Regular Interest ZBB in each case after giving effect to allocations of Realized Losses
and distributions to be made through the end of the Distribution Date to which such
provisions relate; and
3. Making the larger of (a) the fraction whose numerator is Yk and whose denominator is
the sum of Yk and Zk and (b) the fraction whose numerator is Yj and whose denominator is
the sum of Yj, and Zj as large as possible while remaining less than or equal to 0.0005.
In the event of a failure of the foregoing portion of the definition of REMIC II Y
Principal Reduction Amount to accomplish both of goals 1 and 2 above, the amounts thereof
should be adjusted to so as to accomplish such goals within the requirement that each
REMIC II Y Principal Reduction Amount must be less than or equal to the sum of (a) the
principal Realized Losses to be allocated on the related Distribution Date for the related
Loan Group and (b) the remainder of the Available Distribution Amount for the related Loan
Group or after reduction thereof by the distributions to be made on such Distribution in
respect of interest on the related REMIC II Regular Interests, or, if both of such goals
cannot be accomplished within such requirement, such adjustment as is necessary shall be
made to accomplish goal 1 within such requirement. In the event of any conflict among the
provisions of the definition of the REMIC II Y Principal Reduction Amounts, such conflict
shall be resolved on the basis of the goals and their priorities set forth above within the
requirement set forth in the preceding sentence.
REMIC II Realized Losses: Realized Losses on Group I Loans and Group II Loans shall
be allocated to the REMIC II Regular Interests as follows: (1) The interest portion of
Realized Losses on Group I Loans, if any, shall be allocated among REMIC II Regular
Interests Y-1 and Z-1, pro rata, according to the amount of interest accrued but unpaid
thereon, in reduction thereof, and thereafter to REMIC II Regular Interest LT-IO in
reduction thereof; and (2) the interest portion of Realized Losses on Group II Loans, if
any, shall be allocated among REMIC II Regular Interests Y-2 and Z-2, pro rata, according
to the amount of interest accrued but unpaid thereon, in reduction thereof, and thereafter
to REMIC II Regular Interest LT-IO in reduction thereof. Any interest portion of such
Realized Losses in excess of the amount allocated pursuant to the preceding sentence shall
be treated as a principal portion of Realized Losses not attributable to any specific
Mortgage Loan in such Loan Group and allocated pursuant to the succeeding sentences. The
principal portion of Realized Losses on Group I Loans and Group II Loans shall be allocated
to the REMIC II Regular Interests as follows: (1) The principal portion of Realized Losses
on Group I Loans shall be allocated, first, to REMIC II Regular Interest Y-1 to the extent
of the REMIC II Regular Interest Y-1 Principal Reduction Amount in reduction of the
Uncertificated Principal Balance of such Regular Interest and, second, the remainder, if
any, of such principal portion of such Realized Losses shall be allocated to REMIC II
Regular Interest Z-1 in reduction of the Uncertificated Principal Balance thereof; and (2)
the principal portion of Realized Losses on Group II Loans shall be allocated, first, to
REMIC II Regular Interest Y-2 to the extent of the REMIC II Regular Interest Y-2 Principal
Reduction Amount in reduction of the Uncertificated Principal Balance of such Regular
Interest and, second, the remainder, if any, of such principal portion of such Realized
Losses shall be allocated to REMIC II Regular Interest Z-2 in reduction of the
Uncertificated Principal Balance thereof.
REMIC II Regular Interest Y-1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest Y-1 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC II Regular Interest
Y-1 on such Distribution Date.
REMIC II Regular Interest Y-2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest Y-2 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC II Regular Interest
Y-2 on such Distribution Date.
REMIC II Regular Interest Z-1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest Z-1 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC II Regular Interest
Z-1 on such Distribution Date.
REMIC II Regular Interest Z-2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest Z-2 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to the REMIC II Regular
Interest Z-2 on such Distribution Date.
REMIC II Z Principal Reduction Amounts: For any Distribution Date, the amounts by
which the Uncertificated Principal Balances of REMIC II Regular Interests Z-1 and Z-2,
respectively, will be reduced on such Distribution Date by the allocation of Realized
Losses and the distribution of principal, which shall be in each case the excess of (A) the
sum of (x) the excess of the REMIC II Available Distribution Amount for the related Loan
Group (i.e. the "related Loan Group" for REMIC II Regular Interest Z-1 is Loan Group I and
the "related Loan Group" for REMIC II Regular Interest Z-2 is Loan Group II) exclusive of
any amount in respect of Subsequent Recoveries included therein over the amount thereof
distributable (i) in respect of interest on such REMIC II Regular Interest and REMIC II
Regular Interest Y-1 (in the case of REMIC II Regular Interest Z-1) or REMIC II Regular
Interest Y-2 (in the case of REMIC II Regular Interest Z-2) and (ii) to such REMIC II
Regular Interest and REMIC II Regular Interest Y-1 (in the case of REMIC II Regular
Interest Z-1) or REMIC II Regular Interest Y-2 (in the case of REMIC II Regular Interest
Z-2) pursuant clause (d)(i) of the definition of "REMIC II Distribution Amount" and (y) the
amount of Realized Losses allocable to principal for the related Loan Group over (B) the
related REMIC II Y Principal Reduction Amount.
REMIC III: The segregated pool of assets subject hereto, constituting a portion of
the primary trust created hereby and to be administered hereunder, with respect to which a
separate REMIC election is to be made, consisting of the REMIC II Regular Interests.
REMIC III Available Distribution Amount: For any Distribution Date, the amount
distributed from REMIC II to REMIC III on such Distribution Date in respect of the REMIC II
Regular Interests.
REMIC III Distribution Amount: For any Distribution Date, the REMIC III Available
Distribution Amount shall be distributed to REMIC IV in respect of the REMIC III Regular
Interests and to the Class R Certificateholders in respect of Component III thereof in the
following amounts and priority:
(a)...to REMIC IV as the holder of REMIC III Regular Interest LT-IO, in an
amount equal to (i) Uncertificated Accrued Interest for such Regular Interest for such
Distribution Date, plus (ii) any amounts in respect thereof remaining unpaid from previous
Distribution Dates;
(b)...to the extent of the portion of the REMIC III Available Distribution
Amount related to Loan Group I remaining after the distributions made pursuant to clause
(a) above, to REMIC IV as the holder of REMIC III Regular Interests LT1, LT2, LT3, LT4 and
LT-Y1, allocated as follows:
(i) to REMIC III Regular Interests LT1, LT2, LT3, LT4 and LT-Y1, pro
rata, in an amount equal to (A) their Uncertificated Accrued Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates; and
(ii) to REMIC III Regular Interests LT1, LT2, LT3, LT4 and LT-Y1, in an
amount equal to the remainder of such portion of the REMIC III Available Distribution
Amount related to Loan Group I remaining after the distributions made pursuant to
clauses (a) and (b)(i) above, allocated as follows:
(A) in respect of REMIC III Regular Interests LT2, LT3, LT4 and
LT-Y1, their respective Principal Distribution Amounts;
(B) in respect of REMIC III Regular Interest LT1 any remainder
until the Uncertificated Principal Balance thereof is reduced
to zero;
(C) any remainder in respect of REMIC III Regular Interests LT2,
LT3, LT4 and LT-Y1, pro rata according to their respective
Uncertificated Principal Balances as reduced by the
distributions deemed made pursuant to (A) above, until their
respective Uncertificated Principal Balances are reduced to
zero;
(c)...to the extent of the portion of the REMIC III Available Distribution
Amount related to Loan Group II remaining after the distributions made pursuant to clause
(a) above, to REMIC IV as the holder of REMIC III Regular Interests LT5, LT6, LT7, LT8 and
LT-Y2, allocated as follows:
(i) to REMIC III Regular Interests LT5, LT6, LT7, LT8 and LT-Y2, pro
rata, in an amount equal to (A) their Uncertificated Accrued Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates; and
(ii) to REMIC III Regular Interests LT5, LT6, LT7, LT8 and LT-Y2, in an
amount equal to the remainder of such portion of the REMIC III Available Distribution
Amount related to Loan Group II remaining after the distributions made pursuant to
clauses (a) and (c)(i) above, allocated as follows:
(A) in respect of REMIC III Regular Interests LT6, LT7, LT8 and
LT-Y2, their respective Principal Distribution Amounts;
(B) in respect of REMIC III Regular Interest LT5 any remainder
until the Uncertificated Principal Balance thereof is reduced
to zero;
(C) any remainder in respect of REMIC III Regular Interests LT6,
LT7, LT8 and LT-Y2, pro rata according to their respective
Uncertificated Principal Balances as reduced by the
distributions deemed made pursuant to (A) above, until their
respective Uncertificated Principal Balances are reduced to
zero;
(d)...to the extent of amounts remaining after the distributions made pursuant
to clauses (a) through (c) above:
(i) first, to each of the REMIC III Regular Interests, pro
rata according to the amount of unreimbursed Realized Losses allocable to
principal previously allocated to each such REMIC III Regular Interest,
the aggregate amount of any distributions to the Certificates as
reimbursement of such Realized Losses on such Distribution Date pursuant
to clause (ix) in Section 4.02(c); provided, however, that any amounts
distributed pursuant to this paragraph (d)(i) of this definition of
"REMIC III Distribution Amount" shall not cause a reduction in the
Uncertificated Principal Balances of any of the REMIC III Regular
Interests; and
(ii) second, to the Class R Certificates in respect of
Component III thereof, any remaining amount.
REMIC III Principal Reduction Amounts: For any Distribution Date, the amounts by
which the Uncertificated Principal Balances of REMIC III Regular Xxxxxxxxx XX0, XX0, XX0,
XX0, XX0, XX0, XX0, XX0, XX-X0 and LT-Y2, respectively, will be reduced on such
Distribution Date by the allocation of Realized Losses and the distribution of principal,
determined as follows:
For purposes of the succeeding formulas the following symbols shall have the meanings
set forth below:
Y1 = the aggregate Uncertificated Principal Balance of REMIC III Regular Interests
LT1 and LT-Y1 after distributions on the prior Distribution Date.
Y2 = the Uncertificated Principal Balance of REMIC III Regular Interest LT2 after
distributions on the prior Distribution Date.
Y3 = the Uncertificated Principal Balance of REMIC III Regular Interest LT3 after
distributions on the prior Distribution Date.
Y4 = the Uncertificated Principal Balance of REMIC III Regular Interest LT4 after
distributions on the prior Distribution Date (note: Y3 = Y4).
AY1 = the combined REMIC III Regular Interest LT1 and LT-Y1 Principal Reduction
Amount. Such amount shall be allocated first to REMIC III Regular Interest LT-Y1 up to the
REMIC III Regular Interest LT-Y1 Principal Reduction Amount and thereafter the remainder
shall be allocated to REMIC III Regular Interest LT1.
AY2 = the REMIC III Regular Interest LT2 Principal Reduction Amount.
AY3 = the REMIC III Regular Interest LT3 Principal Reduction Amount.
AY4 = the REMIC III Regular Interest LT4 Principal Reduction Amount.
P0 = the aggregate Uncertificated Principal Balance of REMIC III Regular Interests
LT1, LT2, LT3, LT4 and LT-Y1 after distributions and the allocation of Realized Losses on
the prior Distribution Date.
P1 = the Uncertificated Principal Balance of REMIC III Regular Interests LT1, LT2,
LT3, LT4 and LT-Y1 after distributions and the allocation of Realized Losses to be made on
such Distribution Date.
AP = P0 - P1 = the aggregate of the REMIC III Regular Interests LT1, LT2, LT3, LT4
and LT-Y1 Principal Reduction Amounts.
=.....the aggregate of the principal portions of Realized Losses to be
allocated to, and the principal distributions to be made on, the Class A-I Certificates and
the Class M Certificates on such Distribution Date (including distributions of accrued and
unpaid interest on the Class SB Certificates for prior Distribution Dates).
R0 = the Group I REMIC III Net WAC Cap Rate (stated as a monthly rate) after giving
effect to amounts distributed and Realized Losses allocated on the prior Distribution Date.
R1 = the Group I REMIC III Net WAC Cap Rate (stated as a monthly rate) after giving
effect to amounts to be distributed and Realized Losses to be allocated on such
Distribution Date.
a = (Y2 + Y3)/P0. The initial value of a on the Closing Date for use on the first
Distribution Date shall be 0.0001.
a0 = the lesser of (A) the sum of (1) for all Classes of Class A-I Certificates of
the product for each Class of (i) the monthly interest rate (as limited by the Group I Net
WAC Cap Rate, if applicable) for such Class applicable for distributions to be made on such
Distribution Date and (ii) the aggregate Certificate Principal Balance for such Class after
distributions and the allocation of Realized Losses on the prior Distribution Date, (2) for
all Classes of Class M Certificates of the product for each Class of (i) the monthly
interest rate (as limited by the Class M Net WAC Cap Rate, if applicable) for such
Class applicable for distributions to be made on such Distribution Date and (ii) the
aggregate Certificate Principal Balance for such Class multiplied by a fraction whose
numerator is the Uncertificated Principal Balance of REMIC II Regular Interest Y-1 and
whose denominator is the sum of the Uncertificated Principal Balances of REMIC II Regular
Interests Y-1 and Y-2 after distributions and the allocation of Realized Losses on the
prior Distribution Date and (3) the amount, if any, by which the sum of the amounts in
clauses (A)(1), (2) and (3) of the definition of A0 exceeds S0*Q0 and (B) R0*P0.
a1 = the lesser of (A) the sum of (1) for all Classes of Class A-I Certificates of
the product for each Class of (i) the monthly interest rate (as limited by the Group I Net
WAC Cap Rate, if applicable) for such Class applicable for distributions to be made on the
next succeeding Distribution Date and (ii) the aggregate Certificate Principal Balance for
such Class after distributions and the allocation of Realized Losses to be made on such
Distribution Date, (2) for all Classes of Class M Certificates of the product for each
Class of (i) the monthly interest rate (as limited by the Class M Net WAC Cap Rate, if
applicable) for such Class applicable for distributions to be made on the next succeeding
Distribution Date and (ii) the aggregate Certificate Principal Balance for such
Class multiplied by a fraction whose numerator is the Uncertificated Principal Balance of
REMIC II Regular Interest Y-1 and whose denominator is the sum of the Uncertificated
Principal Balances of REMIC II Regular Interests Y-1 and Y-2 after distributions and the
allocation of Realized Losses to be made on such Distribution Date and (3) the amount, if
any, by which the sum of the amounts in clauses (A)(1), (2) and (3) of the definition of A1
exceeds S1*Q1 and (B) R1*P1.
Then, based on the foregoing definitions:
AY1 = AP - AY2 - AY3 - AY4;
AY2 = (a/2){( a0R1 - a1R0)/R0R1};
AY3 = aAP - AY2; and
AY4 = AY3.
if both AY2 and AY3, as so determined, are non-negative numbers. Otherwise:
(1) If AY2, as so determined, is negative, then
AY2 = 0;
AY3 = a{a1R0P0 - a0R1P1}/{a1R0};
AY4 = AY3; and
AY1 = XX - XX0 - XX0 - XX0.
(2) If AY3, as so determined, is negative, then
AY3 = 0;
AY2 = a{a1R0P0 - a0R1P1}/{2R1R0P1 - a1R0};
AY4 = AY3; and
AY1 = XX - XX0 - XX0 - XX0.
For purposes of the succeeding formulas the following symbols shall have the meanings
set forth below:
Y5 = the aggregate Uncertificated Principal Balance of REMIC III Regular Interests
LT5 and LT-Y2 after distributions on the prior Distribution Date.
Y6 = the Uncertificated Principal Balance of REMIC III Regular Interest LT6 after
distributions on the prior Distribution Date.
Y7 = the Uncertificated Principal Balance of REMIC III Regular Interest LT7 after
distributions on the prior Distribution Date.
Y8 = the Uncertificated Principal Balance of REMIC III Regular Interest LT8 after
distributions on the prior Distribution Date (note: Y7 = Y8).
AY5 = the aggregate of the REMIC III Regular Interest LT5 and LT-Y2 Principal
Reduction Amounts. Such amount shall be allocated first to REMIC III Regular Interest
LT-Y2 up to the REMIC III Regular Interest LT-Y2 Principal Reduction Amount and thereafter
the remainder shall be allocated to REMIC III Regular Interest LT5.
AY6 = the REMIC III Regular Interest LT6 Principal Reduction Amount.
AY7 = the REMIC III Regular Interest LT7 Principal Reduction Amount.
AY8 = the REMIC III Regular Interest LT8 Principal Reduction Amount.
Q0 = the aggregate Uncertificated Principal Balance of REMIC III Regular Interests
LT5, LT6, LT7, LT8 and LT-Y2 after distributions and the allocation of Realized Losses on
the prior Distribution Date.
Q1 = the aggregate Uncertificated Principal Balance of REMIC III Regular Interests
LT5, LT6, LT7, LT8 and LT-Y2 after distributions and the allocation of Realized Losses to
be made on such Distribution Date.
AQ = Q0 - Q1 = the aggregate of the REMIC III Regular Interests LT5, LT6, LT7, LT8
and LT-Y2 Principal Reduction Amounts.
=.....the aggregate of the principal portions of Realized Losses to be
allocated to, and the principal distributions to be made on, the Class A-II Certificates
and the Class M Certificates on such Distribution Date (including distributions of accrued
and unpaid interest on the Class SB Certificates for prior Distribution Dates).
S0 = the Group II REMIC III Net WAC Cap Rate (stated as a monthly rate) after giving
effect to amounts distributed and Realized Losses allocated on the prior Distribution Date.
S1 = the Group II REMIC III Net WAC Cap Rate (stated as a monthly rate) after giving
effect to amounts to be distributed and Realized Losses to be allocated on such
Distribution Date.
a = (Y6 + Y7)/Q0. The initial value of a on the Closing Date for use on the first
Distribution Date shall be 0.0001.
A0 = the lesser of (A) the sum of (1) for all Classes of Class A-II Certificates of
the product for each Class of (i) the monthly interest rate (as limited by the Group II Net
WAC Cap Rate, if applicable) for such Class applicable for distributions to be made on such
Distribution Date and (ii) the aggregate Certificate Principal Balance for such Class after
distributions and the allocation of Realized Losses on the prior Distribution Date, (2) for
all Classes of Class M Certificates of the product for each Class of (i) the monthly
interest rate (as limited by the Class M Net WAC Cap Rate, if applicable) for such
Class applicable for distributions to be made on such Distribution Date and (ii) the
aggregate Certificate Principal Balance for such Class multiplied by a fraction whose
numerator is the Uncertificated Principal Balance of REMIC II Regular Interest Y-2 and
whose denominator is the sum of the Uncertificated Principal Balances of REMIC II Regular
Interests Y-1 and Y-2 after distributions and the allocation of Realized Losses on the
prior Distribution Date and (3) the amount, if any, by which the sum of the amounts in
clauses (A)(1), (2) and (3) of the definition of a0 exceeds R0*P0 and (B) S0*Q0.
A1 = the lesser of (A) the sum of (1) for all Classes of Class A-II Certificates of
the product for each Class of (i) the monthly interest rate (as limited by the Group II Net
WAC Cap Rate, if applicable) for such Class applicable for distributions to be made on the
next succeeding Distribution Date and (ii) the aggregate Certificate Principal Balance for
such Class after distributions and the allocation of Realized Losses to be made on such
Distribution Date, (2) for all Classes of Class M Certificates of the product for each
Class of (i) the monthly interest rate (as limited by the Class M Net WAC Cap Rate, if
applicable) for such Class applicable for distributions to be made on the next succeeding
Distribution Date and (ii) the aggregate Certificate Principal Balance for such
Class multiplied by a fraction whose numerator is the Uncertificated Principal Balance of
REMIC II Regular Interest Y-2 and whose denominator is the sum of the principal balances of
REMIC II Regular Interests Y-1 and Y-2 after distributions and the allocation of Realized
Losses to be made on such Distribution Date and (3) the amount, if any, by which the sum of
the amounts in clauses (A)(1), (2) and (3) of the definition of a1 exceeds R1*P1 and (B)
S1*Q1.
Then, based on the foregoing definitions:
AY5 = AQ - AY6 - AY7 - AY8;
AY6 = (a/2){(A0S1 - A1S0)/S0S1};
AY7 = aAQ - AY6; and
AY8 = AY7.
if both AY6 and AY7, as so determined, are non-negative numbers. Otherwise:
(1) If AY6, as so determined, is negative, then
AY6 = 0;
AY7 = a{A1S0Q0 - A0S1Q1}/{A1S0};
AY8 = AY7; and
AY5 = AQ - AY6 - AY7 - AY8.
(2) If AY7, as so determined, is negative, then
AY7 = 0;
AY6 = a{A1S0Q0 - A0S1Q1}/{2S1S0Q1 - A1S0};
AY8 = AY7; and
AY5 = AQ - AY6 - AY7 - AY8.
REMIC III Realized Losses: Realized Losses on Group I Loans and Group II Loans shall
be allocated to the REMIC III Regular Interests as follows: (1) The interest portion of
Realized Losses on Group I Loans, if any, shall be allocated among REMIC III Regular
Interests LT1, LT2, LT4 and LT-Y1, pro rata according to the amount of interest accrued but
unpaid thereon, in reduction thereof, and thereafter to REMIC III Regular Interest LT-IO in
reduction thereof; and (2) the interest portion of Realized Losses on Group II Loans, if
any, shall be allocated among REMIC III Regular Interests LT5, LT6, LT8 and LT-Y2, pro
rata, according to the amount of interest accrued but unpaid thereon, in reduction thereof,
and thereafter to REMIC III Regular Interest LT-IO in reduction thereof. Any interest
portion of such Realized Losses in excess of the amount allocated pursuant to the preceding
sentence shall be treated as a principal portion of Realized Losses not attributable to any
specific Mortgage Loan in such Loan Group and allocated pursuant to the succeeding
sentences. The principal portion of Realized Losses with respect to Loan Group I and Loan
Group II shall be allocated to the REMIC III Regular Interests as follows: (1) The
principal portion of Realized Losses on Group I Loans shall be allocated, first, to REMIC
III Regular Interest LT-Y1 to the extent that such losses were allocated to REMIC II
Regular Interest Y-1 in reduction of the Uncertificated Principal Balance thereof, second,
to REMIC III Regular Interests LT2, LT3 and LT4 pro-rata according to their respective
REMIC III Principal Reduction Amounts to the extent thereof in reduction of the
Uncertificated Principal Balance of such REMIC III Regular Interests and, third, the
remainder, if any, of such principal portion of such Realized Losses shall be allocated to
REMIC III Regular Interest LT1 in reduction of the Uncertificated Principal Balance
thereof; and (2) the principal portion of Realized Losses on Group II Loans shall be
allocated, first, to REMIC III Regular Interest LT-Y2 to the extent that such losses were
allocated to REMIC II Regular Interest Y-2 in reduction of the Uncertificated Principal
Balance thereof, second, to REMIC III Regular Interests LT6, LT7 and LT8 pro-rata according
to their respective REMIC III Principal Reduction Amounts to the extent thereof in
reduction of the Uncertificated Principal Balance of such REMIC III Regular Interests and,
third, the remainder, if any, of such principal portion of such Realized Losses shall be
allocated to REMIC III Regular Interest LT5 in reduction of the Uncertificated Principal
Balance thereof.
REMIC III Regular Interest. Any of the separate non-certificated beneficial
ownership interests in REMIC III issued hereunder and designated as a "regular interest" in
REMIC III. Each REMIC III Regular Interest shall accrue interest at the related
Uncertificated REMIC III Pass-Through 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 Principal Balance as set forth in the
Preliminary Statement hereto. The designations for the respective REMIC III Regular
Interests are set forth in the Preliminary Statement hereto.
REMIC III Regular Interest LT1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT1 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT1 on such Distribution Date.
REMIC III Regular Interest LT2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT2 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT2 on such Distribution Date.
REMIC III Regular Interest LT3 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT3 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT3 on such Distribution Date.
REMIC III Regular Interest LT4 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT4 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT4 on such Distribution Date.
REMIC III Regular Interest LT5 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT5 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT5 on such Distribution Date.
REMIC III Regular Interest LT6 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT6 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT6 on such Distribution Date.
REMIC III Regular Interest LT7 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT7 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT7 on such Distribution Date.
REMIC III Regular Interest LT8 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT8 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to REMIC III Regular Interest
LT8 on such Distribution Date.
REMIC III Regular Interest LT-Y1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT-Y1 Principal Reduction
Amount for such Distribution Date over the Realized Losses allocated to REMIC III Regular
Interest LT-Y1 on such Distribution Date.
REMIC III Regular Interest LT-Y2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC III Regular Interest LT-Y2 Principal Reduction
Amount for such Distribution Date over the Realized Losses allocated to REMIC III Regular
Interest LT-Y2 on such Distribution Date.
REMIC IV: The segregated pool of assets subject hereto, constituting a portion of the
primary trust created hereby and to be administered hereunder, with respect to which a
separate REMIC election is to be made, consisting of the REMIC III Regular Interests.
REMIC IV Available Distribution Amount: For any Distribution Date, the amount
distributed from REMIC III to REMIC IV on such Distribution Date in respect of the REMIC
III Regular Interests.
REMIC IV Distribution Amount: For any Distribution Date, the REMIC IV Available
Distribution Amount shall be deemed distributed to Class A, Class M and Class SB
Certificates in respect of the portion of such Certificates representing ownership of REMIC
IV Regular Interests and the Class R Certificates in respect of Component IV thereof in the
following amounts and priority:
(i) to the Class SB Certificateholders in respect of REMIC IV Regular Interest IO,
the amount distributable with respect to such REMIC IV Regular Interest as described in the
Preliminary Statement, being paid from and in reduction of the REMIC IV Available
Distribution Amount for such Distribution Date;
(ii) to the Class A Certificateholders, the Accrued Certificate Interest payable on
the Class A Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (i) but remaining unpaid from any prior Distribution Date,
being paid from and in reduction of the REMIC IV Available Distribution Amount for such
Distribution Date;
(iii) to the Class M Certificateholders, from the amount, if any, of the Available
Distribution Amount remaining after the foregoing distributions, Accrued Certificate
Interest payable on the Class M Certificates with respect to such Distribution Date, plus
any related amounts accrued pursuant to this clause (ii) but remaining unpaid from any
prior Distribution Date, sequentially, to the Class M-1S Certificateholders, Class M-2S
Certificateholders, Class M-3S Certificateholders, Class M-4 Certificateholders, Class M-5
Certificateholders, Class M-6 Certificateholders, Class M-7 Certificateholders, Class M-8
Certificateholders and Class M-9 Certificateholders, in that order, being paid from and in
reduction of the REMIC IV Available Distribution Amount for such Distribution Date;
(iv) the Principal Distribution Amount shall be distributed as follows, to be
applied to reduce the principal balance of the REMIC IV Regular Interest related to the
applicable Certificates in each case to the extent of the remaining Principal Distribution
Amount:
(A) first, the Class A-I-Principal Distribution Amount shall be distributed
sequentially to the Class A-I-1 Certificateholders, Class A-I-2 Certificateholders,
Class A-I-3 Certificateholders and Class A-I-4 Certificateholders, in that order, in
each case until the Certificate Principal Balance thereof is reduced to zero;
(B) second, to the Class M-1S, Class M-2S and Class M-3S Certificateholders,
in that order, the Sequential Class M Principal Distribution Amount, in each case until
the Certificate Principal Balance thereof has been reduced to zero;
(C) third, to the Class M-4 Certificateholders, the Class M-4 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-4
Certificates has been reduced to zero;
(D) fourth, to the Class M-5 Certificateholders, the Class M-5 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-5
Certificates has been reduced to zero;
(E) fifth, to the Class M-6 Certificateholders, the Class M-6 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-6
Certificates has been reduced to zero;
(F) sixth, to the Class M-7 Certificateholders, the Class M-7 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-7
Certificates has been reduced to zero;
(G) seventh, to the Class M-8 Certificateholders, the Class M-8 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-8
Certificates has been reduced to zero; and
(H) eighth, to the Class M-9 Certificateholders, the Class M-9 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-9
Certificates has been reduced to zero; and
(v) to the Class A Certificateholders and Class M Certificateholders, the amount of
any Prepayment Interest Shortfalls allocated thereto for such Distribution Date, on a pro
rata basis based on Prepayment Interest Shortfalls allocated thereto to the extent not
offset by Eligible Master Servicing Compensation on such Distribution Date;
(vi) to the Class A Certificateholders and Class M Certificateholders, the amount of
any Prepayment Interest Shortfalls previously allocated thereto remaining unpaid from prior
Distribution Dates together with interest thereon at the related Pass-Through Rate, on a
pro rata basis based on unpaid Prepayment Interest Shortfalls previously allocated thereto;
(vii) to the Class SB Certificates, (A) from the amount, if any, of the REMIC IV
Available Distribution Amount remaining after the foregoing distributions, the sum of (I)
Accrued Certificate Interest thereon, (II) the amount of any Overcollateralization
Reduction Amount for such Distribution Date and (III) for any Distribution Date after the
Certificate Principal Balance of each Class of Class A Certificates and Class M
Certificates has been reduced to zero, the Overcollateralization Amount and (B) from
prepayment charges on deposit in the Certificate Account, any prepayment charges received
on the Mortgage Loans during the related Prepayment Period; and
(viii)......to the Class R Certificateholders in respect of Component IV thereof, the
balance, if any, of the REMIC IV Available Distribution Amount.
REMIC IV Regular Interest SB-PO: A separate beneficial ownership interest in REMIC
IV issued hereunder and designated as a Regular Interest in REMIC IV, the ownership of
which is evidenced by the Class SB Certificates. REMIC IV Regular Interest SB-PO shall
have no entitlement to interest, and shall be entitled to distributions of principal
subject to the terms and conditions hereof, in aggregate amount equal to the initial
Certificate Principal Balance of the Class SB Certificates as set forth in the Preliminary
Statement hereto.
REMIC IV Regular Interest SB-IO: A separate beneficial ownership interest in REMIC
IV issued hereunder and designated as a Regular Interest in REMIC IV, the ownership of
which is evidenced by the Class SB Certificates. REMIC IV Regular Interest SB-IO shall
have no entitlement to principal, and shall be entitled to distributions of interest
subject to the terms and conditions hereof, in aggregate amount equal to the interest
distributable with respect to the Class SB Certificates pursuant to the terms and
conditions hereof.
REMIC IV Regular Interest IO: A separate beneficial ownership interest in REMIC IV
issued hereunder and designated as a Regular Interest in REMIC IV, the ownership of which
is evidenced by the Class SB Certificates. REMIC IV Regular Interest IO shall have no
entitlement to principal, and shall be entitled to distributions of interest subject to the
terms and conditions hereof, in aggregate amount equal to the interest distributable with
respect to REMIC III Regular Interest LT-IO.
REMIC IV Regular Interests: REMIC IV Regular Interests SB-IO, SB-PO and IO, together
with the Class A Certificates and Class M Certificates, exclusive of their respective
rights to receive the payment of Basis Risk Shortfalls and other amounts pursuant to the
SB-AM Swap Agreement.
REMIC Provisions: Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at Sections 860A through 860G of Subchapter M of
Chapter 1 of the Code, and related provisions, and temporary and final regulations (or, to
the extent not inconsistent with such temporary or final regulations, proposed regulations)
and published rulings, notices and announcements promulgated thereunder, as the foregoing
may be in effect from time to time.
REO Acquisition: The acquisition by the Master Servicer on behalf of the Trustee for
the benefit of the Certificateholders of any REO Property pursuant to Section 3.14.
REO Disposition: With respect to any REO Property, a determination by the Master
Servicer that it has received substantially all Insurance Proceeds, Liquidation Proceeds,
REO Proceeds and other payments and recoveries (including proceeds of a final sale) which
the Master Servicer expects to be finally recoverable from the sale or other disposition of
the REO Property.
REO Imputed Interest: With respect to any REO Property, for any period, an amount
equivalent to interest (at a rate equal to the Net Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date of acquisition thereof for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any REO Property
(including, without limitation, proceeds from the rental of the related Mortgaged Property)
which proceeds are required to be deposited into the Custodial Account only upon the
related REO Disposition.
REO Property: A Mortgaged Property acquired by the Master Servicer on behalf of the
Trust Fund for the benefit of the Certificateholders through foreclosure or deed in lieu of
foreclosure in connection with a defaulted Mortgage Loan.
Reportable Modified Mortgage Loan: Any Mortgage Loan that (a) has been subject to an
interest rate reduction, (b) has been subject to a term extension or (c) has had amounts
owing on such Mortgage Loan capitalized by adding such amount to the Stated Principal
Balance of such Mortgage Loan; provided, however, that a Mortgage Loan modified in
accordance with (a) above for a temporary period shall not be a Reportable Modified
Mortgage Loan if such Mortgage Loan has not been delinquent in payments of principal and
interest for six months since the date of such modification if that interest rate reduction
is not made permanent thereafter.
Repurchase Event: As defined in the Assignment Agreement.
Request for Release: A request for release, the form of which is attached as
Exhibit G hereto, or an electronic request in a form acceptable to the Custodian.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance policy
which is required to be maintained from time to time under this Agreement, the Program
Guide or the related Subservicing Agreement in respect of such Mortgage Loan.
Required Overcollateralization Amount: With respect to any Distribution Date,
(a) prior to the Stepdown Date, an amount equal to 3.00% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, (b) on or after the Stepdown Date if
a Trigger Event is not in effect, the greater of (i) an amount equal to 6.00% of the
aggregate outstanding Stated Principal Balance of the Mortgage Loans after giving effect to
distributions made on that Distribution Date and (ii) the Overcollateralization Floor and
(c) on or after the Stepdown Date if a Trigger Event is in effect, an amount equal to the
Required Overcollateralization Amount from the immediately preceding Distribution Date.
The Required Overcollateralization Amount may be reduced so long as written confirmation is
obtained from each Rating Agency that such reduction shall not reduce the ratings assigned
to any Class of Certificates by such Rating Agency below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing Date by such Rating
Agency.
Residential Funding: Residential Funding Company, LLC, a Delaware limited liability
company, in its capacity as seller of the Mortgage Loans to the Depositor and any successor
thereto.
Responsible Officer: When used with respect to the Trustee, any officer of the
Corporate Trust Department of the Trustee, including any Senior Vice President, any Vice
President, any Assistant Vice President, any Assistant Secretary, any Trust Officer or
Assistant Trust Officer, or any other officer of the Trustee, in each case with direct
responsibility for the administration of this Agreement.
RFC Exemption: As defined in Section 5.02(e)(ii).
Rule 144A: Rule 144A under the Securities Act of 1933, as in effect from time to
time.
SB-AM Swap Agreement: The swap between the Class SB Certificateholder and the Class
A and Class M Certificateholders evidenced by the confirmation attached hereto as Exhibit Q
and incorporated herein by reference.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving a sale or other transfer of
mortgage loans directly or indirectly to an issuing in connection with an issuance of
publicly offered or privately placed, rated or unrated mortgage-backed securities.
Seller: With respect to any Mortgage Loan, a Person, including any Subservicer, that
executed a Seller's Agreement applicable to such Mortgage Loan.
Seller's Agreement: An agreement for the origination and sale of Mortgage Loans
generally in the form of the seller contract referred to or contained in the Program Guide,
or in such other form as has been approved by the Master Servicer and the Depositor.
Senior Enhancement Percentage: For any Distribution Date, the fraction, expressed as
a percentage, the numerator of which is the sum of (i) the aggregate Certificate Principal
Balance of the Class M Certificates and (ii) the Overcollateralization Amount, in each case
prior to the distribution of the Principal Distribution Amount on such Distribution Date
and the denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution Date.
Senior Percentage: With respect to each Loan Group and any Distribution Date, the
percentage equal to the lesser of (x) the aggregate Certificate Principal Balances of the
related Class A Certificates immediately prior to such Distribution Date divided by the
aggregate Stated Principal Balance of the Mortgage Loans in such Loan Group immediately
prior to such Distribution Date and (y) 100%.
Sequential Class M Certificates: Collectively, the Class M-1S Certificates, Class
M-2S Certificates and Class M-3S Certificates.
Sequential Class M Principal Distribution Amount: With respect to any Distribution
Date (i) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is
in effect for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, or (ii)
on or after the Stepdown Date if a Trigger Event is not in effect for that Distribution
Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date after
distribution of the Class A Principal Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount for that Distribution Date) and (2) the aggregate Certificate
Principal Balance of the Sequential Class M Certificates immediately prior to that
distribution date over (B) the lesser of (x) the product of (1) the Subordination
Percentage with respect to the Class M-3S Certificates and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Servicing Accounts: The account or accounts created and maintained pursuant to
Section 3.08.
Servicing Advances: All customary, reasonable and necessary "out of pocket" costs
and expenses incurred in connection with a default, delinquency or other unanticipated
event by the Master Servicer or a Subservicer 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 or, with respect to a cooperative loan, the related
cooperative apartment, (ii) any enforcement or judicial proceedings, including
foreclosures, including any expenses incurred in relation to any such proceedings that
result from the Mortgage Loan being registered on the MERS(R)System, (iii) the management
and liquidation of any REO Property, (iv) any mitigation procedures implemented in
accordance with Section 3.07, and (v) compliance with the obligations under Sections 3.01,
3.08, 3.11, 3.12(a) and 3.14, including, if the Master Servicer or any Affiliate of the
Master Servicer provides services such as appraisals and brokerage services that are
customarily provided by Persons other than servicers of mortgage loans, reasonable
compensation for such services.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: With respect to any Mortgage Loan and Distribution Date, the fee
payable monthly to the Master Servicer in respect of master servicing compensation that
accrues at an annual rate equal to the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the related Due Date in the related Due
Period, as may be adjusted pursuant to Section 3.16(e).
Servicing Fee Rate: With respect to any Mortgage Loan, the per annum rate designated
on the Mortgage Loan Schedule as the "MSTR SERV FEE," as may be adjusted with respect to
successor Master Servicers as provided in Section 7.02, which rate shall never be greater
than the Mortgage Rate of such Mortgage Loan.
Servicing Modification: Any reduction of the interest rate on or the outstanding
principal balance of a Mortgage Loan, any extension of the final maturity date of a
Mortgage Loan, and any increase to the Stated Principal Balance of a Mortgage Loan by
adding to the Stated Principal Balance unpaid principal and interest and other amounts
owing under the Mortgage Loan, in each case pursuant to a modification of a Mortgage Loan
that is in default, or for which, in the judgment of the Master Servicer, default is
reasonably foreseeable in accordance with Section 3.07(a).
Servicing Officer: Any officer of the Master Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and specimen
signature appear on a list of servicing officers furnished to the Trustee by the Master
Servicer on the Closing Date, as such list may from time to time be amended.
Sixty-Plus Delinquency Percentage: With respect to any Distribution Date and the
Mortgage Loans, the arithmetic average, for each of the three Distribution Dates ending
with such Distribution Date, of the fraction, expressed as a percentage, equal to (x) the
aggregate Stated Principal Balance of the Mortgage Loans that are 60 or more days
delinquent in payment of principal and interest for that Distribution Date, including
Mortgage Loans in foreclosure and REO, over (y) the aggregate Stated Principal Balance of
all of the Mortgage Loans immediately preceding that Distribution Date.
Standard & Poor's: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. or its successors in interest.
Startup Date: The day designated as such pursuant to Article X hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO Property,
as of any date of determination, (i) the sum of (a) the Cut-off Date Principal Balance of
the Mortgage Loan and (b) any amount by which the Stated Principal Balance of the Mortgage
Loan has been increased pursuant to a Servicing Modification, minus (ii) the sum of (a) the
principal portion of the Monthly Payments due with respect to such Mortgage Loan or REO
Property during each Due Period ending with the Due Period relating to the most recent
Distribution Date which were received or with respect to which an Advance was made, (b) all
Principal Prepayments with respect to such Mortgage Loan or REO Property, and all Insurance
Proceeds, Liquidation Proceeds and REO Proceeds, to the extent applied by the Master
Servicer as recoveries of principal in accordance with Section 3.14 with respect to such
Mortgage Loan or REO Property, in each case which were distributed pursuant to Section 4.02
on any previous Distribution Date, and (c) any Realized Loss incurred with respect to such
Mortgage Loan allocated to Certificateholders with respect thereto for any previous
Distribution Date.
Stepdown Date: That Distribution Date which is the earlier to occur of (a) the
Distribution Date immediately succeeding the Distribution Date on which the aggregate
Certificate Principal Balance of the Class A Certificates has been reduced to zero and (b)
the later to occur of (i) the Distribution Date in November 2009 and (ii) the first
Distribution Date on which the Senior Enhancement Percentage is equal to or greater than
43.10%.
Subordinate Component: With respect to each Loan Group and any Distribution Date,
the positive excess, if any, of the aggregate Stated Principal Balance of the Mortgage
Loans in that Loan Group, over the aggregate Certificate Principal Balance of the related
Class A Certificates, in each case immediately prior to that Distribution Date.
Subordination: The provisions described in Section 4.05 relating to the allocation
of Realized Losses.
Subordination Percentage: With respect to the Class A Certificates and any Class of
Class M Certificates, the respective percentage set forth below.
Subordination
Class Percentage
A 56.90%
M-1S 64.60%
M-2S 71.40%
M-3S 75.50%
M-4 79.20%
M-5 82.80%
M-6 86.10%
M-7 89.40%
M-8 91.80%
M-9 94.00%
Subsequent Recoveries: As of any Distribution Date, amounts received by the Master
Servicer (net of any related expenses permitted to be reimbursed pursuant to Section 3.10)
or surplus amounts held by the Master Servicer to cover estimated expenses (including, but
not limited to, recoveries in respect of the representations and warranties made by the
related Seller pursuant to the applicable Seller's Agreement and assigned to the Trustee
pursuant to Section 2.04) specifically related to a Mortgage Loan that was the subject of a
Cash Liquidation or an REO Disposition prior to the related Prepayment Period and that
resulted in a Realized Loss.
Subsequent Recovery Allocation Amount: With respect to a Loan Group, that portion of
the Principal Allocation Amount in respect of that Loan Group attributable to the amounts
described in clause (iv) of the definition of Principal Distribution Amount.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of reference thereto,
is subject to a Subservicing Agreement.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement and who generally satisfied the requirements set forth in the
Program Guide in respect of the qualification of a Subservicer as of the date of its
approval as a Subservicer by the Master Servicer.
Subservicer Advance: Any delinquent installment of principal and interest on a
Mortgage Loan which is advanced by the related Subservicer (net of its Subservicing Fee)
pursuant to the Subservicing Agreement.
Subservicing Account: An account established by a Subservicer in accordance with
Section 3.08.
Subservicing Agreement: The written contract between the Master Servicer and any
Subservicer relating to servicing and administration of certain Mortgage Loans as provided
in Section 3.02, generally in the form of the servicer contract referred to or contained in
the Program Guide or in such other form as has been approved by the Master Servicer and the
Depositor.
Subservicing Fee: With respect to any Mortgage Loan, the fee payable monthly to the
related Subservicer (or, in the case of a Nonsubserviced Mortgage Loan, to the Master
Servicer) in respect of subservicing and other compensation that accrues with respect to
each Distribution Date at an annual rate designated as "SUBSERV FEE" on the Mortgage Loan
Schedule.
Supplemental Interest Trust Account: The separate trust account created and
maintained by the Supplemental Interest Trust Trustee pursuant to Section 4.10(a).
Supplemental Interest Trust: The separate trust created and maintain by the
Supplemental Interest Trust Trustee pursuant to Section 4.10(a). The primary activities of
the Supplemental Interest Trust created pursuant to this Agreement shall be:
(i)...holding the Swap Agreement;
(ii)..receiving collections or making payments with respect to the Swap
Agreement; ...... and
(iii).engaging in other activities that are necessary or incidental to
accomplish these . limited purposes, which activities cannot be contrary to the
status of the Supplemental Interest Trust as a qualified special purpose
entity under existing accounting literature.
Supplemental Interest Trust Trustee: As defined in the preamble hereto.
Swap Agreement: The interest rate swap agreement between the Swap Counterparty and
the Supplemental Interest Trust Trustee, on behalf of the Supplemental Interest Trust,
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, attached hereto as Exhibit O.
Swap Agreement Notional Balance: As to the Swap Agreement and each Floating Rate
Payer Payment Date and Fixed Rate Payer Payment Date (each as defined in the Swap
Agreement) the amount set forth on Schedule I to the Swap Agreement for such Floating Rate
Payer Payment Date.
Swap Counterparty: The swap counterparty under the Swap Agreement either (a)
entitled to receive payments from the Supplemental Interest Trust Trustee from amounts
payable by the Supplemental Interest Trust under this Agreement or (b) required to make
payments to the Supplemental Interest Trust Trustee for payment 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 Counterparty shall be Barclays Bank
PLC.
Swap Counterparty Trigger Event: With respect to any Distribution Date, (i) an Event
of Default under the Swap Agreement with respect to which the Swap Counterparty is a
Defaulting Party, (ii) a Termination Event under the Swap Agreement with respect to which
the Swap Counterparty is the sole Affected Party, or (iii) an additional termination event
under the Swap Agreement with respect to which the Swap Counterparty is the sole Affected
Party.
Swap LIBOR: LIBOR as determined pursuant to the Swap Agreement.
Swap Termination Payment: Upon the occurrence of an Early Termination Date, the
payment to be made by the Supplemental Interest Trust Trustee on behalf of the Supplemental
Interest Trust to the Swap Counterparty from payments from the Supplemental Interest Trust,
or by the Swap Counterparty to the Supplemental Interest Trust Trustee for payment 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 any REMIC hereunder due to its
classification as a REMIC 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 Screen Page 3750: As defined in Section 1.02.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or other form
of assignment of any Ownership Interest in a Certificate.
Transfer Affidavit and Agreement: As defined in Section 5.02(f).
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.
Transferring Servicer: As defined in Section 3.23(c).
Trigger Event: A Trigger Event is in effect with respect to any Distribution Date on
or after the Stepdown Date if either (a) the related Sixty-Plus Delinquency Percentage, as
determined on that Distribution Date, equals or exceeds 39.44% of the Senior Enhancement
Percentage for such Distribution Date or (b) on or after the Distribution Date in November
2008, the aggregate amount of Realized Losses on the Mortgage Loans as a percentage of the
Cut-off Date Balance exceeds the applicable amount set forth below:
November 2008 to October 2009: 1.55% with respect to November 2008, plus
an additional 1/12th of 2.00% for each month
thereafter.
November 2009 to October 2010: 3.55% with respect to November 2009, plus
an additional 1/12th of 2.05% for each month
thereafter.
November 2010 to October 2011: 5.60% with respect to November 2010, plus
an additional 1/12th of 1.60% for each month
thereafter.
November 2011 to October 2012: 7.20% with respect to November 2011, plus
an additional 1/12th of 0.95% for each month
thereafter.
November 2012 and thereafter: 8.15%.
Trustee: As defined in the preamble hereto.
Trust Fund: Collectively, the assets of each REMIC hereunder and the assets in the
Supplemental Interest Trust.
Uncertificated Accrued Interest: With respect to any Uncertificated Regular Interest
for any Distribution Date, one month's interest at the related Uncertificated Pass-Through
Rate for such Distribution Date, accrued on the Uncertificated Principal Balance or
Uncertificated Notional Amount, as applicable, immediately prior to such Distribution Date.
Uncertificated Accrued Interest for the Uncertificated Regular Interests shall accrue on
the basis of a 360-day year consisting of twelve 30-day months. For purposes of calculating
the amount of Uncertificated Accrued Interest for the REMIC I Regular Interests for any
Distribution Date, any Prepayment Interest Shortfalls and Relief Act Shortfalls (to the
extent not covered by Compensating Interest) shall be allocated among REMIC I Regular
Interests, pro rata, based on, and to the extent of, Uncertificated Accrued Interest, as
calculated without application of this sentence. For purposes of calculating the amount of
Uncertificated Accrued Interest for the REMIC II Regular Interests for any Distribution
Date, any Prepayment Interest Shortfalls and Relief Act Shortfalls (to the extent not
covered by Compensating Interest) shall be allocated among REMIC II Regular Interests, pro
rata, based on, and to the extent of, Uncertificated Accrued Interest, as calculated
without application of this sentence. For purposes of calculating the amount of
Uncertificated Accrued Interest for the REMIC III Regular Interests for any Distribution
Date, any Prepayment Interest Shortfalls and Relief Act Shortfalls (to the extent not
covered by Compensating Interest) shall be allocated among the REMIC III Regular Interests,
pro rata, based on, and to the extent of, Uncertificated Accrued Interest, as calculated
without application of this sentence. Uncertificated Accrued Interest on REMIC IV Regular
Interest SB-PO shall be zero. Uncertificated Accrued Interest on REMIC IV Regular Interest
SB-IO for each Distribution Date shall equal Accrued Certificate Interest for the Class SB
Certificates.
Uncertificated Notional Amount: With respect to the Class SB Certificates or REMIC
IV Regular Interest SB-IO, immediately prior to any Distribution Date, the aggregate of the
Uncertificated Principal Balances of the REMIC III Regular Interests.
With respect to REMIC II Regular Interest LT-IO and REMIC III Regular Interest LT-IO
and each Distribution Date listed below, the aggregate Uncertificated Principal 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 X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through I-60-A
10 I-10-A through I-60-A
11 I-11-A through I-60-A
12 I-12-A through I-60-A
13 I-13-A through I-60-A
14 I-14-A through I-60-A
15 I-15-A through I-60-A
16 I-16-A through I-60-A
17 I-17-A through I-60-A
18 I-18-A through I-60-A
19 I-19-A through I-60-A
20 I-20-A through I-60-A
21 I-21-A through I-60-A
22 I-22-A through I-60-A
23 I-23-A through I-60-A
24 I-24-A through I-60-A
25 I-25-A through I-60-A
26 I-26-A through I-60-A
27 I-27-A through I-60-A
28 I-28-A through I-60-A
29 I-29-A through I-60-A
30 I-30-A through I-60-A
31 I-31-A through I-60-A
32 I-32-A through I-60-A
33 I-33-A through I-60-A
34 I-34-A through I-60-A
35 I-35-A through I-60-A
36 I-36-A through I-60-A
37 I-37-A through I-60-A
38 I-38-A through I-60-A
39 I-39-A through I-60-A
40 I-40-A through I-60-A
41 I-41-A through I-60-A
42 I-42-A through I-60-A
43 I-43-A through I-60-A
44 I-44-A through I-60-A
45 I-45-A through I-60-A
46 I-46-A through I-60-A
47 I-47-A through I-60-A
48 I-48-A through I-60-A
49 I-49-A through I-60-A
50 I-50-A through I-60-A
51 I-51-A through I-60-A
52 I-52-A through I-60-A
53 I-53-A through I-60-A
54 I-54-A through I-60-A
55 I-55-A through I-60-A
56 I-56-A through I-60-A
57 I-57-A through I-60-A
58 I-58-A through I-60-A
59 I-59-A through I-60-A
60 I-60-A
thereafter $0.00
With respect to REMIC IV Regular Interest IO, immediately prior to any Distribution
Date, an amount equal to the Uncertificated Notional Amount of REMIC III Regular Interest
LT-IO.
Uncertificated Pass-Through Rate: The Uncertificated REMIC I Pass-Through Rate, the
Uncertificated REMIC II Pass-Through Rate or the Uncertificated REMIC III Pass-Through
Rate, as applicable.
Uncertificated Principal Balance: The principal amount of any Uncertificated Regular
Interest outstanding as of any date of determination. The Uncertificated Principal Balance
of each REMIC Regular Interest shall never be less than zero. With respect to REMIC IV
Regular Interest SB-PO the initial amount set forth with respect thereto in the Preliminary
Statement as reduced by distributions deemed made in respect thereof pursuant to
Section 4.02 and Realized Losses allocated thereto pursuant to Section 4.05.
Uncertificated Regular Interests: The REMIC I Regular Interests, the REMIC II Regular
Interests and the REMIC III Regular Interests.
Uncertificated REMIC I Pass-Through Rate: With respect to each REMIC I Regular
Interest ending with the designation "A," a per annum rate equal to the weighted average of
the Net Mortgage Rates on the Mortgage Loans multiplied by two (2), subject to a maximum
rate of 10.42%. With respect to each REMIC 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 on the Mortgage Loans over (ii) 10.42%
and (y) 0.00000%. With respect to REMIC I Regular Interest A-I, the weighted average of
the Net Mortgage Rates on the Mortgage Loans. With respect to REMIC I Regular Interest I,
the weighted average of the Net Mortgage Rates on the Group I Loans. With respect to REMIC
I Regular Interest II, the weighted average of the Net Mortgage Rates on the Group II Loans.
Uncertificated REMIC II Pass-Through Rate: With respect to any Distribution Date and
(i) REMIC II Regular Interests Y-1 and Z-1, the Group I REMIC II Net WAC Rate, (ii) REMIC
II Regular Interests Y-2 and Z-2, the Group II REMIC II Net WAC Rate, and (iii) REMIC II
Regular Interest LT-IO, the excess of (i) the weighted average of the Uncertificated REMIC
I Pass-Through Rates for REMIC I Regular Interests ending with the designation "A," over
(ii) 2 multiplied by Swap LIBOR.
Uncertificated REMIC III Pass-Through Rate: With respect to any Distribution Date
and (i) REMIC III Regular Interests LT1, LT2 and LT-Y1, the Group I REMIC III Net WAC Rate,
(ii) REMIC III Regular Interests LT5, LT6 and LT-Y2, the Group II REMIC III Net WAC Rate,
(iii) REMIC III Regular Interests LT3 and LT7, zero (0.00%), (iv) REMIC III Regular
Interest LT4, twice the Group I REMIC III Net WAC Rate, (v) REMIC II Regular Interest LT8,
twice the Group II REMIC III Net WAC Rate; and (vi) REMIC III Regular Interest LT IO, the
excess of (i) the weighted average of the Uncertificated REMIC I Pass-Through Rates for
REMIC I Regular Interests ending with the designation "A," over (ii) 2 multiplied by Swap
LIBOR.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform Single
Attestation Program for Mortgage Bankers, as published by the Mortgage Bankers Association
of America and effective with respect to fiscal periods ending on or after December 15,
1995.
Uninsured Cause: Any cause of damage to property subject to a Mortgage such that the
complete restoration of such property is not fully reimbursable by the hazard insurance
policies.
United States Person: Either (i) a citizen or resident of the United States, a
corporation, partnership or other entity (treated as a corporation or partnership for
United States federal income tax purposes) created or organized in, or under the laws of,
the United States, any state thereof, or the District of Columbia (except in the case of a
partnership, to the extent provided in Treasury regulations) provided that, for purposes
solely of the restrictions on the transfer of Class R Certificates, 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 by the applicable operative agreement to be
United States Persons, or an estate that is described in Section 7701(a)(30)(D) of the
Code, or a trust that is described in Section 7701(a)(30)(E) of the Code, or (ii) as
defined in Regulation S, as the context may require.
Voting Rights: The portion of the voting rights of all of the Certificates which is
allocated to any Certificate. 98.00% of all of the Voting Rights shall be allocated among
Holders of the Class A Certificates and Class M Certificates, in proportion to the
outstanding Certificate Principal Balances of their respective Certificates; 1.00% of all
of the Voting Rights shall be allocated to the Holders of the Class SB Certificates; and
1.00% of all of the Voting Rights shall be allocated to the Holders of the Class R
Certificates; in each case to be allocated among the Certificates of such Class in
accordance with their respective Percentage Interests.
Section 1.02......Determination of LIBOR.
LIBOR applicable to the calculation of the Pass-Through Rate on the LIBOR
Certificates for any Interest Accrual Period will be determined as of each LIBOR Rate
Adjustment Date. On each LIBOR Rate Adjustment Date, or if such LIBOR Rate Adjustment Date
is not a Business Day, then on the next succeeding Business Day, LIBOR shall be established
by the Trustee and, as to any Interest Accrual Period, will equal the rate for one month
United States dollar deposits that appears on the Telerate Screen Page 3750 as of 11:00
a.m., London time, on such LIBOR Rate Adjustment Date. "Telerate Screen Page 3750" means
the display designated as page 3750 on the Bridge Telerate Service (or such other page as
may replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks). If such rate does not appear on such page (or such other
page as may replace that page on that service, or if such service is no longer offered,
LIBOR shall be so established by use of such other service for displaying LIBOR or
comparable rates as may be selected by the Trustee after consultation with the Master
Servicer), the rate will be the Reference Bank Rate. The "Reference Bank Rate" will be
determined on the basis of the rates at which deposits in U.S. Dollars are offered by the
reference banks (which shall be any three major banks that are engaged in transactions in
the London interbank market, selected by the Trustee after consultation with the Master
Servicer) as of 11:00 a.m., London time, on the LIBOR Rate Adjustment Date to prime banks
in the London interbank market for a period of one month in amounts approximately equal to
the aggregate Certificate Principal Balance of the LIBOR Certificates then outstanding.
The Trustee shall request the principal London office of each of the reference banks to
provide a quotation of its rate. If at least two such quotations are provided, the rate
will be the arithmetic mean of the quotations rounded up to the next multiple of 1/16%. If
on such date fewer than two quotations are provided as requested, the rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York City, selected
by the Trustee after consultation with the Master Servicer, as of 11:00 a.m., New York City
time, on such date for loans in U.S. Dollars to leading European banks for a period of one
month in amounts approximately equal to the aggregate Certificate Principal Balance of the
LIBOR Certificates then outstanding. If no such quotations can be obtained, the rate will
be LIBOR for the prior Distribution Date; provided however, if, under the priorities
described above, LIBOR for a Distribution Date would be based on LIBOR for the previous
Distribution Date for the third consecutive Distribution Date, the Trustee, after
consultation with the Master Servicer, shall select an alternative comparable index (over
which the Trustee 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 LIBOR by the Trustee on any LIBOR Rate Adjustment Date and the
Trustee's subsequent calculation of the Pass-Through Rates applicable to the LIBOR
Certificates for the relevant Interest Accrual Period, in the absence of manifest error,
will be final and binding. Promptly following each LIBOR Rate Adjustment Date the Trustee
shall supply the Master Servicer with the results of its determination of LIBOR on such
date. Furthermore, the Trustee shall supply to any Certificateholder so requesting by
calling 1-800-934-6802, the Pass-Through Rate on the LIBOR Certificates for the current and
the immediately preceding Interest Accrual Period.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof, does hereby
assign to the Trustee in respect of the Trust Fund without recourse all the right, title
and interest of the Depositor in and to (i) the Mortgage Loans, including all interest and
principal on or with respect to the Mortgage Loans due on or after the Cut-off Date (other
than Monthly Payments due in the month of the Cut-off Date); and (ii) all proceeds of the
foregoing. The Depositor, the Master Servicer and the Trustee agree that it is not
intended that any mortgage loan be included in the Trust Fund that is either (i) a
High-Cost Home Loan as defined in the New Jersey Home Ownership Act effective November 27,
2003, (ii) a High-Cost Home Loan as defined in the New Mexico Home Loan Protection Act
effective January 1, 2004, (iii) a High-Cost Home Loan as defined in the Massachusetts
Predatory Home Loan Practices Act effective November 7, 2004 or (iv) a High-Cost Home Loan
as defined in the Indiana High Cost Home Loan Law Act effective January 1, 2005.
(b) In connection with such assignment, and contemporaneously with the delivery of this
Agreement, except as set forth in Section 2.01(c) below and subject to Section 2.01(d)
below, the Depositor does hereby (1) with respect to each Mortgage Loan, deliver to the
Master Servicer (or an Affiliate of the Master Servicer) each of the documents or
instruments described in clause (ii) below (and the Master Servicer shall hold (or cause
such Affiliate to hold) such documents or instruments in trust for the use and benefit of
all present and future Certificateholders), (2) with respect to each MOM Loan, deliver to,
and deposit with, the Trustee, or the Custodian, as the duly appointed agent of the Trustee
for such purpose, the documents or instruments described in clauses (i) and (v) below, (3)
with respect to each Mortgage Loan that is not a MOM Loan but is registered on the MERS(R)
System, deliver to, and deposit with, the Trustee, or the Custodian, as the duly appointed
agent of the Trustee for such purpose, the documents or instruments described in clauses
(i), (iv) and (v) below and (4) with respect to each Mortgage Loan that is not a MOM Loan
and is not registered on the MERS(R)System, deliver to, and deposit with, the Trustee, or
the Custodian, as the duly appointed agent of the Trustee for such purpose, the documents
or instruments described in clauses (i), (iii), (iv) and (v) below.
(i) The original Mortgage Note, endorsed without recourse to the order of the Trustee and
showing an unbroken chain of endorsements from the originator thereof to the Person
endorsing it to the Trustee, or with respect to any Destroyed Mortgage Note, an
original lost note affidavit from the related Seller or Residential Funding stating
that the original Mortgage Note was lost, misplaced or destroyed, together with a
copy of the related Mortgage Note.
(ii) The original Mortgage, noting the presence of the MIN of the Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a
MOM Loan, with evidence of recording indicated thereon, or a copy of the original
Mortgage with evidence of recording indicated thereon.
(iii) The assignment (which may be included in one or more blanket assignments if permitted
by applicable law) of the Mortgage to the Trustee with evidence of recording
indicated thereon or a copy of such assignment with evidence of recording indicated
thereon.
(iv) The original recorded assignment or assignments of the Mortgage showing an unbroken
chain of title from the originator to the Person assigning it to the Trustee (or to
MERS, if the Mortgage Loan is registered on the MERS(R)System and noting the presence
of a MIN) with evidence of recordation noted thereon or attached thereto, or a copy
of such assignment or assignments of the Mortgage with evidence of recording
indicated thereon.
(v) The original of each modification, assumption agreement or preferred loan agreement,
if any, relating to such Mortgage Loan, or a copy of each modification, assumption
agreement or preferred loan agreement.
The Depositor may, in lieu of delivering the original of the documents set forth in
Section 2.01(b)(iii), (iv) and (v) (or copies thereof) to the Trustee or the Custodian,
deliver such documents to the Master Servicer, and the Master Servicer shall hold such
documents in trust for the use and benefit of all present and future Certificateholders
until such time as is set forth in the next sentence. Within thirty Business Days
following the earlier of (i) the receipt of the original of all of the documents or
instruments set forth in Section 2.01(b)(iii), (iv) and (v) (or copies thereof) for any
Mortgage Loan and (ii) a written request by the Trustee to deliver those documents with
respect to any or all of the Mortgage Loans then being held by the Master Servicer, the
Master Servicer shall deliver a complete set of such documents to the Trustee or the
Custodian, as duly appointed agent of the Trustee.
(c) Notwithstanding the provisions of Section 2.01(b), in the event that in connection
with any Mortgage Loan, if the Depositor cannot deliver the original of the Mortgage, any
assignment, modification, assumption agreement or preferred loan agreement (or copy thereof
as permitted by Section 2.01(b)) with evidence of recording thereon concurrently with the
execution and delivery of this Agreement because of (i) a delay caused by the public
recording office where such Mortgage, assignment, modification, assumption agreement or
preferred loan agreement as the case may be, has been delivered for recordation, or (ii) a
delay in the receipt of certain information necessary to prepare the related assignments,
the Depositor shall deliver or cause to be delivered to the Trustee or the respective
Custodian a copy of such Mortgage, assignment, modification, assumption agreement or
preferred loan agreement.
The Depositor shall promptly cause to be recorded in the appropriate public office
for real property records the Assignment referred to in clause (iii) of Section 2.01(b),
except (a) in states where, in an Opinion of Counsel acceptable to the Master Servicer,
such recording is not required to protect the Trustee's interests in the Mortgage Loan or
(b) if MERS is identified on the Mortgage or on a properly recorded assignment of the
Mortgage, as applicable, as the mortgagee of record solely as nominee for Residential
Funding and its successors and assigns. If any Assignment is lost or returned unrecorded
to the Depositor because of any defect therein, the Depositor shall prepare a substitute
Assignment or cure such defect, as the case may be, and cause such Assignment to be
recorded in accordance with this paragraph. The Depositor shall promptly deliver or cause
to be delivered to the applicable person described in Section 2.01(b), any Assignment or
substitute Assignment (or copy thereof) recorded in connection with this paragraph, with
evidence of recording indicated thereon upon receipt thereof from the public recording
office or from the related Subservicer or Seller.
If the Depositor delivers to the Trustee or Custodian any Mortgage Note or Assignment
of Mortgage in blank, the Depositor shall, or shall cause the Custodian to, complete the
endorsement of the Mortgage Note and the Assignment of Mortgage in the name of the Trustee
in conjunction with the Interim Certification issued by the Custodian, as contemplated by
Section 2.02.
In connection with the assignment of any Mortgage Loan registered on the MERS(R)
System, the Depositor further agrees that it will cause, at the Depositor's own expense,
within 30 Business Days after the Closing Date, the MERS(R)System to indicate that such
Mortgage Loans have been assigned by the Depositor 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 Depositor further agrees that it will not, and will not
permit the Master Servicer to, and the Master Servicer agrees that it will not, alter the
codes referenced in this paragraph with respect to any Mortgage Loan during the term of
this Agreement unless and until such Mortgage Loan is repurchased in accordance with the
terms of this Agreement.
(d) It is intended that the conveyances by the Depositor to the Trustee of the Mortgage
Loans as provided for in this Section 2.01 and the Uncertificated Regular Interests be
construed as a sale by the Depositor to the Trustee of the Mortgage Loans and the
Uncertificated Regular Interests for the benefit of the Certificateholders. Further, it is
not intended that any such conveyance be deemed to be a pledge of the Mortgage Loans and
the Uncertificated Regular Interests by the Depositor to the Trustee to secure a debt or
other obligation of the Depositor. Nonetheless, (a) this Agreement is intended to be and
hereby is a security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyances provided for in this Section 2.01 shall be deemed to be
(1) a grant by the Depositor to the Trustee of a security interest in all of the
Depositor's right (including the power to convey title thereto), title and interest,
whether now owned or hereafter acquired, in and to (A) the Mortgage Loans, including the
related Mortgage Note, the Mortgage, any insurance policies and all other documents in the
related Mortgage File, (B) all amounts payable pursuant to the Mortgage Loans or the Swap
Agreement in accordance with the terms thereof, (C) any Uncertificated Regular Interests
and any and all general intangibles, payment intangibles, accounts, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and investment property and other property of whatever kind or
description now existing or hereafter acquired consisting of, arising from or relating to
any of the foregoing, and (D) all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including without
limitation all amounts from time to time held or invested in the Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or other property
and (2) an assignment by the Depositor to the Trustee of any security interest in any and
all of Residential Funding's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to the property described in the
foregoing clauses (1)(A), (B), (C) and (D) granted by Residential Funding to the Depositor
pursuant to the Assignment Agreement; (c) the possession by the Trustee, the Custodian or
any other agent of the Trustee of Mortgage Notes or such other items of property as
constitute instruments, money, payment intangibles, negotiable documents, goods, deposit
accounts, letters of credit, advices of credit, investment property, certificated
securities or chattel paper shall be deemed to be "possession by the secured party," or
possession by a purchaser or a person designated by such secured party, for purposes of
perfecting the security interest pursuant to the Minnesota Uniform Commercial Code and the
Uniform Commercial Code of any other applicable jurisdiction as in effect (including,
without limitation, Sections 8-106, 9-313 and 9-106 thereof); and (d) 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, securities intermediaries, bailees or agents of, or persons holding
for, (as applicable) the Trustee for the purpose of perfecting such security interest under
applicable law.
The Depositor and, at the Depositor's direction, Residential Funding and the Trustee
shall, to the extent consistent with this Agreement, take such reasonable actions as may be
necessary to ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans and the Uncertificated Regular Interests and the other property
described above, 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. Without limiting the generality of the foregoing, the Depositor shall
prepare and deliver to the Trustee not less than 15 days prior to any filing date and, the
Trustee shall forward for filing, or shall cause to be forwarded for filing, at the expense
of the Depositor, all filings necessary to maintain the effectiveness of any original
filings necessary under the Uniform Commercial Code as in effect in any jurisdiction to
perfect the Trustee's security interest in or lien on the Mortgage Loans and the
Uncertificated Regular Interests, as evidenced by an Officers' Certificate of the
Depositor, including without limitation (x) continuation statements, and (y) such other
statements as may be occasioned by (1) any change of name of Residential Funding, the
Depositor or the Trustee (such preparation and filing shall be at the expense of the
Trustee, if occasioned by a change in the Trustee's name), (2) any change of location of
the place of business or the chief executive office of Residential Funding or the
Depositor, (3) any transfer of any interest of Residential Funding or the Depositor in any
Mortgage Loan or (4) any transfer of any interest of Residential Funding or the Depositor
in any Uncertificated Regular Interests.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans subject to a
Custodial Agreement, and based solely upon a receipt or certification executed by the
Custodian, receipt by the respective Custodian as the duly appointed agent of the Trustee)
of the documents referred to in Section 2.01(b)(i) above (except that for purposes of such
acknowledgement only, a Mortgage Note may be endorsed in blank and an Assignment of
Mortgage may be in blank) and declares that it, or the Custodian as its agent, holds and
will hold such documents and the other documents constituting a part of the Custodial Files
delivered to it, or a Custodian as its agent, in trust for the use and benefit of all
present and future Certificateholders. The Trustee or Custodian (the Custodian being so
obligated under a Custodial Agreement) agrees, for the benefit of Certificateholders, to
review each Custodial File delivered to it pursuant to Section 2.01(b) within 90 days after
the Closing Date to ascertain that all required documents (specifically as set forth in
Section 2.01(b)), have been executed and received, and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule, as supplemented, that have been
conveyed to it, and to deliver to the Trustee a certificate (the "Interim Certification")
to the effect that all documents required to be delivered pursuant to Section 2.01(b) above
have been executed and received and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, except for any exceptions listed on Schedule A
attached to such Interim Certification. Upon delivery of the Custodial Files by the
Depositor or the Master Servicer, the Trustee shall acknowledge receipt (or, with respect
to Mortgage Loans subject to a Custodial Agreement, and based solely upon a receipt or
certification executed by the Custodian, receipt by the respective Custodian as the duly
appointed agent of the Trustee) of the documents referred to in Section 2.01(b) above.
If the Custodian, as the Trustee's agent, finds any document or documents
constituting a part of a Custodial File to be missing or defective, upon receipt of
notification from the Custodian as specified in the succeeding sentence, the Trustee shall
promptly so notify or cause the Custodian to notify the Master Servicer and the Depositor.
Pursuant to Section 2.3 of the Custodial Agreement, the Custodian will notify the Master
Servicer, the Depositor and the Trustee of any such omission or defect found by it in
respect of any Custodial File held by it in respect of the items received by it pursuant to
the Custodial Agreement. If such omission or defect materially and adversely affects the
interests in the related Mortgage Loan of the Certificateholders, the Master Servicer shall
promptly notify the related Subservicer or Seller of such omission or defect and request
that such Subservicer or Seller correct or cure such omission or defect within 60 days from
the date the Master Servicer was notified of such omission or defect and, if such
Subservicer or Seller does not correct or cure such omission or defect within such period,
that such Subservicer or Seller purchase such Mortgage Loan from the Trust Fund at its
Purchase Price, in either case within 90 days from the date the Master Servicer was
notified of such omission or defect; provided that if the omission or defect would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3)
of the Code, any such cure or repurchase must occur within 90 days from the date such
breach was discovered. The Purchase Price for any such Mortgage Loan shall be deposited or
caused to be deposited by the Master Servicer in the Custodial Account maintained by it
pursuant to Section 3.07 and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Master Servicer, the Trustee or the Custodian,
as the case may be, shall release the contents of any related Mortgage File in its
possession to the owner of such Mortgage Loan (or such owner's designee) and the Trustee
shall execute and deliver such instruments of transfer or assignment prepared by the Master
Servicer, in each case without recourse, as shall be necessary to vest in the Subservicer
or Seller or its designee, as the case may be, any Mortgage Loan released pursuant hereto
and thereafter such Mortgage Loan shall not be part of the Trust Fund. In furtherance of
the foregoing and Section 2.04, if the Subservicer or Seller or Residential Funding that
repurchases the Mortgage Loan is not a member of MERS and the Mortgage is registered on the
MERS(R)System, the Master Servicer, at its own expense and without any right of
reimbursement, shall cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to such Subservicer or Seller or
Residential Funding and shall cause such Mortgage to be removed from registration on the
MERS(R)System in accordance with MERS' rules and regulations. It is understood and agreed
that the obligation of the Subservicer or Seller, to so cure or purchase any Mortgage Loan
as to which a material and adverse defect in or omission of a constituent document exists
shall constitute the sole remedy respecting such defect or omission available to
Certificateholders or the Trustee on behalf of Certificateholders.
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the
Depositor.
(a) The Master Servicer hereby represents and warrants to the Trustee for the benefit of
the Certificateholders that as of the Closing Date:
(i) The Master Servicer is a limited liability company duly organized, validly existing
and in good standing under the laws governing its creation and existence and is or
will be in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage Loan in
accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not violate the
Master Servicer's Certificate of Formation or Limited Liability Company Agreement or
constitute a material default (or an event which, with notice or lapse of time, or
both, would constitute a material default) under, or result in the material breach
of, any material contract, agreement or other instrument to which the Master Servicer
is a party or which may be applicable to the Master Servicer or any of its assets;
(iii) This Agreement, assuming due authorization, execution and delivery by the Trustee and
the Depositor, constitutes a valid, legal and binding obligation of the Master
Servicer, enforceable against it in accordance with the terms hereof subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(iv) The Master Servicer is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would materially and
adversely affect the condition (financial or other) or operations of the Master
Servicer or its properties or might have consequences that would materially adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of the Master Servicer's knowledge,
threatened against the Master Servicer which would prohibit its entering into this
Agreement or performing its obligations under this Agreement;
(vi) The Master Servicer shall comply in all material respects in the performance of this
Agreement with all reasonable rules and requirements of each insurer under each
Required Insurance Policy;
(vii) No information, certificate of an officer, statement furnished in writing or report
delivered to the Depositor, any Affiliate of the Depositor or the Trustee by the
Master Servicer will, to the knowledge of the Master Servicer, contain any untrue
statement of a material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading;
(viii) The Master Servicer has examined each existing, and will examine each new,
Subservicing Agreement and is or will be familiar with the terms thereof. The terms
of each existing Subservicing Agreement and each designated Subservicer are
acceptable to the Master Servicer and any new Subservicing Agreements will comply
with the provisions of Section 3.02;
(ix) The Master Servicer is a member of MERS in good standing, and will comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS; and
(x) The Servicing Guide of the Master Servicer requires that the Subservicer for each
Mortgage Loan accurately and fully reports its borrower credit files to each of the
Credit Repositories in a timely manner.
It is understood and agreed that the representations and warranties set forth in this
Section 2.03(a) shall survive delivery of the respective Custodial Files to the Trustee or
the Custodian. Upon discovery by either the Depositor, the Master Servicer, the Trustee or
the Custodian of a breach of any representation or warranty set forth in this
Section 2.03(a) which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties (the Custodian being so obligated under a
Custodial Agreement). Within 90 days of its discovery or its receipt of notice of such
breach, the Master Servicer shall either (i) cure such breach in all material respects or
(ii) to the extent that such breach is with respect to a Mortgage Loan or a related
document, purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02; provided that if the breach would cause the Mortgage Loan
to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code, any
such cure or repurchase must occur within 90 days from the date such breach was
discovered. The obligation of the Master Servicer to cure such breach or to so purchase
such Mortgage Loan shall constitute the sole remedy in respect of a breach of a
representation and warranty set forth in this Section 2.03(a) available to the
Certificateholders or the Trustee on behalf of the Certificateholders.
(b) The Depositor hereby represents and warrants to the Trustee for the benefit of the
Certificateholders that as of the Closing Date (or, if otherwise specified below, as of the
date so specified): (i) immediately prior to the conveyance of the Mortgage Loans to the
Trustee, the Depositor had good title to, and was the sole owner of, each Mortgage Loan
free and clear of any pledge, lien, encumbrance or security interest (other than rights to
servicing and related compensation) and such conveyance validly transfers ownership of the
Mortgage Loans to the Trustee free and clear of any pledge, lien, encumbrance or security
interest; and (ii) each Mortgage Loan constitutes a "qualified mortgage" under
Section 860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1), (2), (4),
(5), (6), (7) and (9), without reliance on the provisions of Treasury
Regulation Section 1.860G-2(a)(3) or Treasury Regulation Section 1.860G-2(f)(2) or any
other provision that would allow a Mortgage Loan to be treated as a "qualified mortgage"
notwithstanding its failure to meet the requirements of Section 860G(a)(3)(A) of the Code
and Treasury Regulation Section 1.860G-2(a)(1), (2), (4), (5), (6), (7) and (9).
It is understood and agreed that the representations and warranties set forth in this
Section 2.03(b) shall survive delivery of the respective Custodial Files to the Trustee or
the Custodian.
Upon discovery by any of the Depositor, the Master Servicer, the Trustee or the
Custodian of a breach of any of the representations and warranties set forth in this
Section 2.03(b) which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties (the Custodian being so obligated under a
Custodial Agreement); provided, however, that in the event of a breach of the
representation and warranty set forth in Section 2.03(b)(ii), the party discovering such
breach shall give such notice within five days of discovery. Within 90 days of its
discovery or its receipt of notice of breach, the Depositor shall either (i) cure such
breach in all material respects or (ii) purchase such Mortgage Loan from the Trust Fund at
the Purchase Price and in the manner set forth in Section 2.02; provided that the Depositor
shall have the option to substitute a Qualified Substitute Mortgage Loan or Loans for such
Mortgage Loan if such substitution occurs within two years following the Closing Date;
provided that if the omission or defect would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure,
substitution or repurchase must occur within 90 days from the date such breach was
discovered. Any such substitution shall be effected by the Depositor under the same terms
and conditions as provided in Section 2.04 for substitutions by Residential Funding. It is
understood and agreed that the obligation of the Depositor to cure such breach or to so
purchase or substitute for any Mortgage Loan as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on behalf of the Certificateholders. Notwithstanding the
foregoing, the Depositor shall not be required to cure breaches or purchase or substitute
for Mortgage Loans as provided in this Section 2.03(b) if the substance of the breach of a
representation set forth above also constitutes fraud in the origination of the Mortgage
Loan.
Section 2.04 Representations and Warranties of Sellers.
The Depositor, as assignee of Residential Funding under the Assignment Agreement,
hereby assigns to the Trustee for the benefit of the Certificateholders all of its right,
title and interest in respect of the Assignment Agreement applicable to a Mortgage Loan as
and to the extent set forth in the Assignment Agreement. Insofar as the Assignment
Agreement relates to the representations and warranties made by Residential Funding in
respect of such Mortgage Loan and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced by the
Master Servicer on behalf of the Trustee and the Certificateholders. Upon the discovery by
the Depositor, the Master Servicer, the Trustee or the Custodian of a breach of any of the
representations and warranties made in the Assignment Agreement in respect of any Mortgage
Loan or of any Repurchase Event which materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the party discovering such breach shall give
prompt written notice to the other parties (the Custodian being so obligated under a
Custodial Agreement). The Master Servicer shall promptly notify Residential Funding of
such breach or Repurchase Event and request that Residential Funding either (i) cure such
breach or Repurchase Event in all material respects within 90 days from the date the Master
Servicer was notified of such breach or Repurchase Event or (ii) purchase such Mortgage
Loan from the Trust Fund at the Purchase Price and in the manner set forth in Section 2.02.
Upon the discovery by the Depositor, the Master Servicer, the Trustee or the
Custodian of a breach of any of such representations and warranties set forth in the
Assignment Agreement in respect of any Mortgage Loan which materially and adversely affects
the interests of the Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties (the Custodian being so
obligated under a Custodial Agreement). The Master Servicer shall promptly notify
Residential Funding of such breach of a representation or warranty set forth in the
Assignment Agreement and request that Residential Funding either (i) cure such breach in
all material respects within 90 days from the date the Master Servicer was notified of such
breach or (ii) purchase such Mortgage Loan from the Trust Fund within 90 days of the date
of such written notice of such breach at the Purchase Price and in the manner set forth in
Section 2.02; provided that Residential Funding shall have the option to substitute a
Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan if such substitution
occurs within two years following the Closing Date; provided that if the breach would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3)
of the Code, any such cure or substitution must occur within 90 days from the date the
breach was discovered. If the breach of representation and warranty that gave rise to the
obligation to repurchase or substitute a Mortgage Loan pursuant to Section 4 of the
Assignment Agreement was the representation and warranty set forth in clause (xlv) of
Section 4 thereof, then the Master Servicer shall request that Residential Funding pay to
the Trust Fund, concurrently with and in addition to the remedies provided in the preceding
sentence, an amount equal to any liability, penalty or expense that was actually incurred
and paid out of or on behalf of the Trust Fund, and that directly resulted from such
breach, or if incurred and paid by the Trust Fund thereafter, concurrently with such
payment. In the event that Residential Funding elects to substitute a Qualified Substitute
Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this Section 2.04,
Residential Funding shall deliver to the Trustee for the benefit of the Certificateholders
with respect to such Qualified Substitute Mortgage Loan or Loans, the original Mortgage
Note, the Mortgage, an Assignment of the Mortgage in recordable form, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note endorsed
as required by Section 2.01. No substitution will be made in any calendar month after the
Determination Date for such month. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall not be part of the Trust Fund
and will be retained by the Master Servicer and remitted by the Master Servicer to
Residential Funding on the next succeeding Distribution Date. For the month of
substitution, distributions to the Certificateholders will include the Monthly Payment due
on a Deleted Mortgage Loan for such month and thereafter Residential Funding shall be
entitled to retain all amounts received in respect of such Deleted Mortgage Loan. The
Master Servicer shall amend or cause to be amended the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Deleted Mortgage Loan and
the substitution of the Qualified Substitute Mortgage Loan or Loans and the Master Servicer
shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon such substitution,
the Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement and the related Subservicing Agreement in all respects, Residential Funding shall
be deemed to have made the representations and warranties with respect to the Qualified
Substitute Mortgage Loan (other than those of a statistical nature) contained in the
Assignment Agreement as of the date of substitution, and the covenants, representations and
warranties set forth in this Section 2.04, and in Section 2.03(b) hereof.
In connection with the substitution of one or more Qualified Substitute Mortgage
Loans for one or more Deleted Mortgage Loans, the Master Servicer shall determine the
amount (if any) by which the aggregate principal balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal
Balance of all such Deleted Mortgage Loans (in each case after application of the principal
portion of the Monthly Payments due in the month of substitution that are to be distributed
to the Certificateholders in the month of substitution). Residential Funding shall deposit
or cause the related Seller to deposit the amount of such shortfall into the Custodial
Account on the day of substitution, without any reimbursement therefor. Residential
Funding shall give notice in writing to the Trustee of such event, which notice shall be
accompanied by an Officers' Certificate as to the calculation of such shortfall and
(subject to Section 10.01(f)) by an Opinion of Counsel to the effect that such substitution
will not cause (a) any federal tax to be imposed on the Trust Fund, 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 portion of any REMIC created hereunder to fail to qualify as a REMIC at any
time that any Certificate is outstanding.
It is understood and agreed that the obligation of the Seller or Residential Funding,
as the case may be, to cure such breach or purchase (and in the case of Residential Funding
to substitute for) such Mortgage Loan as to which such a breach has occurred and is
continuing and to make any additional payments required under the Assignment Agreement in
connection with a breach of the representation and warranty in clause (xlvii) of Section 4
thereof shall constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on behalf of the Certificateholders. If the Master
Servicer is Residential Funding, then the Trustee shall also have the right to give the
notification and require the purchase or substitution provided for in the second preceding
paragraph in the event of such a breach of a representation or warranty made by Residential
Funding in the Assignment Agreement. In connection with the purchase of or substitution
for any such Mortgage Loan by Residential Funding, the Trustee shall assign to Residential
Funding all of the right, title and interest in respect of the Seller's Agreement and the
Assignment Agreement applicable to such Mortgage Loan.
Section 2.05 Execution and Authentication of Certificates; Conveyance of
Uncertificated REMIC Regular Interests.
(a) The Trustee acknowledges the assignment to it of the Mortgage Loans and the delivery
of the Custodial Files to it, or the Custodian on its behalf, subject to any exceptions
noted, together with the assignment to it of all other assets included in the Trust Fund,
receipt of which is hereby acknowledged. Concurrently with such delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed and caused to be authenticated and delivered to or
upon the order of the Depositor the Certificates in authorized denominations which evidence
ownership of the entire Trust Fund.
(b) The Depositor, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Trustee without recourse
all the right, title and interest of the Depositor in and to the REMIC I Regular Interests,
the REMIC II Regular Interests and the REMIC III Regular Interests for the benefit of the
Holders of each Class of Certificates (other than the Class R Certificates in respect of
Components I and II thereof). The Trustee acknowledges receipt of the REMIC I Regular
Interests, REMIC II Regular Interests and REMIC III Regular Interests, and declares that it
holds and will hold the same in trust for the exclusive use and benefit of the Holders of
each Class of Certificates (other than the Class R Certificates in respect of Components I
and II thereof). The interests evidenced by Component IV of the Class R Certificates,
together with the REMIC IV Regular Interests, constitute the entire beneficial ownership
interest in REMIC IV.
Section 2.06 Purposes and Powers of the Trust.
The purpose of the trust, as created hereunder, is to engage in the following
activities:
(a) to sell the Certificates to the Depositor in exchange for the Mortgage Loans;
(b) to enter into and perform its obligations under this Agreement;
(c) to engage in those activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith; and
(d) subject to compliance with this Agreement, to engage in such other activities as may
be required in connection with conservation of the Trust Fund and the making of
distributions to the Certificateholders.
The trust is hereby authorized to engage in the foregoing activities.
Notwithstanding the provisions of Section 11.01, the trust shall not engage in any activity
other than in connection with the foregoing or other than as required or authorized by the
terms of this Agreement while any Certificate is outstanding, and this Section 2.06 may not
be amended, without the consent of the Certificateholders evidencing a majority of the
aggregate Voting Rights of the Certificates.
Section 2.07 Agreement Regarding Ability to Disclose.
The Depositor, the Master Servicer and the Trustee hereby agree that, notwithstanding
any other express or implied agreement to the contrary, any and all Persons, and any of
their respective employees, representatives, and other agents may disclose, immediately
upon commencement of discussions, to any and all Persons, without limitation of any kind,
the tax treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to any of them relating to
such tax treatment and tax structure. For purposes of this paragraph, the terms "tax,"
"tax treatment," "tax structure," and "tax benefit" are defined under Treasury Regulationss.
1.6011-4(c).
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Act as Servicer.
(a) The Master Servicer shall service and administer the Mortgage Loans in accordance
with the terms of this Agreement and the respective Mortgage Loans, following such
procedures as it would employ in its good faith business judgment and which are normal and
usual in its general mortgage servicing activities, and shall have full power and
authority, acting alone or through Subservicers as provided in Section 3.02, to do any and
all things which it may deem necessary or desirable in connection with such servicing and
administration. Without limiting the generality of the foregoing, the Master Servicer in
its own name or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Master Servicer or the Subservicer, as the case may be, believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, or of consent to assumption or
modification in connection with a proposed conveyance, or of assignment of any Mortgage and
Mortgage Note in connection with the repurchase of a Mortgage Loan and all other comparable
instruments, or with respect to the modification or re-recording of a Mortgage for the
purpose of correcting the Mortgage, the subordination of the lien of the Mortgage in favor
of a public utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the commencement, prosecution or completion of
judicial or non-judicial foreclosure, the conveyance of a Mortgaged Property to the related
insurer, the acquisition of any property acquired by foreclosure or deed in lieu of
foreclosure, or the management, marketing and conveyance of any property acquired by
foreclosure or deed in lieu of foreclosure with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Master Servicer further is authorized and
empowered by the Trustee, on behalf of the Certificateholders and the Trustee, in its own
name or in the name of the Subservicer, when the Master Servicer or the Subservicer, as the
case may be, believes it is appropriate in its best judgment to register any Mortgage Loan
on the MERS(R)System, or cause the removal from the registration of any Mortgage Loan on the
MERS(R)System, to execute and deliver, on behalf of the Trustee and the Certificateholders
or any of them, any and all instruments of assignment and other comparable instruments with
respect to such assignment or re-recording of a Mortgage in the name of MERS, solely as
nominee for the Trustee and its successors and assigns. Any expenses incurred in
connection with the actions described in the preceding sentence shall be borne by the
Master Servicer in accordance with Section 3.16(c), with no right of reimbursement;
provided, that if, as a result of MERS discontinuing or becoming unable to continue
operations in connection with the MERS(R)System, it becomes necessary to remove any Mortgage
Loan from registration on the MERS(R)System and to arrange for the assignment of the related
Mortgages to the Trustee, then any related expenses shall be reimbursable to the Master
Servicer as set forth in Section 3.10(a)(ii). Notwithstanding the foregoing, subject to
Section 3.07(a), the Master Servicer shall not permit any modification with respect to any
Mortgage Loan that would both constitute a sale or exchange of such Mortgage Loan within
the meaning of Section 1001 of the Code and any proposed, temporary or final regulations
promulgated thereunder (other than in connection with a proposed conveyance or assumption
of such Mortgage Loan that is treated as a Principal Prepayment in Full pursuant to
Section 3.13(d) hereof) and cause any REMIC created hereunder to fail to qualify as a REMIC
under the Code. The Trustee shall furnish the Master Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Master Servicer to service and
administer the Mortgage Loans. The Trustee shall not be liable for any action taken by the
Master Servicer or any Subservicer pursuant to such powers of attorney or other documents.
In servicing and administering any Nonsubserviced Mortgage Loan, the Master Servicer shall,
to the extent not inconsistent with this Agreement, comply with the Program Guide as if it
were the originator of such Mortgage Loan and had retained the servicing rights and
obligations in respect thereof.
If the Mortgage relating to a Mortgage Loan did not have a lien senior to the
Mortgage Loan on the related Mortgaged Property as of the Cut-off Date, then the Master
Servicer, in such capacity, may not consent to the placing of a lien senior to that of the
Mortgage on the related Mortgaged Property. If the Mortgage relating to a Mortgage Loan
had a lien senior to the Mortgage Loan on the related Mortgaged Property as of the Cut-off
Date, then the Master Servicer, in such capacity, may consent to the refinancing of the
prior senior lien, provided that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such refinancing is
less than the original debt-to-income ratio as set forth on the Mortgage Loan
Schedule; provided, however, that in no instance shall the resulting Combined
Loan-to-Value Ratio ("Combined Loan-to-Value Ratio") of such Mortgage Loan be higher
than that permitted by the Program Guide; or
(B) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan is
no higher than the Combined Loan-to-Value Ratio prior to such refinancing; provided,
however, if such refinanced mortgage loan is a "rate and term" mortgage loan (meaning, the
Mortgagor does not receive any cash from the refinancing), the Combined Loan-to-Value Ratio
may increase to the extent of either (x) the reasonable closing costs of such refinancing
or (y) any decrease in the value of the related Mortgaged Property, if the Mortgagor is in
good standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate existing senior lien, the
maximum interest rate, for the loan evidencing the refinanced senior lien is no more
than 2.0% higher than the interest rate or the maximum interest rate, as the case may
be, on the loan evidencing the existing senior lien immediately prior to the date of
such refinancing; provided, however (A) if the loan evidencing the existing senior
lien prior to the date of refinancing has an adjustable rate and the loan evidencing
the refinanced senior lien has a fixed rate, then the current interest rate on the
loan evidencing the refinanced senior lien may be up to 2.0% higher than the
then-current loan rate of the loan evidencing the existing senior lien and (B) if the
loan evidencing the existing senior lien prior to the date of refinancing has a fixed
rate and the loan evidencing the refinanced senior lien has an adjustable rate, then
the maximum interest rate on the loan evidencing the refinanced senior lien shall be
less than or equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject to negative
amortization.
(b) The Master Servicer shall, to the extent consistent with the servicing standards set
forth herein, take whatever actions as may be necessary to file a claim under or enforce or
allow the Trustee to file a claim under or enforce any title insurance policy with respect
to any Mortgage Loan including, without limitation, joining in or causing any Seller or
Subservicer (or any other party in possession of any title insurance policy) to join in any
claims process, negotiations, actions or proceedings necessary to make a claim under or
enforce any title insurance policy. Notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Master Servicer, reasonably
foreseeable) make or permit any modification, waiver, or amendment of any term of any
Mortgage Loan that would both (i) effect an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or final, temporary or proposed Treasury regulations
promulgated thereunder) (other than in connection with a proposed conveyance or assumption
of such Mortgage Loan that is treated as a Principal Prepayment in Full pursuant to
Section 3.13(d) hereof) and (ii) cause any REMIC formed 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.
(c) In connection with servicing and administering the Mortgage Loans, the Master
Servicer and any Affiliate of the Master Servicer (i) may perform services such as
appraisals and brokerage services that are customarily provided by Persons other than
servicers of mortgage loans, and shall be entitled to reasonable compensation therefor in
accordance with Section 3.10 and (ii) may, at its own discretion and on behalf of the
Trustee, obtain credit information in the form of a "credit score" from a Credit Repository.
(d) All costs incurred by the Master Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on the properties subject to the Mortgage Loans shall not,
for the purpose of calculating monthly distributions to the Certificateholders, be added to
the amount owing under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loan so permit, and such costs shall be recoverable to the extent permitted by
Section 3.10(a)(ii).
(e) The Master Servicer may enter into one or more agreements in connection with the
offering of pass-through certificates evidencing interests in one or more of the
Certificates providing for the payment by the Master Servicer of amounts received by the
Master Servicer as servicing compensation hereunder and required to cover certain
Prepayment Interest Shortfalls on the Mortgage Loans, which payment obligation will
thereafter be an obligation of the Master Servicer hereunder.
(f) The relationship of the Master Servicer (and of any successor to the Master Servicer)
to the Depositor under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
(g) The Master Servicer shall comply with the terms of Section 9 of the Assignment
Agreement.
Section 3.02 Subservicing Agreements Between Master Servicer and Subservicers;
Enforcement of Subservicers' Obligations.
(a) The Master Servicer may continue in effect Subservicing Agreements entered into by
Residential Funding and Subservicers prior to the execution and delivery of this Agreement,
and may enter into new Subservicing Agreements with Subservicers, for the servicing and
administration of all or some of the Mortgage Loans. Each Subservicer shall be either (i)
an institution the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing mortgage loans, and in either case
shall be authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent required by
applicable law to enable the Subservicer to perform its obligations hereunder and under the
Subservicing Agreement, and in either case shall be a Xxxxxxx Mac, Xxxxxx Mae or HUD
approved mortgage servicer. Each Subservicer of a Mortgage Loan shall be entitled to
receive and retain, as provided in the related Subservicing Agreement and in Section 3.07,
the related Subservicing Fee from payments of interest received on such Mortgage Loan after
payment of all amounts required to be remitted to the Master Servicer in respect of such
Mortgage Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage Loan, the Master
Servicer shall be entitled to receive and retain an amount equal to the Subservicing Fee
from payments of interest. Unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Master Servicer in servicing the Mortgage
Loans include actions taken or to be taken by a Subservicer on behalf of the Master
Servicer. Each Subservicing Agreement will be upon such terms and conditions as are
generally required by, permitted by or consistent with the Program Guide and are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer have
agreed. With the approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain obligated under the
related Subservicing Agreement. The Master Servicer and a Subservicer may enter into
amendments thereto or a different form of Subservicing Agreement, and the form referred to
or included in the Program Guide is merely provided for information and shall not be deemed
to limit in any respect the discretion of the Master Servicer to modify or enter into
different Subservicing Agreements; provided, however, that any such amendments or different
forms shall be consistent with and not violate the provisions of either this Agreement or
the Program Guide in a manner which would materially and adversely affect the interests of
the Certificateholders. The Program Guide and any other Subservicing Agreement entered
into between the Master Servicer and any Subservicer shall require the Subservicer to
accurately and fully report its borrower credit files to each of the Credit Repositories in
a timely manner.
(b) As part of its servicing activities hereunder, the Master Servicer, for the benefit
of the Trustee and the Certificateholders, shall use its best reasonable efforts to enforce
the obligations of each Subservicer under the related Subservicing Agreement and of each
Seller under the related Seller's Agreement, to the extent that the non-performance of any
such obligation would have a material and adverse effect on a Mortgage Loan, including,
without limitation, the obligation to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a representation
or warranty, as described in Section 2.04. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Subservicing Agreements or
Seller's Agreements, as appropriate, 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
would employ in its good faith business judgment and which are normal and usual in its
general mortgage servicing activities. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement to the extent, if any, that such recovery exceeds
all amounts due in respect of the related Mortgage Loan or (ii) from a specific recovery of
costs, expenses or attorneys fees against the party against whom such enforcement is
directed. For purposes of clarification only, the parties agree that the foregoing is not
intended to, and does not, limit the ability of the Master Servicer to be reimbursed for
expenses that are incurred in connection with the enforcement of a Seller's obligations and
are reimbursable pursuant to Section 3.10(a)(vii).
Section 3.03 Successor Subservicers.
The Master Servicer shall be entitled to terminate any Subservicing Agreement that
may exist in accordance with the terms and conditions of such Subservicing Agreement and
without any limitation by virtue of this Agreement; provided, however, that in the event of
termination of any Subservicing Agreement by the Master Servicer or the Subservicer, the
Master Servicer shall either act as servicer of the related Mortgage Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Servicer or any Affiliate of Residential
Funding acts as servicer, it will not assume liability for the representations and
warranties of the Subservicer which it replaces. If the Master Servicer enters into a
Subservicing Agreement with a successor Subservicer, the Master Servicer shall use
reasonable efforts to have the successor Subservicer assume liability for the
representations and warranties made by the terminated Subservicer in respect of the related
Mortgage Loans and, in the event of any such assumption by the successor Subservicer, the
Master Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
Section 3.04 Liability of the Master Servicer.
Notwithstanding any Subservicing Agreement, any of the provisions of this Agreement
relating to agreements or arrangements between the Master Servicer or a Subservicer or
reference to actions taken through a Subservicer or otherwise, the Master Servicer shall
remain obligated and liable to the Trustee, and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section 3.01
without diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer or the
Depositor and to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a Subservicer or Seller for
indemnification of the Master Servicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
Section 3.05 No Contractual Relationship Between Subservicer and Trustee or
Certificateholders.
Any Subservicing Agreement that may be entered into and any other transactions or
services relating to the Mortgage Loans involving a Subservicer in its capacity as such and
not as an originator shall be deemed to be between the Subservicer and the Master Servicer
alone, and the Trustee and Certificateholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the Subservicer
in its capacity as such except as set forth in Section 3.06. The foregoing provision shall
not in any way limit a Subservicer's obligation to cure an omission or defect or to
repurchase a Mortgage Loan as referred to in Section 2.02 hereof.
Section 3.06 Assumption or Termination of Subservicing Agreements by Trustee.
(a) In the event the Master Servicer shall for any reason no longer be the master
servicer (including by reason of an Event of Default), the Trustee, as successor Master
Servicer, its designee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer under each Subservicing Agreement that may have been
entered into. The Trustee, its designee or the successor servicer for the Trustee shall be
deemed to have assumed all of the Master Servicer's interest therein and to have replaced
the Master Servicer as a party to the Subservicing Agreement to the same extent as if the
Subservicing Agreement had been assigned to the assuming party except that the Master
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreement.
(b) The Master Servicer shall, upon request of the Trustee but at the expense of the
Master Servicer, deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect the orderly
and efficient transfer of each Subservicing Agreement to the assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments; Deposits to Custodial
Account.
(a) The Master Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions of any
related Primary Insurance Policy, follow such collection procedures as it would employ in
its good faith business judgment and which are normal and usual in its general mortgage
servicing activities. Consistent with the foregoing, the Master Servicer or a Subservicer
may in its discretion (subject to the terms and conditions of the Assignment Agreement)
(i) waive any late payment charge or any prepayment charge or penalty interest in
connection with the prepayment of a Mortgage Loan and (ii) extend the Due Date for payments
due on a Mortgage Loan in accordance with the Program Guide, provided, however, that the
Master Servicer shall first determine that any such waiver or extension will not impair the
coverage of any related Primary Insurance Policy or materially adversely affect the lien of
the related Mortgage. Notwithstanding anything in this Section to the contrary, the Master
Servicer or any Subservicer shall not enforce any prepayment charge to the extent that such
enforcement would violate any applicable law. In the event of any such arrangement, the
Master Servicer shall make timely advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements unless otherwise agreed to by the
Holders of the Classes of Certificates affected thereby; provided, however, that no such
extension shall be made if any advance would be a Nonrecoverable Advance. Consistent with
the terms of this Agreement, the Master Servicer may also waive, modify or vary any term of
any Mortgage Loan or consent to the postponement of strict compliance with any such term or
in any manner grant indulgence to any Mortgagor if in the Master 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), provided, however, that the Master Servicer may not
modify materially or permit any Subservicer to modify any Mortgage Loan, including without
limitation any modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related Mortgage
Loan or except in connection with prepayments to the extent that such reamortization is not
inconsistent with the terms of the Mortgage Loan), capitalize any amounts owing on the
Mortgage Loan by adding such amount to the outstanding principal balance of the Mortgage
Loan, or extend the final maturity date of such Mortgage Loan, unless such Mortgage Loan is
in default or, in the judgment of the Master Servicer, such default is reasonably
foreseeable. No such modification shall reduce the Mortgage Rate on a Mortgage Loan below
the greater of (A) one-half of the Mortgage Rate as in effect on the Cut-off Date and
(B) one-half of the Mortgage Rate as in effect on the date of such modification, but not
less than the sum of the Servicing Fee Rate and the per annum rate at which the
Subservicing Fee accrues. The final maturity date for any Mortgage Loan shall not be
extended beyond the Maturity Date. Also, the aggregate principal balance of all Reportable
Modified Mortgage Loans subject to Servicing Modifications (measured at the time of the
Servicing Modification and after giving effect to any Servicing Modification) can be no
more than five percent of the aggregate principal balance of the Mortgage Loans as of the
Cut-off Date, provided, that such limit may be increased from time to time if each Rating
Agency provides written confirmation that an increase in excess of that limit will not
reduce the rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency. In addition, any amounts owing on a Mortgage Loan added
to the outstanding principal balance of such Mortgage Loan must be fully amortized over the
term of such Mortgage Loan, and such amounts may be added to the outstanding principal
balance of a Mortgage Loan only once during the life of such Mortgage Loan. Also, the
addition of such amounts described in the preceding sentence shall be implemented in
accordance with the Program Guide and may be implemented only by Subservicers that have
been approved by the Master Servicer for such purposes. In connection with any Curtailment
of a Mortgage Loan, the Master Servicer, to the extent not inconsistent with the terms of
the Mortgage Note and local law and practice, may permit the Mortgage Loan to be
re-amortized such that the Monthly Payment is recalculated as an amount that will fully
amortize the remaining principal balance thereof by the original maturity date based on the
original Mortgage Rate; provided, that such reamortization shall not be permitted if it
would constitute a reissuance of the Mortgage Loan for federal income tax purposes.
(b) The Master Servicer shall establish and maintain a Custodial Account in which the
Master Servicer shall deposit or cause to be deposited on a daily basis, except as
otherwise specifically provided herein, the following payments and collections remitted by
Subservicers or received by it in respect of the Mortgage Loans subsequent to the Cut-off
Date (other than in respect of Monthly Payments due before or in the month of the Cut-off
Date):
(i) All payments on account of principal, including Principal Prepayments made by
Mortgagors on the Mortgage Loans and the principal component of any Subservicer
Advance or of any REO Proceeds received in connection with an REO Property for which
an REO Disposition has occurred;
(ii) All payments on account of interest at the Adjusted Mortgage Rate on the Mortgage
Loans, including the interest component of any Subservicer Advance or of any REO
Proceeds received in connection with an REO Property for which an REO Disposition has
occurred;
(iii) Insurance Proceeds, Subsequent Recoveries and Liquidation Proceeds (net of any
related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased pursuant to Section 2.02, 2.03, 2.04 or
4.07 (including amounts received from Residential Funding pursuant to the last
paragraph of Section 4 of the Assignment Agreement in respect of any liability,
penalty or expense that resulted from a breach of the representation and warranty set
forth in clause (xlvii) of Section 4 of the Assignment Agreement) and all amounts
required to be deposited in connection with the substitution of a Qualified
Substitute Mortgage Loan pursuant to Section 2.03 or 2.04; and
(v) Any amounts required to be deposited pursuant to Section 3.07(c) and any payments or
collections received in the nature of prepayment charges.
The foregoing requirements for deposit in the Custodial Account shall be exclusive, it
being understood and agreed that, without limiting the generality of the foregoing,
payments on the Mortgage Loans which are not part of the Trust Fund (consisting of Monthly
Payments due before or in the month of the Cut-off Date) and payments or collections
consisting of late payment charges or assumption fees may but need not be deposited by the
Master Servicer in the Custodial Account. In the event any amount not required to be
deposited in the Custodial Account is so deposited, the Master Servicer may at any time
withdraw such amount from the Custodial Account, any provision herein to the contrary
notwithstanding. Amounts received by the Master Servicer in connection with prepayment
charges on the Mortgage Loans shall be remitted by the Master Servicer on the Certificate
Account Deposit Date to the Trustee and shall be deposited by the Trustee, upon the receipt
thereof and written direction with respect thereto, into the Certificate Account. The
Custodial Account may contain funds that belong to one or more trust funds created for
mortgage pass-through certificates of other series and may contain other funds respecting
payments on mortgage loans belonging to the Master Servicer or serviced or master serviced
by it on behalf of others. Notwithstanding such commingling of funds, the Master Servicer
shall keep records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans. With respect
to Insurance Proceeds, Liquidation Proceeds, REO Proceeds, Subsequent Recoveries and the
proceeds of the purchase of any Mortgage Loan pursuant to Sections 2.02, 2.03, 2.04 and
4.07 received in any calendar month, the Master Servicer may elect to treat such amounts as
included in the Available Distribution Amount for the Distribution Date in the month of
receipt, but is not obligated to do so. If the Master Servicer so elects, such amounts
will be deemed to have been received (and any related Realized Loss shall be deemed to have
occurred) on the last day of the month prior to the receipt thereof.
(c) The Master Servicer shall use its best efforts to cause the institution maintaining
the Custodial Account to invest the funds in the Custodial Account attributable to the
Mortgage Loans in Permitted Investments which shall mature not later than the Certificate
Account Deposit Date next following the date of such investment (with the exception of the
Amount Held for Future Distribution) and which shall not be sold or disposed of prior to
their maturities. All income and gain realized from any such investment shall be for the
benefit of the Master Servicer as additional servicing compensation and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred in respect of
any such investments attributable to the investment of amounts in respect of the Mortgage
Loans shall be deposited in the Custodial Account by the Master Servicer out of its own
funds immediately as realized.
(d) The Master Servicer shall give written notice to the Trustee and the Depositor of any
change in the location of the Custodial Account and the location of the Certificate Account
prior to the use thereof.
(e) Notwithstanding Section 3.07(a), the Master Servicer shall not waive (or permit a
Subservicer to waive) any prepayment charge unless: (i) the enforceability thereof shall
have been limited by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally, (ii) the enforcement thereof is illegal, or
any local, state or federal agency has threatened legal action if the prepayment penalty is
enforced, (iii) the collectability thereof shall have been limited due to acceleration in
connection with a foreclosure or other involuntary payment or (iv) such waiver is standard
and customary in servicing similar Mortgage Loans and relates to a default or a reasonably
foreseeable default and would, in the reasonable judgment of the Master Servicer, maximize
recovery of total proceeds taking into account the value of such prepayment charge and the
related Mortgage Loan. In no event will the Master Servicer waive a prepayment charge in
connection with a refinancing of a Mortgage Loan that is not related to a default or a
reasonably foreseeable default. If a prepayment charge is waived, but does not meet the
standards described above, then the Master Servicer is required to remit the amount of such
waived prepayment charge to the Trustee at the time that the amount prepaid on the related
Mortgage Loan is required to be deposited into the Custodial Account, and upon receipt
thereof and written direction with respect thereto, the Trustee shall deposit such amount
into the Certificate Account. Notwithstanding any other provisions of this Agreement, any
payments made by the Master Servicer in respect of any waived prepayment charges pursuant
to this Section shall be deemed to be paid outside of the Trust Fund and not part of any
REMIC.
Section 3.08 Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage Loan pursuant to a
Subservicing Agreement, the Master Servicer shall cause the Subservicer, pursuant to the
Subservicing Agreement, to establish and maintain one or more Subservicing Accounts which
shall be an Eligible Account or, if such account is not an Eligible Account, shall
generally satisfy the requirements of the Program Guide and be otherwise acceptable to the
Master Servicer and each Rating Agency. The Subservicer will be required thereby to
deposit into the Subservicing Account on a daily basis all proceeds of Mortgage Loans
received by the Subservicer, less its Subservicing Fees and unreimbursed advances and
expenses, to the extent permitted by the Subservicing Agreement. If the Subservicing
Account is not an Eligible Account, the Master Servicer shall be deemed to have received
such monies upon receipt thereof by the Subservicer. The Subservicer shall not be required
to deposit in the Subservicing Account payments or collections in the nature of late
charges or assumption fees, or payments or collections received in the nature of prepayment
charges to the extent that the Subservicer is entitled to retain such amounts pursuant to
the Subservicing Agreement. On or before the date specified in the Program Guide, but in
no event later than the Determination Date, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to remit to the Master Servicer for
deposit in the Custodial Account all funds held in the Subservicing Account with respect to
each Mortgage Loan serviced by such Subservicer that are required to be remitted to the
Master Servicer. The Subservicer will also be required, pursuant to the Subservicing
Agreement, to advance on such scheduled date of remittance amounts equal to any scheduled
monthly installments of principal and interest less its Subservicing Fees on any Mortgage
Loans for which payment was not received by the Subservicer. This obligation to advance
with respect to each Mortgage Loan will continue up to and including the first of the month
following the date on which the related Mortgaged Property is sold at a foreclosure sale or
is acquired by the Trust Fund by deed in lieu of foreclosure or otherwise. All such
advances received by the Master Servicer shall be deposited promptly by it in the Custodial
Account.
(b) The Subservicer may also be required, pursuant to the Subservicing Agreement, to
remit to the Master Servicer for deposit in the Custodial Account interest at the Adjusted
Mortgage Rate (or Modified Net Mortgage Rate plus the rate per annum at which the Servicing
Fee accrues in the case of a Modified Mortgage Loan) on any Curtailment received by such
Subservicer in respect of a Mortgage Loan from the related Mortgagor during any month that
is to be applied by the Subservicer to reduce the unpaid principal balance of the related
Mortgage Loan as of the first day of such month, from the date of application of such
Curtailment to the first day of the following month. Any amounts paid by a Subservicer
pursuant to the preceding sentence shall be for the benefit of the Master Servicer as
additional servicing compensation and shall be subject to its withdrawal or order from time
to time pursuant to Sections 3.10(a)(iv) and (v).
(c) In addition to the Custodial Account and the Certificate Account, the Master Servicer
shall for any Nonsubserviced Mortgage Loan, and shall cause the Subservicers for
Subserviced Mortgage Loans to, establish and maintain one or more Servicing Accounts and
deposit and retain therein all collections from the Mortgagors (or advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums, Primary
Insurance Policy premiums, if applicable, or comparable items for the account of the
Mortgagors. Each Servicing Account shall satisfy the requirements for a Subservicing
Account and, to the extent permitted by the Program Guide or as is otherwise acceptable to
the Master Servicer, may also function as a Subservicing Account. Withdrawals of amounts
related to the Mortgage Loans from the Servicing Accounts may be made only to effect timely
payment of taxes, assessments, hazard insurance premiums, Primary Insurance Policy
premiums, if applicable, or comparable items, to reimburse the Master Servicer or
Subservicer out of related collections for any payments made pursuant to Sections 3.11
(with respect to the Primary Insurance Policy) and 3.12(a) (with respect to hazard
insurance), to refund to any Mortgagors any sums as may be determined to be overages, to
pay interest, if required, to Mortgagors on balances in the Servicing Account or to clear
and terminate the Servicing Account at the termination of this Agreement in accordance with
Section 9.01 or in accordance with the Program Guide. As part of its servicing duties, the
Master Servicer shall, and the Subservicers will, pursuant to the Subservicing Agreements,
be required to pay to the Mortgagors interest on funds in this account to the extent
required by law.
(d) The Master Servicer shall advance the payments referred to in the preceding
subsection that are not timely paid by the Mortgagors or advanced by the Subservicers on
the date when the tax, premium or other cost for which such payment is intended is due, but
the Master Servicer shall be required so to advance only to the extent that such advances,
in the good faith judgment of the Master Servicer, will be recoverable by the Master
Servicer out of Insurance Proceeds, Liquidation Proceeds or otherwise.
Section 3.09 Access to Certain Documentation and Information Regarding the Mortgage
Loans.
In the event that compliance with this Section 3.09 shall make any Class of
Certificates legal for investment by federally insured savings and loan associations, the
Master Servicer shall provide, or cause the Subservicers to provide, to the Trustee, the
Office of Thrift Supervision or the FDIC and the supervisory agents and examiners thereof
access to the documentation regarding the Mortgage Loans required by applicable regulations
of the Office of Thrift Supervision, such access being afforded without charge but only
upon reasonable request and during normal business hours at the offices designated by the
Master Servicer. The Master Servicer shall permit such representatives to photocopy any
such documentation and shall provide equipment for that purpose at a charge reasonably
approximating the cost of such photocopying to the Master Servicer.
Section 3.10 Permitted Withdrawals from the Custodial Account.
(a) The Master Servicer may, from time to time as provided herein, make withdrawals from
the Custodial Account of amounts on deposit therein pursuant to Section 3.07 that are
attributable to the Mortgage Loans for the following purposes:
(i) to make deposits into the Certificate Account in the amounts and in the manner
provided for in Section 4.01;
(ii) to reimburse itself or the related Subservicer for previously unreimbursed Advances,
Servicing Advances or other expenses made pursuant to Sections 3.01, 3.07(a), 3.08,
3.11, 3.12(a), 3.14 and 4.04 or otherwise reimbursable pursuant to the terms of this
Agreement, such withdrawal right being limited to amounts received on the related
Mortgage Loans (including, for this purpose, REO Proceeds, Insurance Proceeds,
Liquidation Proceeds and proceeds from the purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03, 2.04 or 4.07) which represent (A) Late Collections of Monthly
Payments for which any such advance was made in the case of Subservicer Advances or
Advances pursuant to Section 4.04 and (B) recoveries of amounts in respect of which
such advances were made in the case of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if not previously retained by such
Subservicer) out of each payment received by the Master Servicer on account of
interest on a Mortgage Loan as contemplated by Sections 3.14 and 3.16, an amount
equal to that remaining portion of any such payment as to interest (but not in excess
of the Servicing Fee and the Subservicing Fee, if not previously retained) which,
when deducted, will result in the remaining amount of such interest being interest at
a rate per annum equal to the Net Mortgage Rate (or Modified Net Mortgage Rate in the
case of a Modified Mortgage Loan) on the amount specified in the amortization
schedule of the related Mortgage Loan as the principal balance thereof at the
beginning of the period respecting which such interest was paid after giving effect
to any previous Curtailments;
(iv) to pay to itself as additional servicing compensation any interest or investment
income earned on funds and other property deposited in or credited to the Custodial
Account that it is entitled to withdraw pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing compensation any Foreclosure Profits, and
any amounts remitted by Subservicers as interest in respect of Curtailments pursuant
to Section 3.08(b);
(vi) to pay to itself, a Subservicer, a Seller, Residential Funding, the Depositor or any
other appropriate Person, as the case may be, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased or otherwise transferred
pursuant to Section 2.02, 2.03, 2.04, 4.07 or 9.01, all amounts received thereon and
not required to be distributed to Certificateholders as of the date on which the
related Stated Principal Balance or Purchase Price is determined;
(vii) to reimburse itself or the related Subservicer for any Nonrecoverable Advance or
Advances in the manner and to the extent provided in subsection (c) below, and any
Advance or Servicing Advance made in connection with a modified Mortgage Loan that is
in default or, in the judgment of the Master Servicer, default is reasonably
foreseeable pursuant to Section 3.07(a), to the extent the amount of the Advance or
Servicing Advance was added to the Stated Principal Balance of the Mortgage Loan in a
prior calendar month;
(viii) to reimburse itself or the Depositor for expenses incurred by and reimbursable
to it or the Depositor pursuant to Section 3.01(a), 3.11, 3.13, 3.14(c), 6.03, 10.01
or otherwise, or in connection with enforcing any repurchase, substitution or
indemnification obligation of any Seller (other than the Depositor or an Affiliate of
the Depositor) pursuant to the related Seller's Agreement;
(ix) to reimburse itself for amounts expended by it (a) pursuant to Section 3.14 in good
faith in connection with the restoration of property damaged by an Uninsured Cause,
and (b) in connection with the liquidation of a Mortgage Loan or disposition of an
REO Property to the extent not otherwise reimbursed pursuant to clause (ii) or (viii)
above; and
(x) to withdraw any amount deposited in the Custodial Account that was not required to be
deposited therein pursuant to Section 3.07, including any payoff fees or penalties or
any other additional amounts payable to the Master Servicer or Subservicer pursuant
to the terms of the Mortgage Note.
(b) Since, in connection with withdrawals pursuant to clauses (ii), (iii), (v) and (vi),
the Master Servicer's entitlement thereto is limited to collections or other recoveries on
the related Mortgage Loan, the Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal
from the Custodial Account pursuant to such clauses.
(c) The Master Servicer shall be entitled to reimburse itself or the related Subservicer
for any advance made in respect of a Mortgage Loan that the Master Servicer determines to
be a Nonrecoverable Advance by withdrawal from the Custodial Account of amounts on deposit
therein attributable to the Mortgage Loans on any Certificate Account Deposit Date
succeeding the date of such determination. Such right of reimbursement in respect of a
Nonrecoverable Advance relating to an Advance made pursuant to Section 4.04 on any such
Certificate Account Deposit Date shall be limited to an amount not exceeding the portion of
such advance previously paid to Certificateholders (and not theretofore reimbursed to the
Master Servicer or the related Subservicer).
Section 3.11 Maintenance of Primary Insurance Coverage.
(a) The Master Servicer shall not take, or permit any Subservicer to take, any action
which would result in noncoverage under any applicable Primary Insurance Policy of any loss
which, but for the actions of the Master Servicer or Subservicer, would have been covered
thereunder. To the extent coverage is available, the Master Servicer shall keep or cause
to be kept in full force and effect each such Primary Insurance Policy until the principal
balance of the related Mortgage Loan secured by a Mortgaged Property is reduced to 80% or
less of the Appraised Value at origination in the case of such a Mortgage Loan having a
Loan-to-Value Ratio at origination in excess of 80%, provided that such Primary Insurance
Policy was in place as of the Cut-off Date and the Master Servicer had knowledge of such
Primary Insurance Policy. The Master Servicer shall not cancel or refuse to renew any such
Primary Insurance Policy applicable to a Nonsubserviced Mortgage Loan, or consent to any
Subservicer canceling or refusing to renew any such Primary Insurance Policy applicable to
a Mortgage Loan subserviced by it, that is in effect at the date of the initial issuance of
the Certificates and is required to be kept in force hereunder unless the replacement
Primary Insurance Policy for such canceled or non-renewed policy is maintained with an
insurer whose claims-paying ability is acceptable to each Rating Agency for mortgage
pass-through certificates having a rating equal to or better than the lower of the
then-current rating or the rating assigned to the Certificates as of the Closing Date by
such Rating Agency.
(b) In connection with its activities as administrator and servicer of the Mortgage
Loans, the Master Servicer agrees to present or to cause the related Subservicer to
present, on behalf of the Master Servicer, the Subservicer, if any, the Trustee and
Certificateholders, claims to the insurer under any Primary Insurance Policies, in a timely
manner in accordance with such policies, and, in this regard, to take or cause to be taken
such reasonable action as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.07, any Insurance
Proceeds collected by or remitted to the Master Servicer under any Primary Insurance
Policies shall be deposited in the Custodial Account, subject to withdrawal pursuant to
Section 3.10.
Section 3.12 Maintenance of Fire Insurance and Omissions and Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage Loan fire
insurance with extended coverage in an amount which is equal to the lesser of the principal
balance owing on such Mortgage Loan (together with the principal balance of any mortgage
loan secured by a lien that is senior to the Mortgage Loan) or 100% of the insurable value
of the improvements; provided, however, that such coverage may not be less than the minimum
amount required to fully compensate for any loss or damage on a replacement cost basis. To
the extent it may do so without breaching the related Subservicing Agreement, the Master
Servicer shall replace any Subservicer that does not cause such insurance, to the extent it
is available, to be maintained. The Master Servicer shall also cause to be maintained on
property acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan,
fire insurance with extended coverage in an amount which is at least equal to the amount
necessary to avoid the application of any co-insurance clause contained in the related
hazard insurance policy. Pursuant to Section 3.07, any amounts collected by the Master
Servicer under any such policies (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Master Servicer's normal servicing procedures) shall
be deposited in the Custodial Account, subject to withdrawal pursuant to Section 3.10. Any
cost incurred by the Master Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to Certificateholders, be added to the amount
owing under the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Master Servicer out of related late
payments by the Mortgagor or out of Insurance Proceeds and Liquidation Proceeds to the
extent permitted by Section 3.10. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage 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. Whenever
the improvements securing a Mortgage Loan are located at the time of origination of such
Mortgage Loan in a federally designated special flood hazard area, the Master Servicer
shall cause flood insurance (to the extent available) to be maintained in respect thereof.
Such flood insurance shall be in an amount equal to the lesser of (i) the amount required
to compensate for any loss or damage to the Mortgaged Property on a replacement cost basis
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 the event that the Master Servicer shall obtain and maintain a blanket fire
insurance policy with extended coverage insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section 3.12(a), it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer shall, in
the event that there shall not have been maintained on the related Mortgaged Property a
policy complying with the first sentence of this Section 3.12(a) and there shall have been
a loss which would have been covered by such policy, deposit in the Certificate Account the
amount not otherwise payable under the blanket policy because of such deductible clause.
Any such deposit by the Master Servicer shall be made on the Certificate Account Deposit
Date next preceding the Distribution Date which occurs in the month following the month in
which payments under any such policy would have been deposited in the Custodial Account.
In connection with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy.
(b) The Master Servicer shall obtain and maintain at its own expense and keep in full
force and effect throughout the term of this Agreement a blanket fidelity bond and an
errors and omissions insurance policy covering the Master Servicer's officers and employees
and other persons acting on behalf of the Master Servicer in connection with its activities
under this Agreement. The amount of coverage shall be at least equal to the coverage that
would be required by Xxxxxx Xxx or Xxxxxxx Mac, whichever is greater, with respect to the
Master Servicer if the Master Servicer were servicing and administering the Mortgage Loans
for Xxxxxx Mae or Xxxxxxx Mac. In the event that any such bond or policy ceases to be in
effect, the Master Servicer shall obtain a comparable replacement bond or policy from an
issuer or insurer, as the case may be, meeting the requirements, if any, of the Program
Guide and acceptable to the Depositor. Coverage of the Master Servicer under a policy or
bond obtained by an Affiliate of the Master Servicer and providing the coverage required by
this Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).
Section 3.13 Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the Master Servicer or
Subservicer, to the extent it has knowledge of such conveyance, shall enforce any
due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent permitted
under applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required Insurance
Policy. Notwithstanding the foregoing: (i) the Master Servicer shall not be deemed to be
in default under this Section 3.13(a) by reason of any transfer or assumption which the
Master Servicer is restricted by law from preventing; and (ii) if the Master Servicer
determines that it is reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid enforcement of a due-on-sale
clause contained in any Mortgage Note or Mortgage, the Master Servicer shall not be
required to enforce the due-on-sale clause or to contest such action.
(b) Subject to the Master Servicer's or related Subservicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption or modification agreement or supplement to the Mortgage Note or
Mortgage which requires the signature of the Trustee, or if an instrument of release signed
by the Trustee is required releasing the Mortgagor from liability on the Mortgage Loan, the
Master Servicer is authorized, subject to the requirements of the sentence next following,
to execute and deliver, on behalf of the Trustee, the assumption agreement with the Person
to whom the Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are reasonable or
necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise to comply
with any applicable laws regarding assumptions or the transfer of the Mortgaged Property to
such Person; provided, however, none of such terms and requirements shall both constitute a
"significant modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or final, temporary or proposed Treasury regulations promulgated thereunder) and
cause any 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. The Master Servicer shall execute and deliver such
documents only if it reasonably determines that (i) its execution and delivery thereof will
not conflict with or violate any terms of this Agreement or cause the unpaid balance and
interest on the Mortgage Loan to be uncollectible in whole or in part, (ii) any required
consents of insurers under any Required Insurance Policies have been obtained and (iii)
subsequent to the closing of the transaction involving the assumption or transfer (A) the
Mortgage Loan will continue to be secured by a first mortgage lien (or, with respect to any
junior lien, a junior lien of the same priority in relation to any senior lien on such
Mortgage Loan) pursuant to the terms of the Mortgage, (B) such transaction will not
adversely affect the coverage under any Required Insurance Policies, (C) the Mortgage Loan
will fully amortize over the remaining term thereof, (D) no material term of the Mortgage
Loan (including the interest rate on the Mortgage Loan) will be altered nor will the term
of the Mortgage Loan be changed and (E) if the seller/transferor of the Mortgaged Property
is to be released from liability on the Mortgage Loan, the buyer/transferee of the
Mortgaged Property would be qualified to assume the Mortgage Loan based on generally
comparable credit quality and such release will not (based on the Master Servicer's or
related Subservicer's good faith determination) adversely affect the collectability of the
Mortgage Loan. Upon receipt of appropriate instructions from the Master Servicer in
accordance with the foregoing, the Trustee shall execute any necessary instruments for such
assumption or substitution of liability as directed by the Master Servicer. Upon the
closing of the transactions contemplated by such documents, the Master Servicer shall cause
the originals or true and correct copies of the assumption agreement, the release (if any),
or the modification or supplement to the Mortgage Note or Mortgage to be deposited with the
Mortgage File for such Mortgage Loan. Any fee collected by the Master Servicer or such
related Subservicer for entering into an assumption or substitution of liability agreement
will be retained by the Master Servicer or such related Subservicer as additional servicing
compensation.
(c) The Master Servicer or the related Subservicer, as the case may be, shall be entitled
to approve a request from a Mortgagor for a partial release of the related Mortgaged
Property, the granting of an easement thereon in favor of another Person, any alteration or
demolition of the related Mortgaged Property or other similar matters if it has determined,
exercising its good faith business judgment in the same manner as it would if it were the
owner of the related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby and that any
REMIC created hereunder would not fail to continue to qualify as a REMIC under the Code as
a result thereof and (subject to Section 10.01(f)) that no tax on "prohibited transactions"
or "contributions" after the Startup Date would be imposed on any REMIC created hereunder
as a result thereof. Any fee collected by the Master Servicer or the related Subservicer
for processing such a request will be retained by the Master Servicer or such Subservicer
as additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this Agreement, the Trustee
and Master Servicer shall be entitled to approve an assignment in lieu of satisfaction with
respect to any Mortgage Loan, provided the obligee with respect to such Mortgage Loan
following such proposed assignment provides the Trustee and Master Servicer with a "Lender
Certification for Assignment of Mortgage Loan" in the form attached hereto as Exhibit M, in
form and substance satisfactory to the Trustee and Master Servicer, providing the
following: (i) that the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to preserve lien
priority, minimize or avoid mortgage recording taxes or otherwise comply with, or
facilitate a refinancing under, the laws of such jurisdiction; (ii) that the substance of
the assignment is, and is intended to be, a refinancing of such Mortgage Loan and that the
form of the transaction is solely to comply with, or facilitate the transaction under, such
local laws; (iii) that the Mortgage Loan following the proposed assignment will have a rate
of interest more than the greater of (A) 3% and (B) 5% of the annual yield of the
unmodified Mortgage Loan, below or above the rate of interest on such Mortgage Loan prior
to such proposed assignment; and (iv) that such assignment is at the request of the
borrower under the related Mortgage Loan. Upon approval of an assignment in lieu of
satisfaction with respect to any Mortgage Loan, the Master Servicer shall receive cash in
an amount equal to the unpaid principal balance of and accrued interest on such Mortgage
Loan, and the Master Servicer shall treat such amount as a Principal Prepayment in Full
with respect to such Mortgage Loan for all purposes hereof.
Section 3.14 Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) 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 3.07. Alternatively, the
Master Servicer may take other actions in respect of a defaulted Mortgage Loan, which may
include (i) accepting a short sale (a payoff of the Mortgage Loan for an amount less than
the total amount contractually owed in order to facilitate a sale of the Mortgaged Property
by the Mortgagor) or permitting a short refinancing (a payoff of the Mortgage Loan for an
amount less than the total amount contractually owed in order to facilitate refinancing
transactions by the Mortgagor not involving a sale of the Mortgaged Property), (ii)
arranging for a repayment plan or (iii) agreeing to a modification in accordance with
Section 3.07. In connection with such foreclosure or other conversion or action, the
Master Servicer shall, consistent with Section 3.11, follow such practices and procedures
as it shall deem necessary or advisable, as shall be normal and usual in its general
mortgage servicing activities and as shall be required or permitted by the Program Guide;
provided that the Master Servicer shall not be liable in any respect hereunder if the
Master Servicer is acting in connection with any such foreclosure or other conversion or
action in a manner that is consistent with the provisions of this Agreement. The Master
Servicer, however, shall not be required to expend its own funds or incur other
reimbursable charges in connection with any foreclosure, or attempted foreclosure which is
not completed, or towards the correction of any default on a related senior mortgage loan,
or towards the restoration of any property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to Holders of Certificates of one or more Classes after reimbursement to itself for
such expenses or charges and (ii) that such expenses and charges will be recoverable to it
through Liquidation Proceeds, Insurance Proceeds, or REO Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Custodial Account pursuant to
Section 3.10, whether or not such expenses and charges are actually recoverable from
related Liquidation Proceeds, Insurance Proceeds or REO Proceeds). In the event of such a
determination by the Master Servicer pursuant to this Section 3.14(a), the Master Servicer
shall be entitled to reimbursement of its funds so expended pursuant to Section 3.10. In
addition, the Master Servicer may pursue any remedies that may be available in connection
with a breach of a representation and warranty with respect to any such Mortgage Loan in
accordance with Sections 2.03 and 2.04. However, the Master Servicer is not required to
continue to pursue both foreclosure (or similar remedies) with respect to the Mortgage
Loans and remedies in connection with a breach of a representation and warranty if the
Master Servicer determines in its reasonable discretion that one such remedy is more likely
to result in a greater recovery as to the Mortgage Loan. Upon the occurrence of a Cash
Liquidation or REO Disposition, following the deposit in the Custodial Account of all
Insurance Proceeds, Liquidation Proceeds and other payments and recoveries referred to in
the definition of "Cash Liquidation" or "REO Disposition," as applicable, upon receipt by
the Trustee of written notification of such deposit signed by a Servicing Officer, the
Trustee or the Custodian, as the case may be, shall release to the Master Servicer the
related Custodial File and the Trustee shall execute and deliver such instruments of
transfer or assignment prepared by the Master Servicer, in each case without recourse, as
shall be necessary to vest in the Master Servicer or its designee, as the case may be, the
related Mortgage Loan, and thereafter such Mortgage Loan shall not be part of the Trust
Fund. Notwithstanding the foregoing or any other provision of this Agreement, in the
Master Servicer's sole discretion with respect to any defaulted Mortgage Loan or REO
Property as to either of the following provisions, (i) a Cash Liquidation or REO
Disposition may be deemed to have occurred if substantially all amounts expected by the
Master Servicer to be received in connection with the related defaulted Mortgage Loan or
REO Property have been received, and (ii) for purposes of determining the amount of any
Liquidation Proceeds, Insurance Proceeds, REO Proceeds or other unscheduled collections or
the amount of any Realized Loss, the Master Servicer may take into account minimal amounts
of additional receipts expected to be received or any estimated additional liquidation
expenses expected to be incurred in connection with the related defaulted Mortgage Loan or
REO Property.
(b) In the event that title to any Mortgaged Property is acquired by the Trust Fund as an
REO Property by foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Trustee or to its nominee on behalf of Certificateholders.
Notwithstanding any such acquisition of title and cancellation of the related Mortgage
Loan, such REO Property shall (except as otherwise expressly provided herein) be considered
to be an Outstanding Mortgage Loan held in the Trust Fund until such time as the REO
Property shall be sold. Consistent with the foregoing for purposes of all calculations
hereunder so long as such REO Property shall be considered to be an Outstanding Mortgage
Loan it shall be assumed that, notwithstanding that the indebtedness evidenced by the
related Mortgage Note shall have been discharged, such Mortgage Note and the related
amortization schedule in effect at the time of any such acquisition of title (after giving
effect to any previous Curtailments and before any adjustment thereto by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or grace period)
remain in effect.
(c) In the event that the Trust Fund acquires any REO Property as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the Master Servicer on
behalf of the Trust Fund shall dispose of such REO Property as soon as practicable, giving
due consideration to the interests of the Certificateholders, but in all cases, within
three full years after the taxable year of its acquisition by the Trust Fund for purposes
of Section 860G(a)(8) of the Code (or such shorter period as may be necessary under
applicable state (including any state in which such property is located) law to maintain
the status of each REMIC created hereunder as a REMIC under applicable state law and avoid
taxes resulting from such property failing to be foreclosure property under applicable
state law) or, at the expense of the Trust Fund, request, more than 60 days before the day
on which such grace period would otherwise expire, an extension of such grace period unless
the Master Servicer (subject to Section 10.01(f)) obtains for the Trustee an Opinion of
Counsel, addressed to the Trustee and the Master Servicer, to the effect that the holding
by the Trust Fund of such REO Property subsequent to such period will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of the Code or
cause any REMIC created hereunder to fail to qualify as a REMIC (for federal (or any
applicable State or local) income tax purposes) at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such REO Property (subject
to any conditions contained in such Opinion of Counsel). The Master Servicer shall be
entitled to be reimbursed from the Custodial Account for any costs incurred in obtaining
such Opinion of Counsel, as provided in Section 3.10. Notwithstanding any other provision
of this Agreement, no REO Property acquired by the Trust Fund shall be rented (or allowed
to continue to be rented) or otherwise used by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code or (ii)
subject any REMIC created hereunder to the imposition of any federal income taxes on the
income earned from such REO Property, including any taxes imposed by reason of
Section 860G(c) of the Code, unless the Master Servicer has agreed to indemnify and hold
harmless the Trust Fund with respect to the imposition of any such taxes.
(d) The proceeds of any Cash Liquidation, REO Disposition or purchase or repurchase of
any Mortgage Loan pursuant to the terms of this Agreement, as well as any recovery (other
than Subsequent Recoveries) resulting from a collection of Liquidation Proceeds, Insurance
Proceeds or REO Proceeds, will be applied in the following order of priority: first, to
reimburse the Master Servicer or the related Subservicer in accordance with
Section 3.10(a)(ii); second, to the Certificateholders to the extent of accrued and unpaid
interest on the Mortgage Loan, and any related REO Imputed Interest, at the Net Mortgage
Rate (or the Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), to the
Due Date in the related Due Period prior to the Distribution Date on which such amounts are
to be distributed; third, to the Certificateholders as a recovery of principal on the
Mortgage Loan (or REO Property); fourth, to all Servicing Fees and Subservicing Fees
payable therefrom (and the Master Servicer and the Subservicer shall have no claims for any
deficiencies with respect to such fees which result from the foregoing allocation); and
fifth, to Foreclosure Profits.
(e) In the event of a default on a Mortgage Loan one or more of whose obligors is not a
United States Person, in connection with any foreclosure or acquisition of a deed in lieu
of foreclosure (together, "foreclosure") in respect of such Mortgage Loan, the Master
Servicer shall cause compliance with the provisions of Treasury
Regulation Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that no
withholding tax obligation arises with respect to the proceeds of such foreclosure except
to the extent, if any, that proceeds of such foreclosure are required to be remitted to the
obligors on such Mortgage Loan.
Section 3.15 Trustee to Cooperate; Release of Custodial Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or upon the receipt
by the Master Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer shall immediately notify the Trustee (if
it holds the related Custodial File) or the Custodian by a certification of a Servicing
Officer (which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to be
deposited in the Custodial Account pursuant to Section 3.07 have been or will be so
deposited), substantially in the form attached hereto as Exhibit G, or, in the case of a
Custodian, an electronic request in a form acceptable to the Custodian, requesting delivery
to it of the Custodial File. Upon receipt of such certification and request, the Trustee
shall promptly release, or cause the Custodian to release, the related Custodial File to
the Master Servicer. The Master Servicer is authorized to execute and deliver to the
Mortgagor the request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with the Mortgage
Note with, as appropriate, written evidence of cancellation thereon and to cause the
removal from the registration on the MERS(R)System of such Mortgage and to execute and
deliver, on behalf of the Trustee and the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation or of partial or full release, including any
applicable UCC termination statements. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Certificate Account.
(b) From time to time as is appropriate for the servicing or foreclosure of any Mortgage
Loan, the Master Servicer shall deliver to the Custodian, with a copy to the Trustee, a
certificate of a Servicing Officer substantially in the form attached as Exhibit G hereto,
or, in the case of a Custodian, an electronic request in a form acceptable to the
Custodian, requesting that possession of all, or any document constituting part of, the
Custodial File be released to the Master Servicer and certifying as to the reason for such
release and that such release will not invalidate any insurance coverage provided in
respect of the Mortgage Loan under any Required Insurance Policy. Upon receipt of the
foregoing, the Trustee shall deliver, or cause the Custodian to deliver, the Custodial File
or any document therein to the Master Servicer. The Master Servicer shall cause each
Custodial File or any document therein so released to be returned to the Trustee, or the
Custodian as agent for the Trustee when the need therefor by the Master Servicer no longer
exists, unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Custodial Account or (ii) the
Custodial File or such document has been delivered directly or through a Subservicer to an
attorney, or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Master Servicer has
delivered directly or through a Subservicer to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such Custodial File or
such document was delivered and the purpose or purposes of such delivery. In the event of
the liquidation of a Mortgage Loan, the Trustee shall deliver the Request for Release with
respect thereto to the Master Servicer upon the Trustee's receipt of notification from the
Master Servicer of the deposit of the related Liquidation Proceeds in the Custodial Account.
(c) The Trustee or the Master Servicer on the Trustee's behalf shall execute and deliver
to the Master Servicer, if necessary, any court pleadings, requests for trustee's sale or
other documents 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. Together with such documents or pleadings (if signed by the Trustee), the
Master Servicer shall deliver to the Trustee a certificate of a Servicing Officer
requesting that such pleadings or documents be executed by the Trustee and certifying as to
the reason such documents or pleadings are required and that the execution and delivery
thereof by the Trustee shall not invalidate any insurance coverage under any Required
Insurance Policy or invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
Section 3.16 Servicing and Other Compensation; Compensating Interest.
(a) The Master Servicer, as compensation for its activities hereunder, shall be entitled
to receive on each Distribution Date the amounts provided for by clauses (iii), (iv), (v)
and (vi) of Section 3.10(a), subject to clause (e) below. The amount of servicing
compensation provided for in such clauses shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis. In the event that Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of amounts reimbursable therefrom pursuant to Section 3.10(a)(ii)) in
respect of a Cash Liquidation or REO Disposition exceed the unpaid principal balance of
such Mortgage Loan plus unpaid interest accrued thereon (including REO Imputed Interest) at
a per annum rate equal to the related Net Mortgage Rate (or the Modified Net Mortgage Rate
in the case of a Modified Mortgage Loan), the Master Servicer shall be entitled to retain
therefrom and to pay to itself and/or the related Subservicer, any Foreclosure Profits and
any Servicing Fee or Subservicing Fee considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of assumption fees, late payment
charges, investment income on amounts in the Custodial Account or the Certificate Account
or otherwise shall be retained by the Master Servicer or the Subservicer to the extent
provided herein, subject to clause (e) below. Prepayment charges shall be deposited into
the Certificate Account and shall be paid on each Distribution Date to the holders of the
Class SB Certificates.
(c) The Master Servicer shall be required to pay, or cause to be paid, all expenses
incurred by it in connection with its servicing activities hereunder (including payment of
premiums for the Primary Insurance Policies, if any, to the extent such premiums are not
required to be paid by the related Mortgagors, and the fees and expenses of the Trustee and
the Custodian) and shall not be entitled to reimbursement therefor except as specifically
provided in Sections 3.10 and 3.14.
(d) The Master Servicer's right to receive servicing compensation may not be transferred
in whole or in part except in connection with the transfer of all of its responsibilities
and obligations of the Master Servicer under this Agreement.
(e) Notwithstanding clauses (a) and (b) above, the amount of servicing compensation that
the Master Servicer shall be entitled to receive for its activities hereunder for the
period ending on each Distribution Date shall be reduced (but not below zero) by the amount
of Compensating Interest (if any) for such Distribution Date used to cover Prepayment
Interest Shortfalls as provided in Section 3.16(f) below. Such reduction shall be applied
during such period as follows: first, to any Servicing Fee or Subservicing Fee to which the
Master Servicer is entitled pursuant to Section 3.10(a)(iii); and second, to any income or
gain realized from any investment of funds held in the Custodial Account or the Certificate
Account to which the Master Servicer is entitled pursuant to Sections 3.07(c) or 4.01(c),
respectively. In making such reduction, the Master Servicer shall not withdraw from the
Custodial Account any such amount representing all or a portion of the Servicing Fee to
which it is entitled pursuant to Section 3.10(a)(iii) and shall not withdraw from the
Custodial Account or Certificate Account any such amount to which it is entitled pursuant
to Section 3.07(c) or 4.01(c).
(f) With respect to any Distribution Date, Prepayment Interest Shortfalls on the Mortgage
Loans will be covered first, by the Master Servicer, but only to the extent such Prepayment
Interest Shortfalls do not exceed Eligible Master Servicing Compensation.
(g) With respect to any Distribution Date, Compensating Interest derived from a
particular Loan Group shall be used on such Distribution Date to cover any Prepayment
Interest Shortfalls in such Loan Group and then to cover any Prepayment Interest Shortfalls
on the other Loan Group in the same manner and priority as Excess Cash Flow would cover
such shortfalls pursuant to Section 4.02.
Section 3.17 Reports to the Trustee and the Depositor.
Not later than fifteen days after it receives a written request from the Trustee or
the Depositor, the Master Servicer shall forward to the Trustee and the Depositor a
statement, certified by a Servicing Officer, setting forth the status of the Custodial
Account as of the close of business on such Distribution Date as it relates to the Mortgage
Loans and showing, for the period covered by such statement, the aggregate of deposits in
or withdrawals from the Custodial Account in respect of the Mortgage Loans for each
category of deposit specified in Section 3.07 and each category of withdrawal specified in
Section 3.10.
Section 3.18 Annual Statement as to Compliance and Servicing Assessment.
The Master Servicer shall deliver to the Depositor and the Trustee on or before the
earlier of (a) March 31 of each year or (b) with respect to any calendar year during which
the Depositor's annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, the date on which the annual
report on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commission, (i) a servicing assessment as described in
Section 4.03(f)(ii) and (ii) a servicer compliance statement, signed by an authorized
officer of the Master Servicer, as described in Items 1122(a), 1122(b) and 1123 of
Regulation AB, to the effect that:
(A) A review of the Master Servicer's activities during the reporting period and of its
performance under this Agreement has been made under such officer's supervision.
(B) To the best of such officer's knowledge, based on such review, the Master Servicer
has fulfilled all of its obligations under this Agreement in all material
respects throughout the reporting period 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.
The Master Servicer shall use commercially reasonable efforts to obtain from all
other parties participating in the servicing function any additional certifications
required under Item 1123 of Regulation AB to the extent required to be included in a Report
on Form 10-K; provided, however, that a failure to obtain such certifications shall not be
a breach of the Master Servicer's duties hereunder if any such party fails to deliver such
a certification.
Section 3.19 Annual Independent Public Accountants' Servicing Report.
On or before the earlier of (a) March 31 of each year or (b) with respect to any
calendar year during which the Depositor's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the Commission,
the date on which the annual report is required to be filed in accordance with the Exchange
Act and the rules and regulations of the Commission, the Master Servicer at its expense
shall cause a firm of independent public accountants, which shall be members of the
American Institute of Certified Public Accountants, to furnish to the Depositor and the
Trustee the attestation required under Item 1122(b) of Regulation AB. In rendering such
statement, such firm may rely, as to matters relating to the direct servicing of mortgage
loans by Subservicers, upon comparable statements for examinations conducted by independent
public accountants substantially in accordance with standards established by the American
Institute of Certified Public Accountants (rendered within one year of such statement) with
respect to such Subservicers.
Section 3.20 Right of the Depositor in Respect of the Master Servicer.
The Master Servicer shall afford the Depositor and the Trustee, upon reasonable
notice, during normal business hours access to all records maintained by the Master
Servicer in respect of its rights and obligations hereunder and access to officers of the
Master Servicer responsible for such obligations. Upon request, the Master Servicer shall
furnish the Depositor with its most recent financial statements and such other information
as the Master Servicer possesses regarding its business, affairs, property and condition,
financial or otherwise. The Master Servicer shall also cooperate with all reasonable
requests for information including, but not limited to, notices, tapes and copies of files,
regarding itself, the Mortgage Loans or the Certificates from any Person or Persons
identified by the Depositor or Residential Funding. The Depositor may enforce the
obligation of the Master Servicer hereunder and may, but it is not obligated to, perform or
cause a designee to perform, any defaulted obligation of the Master Servicer hereunder or
exercise the rights of the Master Servicer hereunder; provided that the Master Servicer
shall not be relieved of any of its obligations hereunder by virtue of such performance by
the Depositor or its designee. Neither the Depositor nor the Trustee shall have the
responsibility or liability for any action or failure to act by the Master Servicer and
they are not obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
Section 3.21 [Reserved].
Section 3.22 Advance Facility.
(a) The Master Servicer is hereby authorized to enter into a financing or other facility
(any such arrangement, an "Advance Facility") under which (1) the Master Servicer sells,
assigns or pledges to another Person (an "Advancing Person") the Master Servicer's rights
under this Agreement to be reimbursed for any Advances or Servicing Advances and/or (2) an
Advancing Person agrees to fund some or all Advances and/or Servicing Advances required to
be made by the Master Servicer pursuant to this Agreement. No consent of the Depositor,
the Trustee, the Certificateholders or any other party shall be required before the Master
Servicer may enter into an Advance Facility. Notwithstanding the existence of any Advance
Facility under which an Advancing Person agrees to fund Advances and/or Servicing Advances
on the Master Servicer's behalf, the Master Servicer shall remain obligated pursuant to
this Agreement to make Advances and Servicing Advances pursuant to and as required by this
Agreement. If the Master Servicer enters into an Advance Facility, and for so long as an
Advancing Person remains entitled to receive reimbursement for any Advances including
Nonrecoverable Advances ("Advance Reimbursement Amounts") and/or Servicing Advances
including Nonrecoverable Advances ("Servicing Advance Reimbursement Amounts" and together
with Advance Reimbursement Amounts, "Reimbursement Amounts") (in each case to the extent
such type of Reimbursement Amount is included in the Advance Facility), as applicable,
pursuant to this Agreement, then the Master Servicer shall identify such Reimbursement
Amounts consistent with the reimbursement rights set forth in Section 3.10(a)(ii) and (vii)
and remit such Reimbursement Amounts in accordance with this Section 3.22 or otherwise in
accordance with the documentation establishing the Advance Facility to such Advancing
Person or to a trustee, agent or custodian (an "Advance Facility Trustee") designated by
such Advancing Person in an Advance Facility Notice described below in Section 3.22(b).
Notwithstanding the foregoing, if so required pursuant to the terms of the Advance
Facility, the Master Servicer may direct, and if so directed in writing, the Trustee is
hereby authorized to and shall pay to the Advance Facility Trustee the Reimbursement
Amounts identified pursuant to the preceding sentence. An Advancing Person whose
obligations hereunder are limited to the funding of Advances and/or Servicing Advances
shall not be required to meet the qualifications of a Master Servicer or a Subservicer
pursuant to Section 3.02(a) or 6.02(c) hereof and shall not be deemed to be a Subservicer
under this Agreement. Notwithstanding anything to the contrary herein, in no event shall
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be included in the
Available Distribution Amount or distributed to Certificateholders.
(b) If the Master Servicer enters into an Advance Facility and makes the election set
forth in Section 3.22(a), the Master Servicer and the related Advancing Person shall
deliver to the Trustee a written notice and payment instruction (an "Advance Facility
Notice"), providing the Trustee with written payment instructions as to where to remit
Advance Reimbursement Amounts and/or Servicing Advance Reimbursement Amounts (each to the
extent such type of Reimbursement Amount is included within the Advance Facility) on
subsequent Distribution Dates. The payment instruction shall require the applicable
Reimbursement Amounts to be distributed to the Advancing Person or to an Advance Facility
Trustee designated in the Advance Facility Notice. An Advance Facility Notice may only be
terminated by the joint written direction of the Master Servicer and the related Advancing
Person (and any related Advance Facility Trustee).
(c) Reimbursement Amounts shall consist solely of amounts in respect of Advances and/or
Servicing Advances made with respect to the Mortgage Loans for which the Master Servicer
would be permitted to reimburse itself in accordance with Section 3.10(a)(ii) and (vii)
hereof, assuming the Master Servicer or the Advancing Person had made the related
Advance(s) and/or Servicing Advance(s). Notwithstanding the foregoing, except with respect
to reimbursement of Nonrecoverable Advances as set forth in Section 3.10(c) of this
Agreement, no Person shall be entitled to reimbursement from funds held in the Collection
Account for future distribution to Certificateholders pursuant to this Agreement. Neither
the Depositor nor the Trustee shall have any duty or liability with respect to the
calculation of any Reimbursement Amount, nor shall the Depositor or the Trustee have any
responsibility to track or monitor the administration of the Advance Facility and the
Depositor shall not have any responsibility to track, monitor or verify the payment of
Reimbursement Amounts to the related Advancing Person or Advance Facility Trustee. The
Master Servicer shall maintain and provide to any successor master servicer a detailed
accounting on a loan-by-loan basis as to amounts advanced by, sold, pledged or assigned to,
and reimbursed to any Advancing Person. The successor master servicer shall be entitled to
rely on any such information provided by the Master Servicer, and the successor master
servicer shall not be liable for any errors in such information.
(d) Upon the direction of and at the expense of the Master Servicer, the Trustee agrees
to execute such acknowledgments, certificates, and other documents reasonably satisfactory
to the Trustee provided by the Master Servicer and reasonably satisfactory to the Trustee
recognizing the interests of any Advancing Person or Advance Facility Trustee in such
Reimbursement Amounts as the Master Servicer may cause to be made subject to Advance
Facilities pursuant to this Section 3.22, and such other documents in connection with such
Advance Facility as may be reasonably requested from time to time by any Advancing Person
or Advance Facility Trustee and reasonably satisfactory to the Trustee.
(e) Reimbursement Amounts collected with respect to each Mortgage Loan shall be allocated
to outstanding unreimbursed Advances or Servicing Advances (as the case may be) made with
respect to that Mortgage Loan on a "first-in, first out" ("FIFO") basis, subject to the
qualifications set forth below:
(i) Any successor Master Servicer to Residential Funding (a "Successor Master Servicer")
and the Advancing Person or Advance Facility Trustee shall be required to apply all
amounts available in accordance with this Section 3.22(e) to the reimbursement of
Advances and Servicing Advances in the manner provided for herein; provided, however,
that after the succession of a Successor Master Servicer, (A) to the extent that any
Advances or Servicing Advances with respect to any particular Mortgage Loan are
reimbursed from payments or recoveries, if any, from the related Mortgagor, and
Liquidation Proceeds or Insurance Proceeds, if any, with respect to that Mortgage
Loan, reimbursement shall be made, first, to the Advancing Person or Advance Facility
Trustee in respect of Advances and/or Servicing Advances related to that Mortgage
Loan to the extent of the interest of the Advancing Person or Advance Facility
Trustee in such Advances and/or Servicing Advances, second to the Master Servicer in
respect of Advances and/or Servicing Advances related to that Mortgage Loan in excess
of those in which the Advancing Person or Advance Facility Trustee Person has an
interest, and third, to the Successor Master Servicer in respect of any other
Advances and/or Servicing Advances related to that Mortgage Loan, from such sources
as and when collected, and (B) reimbursements of Advances and Servicing Advances that
are Nonrecoverable Advances shall be made pro rata to the Advancing Person or Advance
Facility Trustee, on the one hand, and any such Successor Master Servicer, on the
other hand, on the basis of the respective aggregate outstanding unreimbursed
Advances and Servicing Advances that are Nonrecoverable Advances owed to the
Advancing Person, Advance Facility Trustee or Master Servicer pursuant to this
Agreement, on the one hand, and any such Successor Master Servicer, on the other
hand, and without regard to the date on which any such Advances or Servicing Advances
shall have been made. In the event that, as a result of the FIFO allocation made
pursuant to this Section 3.22(e), some or all of a Reimbursement Amount paid to the
Advancing Person or Advance Facility Trustee relates to Advances or Servicing
Advances that were made by a Person other than Residential Funding or the Advancing
Person or Advance Facility Trustee, then the Advancing Person or Advance Facility
Trustee shall be required to remit any portion of such Reimbursement Amount to the
Person entitled to such portion of such Reimbursement Amount. Without limiting the
generality of the foregoing, Residential Funding shall remain entitled to be
reimbursed by the Advancing Person or Advance Facility Trustee for all Advances and
Servicing Advances funded by Residential Funding to the extent the related
Reimbursement Amount(s) have not been assigned or pledged to an Advancing Person or
Advance Facility Trustee. The documentation establishing any Advance Facility shall
require Residential Funding to provide to the related Advancing Person or Advance
Facility Trustee loan by loan information with respect to each Reimbursement Amount
distributed to such Advancing Person or Advance Facility Trustee on each date of
remittance thereof to such Advancing Person or Advance Facility Trustee, to enable
the Advancing Person or Advance Facility Trustee to make the FIFO allocation of each
Reimbursement Amount with respect to each Mortgage Loan.
(ii) By way of illustration, and not by way of limiting the generality of the foregoing,
if the Master Servicer resigns or is terminated at a time when the Master Servicer is
a party to an Advance Facility, and is replaced by a Successor Master Servicer, and
the Successor Master Servicer directly funds Advances or Servicing Advances with
respect to a Mortgage Loan and does not assign or pledge the related Reimbursement
Amounts to the related Advancing Person or Advance Facility Trustee, then all
payments and recoveries received from the related Mortgagor or received in the form
of Liquidation Proceeds with respect to such Mortgage Loan (including Insurance
Proceeds collected in connection with a liquidation of such Mortgage Loan) will be
allocated first to the Advancing Person or Advance Facility Trustee until the related
Reimbursement Amounts attributable to such Mortgage Loan that are owed to the Master
Servicer and the Advancing Person, which were made prior to any Advances or Servicing
Advances made by the Successor Master Servicer, have been reimbursed in full, at
which point the Successor Master Servicer shall be entitled to retain all related
Reimbursement Amounts subsequently collected with respect to that Mortgage Loan
pursuant to Section 3.10 of this Agreement. To the extent that the Advances or
Servicing Advances are Nonrecoverable Advances to be reimbursed on an aggregate basis
pursuant to Section 3.10 of this Agreement, the reimbursement paid in this manner
will be made pro rata to the Advancing Person or Advance Facility Trustee, on the one
hand, and the Successor Master Servicer, on the other hand, as described in clause
(i)(B) above.
(f) The Master Servicer shall remain entitled to be reimbursed for all Advances and
Servicing Advances funded by the Master Servicer to the extent the related rights to be
reimbursed therefor have not been sold, assigned or pledged to an Advancing Person.
(g) Any amendment to this Section 3.22 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 3.22, including amendments to add provisions relating to a
successor master servicer, may be entered into by the Trustee, the Depositor and the Master
Servicer without the consent of any Certificateholder, with written confirmation from each
Rating Agency that the amendment will not result in the reduction of the ratings on any
Class of the Certificates below the lesser of the then current or original ratings on such
Certificates and delivery of an Opinion of Counsel as required under Section 11.01(c),
notwithstanding anything to the contrary in Section 11.01 of or elsewhere in this Agreement.
(h) Any rights of set-off that the Trust Fund, the Trustee, the Depositor, any Successor
Master Servicer or any other Person might otherwise have against the Master Servicer under
this Agreement shall not attach to any rights to be reimbursed for Advances or Servicing
Advances that have been sold, transferred, pledged, conveyed or assigned to any Advancing
Person.
(i) At any time when an Advancing Person shall have ceased funding Advances and/or
Servicing Advances (as the case may be) and the Advancing Person or related Advance
Facility Trustee shall have received Reimbursement Amounts sufficient in the aggregate to
reimburse all Advances and/or Servicing Advances (as the case may be) the right to
reimbursement for which were assigned to the Advancing Person, then upon the delivery of a
written notice signed by the Advancing Person and the Master Servicer or its successor or
assign) to the Trustee terminating the Advance Facility Notice (the "Notice of Facility
Termination"), the Master Servicer or its Successor Master Servicer shall again be entitled
to withdraw and retain the related Reimbursement Amounts from the Custodial Account
pursuant to Section 3.10.
(j) After delivery of any Advance Facility Notice, and until any such Advance Facility
Notice has been terminated by a Notice of Facility Termination, this Section 3.22 may not
be amended or otherwise modified without the prior written consent of the related Advancing
Person.
Section 3.23 Special Servicing.
(a) Subject to the conditions described in Section 3.23(b) below, the Holder of the Class
SB Certificates may (but is not obligated to) appoint a special servicer (each, a "Special
Servicer") to service any Mortgage Loan which is delinquent in payment by 120 days or more
as of the related Special Servicing Transfer Date; provided, however, that the aggregate
Stated Principal Balance of Mortgage Loans transferred to a Special Servicer pursuant to
this Section shall not equal or exceed 10% of the Cut-off Date Balance. The Holder of the
Class SB Certificates shall give the Trustee and the Master Servicer not less than 40 days
prior written notice of the date on which it anticipates the transfer of servicing with
respect to any Mortgage Loan to a Special Servicer to occur (the "Special Servicing
Transfer Date"), specifying (i) the Mortgage Loan(s) that it intends to transfer and (ii)
the related Special Servicer.
(b) Any Special Servicer appointed pursuant to Section 3.23(a) above shall (i) be rated
in one of the two highest rating categories as a special servicer by at least two of
Standard & Poor's, Xxxxx'x and Xxxxx Ratings, (ii) satisfy and be subject to all
requirements and obligations of a Subservicer under this Agreement, including but not
limited to, servicing in accordance with the Program Guide and this Agreement, (iii) be
approved by the Master Servicer (which approval shall not be unreasonably withheld), (iv)
be capable of full compliance with Regulation AB and (v) sign an acknowledgement agreeing
to be bound by this Agreement. In addition, no Special Servicer may modify a Mortgage Loan
without the prior written consent of the Master Servicer and such modification shall be in
compliance with Section 3.07(a) hereof.
(c) In connection with the transfer of the servicing of any Mortgage Loan to a Special
Servicer, the Master Servicer or Subservicer of such Mortgage Loan (the "Transferring
Servicer") shall, at such Special Servicer's expense, deliver to such Special Servicer all
documents and records relating to such Mortgage Loan and an accounting of amounts collected
or held by it and otherwise use its best efforts to effect the orderly and efficient
transfer of the servicing of such Mortgage Loan to such Special Servicer. Such Special
Servicer shall thereupon assume all of the rights and obligations of the Transferring
Servicer hereunder arising from and after the Special Servicing Transfer Date, including
the right to receive the related Subservicing Fee from payments of interest received on
such Mortgage Loan (and shall have no rights or entitlement to compensation greater than
that of the Transferring Servicer with respect to such Mortgage Loan) and the Transferring
Servicer shall have no further rights or obligations hereunder with respect to such
Mortgage Loan (except that the Master Servicer shall remain obligated to master service
such Mortgage Loan pursuant to this Agreement). In connection with the transfer of the
servicing of any Mortgage Loan to a Special Servicer, the Master Servicer shall amend the
Mortgage Loan Schedule to reflect that such Mortgage Loans are subserviced by such Special
Servicer.
(d) On any Special Servicing Transfer Date, the related Special Servicer shall reimburse
the Transferring Servicer for all unreimbursed Advances, Servicing Advances and Servicing
Fees, as applicable, relating to the Mortgage Loans for which the servicing is being
transferred. The related Special Servicer shall be entitled to be reimbursed pursuant to
Section 3.10 or otherwise pursuant to this Agreement for all such Advances, Servicing
Advances and Servicing Fees, as applicable, paid to the Transferring Servicer pursuant to
this Section 3.23. In addition, in the event that the Transferring Servicer is a
Subservicer, the Holder of the Class SB Certificates or the related Special Servicer shall
pay any termination fees due to such Transferring Servicer pursuant to the applicable
Subservicing Agreement.
(e) Each Special Servicer agrees to indemnify and hold the Master Servicer and the
Transferring Servicer harmless from and against any and all losses, claims, expenses, costs
or liabilities (including attorneys fees and court costs) incurred by the Master Servicer
or Transferring Servicer, as applicable, as a result of or in connection with the failure
by such Special Servicer to perform the obligations or responsibilities imposed upon or
undertaken by such Special Servicer under this Agreement from and after the related Special
Servicing Transfer Date. The Master Servicer agrees to indemnify and hold each Special
Servicer harmless from and against any and all losses, claims, expenses, costs or
liabilities (including attorneys fees and court costs) incurred by such Special Servicer as
a result of or in connection with the failure by the Master Servicer to perform the
obligations or responsibilities imposed upon or undertaken by the Master Servicer under
this Agreement.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01 Certificate Account.
(a) The Master Servicer acting as agent of the Trustee shall establish and maintain a
Certificate Account in which the Master Servicer shall cause to be deposited on behalf of
the Trustee on or before 2:00 P.M. New York time on each Certificate Account Deposit Date
by wire transfer of immediately available funds an amount equal to the sum of (i) any
Advance for the immediately succeeding Distribution Date, (ii) any amount required to be
deposited in the Certificate Account pursuant to Section 3.12(a), (iii) any amount required
to be deposited in the Certificate Account pursuant to Section 3.16(e) or Section 4.07,
(iv) any amount required to be paid pursuant to Section 9.01, and (v) other amounts
constituting the Available Distribution Amount for the immediately succeeding Distribution
Date.
(b) On or prior to the Business Day immediately following each Determination Date, the
Master Servicer shall determine any amounts owed by the Swap Counterparty under the Swap
Agreement and inform the Supplemental Interest Trust Trustee in writing of the amount so
calculated.
(c) The Trustee shall, upon written request from the Master Servicer, invest or cause the
institution maintaining the Certificate Account to invest the funds in the Certificate
Account in Permitted Investments designated in the name of the Trustee for the benefit of
the Certificateholders, which shall mature not later than the Business Day next preceding
the Distribution Date next following the date of such investment (except that (i) if such
Permitted Investment is an obligation of the institution that maintains such account or
fund for which such institution serves as custodian, then such Permitted Investment may
mature on such Distribution Date and (ii) any other investment may mature on such
Distribution Date if the Trustee shall advance funds on such Distribution Date to the
Certificate Account in the amount payable on such investment on such Distribution Date,
pending receipt thereof to the extent necessary to make distributions on the Certificates)
and shall not be sold or disposed of prior to maturity. All income and gain realized from
any such investment shall be for the benefit of the Master Servicer and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred in respect of
any such investments shall be deposited in the Certificate Account by the Master Servicer
out of its own funds immediately as realized.
Section 4.02......Distributions.
(a) On each Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall allocate and distribute the Available Distribution Amount, if any, for such date to
the interests issued in respect of REMIC I, REMIC II, REMIC III and REMIC IV as specified
in this Section.
(b) (1) On each Distribution Date, the REMIC I Distribution Amount shall be deemed to
be distributed by REMIC I to REMIC II on account of the REMIC I Regular Interests
represented thereby in the amounts and with the priorities set forth in the definition
thereof.
(2) On each Distribution Date, the REMIC II Distribution Amount shall be
deemed to be distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests represented thereby in the amounts and with the priorities set forth in the
definition thereof.
(3) On each Distribution Date, the REMIC III Distribution Amount shall be
deemed to be distributed by REMIC III to REMIC IV on account of the REMIC III Regular
Interests represented thereby in the amounts and with the priorities set forth in the
definition thereof.
(4) On each Distribution Date, the REMIC IV Distribution Amount shall be
deemed to have been distributed by REMIC IV to the Certificateholders on account of the
REMIC IV Regular Interests represented thereby in the amounts and with the priorities
set forth in the definition thereof.
(5) On each Distribution Date, the amount, if any, deemed received by the
Class SB Certificates in respect of REMIC IV Regular Interest IO and under the SB-AB
Swap Agreement shall be deemed to have been paid on behalf of the Class SB Certificates
by the Supplemental Interest Trust Trustee pursuant to Section 4.10 in respect of the
Net Swap Payment owed to the Swap Counterparty. On each Distribution Date, the amount,
if any, received by the Supplemental Interest Trust Trustee from the Swap Counterparty
in respect of the Swap Agreement shall be deemed to have been received by the
Supplemental Interest Trust Trustee on behalf of the Class SB Certificate. On each
Distribution Date, amounts paid to the Class A and Class M Certificates pursuant to
Section 4.02(c)(vii) in respect of Basis Risk Shortfall shall be deemed to have been
paid by the Class SB Certificateholders pursuant to the SB-AM Swap Agreement.
(c) On each Distribution Date (x) the Master Servicer on behalf of the Trustee or (y) the
Paying Agent appointed by the Trustee and the Supplemental Interest Trust Trustee, shall
distribute to each Certificateholder of record on the next preceding Record Date (other
than as provided in Section 9.01 respecting the final distribution) either in immediately
available funds (by wire transfer or otherwise) to the account of such Certificateholder at
a bank or other entity having appropriate facilities therefor, if such Certificateholder
has so notified the Master Servicer or the Paying Agent, as the case may be, or, if such
Certificateholder has not so notified the Master Servicer or the Paying Agent by the Record
Date, by check mailed to such Certificateholder at the address of such Holder appearing in
the Certificate Register such Certificateholder's share (which share with respect to each
Class of Certificates, shall be based on the aggregate of the Percentage Interests
represented by Certificates of the applicable Class held by such Holder of the following
amounts), in the following order of priority, in each case to the extent of the Available
Distribution Amount on deposit in the Certificate Account (except, with respect to clause
(i) below, to the extent of and in the priority of the Class A Interest Distribution
Priority) and the Supplemental Interest Trust Account pursuant to Section 4.10(c) (or, with
respect to clause (xi)(B) below, to the extent of prepayment charges on deposit in the
Certificate Account):
(i) to the Class A Certificateholders, the Accrued Certificate Interest payable on the
Class A Certificates with respect to such Distribution Date, which amounts shall be
allocated pursuant to the Class A Interest Distribution Priority, plus any related
amounts accrued pursuant to this clause (i) but remaining unpaid from any prior
Distribution Date, being paid from and in reduction of the Available Distribution
Amount for such Distribution Date;
(ii) to the Class M Certificateholders, from the amount, if any, of the Available
Distribution Amount remaining after the foregoing distributions, Accrued Certificate
Interest payable on the Class M Certificates with respect to such Distribution Date,
plus any related amounts accrued pursuant to this clause (ii) but remaining unpaid
from any prior Distribution Date, sequentially, to the Class M-1S Certificateholders,
Class M-2S Certificateholders, Class M-3S Certificateholders, Class M-4
Certificateholders, Class M-5 Certificateholders, Class M-6 Certificateholders,
Class M-7 Certificateholders, Class M-8 Certificateholders and Class M-9
Certificateholders, in that order, being paid from and in reduction of the Available
Distribution Amount for such Distribution Date;
(iii) [reserved];
(iv) the Principal Distribution Amount shall be distributed as follows, to be applied to
reduce the Certificate Principal Balance of the applicable Certificates in each case
to the extent of the remaining Principal Distribution Amount:
(A) first, concurrently, the Group I Principal Distribution Amount shall be distributed
sequentially to the Class A-I-1 Certificateholders, Class A-I-2
Certificateholders, Class A-I-3 Certificateholders and Class A-I-4
Certificateholders, in that order, in each case until the Certificate Principal
Balance thereof has been reduced to zero and the Group II Principal
Distribution Amount, to the Class A-II Certificateholders, until the
Certificate Principal Balance thereof has been reduced to zero;
(B) second, after application of payments pursuant to clause (A), concurrently, the Group
II Principal Distribution Amount, sequentially, to the Class A-I-1
Certificateholders, Class A-I-2 Certificateholders, Class A-I-3
Certificateholders and Class A-I-4 Certificateholders, in that order, in each
case until the Certificate Principal Balance thereof has been reduced to zero
and the Group I Principal Distribution Amount, to the Class A-II
Certificateholders, until the Certificate Principal Balance thereof has been
reduced to zero;
(C) third, to the Class M-1S, Class M-2S and Class M-3S Certificateholders, in that
order, the Sequential Class M Principal Distribution Amount, in each case until
the Certificate Principal Balance thereof has been reduced to zero;
(D) fourth, to the Class M-4 Certificateholders, the Class M-4 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-4 Certificates
has been reduced to zero;
(E) fifth, to the Class M-5 Certificateholders, the Class M-5 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-5 Certificates
has been reduced to zero;
(F) sixth, to the Class M-6 Certificateholders, the Class M-6 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-6 Certificates
has been reduced to zero;
(G) seventh, to the Class M-7 Certificateholders, the Class M-7 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-7 Certificates
has been reduced to zero;
(H) eighth, to the Class M-8 Certificateholders, the Class M-8 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-8 Certificates
has been reduced to zero;
(I) ninth, to the Class M-9 Certificateholders, the Class M-9 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-9 Certificates
has been reduced to zero; and
(v) to the Class A Certificateholders and Class M Certificateholders, the amount of any
Prepayment Interest Shortfalls allocated thereto for such Distribution Date, on a pro
rata basis based on Prepayment Interest Shortfalls allocated thereto to the extent
not offset by Eligible Master Servicing Compensation on such Distribution Date;
(vi) to the Class A Certificateholders and Class M Certificateholders, the amount of any
Prepayment Interest Shortfalls previously allocated thereto remaining unpaid from
prior Distribution Dates together with interest thereon at the related Pass-Through
Rate, on a pro rata basis based on unpaid Prepayment Interest Shortfalls previously
allocated thereto;
(vii) (A) concurrently, (1) to the Class A-I Certificateholders, the amount of any unpaid
Group I Basis Risk Shortfalls allocated thereto, on a pro rata basis based on the
amount of unpaid Group I Basis Risk Shortfalls allocated thereto, and (2) to the
Class A-II Certificateholders, the amount of any unpaid Group II Basis Risk
Shortfalls allocated thereto, and (B) sequentially, to the Class M-1S
Certificateholders, Class M-2S Certificateholders, Class M-3S Certificateholders,
Class M-4 Certificateholders, Class M-5 Certificateholders, Class M-6
Certificateholders, Class M-7 Certificateholders, Class M-8 Certificateholders and
Class M-9 Certificateholders, in that order, the related Class M Basis Risk Shortfall
for such Class and that Distribution Date;
(viii) to the Class A Certificateholders and Class M Certificateholders, Relief Act
Shortfalls allocated thereto for such Distribution Date, on a pro rata basis based on
Relief Act Shortfalls allocated thereto for such Distribution Date,
(ix) first, to the Class A Certificateholders, the principal portion of any Realized
Losses previously allocated to those Certificates and remaining unreimbursed, on a
pro rata basis based on their respective principal portion of any Realized Losses
previously allocated to those Certificates and remaining unreimbursed, and then,
sequentially, to the Class M-1S, Class M-2S, Class M-3S, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8 and Class M-9 Certificateholders, in that order, the
principal portion of any Realized Losses previously allocated to such Class and
remaining unreimbursed;
(x) to the Supplemental Interest Trust Account for payment to the Swap Counterparty, any
Swap Termination Payments due to a Swap Counterparty Trigger Event;
(xi) to the Class SB Certificates, (A) from the amount, if any, of the Excess Cash Flow
remaining after the foregoing distributions, the sum of (I) Accrued Certificate
Interest thereon, (II) the amount of any Overcollateralization Reduction Amount for
such Distribution Date and (III) for any Distribution Date after the Certificate
Principal Balance of each Class of Class A Certificates and Class M Certificates has
been reduced to zero, the Overcollateralization Amount, (B) from prepayment charges
on deposit in the Certificate Account, any prepayment charges received on the
Mortgage Loans during the related Prepayment Period and (C) from Net Swap Payments
received by the Supplemental Interest Trust Trustee, if any, the amount of such Net
Swap Payments remaining after the foregoing distributions; and
(xii) to the Class R Certificateholders, the balance, if any, of the Excess Cash Flow.
(d) Notwithstanding the foregoing clause (c), upon the reduction of the Certificate
Principal Balance of a Class of Class A Certificates or Class M Certificates to zero, such
Class of Certificates will not be entitled to further distributions pursuant to
Section 4.02.
(e) 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 Certificate
Registrar, the Depositor or the Master Servicer shall have any responsibility therefor
except as otherwise provided by this Agreement or applicable law.
(f) Except as otherwise provided in Section 9.01, if the Master Servicer anticipates that
a final distribution with respect to any Class of Certificates will be made on a future
Distribution Date, the Master Servicer shall, no later than 40 days prior to such
Distribution Date, notify the Trustee and the Trustee shall, not earlier than the 15th day
and not later than the 25th day of the month next preceding such Distribution Date,
distribute, or cause to be distributed, on such date to each Holder of such Class of
Certificates a notice to the effect that: (i) the Trustee anticipates 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
Trustee or as otherwise specified therein, and (ii) no interest shall accrue on such
Certificates from and after the end of the prior calendar month. In the event that
Certificateholders required to surrender their Certificates pursuant to Section 9.01(c) do
not surrender their Certificates for final cancellation, the Trustee shall cause funds
distributable with respect to such Certificates to be withdrawn from the Certificate
Account and credited to a separate escrow account for the benefit of such
Certificateholders as provided in Section 9.01(d).
Section 4.03......Statements to Certificateholders; Statements to Rating Agencies; Exchange
Act Reporting.
(a) Concurrently with each distribution charged to the Certificate Account and with
respect to each Distribution Date the Master Servicer shall forward to the Trustee and the
Trustee shall forward by mail or otherwise make available electronically on its website
(which may be obtained by any Certificateholder by telephoning the Trustee at (800)
934-6802) to each Holder and the Depositor a statement setting forth the following
information as to each Class of Certificates, in each case to the extent applicable:
(i) the applicable Record Date, Determination Date and Distribution Date, and the date on
which the applicable Interest Accrual Period commenced;
(ii) the aggregate amount of payments received with respect to the Mortgage Loans,
including prepayment amounts;
(iii) the Servicing Fee and Subservicing Fee payable to the Master Servicer and the
Subservicer;
(iv) the amount of any other fees or expenses paid, and the identity of the party
receiving such fees or expenses;
(v) (A) the amount of such distribution to the Certificateholders of such Class
applied to reduce the Certificate Principal Balance thereof, and (B) the aggregate
amount included therein representing Principal Prepayments;
(vi) the amount of such distribution to Holders of such Class of Certificates allocable to
interest (including amounts payable as a portion of the Excess Cash Flow);
(vii) if the distribution to the Holders of such Class of Certificates is less than the
full amount that would be distributable to such Holders if there were sufficient
funds available therefor, the amount of the shortfall;
(viii) the amount of any Advance by the Master Servicer with respect to the Group I
Loans and Group II Loans pursuant to Section 4.04;
(ix) the number and Stated Principal Balance of the Group I Loans, the Group II Loans and
the Mortgage Loans in the aggregate after giving effect to the distribution of
principal on such Distribution Date;
(x) the Certificate Principal Balance of each Class of the Certificates, before and after
giving effect to the amounts distributed on such Distribution Date;
(xi) the Certificate Principal Balance of each Class of Class A Certificates as of the
Closing Date;
(xii) the Certificate Principal Balance of each Class of Class M Certificates as of the
Closing Date;
(xiii) the number and Stated Principal Balance of the Mortgage Loans after giving
effect to the distribution of principal on such Distribution Date and the number of
Mortgage Loans at the beginning and end of the related Due Period;
(xiv) on the basis of the most recent reports furnished to it by Subservicers, (A) the
number and Stated Principal Balances of Group I Loans and Group II Loans that are
Delinquent (1) 30-59 days, (2) 60-89 days and (3) 90 or more days and the number and
Stated Principal Balances of Group I Loans and Group II Loans that are in
foreclosure, (B) the number and aggregate principal balances of the Group I Loans,
Group II Loans and the Mortgage Loans in the aggregate that are Reportable Modified
Mortgage Loans that are in foreclosure and are REO Property, indicating in each case
capitalized Mortgage Loans, other Servicing Modifications and totals, and (C) for all
Reportable Modified Mortgage Loans, the number and aggregate principal balances of
the Group I Loans, Group II Loans and the Mortgage Loans in the aggregate that have
been liquidated, the subject of pay-offs and that have been repurchased by the Master
Servicer or Seller;
(xv) the amount, terms and general purpose of any Advance by the Master Servicer pursuant
to Section 4.04 and the amount of all Advances that have been reimbursed during the
related Due Period;
(xvi) any material modifications, extensions or waivers to the terms of the Mortgage Loans
during the Due Period or that have cumulatively become material over time;
(xvii) any material breaches of Mortgage Loan representations or warranties or
covenants in the Agreement;
(xviii) the number, aggregate principal balance and Stated Principal Balance of any REO
Properties with respect to the Group I Loans and Group II Loans;
(xix) the aggregate Accrued Certificate Interest remaining unpaid, if any, for each Class
of Certificates, after giving effect to the distribution made on such Distribution
Date;
(xx) the aggregate amount of Realized Losses with respect to the Group I Loans and Group
II Loans for such Distribution Date and the aggregate amount of Realized Losses with
respect to the Group I Loans and Group II Loans incurred since the Cut-off Date;
(xxi) the Pass-Through Rate on each Class of Certificates, the Group I Net WAC Cap Rate and
the Group II Net WAC Cap Rate;
(xxii) the Group I Basis Risk Shortfalls, Group II Basis Risk Shortfalls, Class M
Basis Risk Shortfalls and Prepayment Interest Shortfalls;
(xxiii) the Overcollateralization Amount and the Required Overcollateralization Amount
following such Distribution Date;
(xxiv) the number and aggregate principal balance of the Group I Loans and Group II
Loans repurchased under Section 4.07;
(xxv) the aggregate amount of any recoveries with respect to the Group I Loans and Group
II Loans on previously foreclosed loans from Residential Funding;
(xxvi) the weighted average remaining term to maturity of the Group I Loans and Group
II Loans after giving effect to the amounts distributed on such Distribution Date;
(xxvii) the weighted average Mortgage Rates of the Group I Loans and Group II Loans
after giving effect to the amounts distributed on such Distribution Date;
(xxviii) the amount of any Net Swap Payment payable to the Supplemental Interest Trust
Trustee on behalf of the Supplemental Interest Trust, any Net Swap Payment payable to
the Swap Counterparty, any Swap Termination Payment payable to the Trustee on behalf
of the Supplemental Interest Trust and any Swap Termination Payment payable to the
Swap Counterparty; and
(xxix) the occurrence of the Stepdown Date.
In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Certificate with a $1,000 denomination.
In addition to the statement provided to the Trustee as set forth in this Section 4.03(a),
the Master Servicer shall provide to any manager of a trust fund consisting of some or all
of the Certificates, upon reasonable request, such additional information as is reasonably
obtainable by the Master Servicer at no additional expense to the Master Servicer. Also,
at the request of a Rating Agency, the Master Servicer shall provide the information
relating to the Reportable Modified Mortgage Loans substantially in the form attached
hereto as Exhibit U to such Rating Agency within a reasonable period of time; provided,
however, that the Master Servicer shall not be required to provide such information more
than four times in a calendar year to any Rating Agency.
(b) Within a reasonable period of time after the Master Servicer receives a written
request from a Holder of a Certificate, other than a Class R Certificate, the Master
Servicer shall prepare, or cause to be prepared, and shall forward, or cause to be
forwarded, to each Person who at any time during the calendar year was the Holder of a
Certificate, other than a Class R Certificate, a statement containing the information set
forth in clauses (iv) and (v) of subsection (a) above aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder. Such
obligation of the Master Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Master Servicer pursuant to
any requirements of the Code.
(c) Within a reasonable period of time after the Master Servicer receives a written
request from any Holder of a Class R Certificate, the Master Servicer shall prepare, or
cause to be prepared, and shall forward, or cause to be forwarded, to each Person who at
any time during the calendar year was the Holder of a Class R Certificate, a statement
containing the applicable distribution information provided pursuant to this Section 4.03
aggregated for such calendar year or applicable portion thereof during which such Person
was the Holder of a Class R Certificate. Such obligation of the Master Servicer shall be
deemed to have been satisfied to the extent that substantially comparable information shall
be provided by the Master Servicer pursuant to any requirements of the Code.
(d) Upon the written request of any Certificateholder, the Master Servicer, as soon as
reasonably practicable, shall provide the requesting Certificateholder with such
information as is necessary and appropriate, in the Master Servicer's sole discretion, for
purposes of satisfying applicable reporting requirements under Rule 144A.
(e) The Master Servicer shall, on behalf of the Depositor and in respect of the Trust
Fund, sign and cause to be filed with the Commission any periodic reports required to be
filed under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder, including without limitation, reports on Form 10-K, Form 10-D and
Form 8-K. In connection with the preparation and filing of such periodic reports, the
Trustee shall timely provide to the Master Servicer (I) a list of Certificateholders as
shown on the Certificate Register as of the end of each calendar year, (II) copies of all
pleadings, other legal process and any other documents relating to any claims, charges or
complaints involving the Trustee, as trustee hereunder, or the Trust Fund that are received
by a Responsible Officer of the Trustee, (III) notice of all matters that, to the actual
knowledge of a Responsible Officer of the Trustee, have been submitted to a vote of the
Certificateholders, other than those matters that have been submitted to a vote of the
Certificateholders at the request of the Depositor or the Master Servicer, and (IV) notice
of any failure of the Trustee to make any distribution to the Certificateholders as
required pursuant to this Agreement. Neither the Master Servicer nor the Trustee shall have
any liability with respect to the Master Servicer's failure to properly prepare or file
such periodic reports resulting from or relating to the Master Servicer's inability or
failure to obtain any information not resulting from the Master Servicer's own negligence
or willful misconduct.
(f) Any Form 10-K filed with the Commission in connection with this Section 4.03 shall
include, with respect to the Certificates relating to such 10-K:
(i) A certification, signed by the senior officer in charge of the servicing functions of
the Master Servicer, in the form attached as Exhibit T-1 hereto or such other form as
may be required or permitted by the Commission (the "Form 10-K Certification"), in
compliance with Rules 13a-14 and 15d-14 under the Exchange Act and any additional
directives of the Commission.
(ii) A report regarding its assessment of compliance during the preceding calendar year
with all applicable servicing criteria set forth in relevant Commission regulations
with respect to mortgage-backed securities transactions taken as a whole involving
the Master Servicer that are backed by the same types of assets as those backing the
certificates, as well as similar reports on assessment of compliance received from
other parties participating in the servicing function as required by relevant
Commission regulations, as described in Item 1122(a) of Regulation AB. The Master
Servicer shall obtain from all other parties participating in the servicing function
any required assessments.
(iii) With respect to each assessment report described immediately above, a report by a
registered public accounting firm that attests to, and reports on, the assessment
made by the asserting party, as set forth in relevant Commission regulations, as
described in Regulation 1122(b) of Regulation AB and Section 3.19.
(iv) The servicer compliance certificate required to be delivered pursuant Section 3.18.
(g) In connection with the Form 10-K Certification, the Trustee shall provide the Master
Servicer with a back-up certification substantially in the form attached hereto as Exhibit
T-2.
(h) This Section 4.03 may be amended in accordance with this Agreement without the
consent of the Certificateholders.
(i) The Trustee shall make available on the Trustee's internet website each of the
reports filed with the Commission by or on behalf of the Depositor under the Exchange Act,
as soon as reasonably practicable upon delivery of such report to the Trustee.
Section 4.04 Distribution of Reports to the Trustee and the Depositor; Advances by the
Master Servicer.
(a) Prior to the close of business on the Business Day next succeeding each Determination
Date, the Master Servicer shall furnish a written statement (which may be in a mutually
agreeable electronic format) to the Trustee, any Paying Agent and the Depositor (the
information in such statement to be made available to Certificateholders by the Master
Servicer on request) (provided that the Master Servicer shall use its best efforts to
deliver such written statement not later than 12:00 p.m. New York time on the second
Business Day prior to the Distribution Date) setting forth (i) the Available Distribution
Amount, (ii) the amounts required to be withdrawn from the Custodial Account and deposited
into the Certificate Account on the immediately succeeding Certificate Account Deposit Date
pursuant to clause (iii) of Section 4.01(a), (iii) the amount of Prepayment Interest
Shortfalls and Basis Risk Shortfalls and (iv) the Swap Payments, if any, for such
Distribution Date. The determination by the Master Servicer of such amounts shall, in the
absence of obvious error, be presumptively deemed to be correct for all purposes hereunder
and the Trustee shall be protected in relying upon the same without any independent check
or verification.
(b) On or before 2:00 P.M. New York time on each Certificate Account Deposit Date, the
Master Servicer shall either (i) remit to the Trustee for deposit in the Certificate
Account from its own funds, or funds received therefor from the Subservicers, an amount
equal to the Advances to be made by the Master Servicer in respect of the related
Distribution Date, which shall be in an aggregate amount equal to the sum of (A) the
aggregate amount of Monthly Payments other than Balloon Payments (with each interest
portion thereof adjusted to a per annum rate equal to the Net Mortgage Rate), less the
amount of any related Servicing Modifications, Debt Service Reductions or Relief Act
Shortfalls, on the Outstanding Mortgage Loans as of the related Due Date in the related Due
Period, which Monthly Payments were due during the related Due Period and not received as
of the close of business as of the related Determination Date; provided that no Advance
shall be made if it would be a Nonrecoverable Advance and (B) with respect to each Balloon
Loan delinquent in respect of its Balloon Payment as of the close of business on the
related Determination Date, an amount equal to the assumed Monthly Payment (with each
interest portion thereof adjusted to a per annum rate equal to the Net Mortgage Rate) that
would have been due on the related Due Date based on the original amortization schedule for
such Balloon Loan until such Balloon Loan is finally liquidated, over any payments of
interest or principal (with each interest portion thereof adjusted to a per annum rate
equal to the Net Mortgage Rate) received from the related Mortgagor as of the close of
business on the related Determination Date and allocable to the Due Date during the related
Due Period for each month until such Balloon Loan is finally liquidated, (ii) withdraw from
amounts on deposit in the Custodial Account and remit to the Trustee for deposit in the
Certificate Account all or a portion of the Amount Held for Future Distribution in
discharge of any such Advance, or (iii) make advances in the form of any combination of
clauses (i) and (ii) aggregating the amount of such Advance. Any portion of the Amount
Held for Future Distribution so used shall be replaced by the Master Servicer by deposit in
the Certificate Account on or before 11:00 A.M. New York time on any future Certificate
Account Deposit Date to the extent that funds attributable to the Mortgage Loans that are
available in the Custodial Account for deposit in the Certificate Account on such
Certificate Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date. The Master Servicer shall be entitled to
use any Advance made by a Subservicer as described in Section 3.07(b) that has been
deposited in the Custodial Account on or before such Distribution Date as part of the
Advance made by the Master Servicer pursuant to this Section 4.04. The determination by
the Master Servicer that it has made a Nonrecoverable Advance or that any proposed Advance,
if made, would constitute a Nonrecoverable Advance, shall be evidenced by a certificate of
a Servicing Officer delivered to the Depositor and the Trustee. In the event that the
Master Servicer determines as of the Business Day preceding any Certificate Account Deposit
Date that it will be unable to deposit in the Certificate Account an amount equal to the
Advance required to be made for the immediately succeeding Distribution Date, it shall give
notice to the Trustee of its inability to advance (such notice may be given by telecopy),
not later than 3:00 P.M., New York time, on such Business Day, specifying the portion of
such amount that it will be unable to deposit. Not later than 3:00 P.M., New York time, on
the Certificate Account Deposit Date the Trustee shall, unless by 12:00 Noon, New York
time, on such day the Trustee shall have been notified in writing (by telecopy) that the
Master Servicer shall have directly or indirectly deposited in the Certificate Account such
portion of the amount of the Advance as to which the Master Servicer shall have given
notice pursuant to the preceding sentence, pursuant to Section 7.01, (a) terminate all of
the rights and obligations of the Master Servicer under this Agreement in accordance with
Section 7.01 and (b) assume the rights and obligations of the Master Servicer hereunder,
including the obligation to deposit in the Certificate Account an amount equal to the
Advance for the immediately succeeding Distribution Date. The Trustee shall deposit all
funds it receives pursuant to this Section 4.04(b) into the Certificate Account.
Section 4.05 Allocation of Realized Losses.
(a) Prior to each Distribution Date, the Master Servicer shall determine the total amount
of Realized Losses, if any, that resulted from any Cash Liquidation, Servicing
Modifications, Debt Service Reduction, Deficient Valuation or REO Disposition that occurred
during the related Prepayment Period or, in the case of a Servicing Modification that
constitutes a reduction of the interest rate on a Mortgage Loan, the amount of the
reduction in the interest portion of the Monthly Payment due in the month in which such
Distribution Date occurs. The amount of each Realized Loss shall be evidenced by an
Officers' Certificate.
(b) All Realized Losses on the Mortgage Loans shall be allocated as follows:
(i) first, to Excess Cash Flow in the amounts and priority as provided in Section 4.02;
(ii) second, in reduction of the Overcollateralization Amount, until such amount has been
reduced to zero;
(iii) third, to the Class M-9 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(iv) fourth, to the Class M-8 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(v) fifth, to the Class M-7 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(vi) sixth, to the Class M-6 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(vii) seventh, to the Class M-5 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(viii) eighth, to the Class M-4 Certificates, until the aggregate Certificate
Principal Balance thereof has been reduced to zero;
(ix) ninth, to the Class M-3S Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(x) tenth, to the Class M-2S Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(xi) eleventh, to the Class M-1S Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero; and
(xii) twelfth, for losses on the Group I Loans to the Class A-I-1, Class A-I-2, Class A-I-3
and Class A-I-4 Certificates on a pro rata basis, based on their then
outstanding Certificate Principal Balances prior to giving effect to
distributions to be made on such Distribution Date, until the aggregate
Certificate Principal Balance of each such Class has been reduced to zero
and for losses on the Group II Loans, to the Class A-II Certificates,
until the Certificate Principal Balance thereof has been reduced to zero.
(c) 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 in the case of the principal portion of a Realized Loss or based on the
Accrued Certificate Interest thereon payable on such Distribution Date in the case of an
interest portion of a Realized Loss. Any allocation of the principal portion of Realized
Losses (other than Debt Service Reductions) to the Class A Certificates or Class M
Certificates shall be made by reducing the Certificate Principal Balance thereof by the
amount so allocated, which allocation shall be deemed to have occurred on such Distribution
Date; provided, that no such reduction shall reduce the aggregate Certificate Principal
Balance of the Certificates below the aggregate Stated Principal Balance of the Mortgage
Loans. Allocations of the interest portions of Realized Losses (other than any interest
rate reduction resulting from a Servicing Modification) shall be made by operation of the
definition of "Accrued Certificate Interest" for each Class for such Distribution Date.
Allocations of the interest portion of a Realized Loss resulting from an interest rate
reduction in connection with a Servicing Modification shall be made by operation of the
priority of payment provisions of Section 4.02(c). Allocations of the principal portion of
Debt Service Reductions shall be made by operation of the priority of payment provisions of
Section 4.02(c). 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.
(d) All Realized Losses on the Mortgage Loans shall be allocated on each Distribution
Date to the REMIC I Regular Interests, the REMIC II Regular Interests and the REMIC III
Regular Interests as provided in the definition of REMIC I Realized Losses, REMIC II
Realized Losses and REMIC III Realized Losses, respectively.
(e) Realized Losses allocated to the Excess Cash Flow or the Overcollateralization Amount
pursuant to paragraphs (a), (b) or (c) of this Section, the definition of Accrued
Certificate Interest and the operation of Section 4.02(c) shall be deemed allocated to the
Class SB Certificates. Realized Losses allocated to the Class SB Certificates shall, to
the extent such Realized Losses represent Realized Losses on an interest portion, be
allocated to REMIC IV Regular Interest SB-IO. Realized Losses allocated to the Excess Cash
Flow pursuant to paragraph (b) of this Section shall be deemed to reduce Accrued
Certificate Interest on REMIC IV Regular Interest SB-IO. Realized Losses allocated to the
Overcollateralization Amount pursuant to paragraph (b) of this Section shall be deemed
first to reduce the principal balance of REMIC IV Regular Interest SB-PO until such
principal balance shall have been reduced to zero and thereafter to reduce accrued and
unpaid interest on REMIC IV Regular Interest SB-IO.
Section 4.06 Reports of Foreclosures and Abandonment of Mortgaged Property.
The Master Servicer or the Subservicers shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, the reports of
foreclosures and abandonments of any Mortgaged Property and the informational returns
relating to cancellation of indebtedness income with respect to any Mortgaged Property
required by Sections 6050H, 6050J and 6050P of the Code, respectively, and deliver to the
Trustee an Officers' Certificate on or before March 31 of each year, beginning with the
first March 31 that occurs at least six months after the Cut-off Date, stating that such
reports have been filed. 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 4.07 Optional Purchase of Defaulted Mortgage Loans.
(a) With respect to any Mortgage Loan which is delinquent in payment by 90 days or more,
(i) the Holder of the Class SB Certificate may, at its option, upon twenty days prior
written notice to the Master Servicer, purchase such Mortgage Loan from the Trustee at the
Purchase Price therefore, except that in no event shall the Holder of the Class SB
Certificate purchase such Mortgage Loan where the aggregate value of all such Mortgage
Loans purchased by the Holder of the Class SB Certificate would be greater than three
percent (3%) of the Certificate Principal Balance of any Certificate and (ii) if the Holder
of the Class SB Certificate fails to provide notice pursuant to the immediately preceding
sentence, the Master Servicer may, at its option, purchase such Mortgage Loan from the
Trustee at the Purchase Price therefor; provided, that with respect to the Master Servicer,
such Mortgage Loan that becomes 90 days or more delinquent during any given Calendar
Quarter shall only be eligible for purchase pursuant to this Section during the period
beginning on the first Business Day of the following Calendar Quarter, and ending at the
close of business on the second-to-last Business Day of such following Calendar Quarter;
and provided, further, that such Mortgage Loan is 90 days or more delinquent at the time of
repurchase. Such option if not exercised shall not thereafter be reinstated as to any
Mortgage Loan, unless the delinquency is cured and the Mortgage Loan thereafter again
becomes delinquent in payment by 90 days or more in a subsequent Calendar Quarter.
(b) If at any time the Master Servicer makes a payment to the Certificate Account
covering the amount of the Purchase Price for such a Mortgage Loan as provided in clause
(a) above, and the Master Servicer provides to the Trustee a certification signed by a
Servicing Officer stating that the amount of such payment has been deposited in the
Certificate Account, then the Trustee shall execute the assignment of such Mortgage Loan at
the request of the Master Servicer without recourse to the Master Servicer which shall
succeed to all the Trustee's right, title and interest in and to such Mortgage Loan, and
all security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. The Master Servicer will thereupon own such Mortgage, and
all such security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
Section 4.08 [Reserved].
Section 4.09 [Reserved].
Section 4.10 Swap Agreement.
(a) On the Closing Date, the Supplemental Interest Trust Trustee shall (i) establish and
maintain in its name, in trust for the benefit of the Certificateholders, the Supplemental
Interest Trust Account and (ii) for the benefit of the Certificateholders, cause the
Supplemental Interest Trust to enter into the Swap Agreement.
(b) The Supplemental Interest Trust Trustee shall deposit in the Supplemental Interest
Trust Account all payments that are payable to the Supplemental Interest Trust under the
Swap Agreement. Net Swap Payments and Swap Termination Payments (other than Swap
Termination Payments resulting from a Swap Counterparty Trigger Event) payable by the
Supplemental Interest Trust to the Swap Counterparty pursuant to the Swap Agreement shall
be excluded from the Available Distribution Amount and paid to the Swap Counterparty prior
to any distributions to the Certificateholders. On each Distribution Date, such amounts
will be remitted by the Supplemental Interest Trust Trustee to the Supplemental Interest
Trust Account for payment to the Swap Counterparty, and such amounts (plus any amounts
deposited into the Supplemental Interest Trust Account pursuant to Section 4.02(c)(x))
shall be paid to the Swap Counterparty in the following order of priority: first to make
any Net Swap Payment owed to the Swap Counterparty pursuant to the Swap Agreement for such
Distribution Date; and second to make any Swap Termination Payment (not due to a Swap
Counterparty Trigger Event) owed to the Swap Counterparty pursuant to the Swap Agreement
for such Distribution Date. For federal income tax purposes, such amounts paid to the
Supplemental Interest Trust Account on each Distribution Date shall first be deemed paid to
the Supplemental Interest Trust Account in respect of REMIC IV Regular Interest IO to the
extent of the amount distributable on such REMIC IV Regular Interest IO on such
Distribution Date, and any remaining amount shall be deemed paid to the Supplemental
Interest Trust Account in respect of the SB-AM Swap Agreement. Any Swap Termination
Payment triggered by a Swap Counterparty Trigger Event owed to the Swap Counterparty
pursuant to the Swap Agreement will be subordinated to distributions to the Holders of the
Class A Certificates and Class M Certificates and shall be paid as set forth under
Section 4.02.
(c) Net Swap Payments payable by the Swap Counterparty to the Supplemental Interest Trust
Trustee on behalf of the Supplemental Interest Trust pursuant to the Swap Agreement shall
be deposited by the Supplemental Interest Trust Trustee into the Supplemental Interest
Trust Account and shall be applied in accordance with Section 4.02.
(d) Subject to Sections 8.01 and 8.02 hereof, the Supplemental Interest Trust Trustee
agrees to comply with the terms of the Swap Agreement and to enforce the terms and
provisions thereof against the Swap Counterparty at the written direction of the Holders of
Certificates entitled to at least 51% of the Voting Rights, or if the Supplemental Interest
Trust Trustee does not receive such direction from such Certificateholders, then at the
written direction of Residential Funding.
(e) The Supplemental Interest Trust Account shall be an Eligible Account. Amounts held in
the Supplemental Interest Trust Account from time to time shall continue to constitute
assets of the Supplemental Interest Trust, but not of the REMICs, until released from the
Supplemental Interest Trust Account pursuant to this Section 4.10. The Supplemental
Interest Trust Account constitutes an "outside reserve fund" within the meaning of Treasury
Regulation Section 1.860G-2(h) and is not an asset of the REMICs. The Class SB
Certificateholders shall be the owners of the Supplemental Interest Trust Account. The
Supplemental Interest Trust Trustee shall keep records that accurately reflect the funds on
deposit in the Supplemental Interest Trust Account. The Supplemental Interest Trust Trustee
shall, at the written direction of the Master Servicer, invest amounts on deposit in the
Supplemental Interest Trust Account in Permitted Investments. In the absence of written
direction to the Supplemental Interest Trust Trustee from the Master Servicer, all funds in
the Supplemental Interest Trust Account shall remain uninvested.
(f) The Supplemental Interest Trust Trustee shall, on behalf of the holders of each Class
of Certificates (other than the Class SB Certificates and Class R Certificates) enter into
the SB-AM Swap Agreement, with itself, on behalf of the holders of the Class SB
Certificates. Pursuant to the SB-AM Swap Agreement, all holders of Certificates (other
than the Class SB Certificates and Class R Certificates) shall be treated as having agreed
to pay, on each Distribution Date, to the holder of the Class SB Certificates an aggregate
amount equal to the excess, if any, of (i) the amount payable on such Distribution Date on
the REMIC IV Regular Interest corresponding to 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"). In addition, pursuant to the SB-AM Swap Agreement, the
holder of the Class SB Certificates shall be treated as having agreed to pay the related
Basis Risk Shortfalls to the holders of the Certificates (other than the Class SB
Certificates and Class R Certificates) in accordance with the terms of this Agreement. Any
payments to the Certificates from amounts deemed received in respect of the SB-AM Swap
Agreement 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 SB Certificates and Class R 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 REMIC IV Regular Interest corresponding to such Class of Certificates and as
having been paid by such holders to the Supplemental Interest Trust Account pursuant to the
SB-AM Swap Agreement. Thus, each Certificate (other than the Class R Certificates) shall
be treated as representing not only ownership of regular interests in REMIC IV, but also
ownership of an interest in, and obligations with respect to, a notional principal contract.
(g) Upon the occurrence of an Early Termination Date, the Supplemental Interest Trust
Trustee shall use reasonable efforts to appoint a successor swap counterparty. To the
extent that the Supplemental Interest Trust Trustee receives a Swap Termination Payment
from the Swap Counterparty, the Supplemental Interest Trust Trustee shall apply such Swap
Termination Payment to appoint a successor swap counterparty. In the event that the
Supplemental Interest Trust receives a Swap Termination Payment from the Swap Counterparty
and a replacement swap agreement or similar agreement cannot be obtained within 30 days
after receipt by the Supplemental Interest Trust Trustee of such Swap Termination Payment,
then the Supplemental Interest Trust Trustee shall deposit such Swap Termination Payment
into a separate, non interest bearing account and will, on each subsequent Distribution
Date, withdraw from the amount then remaining on deposit in such reserve account an amount
equal to the Net Swap Payment, if any, that would have been paid to the Supplemental
Interest Trust by the original Swap Counterparty calculated in accordance with the terms of
the original Swap Agreement, and deposit such amount into the Supplemental Interest Trust
Account for distribution on such Distribution Date pursuant to Section 4.02(c). To the
extent that the Supplemental Interest Trust is required to pay a Swap Termination Payment
to the Swap Counterparty, any upfront payment received from the counterparty to a
replacement swap agreement will be used to pay such Swap Termination Payment prior to using
any portion of the Available Distribution Amount for such Distribution Date.
(h) The Supplemental Interest Trust Trustee is hereby directed by the Depositor, on or
before the Closing Date, to sign the Swap Agreement and the SB-AM Swap Agreement on behalf
of the Supplemental Interest Trust for the benefit of the Certificateholders, in the form
presented to it by the Depositor. The Supplemental Interest Trust Trustee shall have no
responsibility for the contents, adequacy or sufficiency of the Swap Agreement or the SB-AM
Swap Agreement, including, without limitation, any representations and warranties contained
herein.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
(a) The Class A Certificates, Class M Certificates, Class SB Certificates and Class R
Certificates shall be substantially in the forms set forth in Exhibits A, B, C and D,
respectively, and shall, on original issue, be executed and delivered by the Trustee to the
Certificate Registrar for authentication and delivery to or upon the order of the Depositor
upon receipt by the Trustee or the Custodian of the documents specified in Section 2.01.
Each class of Class A Certificates and the Class M Certificates shall be issuable in
minimum dollar denominations of $100,000 and integral multiples of $1 in excess thereof.
The Class SB Certificates shall be issuable in registered, certificated form in minimum
percentage interests of 5.00% and integral multiples of 0.01% in excess thereof. Each
Class of Class R Certificates shall be issued in registered, certificated form in minimum
percentage interests of 20.00% and integral multiples of 0.01% in excess thereof; provided,
however, that one Class R Certificate of each Class will be issuable to the REMIC
Administrator as "tax matters person" pursuant to Section 10.01(c) in a minimum
denomination representing a Percentage Interest of not less than 0.01%. The Certificates
shall be executed by manual or facsimile signature on behalf of an authorized officer of
the Trustee. Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Trustee shall bind the Trustee, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificate or did not hold such offices at the date of
such Certificates. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date of their
authentication.
(b) (i) The Class A Certificates and Class M Certificates shall initially be issued as
one or more Certificates 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
Trustee 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 each Class A Certificate and
Class M Certificate through the book-entry facilities of the Depository and, except as
provided below, shall not be entitled to 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 transfer the Ownership Interests only 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.
(ii) The Trustee, the Master Servicer and the Depositor may for all purposes
(including the making of payments due on the respective Classes of Book-Entry Certificates)
deal with the Depository as the authorized representative of the Certificate Owners with
respect to the respective Classes of Book-Entry Certificates for purposes of exercising the
rights of Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry 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 any Class of Book-Entry Certificates with
respect to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trustee 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.
(iii).If with respect to any Book-Entry Certificate (i)(A) the Depositor
advises the Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository with respect to such Book-Entry Certificate
and (B) the Depositor is unable to locate a qualified successor, or (ii) (A) the Depositor
at its option advises the Trustee in writing that it elects to terminate the book-entry
system for such Book-Entry Certificate through the Depository and (B) upon receipt of
notice from the Depository of the Depositor's election to terminate the book-entry system
for such Book-Entry Certificate, the Depository Participants holding beneficial interests
in such Book-Entry Certificates agree to initiate such termination, the Trustee shall
notify all Certificate Owners of such Book-Entry Certificate, through the Depository, of
the occurrence of any such event and of the availability of Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from the
Depository for registration of transfer, the Trustee shall issue the Definitive
Certificates.
(iv) In addition, if an Event of Default has occurred and is continuing, each
Certificate Owner materially adversely affected thereby may at its option request a
Definitive Certificate evidencing such Certificate Owner's Percentage Interest in the
related Class of Certificates. In order to make such request, such Certificate Owner
shall, subject to the rules and procedures of the Depository, provide the Depository or the
related Depository Participant with directions for the Certificate Registrar to exchange or
cause the exchange of the Certificate Owner's interest in such Class of Certificates for an
equivalent Percentage Interest in fully registered definitive form. Upon receipt by the
Certificate Registrar of instructions from the Depository directing the Certificate
Registrar to effect such exchange (such instructions to contain information regarding the
Class of Certificates and the Certificate Principal Balance being exchanged, the Depository
Participant account to be debited with the decrease, the registered holder of and delivery
instructions for the Definitive Certificate, and any other information reasonably required
by the Certificate Registrar), (i) the Certificate Registrar shall instruct the Depository
to reduce the related Depository Participant's account by the aggregate Certificate
Principal Balance of the Definitive Certificate, (ii) the Trustee shall execute and the
Certificate Registrar shall authenticate and deliver, in accordance with the registration
and delivery instructions provided by the Depository, a Definitive Certificate evidencing
such Certificate Owner's Percentage Interest in such Class of Certificates and (iii) the
Trustee shall execute and the Certificate Registrar shall authenticate a new Book-Entry
Certificate reflecting the reduction in the aggregate Certificate Principal Balance of such
Class of Certificates by the amount of the Definitive Certificates.
(v) None of the Depositor, the Master Servicer or the Trustee shall be liable
for any actions taken by the Depository or its nominee, including, without limitation, any
delay in delivery of any instructions required under this Section 5.01 and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee and the Master Servicer shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.
(c) Each of the Certificates is intended to be a "security" governed by Article 8 of the
Uniform Commercial Code as in effect in the State of New York and any other applicable
jurisdiction, to the extent that any of such laws may be applicable.
Section 5.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies to be appointed
by the Trustee in accordance with the provisions of Section 8.12 a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Trustee is initially appointed Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates as herein
provided. The Certificate Registrar, or the Trustee, shall provide the Master Servicer
with a certified list of Certificateholders as of each Record Date prior to the related
Determination Date.
(b) Upon surrender for registration of transfer of any Certificate at any office or
agency of the Trustee maintained for such purpose pursuant to Section 8.12 and, in the case
of any Class SB Certificate or Class R Certificate, upon satisfaction of the conditions set
forth below, the Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new
Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be exchanged for other
Certificates of authorized denominations of a like Class and aggregate Percentage Interest,
upon surrender of the Certificates to be exchanged at any such office or agency. Whenever
any Certificates are so surrendered for exchange the Trustee shall execute and the
Certificate Registrar shall authenticate and deliver the Certificates of such Class 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 Trustee or
the Certificate Registrar) be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing.
(d) (i) No transfer, sale, pledge or other disposition of a Class SB Certificate or
Class R Certificate shall be made unless such transfer, sale, pledge or other disposition
is exempt from the registration requirements of the Securities Act, and any applicable
state securities laws or is made in accordance with said Act and laws.
(ii) Except as otherwise provided in this Section 5.02(d), in the event that a transfer of
a Class SB Certificate or Class R Certificate is to be made, (i) unless the Depositor
directs the Trustee otherwise, the Trustee shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and the Depositor that
such transfer may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from said Act and laws or is being made pursuant to said Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee, the Trust Fund, the
Depositor or the Master Servicer, and (ii) the Trustee shall require the transferee to
execute a representation letter, substantially in the form of Exhibit I hereto, and the
Trustee shall require the transferor to execute a representation letter, substantially in
the form of Exhibit J hereto, each acceptable to and in form and substance satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the facts
surrounding such transfer, which representation letters shall not be an expense of the
Trustee, the Trust Fund, the Depositor or the Master Servicer. In lieu of the requirements
set forth in the preceding sentence, Class SB Certificates or Class R Certificates may be
made in accordance with this Section 5.02(d) if the prospective transferee of such a
Certificate provides the Trustee and the Master Servicer with an investment letter
substantially in the form of Exhibit N-1 attached hereto, which investment letter shall not
be an expense of the Trustee, the Depositor, or the Master Servicer, and which investment
letter states that, among other things, such transferee (i) is a Qualified Institutional
Buyer, acting for its own account or the accounts of other Qualified Institutional Buyer,
and (ii) is aware that the proposed transferor intends to rely on the exemption from
registration requirements under the Securities Act provided by Rule 144A. The Holder of a
Class SB Certificate or Class R Certificate desiring to effect any transfer, sale, pledge
or other disposition shall, and does hereby agree to, indemnify the Trustee, the Depositor,
the Master Servicer and the Certificate Registrar against any liability that may result if
the transfer, sale, pledge or other disposition is not so exempt or is not made in
accordance with such federal and state laws and this Agreement.
(e) (i) In the case of any Class SB or Class R Certificate presented for registration
in the name of any Person, either (A) the Trustee shall require an Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee, the Depositor and the
Master Servicer to the effect that the purchase or holding of such Class SB or Class R
Certificate is permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
(or comparable provisions of any subsequent enactments), and will not subject the Trustee,
the Depositor or the Master Servicer 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 Trustee, the
Depositor or the Master Servicer, or (B) the prospective transferee shall be required to
provide the Trustee, the Depositor and the Master Servicer with a certification to the
effect set forth in Exhibit P (with respect to a Class SB Certificate) or in paragraph
fifteen of Exhibit H-1 (with respect to a Class R Certificate), which the Trustee may rely
upon without further inquiry or investigation, or such other certifications as the Trustee
may deem desirable or necessary in order to establish that such transferee or the Person in
whose name such registration is requested is not an employee benefit plan or other plan or
arrangement subject to the prohibited transaction provisions of ERISA or Section 4975 of
the Code, or any Person (including an insurance company investing its general accounts, an
investment manager, a named fiduciary or a trustee of any such plan) who is using "plan
assets" of any such plan to effect such acquisition (each of the foregoing, a "Plan
Investor").
(ii) Any Transferee of a Class M Certificate (or interest therein) acquired
after termination of the Swap Agreement 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 Investor, (b) it has acquired and is holding such Certificate in
reliance on U.S. Department of Labor Prohibited Transaction Exemption ("PTE") 94-29, as
most recently amended by PTE 2002-41, 67 Fed. Reg. 54487 (Aug. 22, 2002) (the "RFC
Exemption"), and that it understands that there are certain conditions to the availability
of the RFC Exemption, including that such Certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by Fitch, Standard & Poor's or Moody's
or (c) (x) such Transferee is an insurance company, (y) the source of funds used to
purchase or hold such Certificate (or interest therein) is an "insurance company general
account" (as defined in Prohibited Transaction Class Exemption ("PTCE") 95-60), and (z) the
conditions set forth in Sections I and III of PTCE 95-60 have been satisfied (each entity
that satisfies this clause (c), a "Complying Insurance Company").
(iii) If any Class M Certificate (or any interest therein) is acquired or held
by any Person that does not satisfy the conditions described in paragraph (ii) above, then
the last preceding Transferee that either (x) is not a Plan Investor, (y) acquired such
Certificate in compliance with the RFC Exemption or (z) is a Complying Insurance Company
shall be restored, to the extent permitted by law, to all rights and obligations as
Certificate Owner thereof retroactive to the date of such Transfer of such Class M
Certificate. The Trustee shall be under no liability to any Person for making any payments
due on such Certificate to such preceding Transferee.
(iv) Any purported Certificate Owner whose acquisition or holding of any Class
SB or Class M Certificate (or interest therein) was effected in violation of the
restrictions in this Section 5.02(e) shall indemnify and hold harmless the Depositor, the
Trustee, the Master Servicer, any Subservicer, any underwriter and the Trust Fund from and
against any and all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.
(v) Each Holder of a Certificate or any interest therein acquired as of any
date prior to the termination of the Swap Agreement that is a Plan Investor shall be deemed
to have represented, by its acquisition or holding of such Certificate or any interest
therein, that at least one of PTCE 84-14, 90-1, 91-38, 95-60 or 96-23 or other applicable
exemption applies to such Holder's right to receive payments from the Supplemental Interest
Trust.
(vi) Any Transferee of a Class M Certificate will be deemed to have
represented by virtue of its purchase or holding of such Certificate or interest therein
that such Certificate, at the time of purchase, is rated not lower than "BBB-" (or its
equivalent) by Fitch, Standard & Poors or Moodys.
(f) (i) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership Interest to
have agreed to be bound by the following provisions and to have irrevocably authorized the
Trustee or its designee under clause (iii)(A) below to deliver payments to a Person other
than such Person and to negotiate the terms of any mandatory sale under clause (iii)(B)
below and to execute all instruments of transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any Ownership Interest
in a Class R Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly notify the Trustee
of any change or impending change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to it, and shall not
register the Transfer of any Class R Certificate until its receipt of,
(I) an affidavit and agreement (a "Transfer Affidavit and
Agreement," in the form attached hereto as Exhibit H-1) from the proposed Transferee, in
form and substance satisfactory to the Master Servicer, representing and warranting, among
other things, that it is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person who is not a Permitted Transferee, that for so
long as it retains its Ownership Interest in a Class R Certificate, it will endeavor to
remain a Permitted Transferee, and that it has reviewed the provisions of this
Section 5.02(f) and agrees to be bound by them, and
(II) a certificate, in the form attached hereto as Exhibit H-2,
from the Holder wishing to transfer the Class R Certificate, in form and substance
satisfactory to the Master Servicer, representing and warranting, among other things, that
no purpose of the proposed Transfer is to impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a Responsible Officer of the
Trustee who is assigned to this Agreement has actual knowledge that the proposed Transferee
is not a Permitted Transferee, no Transfer of an Ownership Interest in a Class R
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Class R 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 Class R
Certificate and (y) not to transfer its Ownership Interest unless it provides a certificate
to the Trustee in the form attached hereto as Exhibit H-2.
(E) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in such Certificate, agrees to
give the Trustee written notice that it is a "pass-through interest holder" within the
meaning of Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Class R Certificate, if it is, or is holding an
Ownership Interest in a Class R Certificate on behalf of, a "pass-through interest holder."
(ii) The Trustee shall register the Transfer of any Class R Certificate only if it shall
have received the Transfer Affidavit and Agreement, a certificate of the Holder
requesting such transfer in the form attached hereto as Exhibit H-2 and all of such
other documents as shall have been reasonably required by the Trustee as a condition
to such registration. Transfers of the Class R Certificates to Non-United States
Persons and Disqualified Organizations (as defined in Section 860E(e)(5) of the Code)
are prohibited.
(A) If any Disqualified Organization shall become a holder of a
Class R Certificate, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof retroactive to the
date of registration of such Transfer of such Class R Certificate. If a Non-United States
Person shall become a holder of a Class R Certificate, then the last preceding United
States Person shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of such Transfer of
such Class R Certificate. If a transfer of a Class R Certificate is disregarded pursuant
to the provisions of Treasury Regulations Section 1.860E-1 or Section 1.860G-3, then the
last preceding Permitted Transferee shall be restored, to the extent permitted by law, to
all rights and obligations as Holder thereof retroactive to the date of registration of
such Transfer of such Class R Certificate. The Trustee shall be under no liability to any
Person for any registration of Transfer of a Class R Certificate that is in fact not
permitted by this Section 5.02(f) 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 Class R
Certificate in violation of the restrictions in this Section 5.02(f) and to the extent that
the retroactive restoration of the rights of the Holder of such Class R Certificate as
described in clause (iii)(A) above shall be invalid, illegal or unenforceable, then the
Master Servicer shall have the right, without notice to the holder or any prior holder of
such Class R Certificate, to sell such Class R Certificate to a purchaser selected by the
Master Servicer on such terms as the Master Servicer may choose. Such purported Transferee
shall promptly endorse and deliver each Class R Certificate in accordance with the
instructions of the Master Servicer. Such purchaser may be the Master Servicer itself or
any Affiliate of the Master Servicer. The proceeds of such sale, net of the commissions
(which may include commissions payable to the Master Servicer or its Affiliates), expenses
and taxes due, if any, will be remitted by the Master Servicer 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 Master Servicer, and the Master Servicer shall not
be liable to any Person having an Ownership Interest in a Class R Certificate as a result
of its exercise of such discretion.
(iii) The Master Servicer, on behalf of the Trustee, shall make available, upon written
request from the Trustee, all information necessary to compute any tax imposed
(A) as a result of the Transfer of an Ownership Interest in a
Class R Certificate to any Person who is a Disqualified Organization, including the
information regarding "excess inclusions" of such Class R Certificates required to be
provided to the Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), 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 Class R Certificate
having as among its record holders at any time any Person who is a Disqualified
Organization. Reasonable compensation for providing such information may be required by
the Master Servicer from such Person.
(iv) The provisions of this Section 5.02(f) set forth prior to this clause (iv) may be
modified, added to or eliminated, provided that there shall have been delivered to
the Trustee 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, if any, of the Class A Certificates or
Class M Certificates below the lower of the then-current rating or the rating assigned to
such Certificates as of the Closing Date by such Rating Agency; and
(B) a certificate of the Master Servicer stating that the Master
Servicer has received an Opinion of Counsel, in form and substance satisfactory to the
Master Servicer, to the effect that such modification, addition to or absence of such
provisions will not cause any REMIC created hereunder to cease to qualify as a REMIC and
will not cause (x) any REMIC created hereunder to be subject to an entity-level tax caused
by the Transfer of any Class R Certificate to a Person that is a Disqualified Organization
or (y) a Certificateholder or another Person to be subject to a REMIC-related tax caused by
the Transfer of a Class R Certificate to a Person that is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange of Certificates of any
Class, but the Trustee 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 destroyed by the
Certificate Registrar.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate Registrar, or the
Trustee and the Certificate Registrar receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to the Trustee
and the Certificate Registrar such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor, Class and Percentage Interest but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section, the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees and expenses
of the Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer, the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat the
Person in whose name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.02 and for all other purposes
whatsoever, except as and to the extent provided in the definition of "Certificateholder,"
and neither the Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor
any agent of the Depositor, the Master Servicer, the Trustee or the Certificate Registrar
shall be affected by notice to the contrary except as provided in Section 5.02(f).
Section 5.05 Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making distributions to
Certificateholders pursuant to Section 4.02. In the event of any such appointment, on or
prior to each Distribution Date the Master Servicer on behalf of the Trustee shall deposit
or cause to be deposited with the Paying Agent a sum sufficient to make the payments to
Certificateholders in the amounts and in the manner provided for in Section 4.02, such sum
to be held in trust for the benefit of Certificateholders. The Trustee shall cause each
Paying Agent to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by it for the
payment to Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so held by such
Paying Agent shall be held only in Eligible Accounts to the extent such sums are not
distributed to the Certificateholders on the date of receipt by such Paying Agent.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01 Respective Liabilities of the Depositor and the Master Servicer.
The Depositor and the Master Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon and
undertaken by the Depositor and the Master Servicer herein. By way of illustration and not
limitation, the Depositor is not liable for the servicing and administration of the
Mortgage Loans, nor is it obligated by Section 7.01 or Section 10.01 to assume any
obligations of the Master Servicer or to appoint a designee to assume such obligations, nor
is it liable for any other obligation hereunder that it may, but is not obligated to,
assume unless it elects to assume such obligation in accordance herewith.
Section 6.02 Merger or Consolidation of the Depositor or the Master Servicer;
Assignment of Rights and Delegation of Duties by Master Servicer.
(a) The Depositor and the Master Servicer shall each keep in full effect its existence,
rights and franchises as a corporation under the laws of the state of its incorporation and
as a limited liability company under the laws of the state of its organization,
respectively, and will each obtain and preserve its qualification to do business as a
foreign corporation or other Person 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.
(b) Any Person into which the Depositor or the Master Servicer may be merged or
converted or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Depositor or the Master Servicer shall be a party,
or any Person succeeding to the business of the Depositor or the Master Servicer, shall be
the successor of the Depositor 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 in this Section 6.02(b) to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master Servicer shall be qualified
to service mortgage loans on behalf of Xxxxxx Xxx or Xxxxxxx Mac; and provided further that
the Master Servicer (or the Depositor, as applicable) shall notify each Rating Agency and
the Trustee in writing of any such merger, conversion or consolidation at least 30 days
prior to the effective date of such event.
(c) Notwithstanding anything else in this Section 6.02 and Section 6.04 to the contrary,
the Master Servicer may assign its rights and delegate its duties and obligations under
this Agreement; provided that the Person accepting such assignment or delegation shall be a
Person which is qualified to service mortgage loans on behalf of Xxxxxx Mae or Xxxxxxx Mac,
is reasonably satisfactory to the Trustee and the Depositor, is willing to service the
Mortgage Loans and executes and delivers to the Depositor and the Trustee an agreement, in
form and substance reasonably satisfactory to the Depositor and the Trustee, which contains
an assumption by such Person of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Master Servicer under this
Agreement; provided further that each Rating Agency's rating of the Classes of Certificates
that have been rated in effect immediately prior to such assignment and delegation will not
be qualified, reduced or withdrawn as a result of such assignment and delegation (as
evidenced by a letter to such effect from each Rating Agency). In the case of any such
assignment and delegation, the Master Servicer shall be released from its obligations under
this Agreement, except that the Master Servicer shall remain liable for all liabilities and
obligations incurred by it as Master Servicer hereunder prior to the satisfaction of the
conditions to such assignment and delegation set forth in the next preceding sentence.
Notwithstanding the foregoing, in the event of a pledge or assignment by the Master
Servicer solely of its rights to purchase all assets of the Trust Fund under
Section 9.01(a) (or, if so specified in Section 9.01(a), its rights to purchase the
Mortgage Loans and property acquired related to such Mortgage Loans or its rights to
purchase the Certificates related thereto), the provisos of the first sentence of this
paragraph will not apply.
Section 6.03 Limitation on Liability of the Depositor, the Master Servicer and Others.
None of the Depositor, the Master Servicer or any of the directors, officers,
employees or agents of the Depositor 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 Master Servicer
or any such Person against any breach of warranties, representations or covenants made
herein or 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 Master Servicer and any
director, officer, employee or agent of the Depositor or the Master Servicer may rely in
good faith on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific Mortgage
Loan or Mortgage Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties hereunder. Neither
the Depositor nor the Master Servicer shall be under any obligation to appear in, prosecute
or defend any legal or administrative action, proceeding, hearing or examination that is
not incidental to its respective duties under this Agreement and which in its opinion may
involve it in any expense or liability; provided, however, that the Depositor or the Master
Servicer may in its discretion undertake any such action, proceeding, hearing or
examination that it may deem necessary or desirable in 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, proceeding, hearing
or examination and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Master Servicer shall be entitled
to be reimbursed therefor out of amounts attributable to the Mortgage Loans on deposit in
the Custodial Account as provided by Section 3.10 and, on the Distribution Date(s)
following such reimbursement, the aggregate of such expenses and costs shall be allocated
in reduction of the Accrued Certificate Interest on each Class entitled thereto in the same
manner as if such expenses and costs constituted a Prepayment Interest Shortfall.
Section 6.04 Depositor and Master Servicer Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor the Master
Servicer shall resign from its respective obligations and duties hereby imposed on it
except upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the Depositor or the
Master Servicer shall be evidenced by an Opinion of Counsel (at the expense of the
resigning party) to such effect delivered to the Trustee. No such resignation by the
Master Servicer shall become effective until the Trustee or a successor servicer shall have
assumed the Master Servicer's responsibilities and obligations in accordance with
Section 7.02.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default.
Event of Default, wherever used herein, means any one of the following events
(whatever reason for such Event of Default and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body):
(i) the Master Servicer shall fail to distribute or cause to be distributed to Holders of
Certificates of any Class any distribution required to be made under the terms of the
Certificates of such Class and this Agreement and, in either case, such failure shall
continue unremedied for a period of 5 days after the date upon which written notice
of such failure, requiring such failure to be remedied, shall have been given to the
Master Servicer by the Trustee or the Depositor or to the Master Servicer, the
Depositor and the Trustee by the Holders of Certificates of such Class evidencing
Percentage Interests aggregating not less than 25%; or
(ii) the Master Servicer shall fail to observe or perform in any material respect any
other of the covenants or agreements on the part of the Master Servicer contained in
the Certificates of any Class or in this Agreement and such failure shall continue
unremedied for a period of 30 days (except that such number of days shall be 15 in
the case of a failure to pay the premium for any Required Insurance Policy) after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Trustee or the Depositor, or to
the Master Servicer, the Depositor and the Trustee by the Holders of Certificates of
any Class evidencing, as to such Class, Percentage Interests aggregating not less
than 25%; 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 appointing a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days; or
(iv) 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, the Master Servicer or of, or
relating to, all or substantially all of the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of, or commence a voluntary
case under, any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its obligations;
or
(vi) the Master Servicer shall notify the Trustee pursuant to Section 4.04(b) that it is
unable to deposit in the Certificate Account an amount equal to the Advance.
If an Event of Default described in clauses (i)-(v) of this Section shall occur,
then, and in each and every such case, so long as such Event of Default shall not have been
remedied, either the Depositor or the Trustee shall at the direction of Holders of
Certificates entitled to at least 51% of the Voting Rights 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), terminate all of the rights and obligations of the Master Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof, other than its
rights as a Certificateholder hereunder; provided, however, that a successor to the Master
Servicer is appointed pursuant to Section 7.02 and such successor Master Servicer shall
have accepted the duties of Master Servicer effective upon the resignation of the Master
Servicer. If an Event of Default described in clause (vi) hereof shall occur, the Trustee
shall, by notice to the Master Servicer and the Depositor, immediately terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder as provided in Section 4.04(b). 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 thereof) or the
Mortgage Loans or otherwise, shall subject to Section 7.02 pass to and be vested in the
Trustee or the Trustee's designee appointed pursuant to Section 7.02; and, without
limitation, the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees to cooperate with the Trustee (or its designee) as
successor Master Servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the transfer to the
Trustee or its designee for administration by it of all cash amounts which shall at the
time be credited to the Custodial Account or the Certificate Account or thereafter be
received with respect to the Mortgage Loans. No such termination shall release the Master
Servicer for any liability that it would otherwise have hereunder for any act or omission
prior to the effective time of such termination. Notwithstanding any termination of the
activities of Residential Funding in its capacity as Master Servicer hereunder, Residential
Funding shall be entitled to receive, out of any late collection of a Monthly Payment on a
Mortgage Loan which was due prior to the notice terminating Residential Funding's rights
and obligations as Master Servicer hereunder and received after such notice, that portion
to which Residential Funding would have been entitled pursuant to Sections 3.10(a)(ii),
(vi) and (vii) as well as its Servicing Fee in respect thereof, and any other amounts
payable to Residential Funding hereunder the entitlement to which arose prior to the
termination of its activities hereunder. Upon the termination of Residential Funding as
Master Servicer hereunder the Depositor shall deliver to the Trustee, as successor Master
Servicer, a copy of the Program Guide.
Section 7.02......Trustee or Depositor to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of termination pursuant
to Section 7.01 or resigns in accordance with Section 6.04, the Trustee or, upon notice to
the Depositor and with the Depositor's consent (which shall not be unreasonably withheld) a
designee (which meets the standards set forth below) of the Trustee, shall be the successor
in all respects to the Master Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master Servicer
(except for the responsibilities, duties and liabilities contained in Sections 2.02 and
2.03(a), excluding the duty to notify related Subservicers as set forth in such Sections,
and its obligations to deposit amounts in respect of losses incurred prior to such notice
or termination on the investment of funds in the Custodial Account or the Certificate
Account pursuant to Sections 3.07(c) and 4.01(c) by the terms and provisions hereof);
provided, however, that any failure to perform such duties or responsibilities caused by
the preceding Master Servicer's failure to provide information required by Section 4.04
shall not be considered a default by the Trustee hereunder as successor Master Servicer.
As compensation therefor, the Trustee as successor Master Servicer shall be entitled to all
funds relating to the Mortgage Loans which the Master Servicer would have been entitled to
charge to the Custodial Account or the Certificate Account if the Master Servicer had
continued to act hereunder and, in addition, shall be entitled to the income from any
Permitted Investments made with amounts attributable to the Mortgage Loans held in the
Custodial Account or the Certificate Account. If the Trustee has become the successor to
the Master Servicer in accordance with Section 6.04 or Section 7.01, then notwithstanding
the above, the Trustee may, if it shall be unwilling to so act, or shall, if it is unable
to so act, appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, which is also a Xxxxxx Xxx or Xxxxxxx
Mac-approved mortgage servicing institution, having a net worth of not less than
$10,000,000 as the successor to the Master Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee shall
become successor to the Master Servicer and shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage Loans as it
and such successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the initial Master Servicer hereunder. The Depositor, the Trustee,
the Custodian and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. Any successor Master Servicer
appointed pursuant to this Section 7.02 shall not receive a Servicing Fee with respect any
Mortgage Loan not directly serviced by the Master Servicer on which the Subservicing Fee
(i) accrues at a rate of less than 0.50% per annum and (ii) has to be increased to a rate
of 0.50% per annum in order to hire a Subservicer. The Master Servicer shall pay the
reasonable expenses of the Trustee in connection with any servicing transfer hereunder.
(b) In connection with the termination or resignation of the Master Servicer hereunder,
either (i) the successor Master Servicer, including the Trustee if the Trustee is acting as
successor Master Servicer, shall represent and warrant that it is a member of MERS in good
standing and shall agree to comply in all material respects with the rules and procedures
of MERS in connection with the servicing of the Mortgage Loans that are registered with
MERS, in which case the predecessor Master Servicer shall cooperate with the successor
Master Servicer in causing MERS to revise its records to reflect the transfer of servicing
to the successor Master Servicer as necessary under MERS' rules and regulations, or (ii)
the predecessor Master Servicer shall cooperate with the successor Master Servicer in
causing MERS to execute and deliver an assignment of Mortgage in recordable form to
transfer the Mortgage from MERS to the Trustee and to execute and deliver such other
notices, documents and other instruments as may be necessary or desirable to effect a
transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS(R)System to
the successor Master Servicer. The predecessor Master Servicer shall file or cause to be
filed any such assignment in the appropriate recording office. The predecessor Master
Servicer shall bear any and all fees of MERS, costs of preparing any assignments of
Mortgage, and fees and costs of filing any assignments of Mortgage that may be required
under this subsection (b). The successor Master Servicer shall cause such assignment to be
delivered to the Trustee or the Custodian promptly upon receipt of the original with
evidence of recording thereon or a copy certified by the public recording office in which
such assignment was recorded.
Section 7.03......Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the Master Servicer, the
Trustee shall give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
(b) Within 60 days after the occurrence of any Event of Default, the Trustee shall
transmit by mail to all Holders of Certificates notice of each such Event of Default
hereunder known to the Trustee, unless such Event of Default shall have been cured or
waived as provided in Section 7.04 hereof.
Section 7.04......Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights of Certificates affected
by a default or Event of Default hereunder may waive any default or Event of Default;
provided, however, that (a) a default or Event of Default under clause (i) of Section 7.01
may be waived only by all of the Holders of Certificates affected by such default or Event
of Default and (b) no waiver pursuant to this Section 7.04 shall affect the Holders of
Certificates in the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such
waiver of a default or Event of Default by the Holders representing the requisite
percentage of Voting Rights of Certificates affected by such default or Event of Default,
such default or 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 or Event of Default or impair any right consequent thereon except to the
extent expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01......Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and after the curing of
all Events of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. In case an Event of Default
has occurred (which has not been cured or waived), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise as a prudent investor would exercise or use under the circumstances in
the conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Trustee 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. The
Trustee shall notify the Certificateholders of any such documents which do not materially
conform to the requirements of this Agreement in the event that the Trustee, after so
requesting, does not receive satisfactorily corrected documents. The Trustee shall forward
or cause to be forwarded in a timely fashion the notices, reports and statements required
to be forwarded by the Trustee pursuant to Sections 4.03, 7.03, and 10.01. The Trustee
shall furnish in a timely fashion to the Master Servicer such information as the Master
Servicer may reasonably request from time to time for the Master Servicer to fulfill its
duties as set forth in this Agreement. The Trustee covenants and agrees that it shall
perform its obligations hereunder in a manner so as to maintain the status of each REMIC
created hereunder as a REMIC under the REMIC Provisions and (subject to Section 10.01(f))
to prevent the imposition of any federal, state or local income, prohibited transaction,
contribution or other tax on the Trust Fund to the extent that maintaining such status and
avoiding such taxes are reasonably within the control of the Trustee and are reasonably
within the scope of its duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the curing or waiver of all
such Events of Default which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee by the Depositor or the Master
Servicer and which on their face, do not contradict the requirements of this
Agreement;
(ii) The Trustee shall not be personally liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally 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
Certificateholders holding Certificates which evidence, Percentage Interests
aggregating not less than 25% of the affected Classes as to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with knowledge of any default (other than a default
in payment to the Trustee) specified in clauses (i) and (ii) of Section 7.01 or an
Event of Default under clauses (iii), (iv) and (v) of Section 7.01 unless a
Responsible Officer of the Trustee assigned to and working in the Corporate Trust
Office obtains actual knowledge of such failure or event or the Trustee receives
written notice of such failure or event at its Corporate Trust Office from the Master
Servicer, the Depositor or any Certificateholder; and
(v) Except to the extent provided in Section 7.02, no provision in this Agreement shall
require the Trustee to expend or risk its own funds (including, without limitation,
the making of any Advance) or otherwise incur any personal financial liability in the
performance of any of its duties as Trustee hereunder, or in the exercise of any of
its rights or powers, if the Trustee shall have reasonable grounds for believing that
repayment of funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of any and all federal,
state and local taxes imposed on the Trust Fund or its assets or transactions including,
without limitation, (A) "prohibited transaction" penalty taxes as defined in Section 860F
of the Code, if, when and as the same shall be due and payable, (B) any tax on
contributions to a REMIC after the Closing Date imposed by Section 860G(d) of the Code and
(C) any tax on "net income from foreclosure property" as defined in Section 860G(c) of the
Code, but only if such taxes arise out of a breach by the Trustee of its obligations
hereunder, which breach constitutes negligence or willful misconduct of the Trustee.
Section 8.02......Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may rely 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 believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel, and any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the trusts or powers
vested in it by this Agreement or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default (which has not been cured), 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 investor would exercise or use under
the circumstances in the conduct of such investor's own affairs;
(iv) The Trustee shall not be personally 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 an Event of Default hereunder and after the curing of all
Events of Default which may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by the Holders
of Certificates of any Class evidencing, as to such Class, Percentage Interests,
aggregating not less than 50%; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer, if an Event of Default shall have
occurred and is continuing, and otherwise by the Certificateholder requesting the
investigation;
(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 provided that the
Trustee shall remain liable for any acts of such agents or attorneys; and
(vii) To the extent authorized under the Code and the regulations promulgated thereunder,
each Holder of a Class R Certificate hereby irrevocably appoints and authorizes the
Trustee to be its attorney-in-fact for purposes of signing any Tax Returns required
to be filed on behalf of the Trust Fund. The Trustee shall sign on behalf of the
Trust Fund and deliver to the Master Servicer in a timely manner any Tax Returns
prepared by or on behalf of the Master Servicer that the Trustee is required to sign
as determined by the Master Servicer pursuant to applicable federal, state or local
tax laws, provided that the Master Servicer shall indemnify the Trustee for signing
any such Tax Returns that contain errors or omissions.
(b) Following the issuance of the Certificates (and except as provided for in
Section 2.04), the Trustee shall not accept any contribution of assets to the Trust Fund
unless (subject to Section 10.01(f)) it shall have obtained or been furnished with an
Opinion of Counsel to the effect that such contribution will not (i) cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any Certificates are
outstanding or (ii) cause the Trust Fund to be subject to any federal tax as a result of
such contribution (including the imposition of any federal tax on "prohibited transactions"
imposed under Section 860F(a) of the Code).
Section 8.03......Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the execution of
the Certificates and relating to the acceptance and receipt of the Mortgage Loans) shall be
taken as the statements of the Depositor or the Master Servicer as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the Certificates
(except that the Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document, or of MERS or the MERS(R)
System. Except as otherwise provided herein, the Trustee shall not be accountable for the
use or application by the Depositor or the Master Servicer of any of the Certificates or of
the proceeds of such Certificates, or for the use or application of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Custodial Account or the Certificate Account by the Depositor or the
Master Servicer.
Section 8.04......Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates with the same rights it would have if it were not Trustee.
Section 8.05......Master Servicer to Pay Trustee's Fees and Expenses; Indemnification.
(a) The Master Servicer covenants and agrees to pay to the Trustee and any co-trustee
from time to time, and the Trustee and any co-trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by each of them in
the execution of the trusts hereby created and in the exercise and performance of any of
the powers and duties hereunder of the Trustee and any co-trustee, and the Master Servicer
shall pay or reimburse the Trustee and any co-trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee or any co-trustee in
accordance with any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel and of all persons not
regularly in its employ, and the expenses incurred by the Trustee or any co-trustee in
connection with the appointment of an office or agency pursuant to Section 8.12) except any
such expense, disbursement or advance as may arise from its negligence or bad faith.
(b) The Master Servicer agrees to indemnify the Trustee for, and to hold the Trustee
harmless against, any loss, liability or expense incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the acceptance and
administration of the Trust Fund, including its obligation to execute the DTC Letter in its
individual capacity, and including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against any claim in connection with the exercise or
performance of any of its powers or duties under this Agreement and the Swap Agreement,
provided that:
(i) with respect to any such claim, the Trustee shall have given the Master Servicer
written notice thereof promptly after the Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee shall cooperate and
consult fully with the Master Servicer in preparing such defense; and
(iii) notwithstanding anything in this Agreement to the contrary, the Master Servicer shall
not be liable for settlement of any claim by the Trustee entered into without the
prior consent of the Master Servicer which consent shall not be unreasonably
withheld. No termination of this Agreement shall affect the obligations created by
this Section 8.05(b) of the Master Servicer to indemnify the Trustee under the
conditions and to the extent set forth herein. Notwithstanding the foregoing, the
indemnification provided by the Master Servicer in this Section 8.05(b) shall not
pertain to any loss, liability or expense of the Trustee, including the costs and
expenses of defending itself against any claim, incurred in connection with any
actions taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
Section 8.06......Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a national banking association or a New
York banking corporation having its principal office in a state and city acceptable to the
Depositor and organized and doing business under the laws of such state or the United
States of America, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for purposes of this
Section the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Trustee shall resign immediately in the manner and with
the effect specified in Section 8.07.
Section 8.07......Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Depositor and the Master Servicer. Upon receiving
such notice of resignation, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, then the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.06 and shall fail to resign after written request therefor by the
Depositor, or if at any time the Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee and appoint a successor trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee. In addition, in the event that the Depositor determines
that the Trustee has failed (i) to distribute or cause to be distributed to
Certificateholders any amount required to be distributed hereunder, if such amount is held
by the Trustee or its Paying Agent (other than the Master Servicer or the Depositor) for
distribution or (ii) to otherwise observe or perform in any material respect any of its
covenants, agreements or obligations hereunder, and such failure shall continue unremedied
for a period of 5 days (in respect of clause (i) above) or 30 days (in respect of clause
(ii) above, other than any failure to comply with the provisions of Article XII, in which
case no notice or grace period shall be applicable) after the date on which written notice
of such failure, requiring that the same be remedied, shall have been given to the Trustee
by the Depositor, then the Depositor may remove the Trustee and appoint a successor trustee
by written instrument delivered as provided in the preceding sentence. In connection with
the appointment of a successor trustee pursuant to the preceding sentence, the Depositor
shall, on or before the date on which any such appointment becomes effective, obtain from
each Rating Agency written confirmation that the appointment of any such successor trustee
will not result in the reduction of the ratings on any Class of the Certificates below the
lesser of the then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the Voting Rights may at any
time remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 8.08.
Section 8.08......Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee shall become
effective and such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Custodial Files and related documents
and statements held by it hereunder (other than any Custodial Files at the time held by a
Custodian, which shall become the agent of any successor trustee hereunder), and the
Depositor, the Master Servicer and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights, powers, duties
and obligations.
(b) No successor trustee shall accept appointment as provided in this Section unless at
the time of such acceptance such successor trustee shall be eligible under the provisions
of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee 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 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
Section 8.09......Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee may be merged
or converted or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding to the
business of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the provisions of
Section 8.06, without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding. The Trustee
shall mail notice of any such merger or consolidation to the Certificateholders at their
address as shown in the Certificate Register.
Section 8.10......Appointment of Co-Trustee or Separate Trustee.
(a) 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 Trust Fund or property
securing the same may at the time be located, the Master Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all instruments to appoint one
or more Persons approved by the Trustee to act as co-trustee or co-trustees, jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the Trust
Fund, and to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. If the Master Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in case an
Event of Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section 8.06
hereunder, and no notice to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee pursuant to this
Section 8.10, all rights, powers, duties and obligations conferred or imposed upon the
Trustee 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 (whether as Trustee
hereunder or as successor to the Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such separate trustee
or co-trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall be deemed to have
been given to each of the then separate trustees and co-trustees, as effectively as if
given to each of them. Every instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this Article VIII. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the Trustee, its
agent or attorney-in-fact, with full power and authority, to the extent not prohibited by
law, to do any lawful act under or in respect of this Agreement on its behalf and in its
name. If any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Trustee, to the extent permitted by law, without the appointment of
a new or successor trustee.
Section 8.11......Appointment of the Custodian.
The Trustee may, with the consent of the Master Servicer and the Depositor, or shall,
at the direction of the Master Servicer and the Depositor, appoint custodians who are not
Affiliates of the Depositor or the Master Servicer to hold all or a portion of the
Custodial Files as agent for the Trustee, by entering into a Custodial Agreement. The
Trustee is hereby directed to enter into a Custodial Agreement with Xxxxx Fargo Bank, N.A.
Subject to Article VIII, the Trustee agrees to comply with the terms of each Custodial
Agreement with respect to the Custodial Files and to enforce the terms and provisions
thereof against the related custodian for the benefit of the Certificateholders. Each
custodian shall be a depository institution subject to supervision by federal or state
authority, shall have a combined capital and surplus of at least $15,000,000 and shall be
qualified to do business in the jurisdiction in which it holds any Custodial File. Each
Custodial Agreement, with respect to the Custodial Files, may be amended only as provided
in Section 11.01. The Trustee shall notify the Certificateholders of the appointment of
any custodian (other than the custodian appointed as of the Closing Date) pursuant to this
Section 8.11.
Section 8.12......Appointment of Office or Agency.
The Trustee shall maintain an office or agency in the City of St. Xxxx, Minnesota
where Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its offices located at the Corporate Trust Office for the
purpose of keeping the Certificate Register. The Trustee shall maintain an office at the
address stated in Section 11.05(c) hereof where notices and demands to or upon the Trustee
in respect of this Agreement may be served.
Section 8.13......DTC Letter of Representations.
The Trustee is hereby authorized and directed to, and agrees that it shall, enter
into the DTC Letter on behalf of the Trust Fund and in its individual capacity as agent
thereunder.
Section 8.14......Swap Agreements.
The Supplemental Interest Trust Trustee is hereby authorized and directed to, and
agrees that it shall (a) enter into the Swap Agreement on behalf of the Supplemental
Interest Trust and (b) enter into the SB-AM Swap Agreement on behalf of (i) the Class A
Certificateholders and Class M Certificateholders on the one hand, and (ii) the Class SB
Certificateholders on the other hand.
ARTICLE IX
TERMINATION
Section 9.01......Termination Upon Purchase or Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and responsibilities of the
Depositor, the Master Servicer and the Trustee created hereby in respect of the
Certificates (other than the obligation of the Trustee to make certain payments after the
Final Distribution Date to Certificateholders and the obligation of the Depositor to send
certain notices as hereinafter set forth) shall terminate upon the last action required to
be taken by the Trustee on the Final Distribution Date pursuant to this Article IX
following the earlier of:
(i) the later of the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund or the disposition of
all property acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan, or
(ii) at the option of the Master Servicer or the Holder of the Class SB Certificates as
provided in Section 9.01(f), the purchase of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund, at a price
equal to the sum of (A) 100% of the unpaid principal balance of each Mortgage Loan
(or, if less than such unpaid principal balance, the fair market value of the related
underlying property of such Mortgage Loan with respect to Mortgage Loans as to which
title has been acquired if such fair market value is less than such unpaid principal
balance) (and if such purchase is made by the Master Servicer only, net of any
unreimbursed Advances attributable to principal) on the day of repurchase, plus
accrued interest thereon at the Net Mortgage Rate (or Modified Net Mortgage Rate in
the case of any Modified Mortgage Loan), to, but not including, the first day of the
month in which such repurchase price is distributed, and (B) any unpaid Swap
Termination Payment and any Net Swap Payments payable to the Swap Counterparty (or
any Swap Termination Payment payable to the Swap Counterparty as a result of the
exercise of the option provided for in this Section 9.01(a)(ii));
provided, however, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late ambassador of the United States to the Court of St. Xxxxx, living on the
date hereof; and provided further, that the purchase price set forth above shall be
increased as is necessary, as determined by the Master Servicer, to avoid disqualification
of any REMIC created hereunder as a REMIC.
The purchase price paid by the Master Servicer or the Holder of the Class SB
Certificates, as applicable, pursuant to Section 9.01(a)(ii) shall also include any amounts
owed by Residential Funding pursuant to the last paragraph of Section 4 of the Assignment
Agreement in respect of any liability, penalty or expense that resulted from a breach of
the representation and warranty set forth in clause (xlvii) of Section 4 of the Assignment
Agreement that remain unpaid on the date of such purchase.
The right of the Master Servicer or the Holder of the Class SB Certificates, as
applicable, to purchase all of the Mortgage Loans pursuant to clause (ii) above is
conditioned upon the date of such purchase occurring on or after the Optional Termination
Date. If such right is exercised by the Master Servicer, the Master Servicer shall be
deemed to have been reimbursed for the full amount of any unreimbursed Advances theretofore
made by it with respect to the Mortgage Loans being purchased. In addition, the Master
Servicer shall provide to the Trustee the certification required by Section 3.15, and the
Trustee and the Custodian shall, promptly following payment of the purchase price, release
to the Master Servicer or the Holder of the Class SB Certificates, as applicable, the
Custodial Files pertaining to the Mortgage Loans being purchased.
In addition to the foregoing, on any Distribution Date on or after the Optional
Termination Date, the Master Servicer or the Holder of the Class SB Certificates as
provided in Section 9.01(f), shall have the right, at its option, to purchase the Class A
Certificates, Class M Certificates and Class SB Certificates in whole, but not in part, at
a price equal to the sum of the outstanding Certificate Principal Balance of such
Certificates plus the sum of one month's Accrued Certificate Interest thereon, any
previously unpaid Accrued Certificate Interest, and any unpaid Prepayment Interest
Shortfalls previously allocated thereto and, in the case of Prepayment Interest Shortfalls,
accrued interest thereon at the applicable Pass-Through Rate, plus, with respect to any
optional termination by the Holder of the Class SB Certificates, an amount equal to all
accrued and unpaid Servicing Fees and reimbursement for all unreimbursed Advances and
Servicing Advances, in each case through the date of such optional termination. If the
Master Servicer or the Holder of the Class SB Certificates, as applicable, exercises this
right to purchase the outstanding Class A Certificates, Class M Certificates and Class SB
Certificates, the Master Servicer or the Holder of the Class SB Certificates, as
applicable, will promptly terminate the respective obligations and responsibilities created
hereby in respect of these Certificates pursuant to this Article IX.
(b) The Master Servicer or the Holder of the Class SB Certificates, as applicable, shall
give the Trustee, the Supplemental Interest Trust Trustee (and the Master Servicer if the
Holder of the Class SB Certificates is exercising its option) and the Swap Counterparty (so
long as the Swap Agreement has not previously been terminated) not less than 40 days prior
notice of the Distribution Date on which (1) the Master Servicer or the Holder of the
Class SB Certificates, as applicable, anticipates that the final distribution will be made
to Certificateholders as a result of the exercise by the Master Servicer or the Holder of
the Class SB Certificates, as applicable, of its right to purchase the Mortgage Loans or on
which (2) the Master Servicer or the Holder of the Class SB Certificates, as applicable,
anticipates that the Certificates will be purchased as a result of the exercise by the
Master Servicer or the Holder of the Class SB Certificates, as applicable, to purchase the
outstanding Certificates. Notice of any termination, specifying the anticipated Final
Distribution Date (which shall be a date that would otherwise be a Distribution Date) upon
which the Certificateholders may surrender their Certificates to the Trustee (if so
required by the terms hereof) for payment of the final distribution and cancellation or
notice of any purchase of the outstanding Certificates, specifying the Distribution Date
upon which the Holders may surrender their Certificates to the Trustee for payment, shall
be given promptly by the Master Servicer (if it is exercising the right to purchase the
Mortgage Loans or to purchase the outstanding Certificates), or by the Trustee (in any
other case) by letter to the Certificateholders (with a copy to the Certificate Registrar)
mailed (or distributed through the Depository with respect to any Book-Entry Certificates)
not earlier than the 15th day and not later than the 25th day of the month next preceding
the month of such final distribution specifying:
(i) the anticipated Final Distribution Date upon which final payment of the Certificates
is anticipated to be made upon presentation and surrender of Certificates at the
office or agency of the Trustee therein designated where required pursuant to this
Agreement or, in the case of the purchase by the Master Servicer or the Holder of the
Class SB Certificates, as applicable, of the outstanding Certificates, the
Distribution Date on which such purchase is made,
(ii) the amount of any such final payment or, in the case of the purchase of the
outstanding Certificates, the purchase price, in either case, if known, and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, and that payment will be made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
If the Master Servicer or the Trustee is obligated to give notice to
Certificateholders as required above, it shall give such notice to the Certificate
Registrar at the time such notice is given to Certificateholders. In the event of a
purchase of the Mortgage Loans by the Master Servicer or the Holder of the Class SB
Certificates, as applicable, the Master Servicer or the Holder of the Class SB
Certificates, as applicable, shall deposit in the Certificate Account before the Final
Distribution Date in immediately available funds an amount equal to the purchase price
computed as provided above. As a result of the exercise by the Master Servicer or the
Holder of the Class SB Certificates, as applicable, of its right to purchase the
outstanding Certificates, the Master Servicer or the Holder of the Class SB Certificates,
as applicable, shall deposit in the Certificate Account, before the Distribution Date on
which such purchase is to occur, in immediately available funds, an amount equal to the
purchase price for the Certificates computed as provided above, and provide notice of such
deposit to the Trustee. The Trustee shall withdraw from such account the amount specified
in subsection (c) below and distribute such amount to the Certificateholders as specified
in subsection (c) below. The Master Servicer or the Holder of the Class SB Certificates,
as applicable, shall provide to the Trustee written notification of any change to the
anticipated Final Distribution Date as soon as practicable. If the Trust Fund is not
terminated on the anticipated Final Distribution Date, for any reason, the Trustee shall
promptly mail notice thereof to each affected Certificateholder.
(c) Upon presentation and surrender of the Class A Certificates, Class M Certificates and
Class SB Certificates by the Certificateholders thereof, the Trustee and the Supplemental
Interest Trust Trustee, as applicable shall distribute to such Certificateholders (i) the
amount otherwise distributable on such Distribution Date, if not in connection with the
Master Servicer's or the Holder's of the Class SB Certificates, as applicable, election to
repurchase the Mortgage Loans or the outstanding Class A Certificates, Class M Certificates
and Class SB Certificates, or (ii) if the Master Servicer or the Holder of the Class SB
Certificates, as applicable, elected to so repurchase the Mortgage Loans or the outstanding
Class A Certificates, Class M Certificates and Class SB Certificates, an amount equal to
the price paid pursuant to Section 9.01(a) as follows: first, with respect to any optional
termination by the Holder of the Class SB Certificates, payment of any accrued and unpaid
Servicing Fees and reimbursement for all unreimbursed Advances and Servicing Advances, in
each case through the date of such optional termination, to the Master Servicer, second,
with respect to the Class A Certificates, pari passu, the outstanding Certificate Principal
Balance thereof, plus Accrued Certificate Interest thereon for the related Interest Accrual
Period and any previously unpaid Accrued Certificate Interest, third, with respect to the
Class M-1S Certificates, the outstanding Certificate Principal Balance thereof, plus
Accrued Certificate Interest thereon for the related Interest Accrual Period and any
previously unpaid Accrued Certificate Interest, fourth, with respect to the Class M-2S
Certificates, the outstanding Certificate Principal Balance thereof, plus Accrued
Certificate Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, fifth, with respect to the Class M-3S Certificates,
the outstanding Certificate Principal Balance thereof, plus Accrued Certificate Interest
thereon for the related Interest Accrual Period and any previously unpaid Accrued
Certificate Interest, sixth, with respect to the Class M-4 Certificates, the outstanding
Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon for the
related Interest Accrual Period and any previously unpaid Accrued Certificate Interest,
seventh, with respect to the Class M-5 Certificates, the outstanding Certificate Principal
Balance thereof, plus Accrued Certificate Interest thereon for the related Interest Accrual
Period and any previously unpaid Accrued Certificate Interest, eighth, with respect to the
Class M-6 Certificates, the outstanding Certificate Principal Balance thereof, plus Accrued
Certificate Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, ninth, with respect to the Class M-7 Certificates, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate Interest
thereon for the related Interest Accrual Period and any previously unpaid Accrued
Certificate Interest, tenth, with respect to the Class M-8 Certificates, the outstanding
Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon for the
related Interest Accrual Period and any previously unpaid Accrued Certificate Interest,
eleventh, with respect to the Class M-9 Certificates, the outstanding Certificate Principal
Balance thereof, plus Accrued Certificate Interest thereon for the related Interest Accrual
Period and any previously unpaid Accrued Certificate Interest, twelfth, to the Class A
Certificates and Class M Certificates, the amount of any Prepayment Interest Shortfalls
allocated thereto for such Distribution Date or remaining unpaid from prior Distribution
Dates and accrued interest thereon at the applicable Pass-Through Rate, on a pro rata basis
based on Prepayment Interest Shortfalls allocated thereto for such Distribution Date or
remaining unpaid from prior Distribution Dates, thirteenth, to the Swap Counterparty
(without duplication of amounts payable to the Swap Counterparty on such date in accordance
with Section 4.02) any Swap Termination Payment payable to the Swap Counterparty then
remaining unpaid or which is due to the exercise of any early termination of the Trust Fund
pursuant to this Section 9.01, and fourteenth, to the Class SB Certificates, all remaining
amounts.
(d) In the event that any Certificateholders shall not surrender their Certificates for
final payment and cancellation on or before the Final Distribution Date, the Master
Servicer (if it exercised its right to purchase the Mortgage Loans) or the Trustee (in any
other case), shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution with
respect thereto. If within six months after the second notice any Certificate shall not
have been surrendered for cancellation, the Trustee shall take appropriate steps as
directed by the Master Servicer to contact the remaining Certificateholders concerning
surrender of their Certificates. The costs and expenses of maintaining the Certificate
Account and of contacting Certificateholders shall be paid out of the assets which remain
in the Certificate Account. If within nine months after the second notice any Certificates
shall not have been surrendered for cancellation, the Trustee shall pay to the Master
Servicer all amounts distributable to the holders thereof and the Master Servicer shall
thereafter hold such amounts until distributed to such Holders. No interest shall accrue
or be payable to any Certificateholder on any amount held in the Certificate Account or by
the Master Servicer as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 9.01 and the
Certificateholders shall look only to the Master Servicer for such payment.
(e) If any Certificateholders do not surrender their Certificates on or before the
Distribution Date on which a purchase of the outstanding Certificates is to be made, the
Master Servicer shall give a second written notice to such Certificateholders to surrender
their Certificates for payment of the purchase price therefor. If within six months after
the second notice any Certificate shall not have been surrendered for cancellation, the
Trustee shall take appropriate steps as directed by the Master Servicer to contact the
Holders of such Certificates concerning surrender of their Certificates. The costs and
expenses of maintaining the Certificate Account and of contacting Certificateholders shall
be paid out of the assets which remain in the Certificate Account. If within nine months
after the second notice any Certificates shall not have been surrendered for cancellation
in accordance with this Section 9.01, the Trustee shall pay to the Master Servicer all
amounts distributable to the Holders thereof and shall have no further obligation or
liability therefor and the Master Servicer shall thereafter hold such amounts until
distributed to such Holders. No interest shall accrue or be payable to any
Certificateholder on any amount held in the Certificate Account or by the Master Servicer
as a result of such Certificateholder's failure to surrender its Certificate(s) for payment
in accordance with this Section 9.01. Any Certificate that is not surrendered on the
Distribution Date on which a purchase pursuant to this Section 9.01 occurs as provided
above will be deemed to have been purchased and the Holder as of such date will have no
rights with respect thereto except to receive the purchase price therefor minus any costs
and expenses associated with such Certificate Account and notices allocated thereto. Any
Certificates so purchased or deemed to have been purchased on such Distribution Date shall
remain outstanding hereunder. The Master Servicer shall be for all purposes the Holder
thereof as of such date.
(f) With respect to the first possible Optional Termination Date, the Master Servicer
shall have the sole option to exercise the purchase options described in Section 9.01(a)
and the Holder of the Class SB Certificates shall have no claim thereto. If, however, the
Master Servicer elects not to exercise one of its options to purchase pursuant to
Section 9.01(a) with respect to the first possible Optional Termination Date, the Holder of
the Class SB Certificates shall have the sole option to exercise the purchase options
described in Section 9.01(a) on the second possible Optional Termination Date and the
Master Servicer shall have no claim thereto. If the Holder of the Class SB Certificates
elects not to exercise one of its options to purchase pursuant to Section 9.01(a) with
respect to the second possible Optional Termination Date, it shall lose such right and have
no claim to exercise any purchase options pursuant to this Section 9.01 thereafter.
Beginning with the third possible Optional Termination Date and thereafter, the Master
Servicer shall again have the sole option to exercise the purchase options described in
Section 9.01(a).
Section 9.02......Additional Termination Requirements.
(a) Any REMIC hereunder, as the case may be, shall be terminated in accordance with the
following additional requirements, unless (subject to Section 10.01(f)) the Trustee and the
Master Servicer have received an Opinion of Counsel (which Opinion of Counsel shall not be
an expense of the Trustee) to the effect that the failure of any REMIC created hereunder as
the case may be, to comply with the requirements of this Section 9.02 will not (i) result
in the imposition on the Trust Fund of taxes on "prohibited transactions," as described in
Section 860F of the Code, or (ii) cause any REMIC created hereunder to fail to qualify as a
REMIC at any time that any Certificate is outstanding:
(i) The Master Servicer shall establish a 90-day liquidation period for REMIC I, REMIC
II, REMIC III or REMIC IV, as applicable, and any other related terminating REMICs,
and specify the first day of such period in a statement attached to REMIC I's, REMIC
II's, REMIC III's or REMIC IV's, as applicable, and any other related terminating
REMICs', final Tax Return pursuant to Treasury Regulations Section 1.860F-1. The
Master Servicer also shall satisfy all of the requirements of a qualified liquidation
for each of REMIC I, REMIC II, REMIC III and REMIC IV under Section 860F of the Code
and the regulations thereunder;
(ii) The Master Servicer shall notify the Trustee at the commencement of 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 or otherwise dispose of all of the remaining
assets of the liquidating REMICs in accordance with the terms hereof; and
(iii) If the Master Servicer is exercising its right to purchase the assets of the Trust
Fund, the Master Servicer shall, during the 90-day liquidation period and at or prior
to the Final Distribution Date, purchase all of the assets of the liquidating REMICs
for cash.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably approves and appoints
the Master Servicer as its attorney-in-fact to adopt a plan of complete liquidation for any
REMIC hereunder at the expense of the Trust Fund in accordance with the terms and
conditions of this Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01.....REMIC Administration.
(a) The REMIC Administrator shall make an election to treat all REMICs created hereunder
as a REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made on Form 1066 or other appropriate federal tax or information return
(including Form 8811) or any appropriate state return for the taxable year ending on the
last day of the calendar year in which the Certificates are issued. The REMIC I Regular
Interests shall be designated as the "regular interests" and Component I of the Class R
Certificates shall be designated as the sole Class of "residual interests" in REMIC I. The
REMIC II Regular Interests shall be designated as the "regular interests" and Component II
of the Class R Certificates shall be designated as the sole Class of "residual interests"
in REMIC II. The REMIC III Regular Interests shall be designated as the "regular
interests" and Component III of the Class R Certificates shall be designated as the sole
Class of "residual interests" in REMIC III. The REMIC IV Regular Interests shall be
designated as the "regular interests" and Component IV of the Class R Certificates shall be
designated as the sole Class of "residual interests" in REMIC IV. The REMIC Administrator
and the Trustee shall not permit the creation of any "interests" (within the meaning of
Section 860G of the Code) in REMIC I, REMIC II, REMIC III or REMIC IV other than the
REMIC I Regular Interests, the REMIC II Regular Interests, the REMIC III Regular Interests,
REMIC IV Regular Interest IO and the Certificates.
(b) The Closing Date is hereby designated as the "startup day" of each of REMIC created
hereunder within the meaning of Section 860G(a)(9) of the Code (the "Startup Date").
(c) The REMIC Administrator shall hold a Class R Certificate in each REMIC representing a
0.01% Percentage Interest of the Class R Certificates in each REMIC and shall be designated
as the "tax matters person" with respect to each REMIC in the manner provided under
Treasury regulations Section 1.860F-4(d) and Treasury regulations
Section 301.6231(a)(7)-1. The REMIC Administrator, as tax matters person, shall (i) act on
behalf of each REMIC in relation to any tax matter or controversy involving the Trust Fund
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
legal expenses, including without limitation attorneys' or accountants' fees, and costs of
any such proceeding and any liability resulting therefrom shall be expenses of the Trust
Fund and the REMIC Administrator shall be entitled to reimbursement therefor out of amounts
attributable to the Mortgage Loans on deposit in the Custodial Account as provided by
Section 3.10 unless such legal expenses and costs are incurred by reason of the REMIC
Administrator's willful misfeasance, bad faith or gross negligence. If the REMIC
Administrator is no longer the Master Servicer hereunder, at its option the REMIC
Administrator may continue its duties as REMIC Administrator and shall be paid reasonable
compensation not to exceed $3,000 per year by any successor Master Servicer hereunder for
so acting as the REMIC Administrator.
(d) The REMIC Administrator shall prepare or cause to be prepared all of the Tax Returns
that it determines are required with respect to the REMICs created hereunder and deliver
such Tax Returns in a timely manner to the Trustee and the Trustee shall sign and file such
Tax Returns in a timely manner. The expenses of preparing such returns shall be borne by
the REMIC Administrator without any right of reimbursement therefor. The REMIC
Administrator agrees to indemnify and hold harmless the Trustee with respect to any tax or
liability arising from the Trustee's signing of Tax Returns that contain errors or
omissions. The Trustee and Master Servicer shall promptly provide the REMIC Administrator
with such information as the REMIC Administrator may from time to time request for the
purpose of enabling the REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor of a Class R Certificate
such information as is necessary for the application of any tax relating to the transfer of
a Class R Certificate to any Person who is not a Permitted Transferee, (ii) to the Trustee
and the Trustee shall forward 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, if any, and market discount or premium (using the Prepayment
Assumption) 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 REMIC created
hereunder.
(f) The Master Servicer and the REMIC Administrator shall take such actions and shall
cause each REMIC created hereunder to take such actions as are reasonably within the Master
Servicer's or the REMIC Administrator's control and the scope of its duties more
specifically set forth herein as shall be necessary or desirable to maintain the status
thereof as a REMIC under the REMIC Provisions (and the Trustee shall assist the Master
Servicer and the REMIC Administrator, to the extent reasonably requested by the Master
Servicer and the REMIC Administrator to do so). In performing their duties as more
specifically set forth herein, the Master Servicer and the REMIC Administrator shall not
knowingly or intentionally take any action, cause the Trust Fund to take any action or fail
to take (or fail to cause to be taken) any action reasonably within their respective
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, could (i) endanger the status of any
REMIC created hereunder as a REMIC or (ii) result in the imposition of a tax upon any
REMIC created hereunder (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code (except as provided in Section 2.04) and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either such event,
in the absence of an Opinion of Counsel or the indemnification referred to in this
sentence, an "Adverse REMIC Event") unless the Master Servicer or the REMIC Administrator,
as applicable, has received an Opinion of Counsel (at the expense of the party seeking to
take such action or, if such party fails to pay such expense, and the Master Servicer or
the REMIC Administrator, as applicable, determines that taking such action is in the best
interest of the Trust Fund and the Certificateholders, at the expense of the Trust Fund,
but in no event at the expense of the Master Servicer, the REMIC Administrator or the
Trustee) to the effect that the contemplated action will not, with respect to the Trust
Fund created hereunder, endanger such status or, unless the Master Servicer or the REMIC
Administrator or both, as applicable, determine in its or their sole discretion to
indemnify the Trust Fund against the imposition of such a tax, result in the imposition of
such a tax. Wherever in this Agreement a contemplated action may not be taken because the
timing of such action might result in the imposition of a tax on the Trust Fund, or may
only be taken pursuant to an Opinion of Counsel that such action would not impose a tax on
the Trust Fund, such action may nonetheless be taken provided that the indemnity given in
the preceding sentence with respect to any taxes that might be imposed on the Trust Fund
has been given and that all other preconditions to the taking of such action have been
satisfied. The Trustee shall not take or fail to take any action (whether or not
authorized hereunder) as to which the Master Servicer or the REMIC Administrator, as
applicable, 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 or inaction, as
the case may be. In addition, prior to taking any action with respect to the Trust Fund or
its assets, or causing the Trust Fund to take any action, which is not expressly permitted
under the terms of this Agreement, the Trustee shall consult with the Master Servicer or
the REMIC Administrator, as applicable, or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to the Trust
Fund and the Trustee shall not take any such action or cause the Trust Fund to take any
such action as to which the Master Servicer or the REMIC Administrator, as applicable, has
advised it in writing that an Adverse REMIC Event could occur. The Master Servicer or the
REMIC Administrator, as applicable, may consult with counsel to make such written advice,
and the cost of same shall be borne by the party seeking to take the action not expressly
permitted by this Agreement, but in no event at the expense of the Master Servicer or the
REMIC Administrator. At all times as may be required by the Code, the Master Servicer or
the REMIC Administrator, as applicable, will to the extent within its control and the scope
of its duties more specifically set forth herein, maintain substantially all of the assets
of the REMIC as "qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(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 "net income from
foreclosure property" of any REMIC as defined in Section 860G(c) of the Code, on any
contributions to any REMIC after the Startup Date therefor pursuant to Section 860G(d) of
the Code, or any other tax imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Master Servicer, if such tax arises
out of or results from a breach by the Master Servicer in its role as Master Servicer or
REMIC Administrator of any of its obligations under this Agreement or the Master Servicer
has in its sole discretion determined to indemnify the Trust Fund against such tax, (ii) to
the Trustee, if such tax arises out of or results from a breach by the Trustee of any of
its obligations under this Article X, or (iii) otherwise against amounts on deposit in the
Custodial Account as provided by Section 3.10 and on the Distribution Date(s) following
such reimbursement the aggregate of such taxes shall be allocated in reduction of the
Accrued Certificate Interest on each Class entitled thereto in the same manner as if such
taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal income tax purposes, maintain
books and records with respect to each REMIC on a calendar year and on an accrual basis or
as otherwise may be required by the REMIC Provisions.
(i) Following the Startup Date, neither the Master Servicer nor the Trustee shall accept
any contributions of assets to any REMIC unless (subject to Section 10.01(f)) the Master
Servicer and the Trustee shall have received an Opinion of Counsel (at the expense of the
party seeking to make such contribution) to the effect that the inclusion of such assets in
any REMIC will not cause any REMIC created hereunder to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject any such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law or
ordinances.
(j) Neither the Master Servicer nor the Trustee shall (subject to Section 10.01(f)) enter
into any arrangement by which any REMIC created hereunder will receive a fee or other
compensation for services nor permit any REMIC created hereunder 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) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" by which the principal balance of each regular interest in
each REMIC would be reduced to zero is November 25, 2036, which is the Distribution Date in
the month following the last scheduled payment on any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC Administrator shall prepare and file
with the Internal Revenue Service Form 8811, "Information Return for Real Estate Mortgage
Investment Conduits (REMIC) and Issuers of Collateralized Debt Obligations" for the Trust
Fund.
(m) Neither the Trustee nor the Master Servicer shall sell, dispose of or substitute for
any of the Mortgage Loans (except in connection with (i) the default, imminent default or
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 the
Trust Fund, (iii) the termination of any REMIC pursuant to Article IX of this Agreement or
(iv) a purchase of Mortgage Loans pursuant to Article II or III of this Agreement) or
acquire any assets for any REMIC or sell or dispose of any investments in the Custodial
Account or the Certificate Account for gain, or accept any contributions to any REMIC after
the Closing Date unless it has received an Opinion of Counsel that such sale, disposition,
substitution or acquisition will not (a) affect adversely the status of any REMIC created
hereunder as a REMIC or (b) unless the Master Servicer has determined in its sole
discretion to indemnify the Trust Fund against such tax, cause any REMIC to be subject to a
tax on "prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
Section 10.02.....Master Servicer, REMIC Administrator and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor, the REMIC
Administrator and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer, as a result of a breach of the Trustee's covenants set
forth in Article VIII or this Article X. In the event that Residential Funding is no
longer the Master Servicer, the Trustee shall indemnify Residential Funding for any taxes
and costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by Residential Funding as a result of a breach of the Trustee's covenants set
forth in Article VIII or this Article X.
(b) The REMIC Administrator agrees to indemnify the Trust Fund, the Depositor, the Master
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
Master Servicer or the Trustee, as a result of a breach of the REMIC Administrator's
covenants set forth in this Article X with respect to compliance with the REMIC Provisions,
including without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by the REMIC Administrator that contain errors or omissions; provided,
however, that such liability will not be imposed to the extent such breach is a result of
an error or omission in information provided to the REMIC Administrator by the Master
Servicer in which case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust Fund, the Depositor, the REMIC
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
REMIC Administrator or the Trustee, as a result of a breach of the Master Servicer's
covenants set forth in this Article X or in Article III with respect to compliance with the
REMIC Provisions, including without limitation, any penalties arising from the Trustee's
execution of Tax Returns prepared by the Master Servicer that contain errors or omissions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01.....Amendment.
(a) This Agreement or any Custodial Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee, without the consent of any of the
Certificateholders:
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein or therein, which may be inconsistent
with any other provisions herein or therein or to correct any error,
(iii) to modify, eliminate or add to any of its provisions to such extent as shall be
necessary or desirable to maintain the qualification of any REMIC created hereunder
as a REMIC at all times that any Certificate is outstanding or to avoid or minimize
the risk of the imposition of any tax on the Trust Fund pursuant to the Code that
would be a claim against the Trust Fund, provided that the Trustee has received an
Opinion of Counsel to the effect that (A) such action is necessary or desirable to
maintain such qualification or to avoid or minimize the risk of the imposition of any
such tax and (B) such action will not adversely affect in any material respect the
interests of any Certificateholder,
(iv) to change the timing and/or nature of deposits into the Custodial Account or the
Certificate Account or to change the name in which the Custodial Account is
maintained, provided that (A) the Certificate Account Deposit Date shall in no event
be later than the related Distribution Date, (B) such change shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder and (C) such change shall not result in a reduction of the
rating assigned to any Class of Certificates below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect,
(v) to modify, eliminate or add to the provisions of Section 5.02(f) or any other
provision hereof restricting transfer of the Class R Certificates by virtue of their
being the "residual interests" in the Trust Fund provided that (A) such change shall
not result in reduction of the rating assigned to any such Class of Certificates
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date, as evidenced by a letter from each Rating Agency
to such effect, and (B) such change shall not (subject to Section 10.01(f)), as
evidenced by an Opinion of Counsel (at the expense of the party seeking so to modify,
eliminate or add such provisions), cause the Trust Fund or any of the
Certificateholders (other than the transferor) to be subject to a federal tax caused
by a transfer to a Person that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to matters or questions arising under this
Agreement or such Custodial Agreement which shall not be materially inconsistent with
the provisions of this Agreement, provided that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder and is authorized or permitted under Section 11.01.
(b) This Agreement or any Custodial Agreement may also be amended from time to time by
the Depositor, the Master Servicer, the Trustee and the Holders of Certificates evidencing
in the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates with a Certificate Principal Balance greater than zero affected thereby for
the purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or such Custodial Agreement or of modifying in any manner the
rights of the Holders of Certificates of such Class; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount of, or delay the timing of, payments 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 interest of the Holders of Certificates
of any Class in a manner other than as described in clause (i) hereof without the
consent of Holders of Certificates of such Class evidencing, as to such Class,
Percentage Interests aggregating not less than 66%, or
(iii) reduce the aforesaid percentage of Certificates of any Class the Holders of which are
required to consent to any such amendment, in any such case without the consent of
the Holders of all Certificates of such Class then outstanding.
(c) 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 (at the expense of the party seeking such amendment) to the effect that such
amendment or the exercise of any power granted to the Master Servicer, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of a federal
tax on the Trust Fund or cause any REMIC created hereunder to fail to qualify as a REMIC at
any time that any Certificate is outstanding; provided, that if the indemnity described in
Section 10.01(f) with respect to any taxes that might be imposed on the Trust Fund has been
given, the Trustee shall not require the delivery to it of the Opinion of Counsel described
in this Section 11.01(c). The Trustee may but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and immunities and this
Agreement or otherwise; provided, however, such consent shall not be unreasonably withheld.
(d) Promptly after the execution of any such amendment the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder. It shall not be
necessary for the consent of Certificateholders under this Section 11.01 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.
(e) The Depositor shall have the option, in its sole discretion, to obtain and deliver to
the Trustee any corporate guaranty, payment obligation, irrevocable letter of credit,
surety bond, insurance policy or similar instrument or a reserve fund, or any combination
of the foregoing, for the purpose of protecting the Holders of the Class SB Certificates
against any or all Realized Losses or other shortfalls. Any such instrument or fund shall
be held by the Trustee for the benefit of the Class SB Certificateholders, but shall not be
and shall not be deemed to be under any circumstances included in any REMIC. To the extent
that any such instrument or fund constitutes a reserve fund for federal income tax
purposes, (i) any reserve fund so established shall be an outside reserve fund and not an
asset of such REMIC, (ii) any such reserve fund shall be owned by the Depositor, and (iii)
amounts transferred by such REMIC to any such reserve fund shall be treated as amounts
distributed by such REMIC to the Depositor or any successor, all within the meaning of
Treasury Regulations Section 1.860G-2(h) in effect as of the Cut-off Date. In connection
with the provision of any such instrument or fund, this Agreement and any provision hereof
may be modified, added to, deleted or otherwise amended in any manner that is related or
incidental to such instrument or fund or the establishment or administration thereof, such
amendment to be made by written instrument executed or consented to by the Depositor and
such related insurer but without the consent of any Certificateholder and without the
consent of the Master Servicer or the Trustee being required unless any such amendment
would impose any additional obligation on, or otherwise adversely affect the interests of
the Certificateholders, the Master Servicer or the Trustee, as applicable; provided that
the Depositor obtains an Opinion of Counsel (which need not be an opinion of Independent
counsel) to the effect that any such amendment will not cause (a) any federal tax to be
imposed on the Trust Fund, 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 and (b) any REMIC created hereunder
to fail to qualify as a REMIC at any time that any Certificate is outstanding. In the
event that the Depositor elects to provide such coverage in the form of a limited guaranty
provided by GMAC LLC, the Depositor may elect that the text of such amendment to this
Agreement shall be substantially in the form attached hereto as Exhibit K (in which case
Residential Funding's Subordinate Certificate Loss Obligation as described in such exhibit
shall be established by Residential Funding's consent to such amendment) and that the
limited guaranty shall be executed in the form attached hereto as Exhibit L, with such
changes as the Depositor shall deem to be appropriate; it being understood that the Trustee
has reviewed and approved the content of such forms and that the Trustee's consent or
approval to the use thereof is not required.
(f) Notwithstanding anything to the contrary set forth in Sections 11.01 (b), (c), (d),
and (e), any amendment of Sections 4.02(c)(i) through (x) and Section 4.10 of this
Agreement shall require the consent of the Swap Counterparty as a third-party beneficiary
of Sections 4.02(c)(x) and 4.10 of this Agreement.
Section 11.02.....Recordation of Agreement; Counterparts.
(a) 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 Master Servicer and at its expense on direction by the
Trustee (pursuant to the request of the Holders of Certificates entitled to at least 25% of
the Voting Rights), but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests of the
Certificateholders.
(b) 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 11.03.....Limitation on Rights of Certificateholders.
(a) 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 any of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as expressly provided
herein) or in any manner otherwise control the operation and management of the Trust Fund,
or the obligations of the parties hereto, nor shall anything herein set forth, or contained
in the terms of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any Certificateholder
be under any liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) 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 of any Class evidencing in the
aggregate not less than 25% of the related Percentage Interests of such Class, shall have
made written request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such action, suit
or proceeding it being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no one or more
Holders of Certificates of any Class shall have any right in any manner whatever by virtue
of any provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates of such Class or any other Class, or to obtain or
seek to obtain priority over or preference to any other such Holder, or to enforce any
right under this Agreement, except in the manner herein provided and for the common benefit
of Certificateholders of such Class or all Classes, as the case may be. For the protection
and enforcement of the provisions of this Section 11.03, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Section 11.04.....Governing Law.
This agreement and the Certificates shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of law principles
thereof, other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and
the obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 11.05.....Notices.
All demands and notices hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered at or mailed by registered mail, postage prepaid
(except for notices to the Trustee which shall be deemed to have been duly given only when
received), to (a) in the case of the Depositor, 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: President (RASC), or such other address as may
hereafter be furnished to the Master Servicer and the Trustee in writing by the Depositor;
(b) in the case of the Master Servicer, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000-0000, Attention: Bond Administration or such other address as may be hereafter
furnished to the Depositor and the Trustee by the Master Servicer in writing; (c) in the
case of the Trustee, the Corporate Trust Office or such other address as may hereafter be
furnished to the Depositor and the Master Servicer in writing by the Trustee; (d) in the
case of Standard & Poor's, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Mortgage
Surveillance or such other address as may be hereafter furnished to the Depositor, Trustee
and Master Servicer by Standard & Poor's; (e) in the case of Moody's, 00 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department, or such other address as may
be hereafter furnished to the Depositor, the Trustee and the Master Servicer in writing by
Moody's, (f) in the case of Fitch, Xxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other
address as may be hereafter furnished to the Depositor, the Trustee and the Master Servicer
in writing by Fitch, and (g) in the case of the Swap Counterparty, Barclays Bank PLC, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other address as may be hereafter furnished
to the Depositor, the Trustee and the Master Servicer in writing by the Swap Counterparty.
Any notice required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.06.....Notices to Rating Agencies.
The Depositor, the Master Servicer or the Trustee, as applicable, shall notify each
Rating Agency and each Subservicer at such time as it is otherwise required pursuant to
this Agreement to give notice of the occurrence of, any of the events described in clause
(a), (b), (c), (d), (g), (h), (i) or (j) below or provide a copy to each Rating Agency and
each Subservicer at such time as otherwise required to be delivered pursuant to this
Agreement of any of the statements described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master Servicer or Trustee or a change
in the majority ownership of the Trustee,
(d) the filing of any claim under the Master Servicer's blanket fidelity bond and the
errors and omissions insurance policy required by Section 3.12 or the cancellation or
modification of coverage under any such instrument,
(e) the statement required to be delivered to the Holders of each Class of Certificates
pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to Sections 3.18 and 3.19,
(g) a change in the location of the Custodial Account or the Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to the Holders of any Class of
Certificates resulting from the failure by the Master Servicer to make an Advance pursuant
to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage Loan, provided, however, that with
respect to notice of the occurrence of the events described in clauses (d), (g) or (h)
above, the Master Servicer shall provide prompt written notice to each Rating Agency and
each Subservicer of any such event known to the Master Servicer.
Section 11.07.....Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates or the
rights of the Holders thereof.
Section 11.08.....Supplemental Provisions for Resecuritization.
This Agreement may be supplemented by means of the addition of a separate
Article hereto (a "Supplemental Article") for the purpose of resecuritizing any of the
Certificates issued hereunder, under the following circumstances. With respect to any
Class or Classes of Certificates issued hereunder, or any portion of any such Class, as to
which the Depositor or any of its Affiliates (or any designee thereof) is the registered
Holder (the "Resecuritized Certificates"), the Depositor may deposit such Resecuritized
Certificates into a new REMIC, grantor trust or custodial arrangement (a "Restructuring
Vehicle") to be held by the Trustee pursuant to a Supplemental Article. The instrument
adopting such Supplemental Article shall be executed by the Depositor, the Master Servicer
and the Trustee; provided, that neither the Master Servicer nor the Trustee shall withhold
their consent thereto if their respective interests would not be materially adversely
affected thereby. To the extent that the terms of the Supplemental Article do not in any
way affect any provisions of this Agreement as to any of the Certificates initially issued
hereunder, the adoption of the Supplemental Article shall not constitute an "amendment" of
this Agreement. Each Supplemental Article shall set forth all necessary provisions
relating to the holding of the Resecuritized Certificates by the Trustee, the establishment
of the Restructuring Vehicle, the issuing of various classes of new certificates by the
Restructuring Vehicle and the distributions to be made thereon, and any other provisions
necessary to the purposes thereof. In connection with each Supplemental Article, the
Depositor shall deliver to the Trustee an Opinion of Counsel to the effect that (i) the
Restructuring Vehicle will qualify as a REMIC, grantor trust or other entity not subject to
taxation for federal income tax purposes and (ii) the adoption of the Supplemental
Article will not endanger the status of any REMIC created hereunder as a REMIC or result in
the imposition of a tax upon the Trust Fund (including but not limited to the tax on
prohibited transaction as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC as set forth in Section 860G(d) of the Code.
Section 11.09.....Third-Party Beneficiary.
The Swap Counterparty is an express third-party beneficiary of Sections 4.02(c)(x)
and 4.10 of this Agreement, and shall have the right to enforce the provisions of Sections
4.02(c)(x) and 4.10 of this Agreement as if it were a party hereto.
Section 11.10.....Tax Treatment.
Each party to this Agreement and each holder of a Certificate by it acceptance of its
ownership interest in such Certificate, hereby agrees to treat the payment made and
received hereunder and any payments received with respect to any Certificate for federal
income tax purposes consistently with the REMIC structure, the Swap Agreement and the SB-AM
Swap Agreement as set forth herein or incorporated herein and with the deemed payments made
with respect thereto as set forth herein.
ARTICLE XII
COMPLIANCE WITH REGULATION AB
Section 12.01.....Intent of Parties; Reasonableness.
The Depositor, the Trustee and the Master Servicer acknowledge and agree that the
purpose of this Article XII is to facilitate compliance by the Depositor with the
provisions of Regulation AB and related rules and regulations of the Commission. The
Depositor shall not exercise its right to request delivery of information or other
performance under these provisions other than in good faith, or for purposes other than
compliance with the Securities Act, the Exchange Act and the rules and regulations of the
Commission under the Securities Act and the Exchange Act. Each of the Master Servicer and
the Trustee acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the Commission or its
staff, consensus among participants in the mortgage-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Depositor in good
faith for delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. Each of the Master Servicer and the Trustee shall
cooperate reasonably with the Depositor to deliver to the Depositor (including any of its
assignees or designees), any and all disclosure, statements, reports, certifications,
records and any other information necessary in the reasonable, good faith determination of
the Depositor to permit the Depositor to comply with the provisions of Regulation AB.
Section 12.02.....Additional Representations and Warranties of the Trustee.
(a) The Trustee shall be deemed to represent to the Depositor as of the Closing Date and
on each date on which information is provided to the Depositor under Sections 12.01,
12.02(b) or 12.03 that, except as disclosed in writing to the Depositor prior to such
date: (i) it is not aware and has not received notice that any default, early amortization
or other performance triggering event has occurred as to any other Securitization
Transaction due to any default of the Trustee; (ii) there are no aspects of its financial
condition that could have a material adverse effect on the performance by it of its trustee
obligations under this Agreement or any other Securitization Transaction as to which it is
the trustee; (iii) there are no material legal or governmental proceedings pending (or
known to be contemplated) against it that would be material to Certificateholders; (iv)
there are no relationships or transactions relating to the Trustee with respect to the
Depositor or any sponsor, issuing entity, servicer, trustee, originator, significant
obligor, enhancement or support provider or other material transaction party (as such terms
are used in Regulation AB) relating to the Securitization Transaction contemplated by the
Agreement, as identified by the Depositor to the Trustee in writing as of the Closing Date
(each, a "Transaction Party") that are outside the ordinary course of business or on terms
other than would be obtained in an arm's length transaction with an unrelated third party,
apart from the Securitization Transaction, and that are material to the investors'
understanding of the Certificates; and (v) the Trustee is not an affiliate of any
Transaction Party. The Depositor shall notify the Trustee of any change in the identity of
a Transaction Party after the Closing Date.
(b) If so requested by the Depositor on any date following the Closing Date, the Trustee
shall, within five Business Days following such request, confirm in writing the accuracy of
the representations and warranties set forth in paragraph (a) of this Section or, if any
such representation and warranty is not accurate as of the date of such confirmation,
provide the pertinent facts, in writing, to the Depositor. Any such request from the
Depositor shall not be given more than once each calendar quarter, unless the Depositor
shall have a reasonable basis for a determination that any of the representations and
warranties may not be accurate.
Section 12.03.....Information to be Provided by the Trustee.
For so long as the Certificates are outstanding, for the purpose of satisfying the
Depositor's reporting obligation under the Exchange Act with respect to any Class of
Certificates, the Trustee shall provide to the Depositor a written description of (a) any
litigation or governmental proceedings pending against the Trustee as of the last day of
each calendar month that would be material to Certificateholders, and (b) any affiliations
or relationships (as described in Item 1119 of Regulation AB) that develop following the
Closing Date between the Trustee and any Transaction Party of the type described in
Section 12.02(a)(iv) or 12.02(a)(v) as of the last day of each calendar year. Any
descriptions required with respect to legal proceedings, as well as updates to previously
provided descriptions, under this Section 12.03 shall be given no later than five Business
Days prior to the Determination Date following the month in which the relevant event
occurs, and any notices and descriptions required with respect to affiliations, as well as
updates to previously provided descriptions, under this Section 12.03 shall be given no
later than January 31 of the calendar year following the year in which the relevant event
occurs. As of the date the Depositor or Master Servicer files each Report on Form 10-D and
Report on Form 10-K with respect to the Certificates, the Trustee will be deemed to
represent that any information previously provided under this Article XII is materially
correct and does not have any material omissions unless the Trustee has provided an update
to such information. The Depositor will allow the Trustee to review any disclosure
relating to material litigation against the Trustee prior to filing such disclosure with
the Commission to the extent the Depositor changes the information provided by the Trustee.
Section 12.04.....Report on Assessment of Compliance and Attestation.
On or before March 15 of each calendar year, the Trustee shall:
(a) deliver to the Depositor a report (in form and substance reasonably satisfactory to
the Depositor) regarding the Trustee's assessment of compliance with the applicable
Servicing Criteria during the immediately preceding calendar year, as required under Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be
addressed to the Depositor and signed by an authorized officer of the Trustee, and shall
address each of the Servicing Criteria specified on Exhibit S hereto; and
(b) deliver to the Depositor a report of a registered public accounting firm reasonably
acceptable to the Depositor that attests to, and reports on, the assessment of compliance
made by the Trustee and delivered pursuant to the preceding paragraph. Such attestation
shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act.
Section 12.05.....Indemnification; Remedies.
(a) The Trustee shall indemnify the Depositor, each affiliate of the Depositor, the
Master Servicer and each broker dealer acting as underwriter, placement agent or initial
purchaser of the Certificates or each Person who controls any of such parties (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act); and the
respective present and former directors, officers, employees and agents of each of the
foregoing, and shall hold each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that any of them may sustain arising out of or based
upon:
(i) (A) any untrue statement of a material fact contained or alleged to be
contained in any information, report, certification, accountants' attestation or
other material provided under this Article XII by or on behalf of the Trustee
(collectively, the "Trustee Information"), or (B) the omission or alleged omission to
state in the Trustee Information a material fact required to be stated in the Trustee
Information or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, by way of
clarification, that clause (B) of this paragraph shall be construed solely by
reference to the Trustee Information and not to any other information communicated in
connection with a sale or purchase of securities, without regard to whether the
Trustee Information or any portion thereof is presented together with or separately
from such other information; or
(ii) any failure by the Trustee to deliver any information, report, certification or other
material when and as required under this Article XII, other than a failure by the
Trustee to deliver the accountants' attestation.
(b) In the case of any failure of performance described in clause (ii) of
Section 12.05(a), the Trustee shall (i) promptly reimburse the Depositor for all costs
reasonably incurred by the Depositor in order to obtain the information, report,
certification, accountants' attestation or other material not delivered as required by the
Trustee and (ii) cooperate with the Depositor to mitigate any damages that may result from
such failure.
(c) The Depositor and the Master Servicer shall indemnify the Trustee, each affiliate of
the Trustee or each Person who controls the Trustee (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act), and the respective present and
former directors, officers, employees and agents of the Trustee, and shall hold each of
them harmless from and against any losses, damages, penalties, fines, forfeitures, legal
fees and expenses and related costs, judgments, and any other costs, fees and expenses that
any of them may sustain arising out of or based upon (i) any untrue statement of a material
fact contained or alleged to be contained in any information provided under this Agreement
by or on behalf of the Depositor or Master Servicer for inclusion in any report filed with
Commission under the Exchange Act (collectively, the "RFC Information"), or (ii) the
omission or alleged omission to state in the RFC Information a material fact required to be
stated in the RFC Information or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided, by way of
clarification, that clause (ii) of this paragraph shall be construed solely by reference to
the RFC Information and not to any other information communicated in connection with a sale
or purchase of securities, without regard to whether the RFC Information or any portion
thereof is presented together with or separately from such other information.
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly authorized as
of the day and year first above written.
RESIDENTIAL ASSET SECURITIES CORPORATION
By: /s/Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Title: Vice President
RESIDENTIAL FUNDING COMPANY, LLC
By: /s/Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Associate
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:/s/Xxxxxx Xxxxxx-Xxxx
Name: Xxxxxx Xxxxxx-Xxxx
Title: Vice President
STATE OF MINNESOTA
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of October 2006 before me, a notary public in and for said State,
personally appeared Xxx Xxxxxxxx known to me to be a Vice President of Residential Asset
Securities Corporation, 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
/s/Xxx Xxx Xxxxx
[Notarial Seal]
STATE OF MINNESOTA
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of October 2006 before me, a notary public in and for said State,
personally appeared Xxxxxx Xxxxxx, known to me to be an Associate of Residential Funding
Company, LLC, a limited liability company that executed the within instrument, and also
known to me to be the person who executed it on behalf of said limited liability company,
and acknowledged to me that such limited liability company 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
/s/Xxx Xxx Xxxxx
[Notarial Seal]
STATE OF MINNESOTA
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of October 2006 before me, a notary public in and for said State,
personally appeared Xxxxxx Xxxxxx-Xxxx, known to me to be a Vice President of U.S. Bank
National Association, a banking association organized under the laws of the United States
that executed the within instrument, and also known to me to be the person who executed it
on behalf of said banking corporation and acknowledged to me that such banking 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
/s/Xxxxxx X. Xxxxxxx
[Notarial Seal]
EXHIBIT A
FORM OF CLASS A-[_] 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 COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS UNDER THE
SWAP AGREEMENT.
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
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 TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED
THAT AS OF ANY DATE PRIOR TO THE TERMINATION OF THE SWAP AGREEMENT, EITHER IT
IS NOT A PLAN INVESTOR OR AT LEAST ONE OF U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTIONS 84-14, 90-1, 91-38, 95-60, 96-23 OR OTHER
APPLICABLE EXEMPTION APPLIES TO SUCH HOLDER'S RIGHT TO RECEIVE PAYMENTS FROM
THE SUPPLEMENTAL INTEREST TRUST.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY
ANY PERSON THAT DOES NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING
PARAGRAPH, THEN THE LAST PRECEDING TRANSFEREE THAT SATISFIES SUCH CONDITIONS
SHALL BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL RIGHTS AND
OBLIGATIONS AS CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH
TRANSFER OF THIS CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY
PERSON FOR MAKING ANY PAYMENTS DUE ON THIS CERTIFICATE TO SUCH PRECEDING
TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE
RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL
INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER,
ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH
ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. A-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: October 27, 2006
First Distribution Date: November 27, Aggregate Initial Certificate Principal
2006 Balance of the Class A-[_]
Certificates:
$___________________________
Master Servicer: Initial Certificate Principal Balance
Residential Funding Company, LLC of this Class A-[_] Certificate:
$___________________________
Final Scheduled Distribution Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS9
evidencing a percentage interest in the distributions
allocable to the Class A-[_] Certificates with
respect to a Trust Fund consisting primarily of a
pool of [fixed] [adjustable] interest rate, first
[and junior] lien mortgage loans on one- to
four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, LLC or any of their affiliates. Neither this Certificate
nor the underlying mortgage loans are guaranteed or insured by any
governmental agency or instrumentality or by Residential Asset Securities
Corporation, the Master Servicer, the Trustee or GMAC Mortgage Group, LLC or
any of their affiliates. None of the Depositor, the Master Servicer, GMAC
Mortgage Group, LLC or any of their affiliates will have any obligation with
respect to any certificate or other obligation secured by or payable from
payments on the Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions
with respect to the Trust Fund consisting primarily of an interest in a pool
of [fixed] [adjustable] interest rate, first [and junior] lien mortgage loans
on one- to four- family residential properties (the "Mortgage Loans"), sold
by Residential Asset Securities Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and U.S. Bank National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
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, a distribution 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 (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
that Distribution Date (the "Record Date"), from the related Available
Distribution Amount in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class A-[_]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by
the Trustee in immediately available funds (by wire transfer or otherwise)
for the account of the Person entitled thereto if such Person shall have so
notified the Master Servicer or such Paying Agent, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register.
Each holder of this certificate is deemed to represent that as of any
date prior to the termination of the Swap Agreement, either it is not a plan
investor or at least one of U.S. Department of Labor Prohibited Transaction
Class Exemptions 84-14, 90-1, 91-38, 95-60, 96-23 or other applicable
exemption applies to such holder's right to receive payments from the
Supplemental Interest Trust. Any purported Certificate owner whose
acquisition or holding of this Certificate (or interest therein) was effected
in violation of the restrictions in Section 5.02(e) of the Pooling and
Servicing Agreement shall indemnify and hold harmless the Depositor, the
Trustee, the Master Servicer, any Subservicer, and the Trust Fund from and
against any and all liabilities, claims, costs or expenses incurred by such
parties as a result of such acquisition or holding.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in St. Xxxx, Minnesota. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced [from time to time
pursuant to the Agreement].
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
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. In the event Master Servicer funds are
advanced with respect to any Mortgage Loan, such advance is reimbursable to
the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been
distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Master Servicer from time to time for
purposes other than distributions to Certificateholders, such purposes
including without limitation reimbursement to the Depositor and the Master
Servicer of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. 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 the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
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 Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and there upon one or more new
Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same Class and 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, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar 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 or any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier
of (i) the maturity or other liquidation of the last Mortgage Loan subject
thereto or the disposition of all property acquired upon foreclosure or deed
in lieu of foreclosure of any Mortgage Loan, and (ii) the purchase by the
Holder of the Class SB Certificates or the Master Servicer, as described in
the Agreement, from the Trust Fund of all remaining Mortgage Loans and all
property acquired in respect of such Mortgage Loans or the Certificates, in
either case thereby effecting early retirement of the Certificates. The
Agreement permits, but does not require, the Holder of the Class SB
Certificates or the Master Servicer, as described in the Agreement, (i) to
purchase, at a price determined as provided in the Agreement, all remaining
Mortgage Loans and all property acquired in respect of any Mortgage Loan or
(ii) to purchase in whole, but not in part, all of the Certificates from the
Holders thereof, provided, that any such option may only be exercised if the
Stated Principal Balance before giving effect to the distributions to be made
on such Distribution Date of the Mortgage Loans, as of the Distribution Date
upon which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate
and hereby authorizes the transfer of registration of such interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
______________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of
assignor
______________________________________________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund
to____________________________________________________________________________
for the account of ___________________________________________________________
account number _______________________________________________________________
or, if mailed by check, to ___________________________________________________
Applicable statements should be mailed to:______________________________
______________________________________________________________________________
______________________________________________________________________________
This information is provided by ___________________________________,
the assignee named above, or ______________________________, as its agent.
EXHIBIT B
FORM OF CLASS M-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M-[_] CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
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 TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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 (THE "CODE") COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS
UNDER THE SWAP AGREEMENT.
ANY TRANSFEREE OF THIS CERTIFICATE (OR INTEREST THEREIN) ACQUIRED AFTER
TERMINATION OF THE SWAP AGREEMENT WILL BE DEEMED TO HAVE REPRESENTED BY
VIRTUE OF ITS PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN)
THAT EITHER (A) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY
INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A
TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN ASSETS" OF ANY SUCH PLAN TO
EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A "PLAN INVESTOR"), (B) IT
HAS ACQUIRED AND IS HOLDING THIS CERTIFICATE IN RELIANCE ON U.S. DEPARTMENT
OF LABOR PROHIBITED TRANSACTION EXEMPTION ("PTE") 94-29, 59 FED. REG. 14674
(MARCH 29, 1994), AS MOST RECENTLY AMENDED BY PTE 2002-41, 67 FED. REG. 54487
(AUGUST 22, 2002) (THE "RFC EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE
ARE CERTAIN CONDITIONS TO THE AVAILABILITY OF THE RFC EXEMPTION INCLUDING
THAT THIS CERTIFICATE MUST BE RATED, AT THE TIME OF PURCHASE, NOT LOWER THAN
"BBB-" (OR ITS EQUIVALENT) BY STANDARD & POOR'S, FITCH OR MOODY'S OR (C) (I)
THE TRANSFEREE IS AN INSURANCE COMPANY, (II) THE SOURCE OF FUNDS USED TO
PURCHASE OR HOLD THIS CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS DEFINED IN U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 95-60), AND (III) THE CONDITIONS SET FORTH IN
SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED (EACH ENTITY THAT
SATISFIES THIS CLAUSE (C), A "COMPLYING INSURANCE COMPANY"). EACH HOLDER OF
THIS CERTIFICATE IS DEEMED TO REPRESENT THAT, AS OF ANY DATE PRIOR TO THE
TERMINATION OF THE SWAP AGREEMENT, EITHER IT IS NOT A PLAN INVESTOR OR AT
LEAST ONE OF U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTIONS
84-14, 90-1, 91-38, 95-60, 96-23 OR OTHER APPLICABLE EXEMPTION APPLIES TO
SUCH HOLDER'S RIGHT TO RECEIVE PAYMENTS FROM THE SUPPLEMENTAL INTEREST TRUST.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY
ANY PERSON THAT DOES NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING
PARAGRAPH, THEN THE LAST PRECEDING TRANSFEREE THAT EITHER (I) IS NOT A PLAN
INVESTOR, (II) ACQUIRED SUCH CERTIFICATE IN COMPLIANCE WITH THE TRANSFER
RESTRICTIONS DESCRIBED ABOVE, OR (III) IS A COMPLYING INSURANCE COMPANY SHALL
BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL RIGHTS AND OBLIGATIONS AS
CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH TRANSFER OF THIS
CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY PERSON FOR
MAKING ANY PAYMENTS DUE ON THIS CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY TRANSFEREE OF A CLASS M CERTIFICATE THAT IS A PLAN INVESTOR WILL BE
DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS PURCHASE OR HOLDING OF SUCH
CERTIFICATE OR INTEREST THEREIN THAT SUCH CERTIFICATE, AT THE TIME OF
PURCHASE, IS RATED NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY FITCH,
STANDARD & POOR'S OR MOODY'S.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE
RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL
INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER,
ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH
ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. M-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: October 27, 2006 [Fixed Pass-Through Rate]
First Distribution Date: November 27, Aggregate Initial Certificate Principal
2006 Balance of the Class M-[_]
Certificates:
$___________________________
Master Servicer: Initial Certificate Principal Balance
Residential Funding Company, LLC of this Class M-[_] Certificate:
$___________________________
Final Scheduled Distribution Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS9
evidencing a percentage interest in the distributions
allocable to the Class M-[_] Certificates with
respect to a Trust Fund consisting primarily of a
pool of [fixed] [adjustable] interest rate, first
[and junior] lien mortgage loans on one- to
four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
GMAC Mortgage Group, LLC or any of their affiliates. Neither this Certificate
nor the underlying mortgage loans are guaranteed or insured by any
governmental agency or instrumentality or by Residential Asset Securities
Corporation, the Master Servicer, the Trustee or GMAC Mortgage Group, LLC or
any of their affiliates. None of the Depositor, the Master Servicer, GMAC
Mortgage Group, LLC or any of their affiliates will have any obligation with
respect to any certificate or other obligation secured by or payable from
payments on the Certificates.
This certifies that [Cede & Co.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions
with respect to the Trust Fund consisting primarily of an interest in a pool
of [fixed] [adjustable] interest rate, first [and junior] lien mortgage loans
on one- to four- family residential properties (the "Mortgage Loans"), sold
by Residential Asset Securities Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement
referred to below). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and U.S. Bank National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
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, a distribution 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 (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the Business Day immediately preceding
that Distribution Date (the "Record Date"), from the related Available
Distribution Amount in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount of interest and
principal, if any, required to be distributed to Holders of Class M-[_]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by
the Trustee in immediately available funds (by wire transfer or otherwise)
for the account of the Person entitled thereto if such Person shall have so
notified the Master Servicer or such Paying Agent, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register.
Any Transferee of this Certificate will be deemed to have represented
by virtue of its purchase or holding of this Certificate (or interest
therein) after termination of the Swap Agreement that either (a) such
transferee is not an employee benefit plan or other plan or arrangement
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
code or a person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such
plan) who is using "plan assets" of any such plan to effect such acquisition
(each of the foregoing, a "Plan Investor"), (b) it has acquired and is
holding this Certificate in reliance on U.S. Department of Labor Prohibited
Transaction Exemption ("PTE") 94-29, 59 Fed. Reg. 14674 (March 29, 1994), as
most recently amended by PTE 2002-41, 67 Fed. Reg. 54487 (August 22, 2002)
(the "RFC Exemption"), and that it understands that there are certain
conditions to the availability of the RFC Exemption including that this
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by Standard & Poor's, Fitch or Moody's or (c) (i) the
transferee is an insurance company, (ii) the source of funds used to purchase
or hold this certificate is an "insurance company general account" (as
defined in U.S. Department of Labor Prohibited Transaction Class Exemption
("PTCE") 95-60), and (iii) the conditions set forth in sections I and III of
PTCE 95-60 have been satisfied (each entity that satisfies this clause (c), a
"Complying Insurance Company"). Each holder of this Certificate is deemed to
represent that, as of any date prior to the termination of the Swap
Agreement, either it is not a plan investor or at least one of U.S.
Department of Labor Prohibited Transaction Class Exemptions 84-14, 90-1,
91-38, 95-60, 96-23 or other applicable exemption applies to such holder's
right to receive payments from the Supplemental Interest Trust.
If this Certificate (or any interest therein) is acquired or held by
any person that does not satisfy the conditions described in the preceding
paragraph, then the last preceding transferee that either (i) is not a Plan
Investor, (ii) acquired such Certificate in compliance with the transfer
restrictions described above, or (iii) is a Complying Insurance Company shall
be restored, to the extent permitted by law, to all rights and obligations as
Certificate owner thereof retroactive to the date of such transfer of this
Certificate. The Trustee shall be under no liability to any person for
making any payments due on this Certificate to such preceding transferee.
Any purported Certificate owner whose acquisition or holding of this
Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e) of the Pooling and Servicing Agreement shall
indemnify and hold harmless the Depositor, the Trustee, the Master Servicer,
any Subservicer, and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by such parties as a result of such
acquisition or holding.
Any Transferee of a Class M Certificate that is a plan investor will be
deemed to have represented by virtue of its purchase or holding of such
Certificate or interest therein that such Certificate, at the time of
purchase, is rated not lower than "BBB-" (or its equivalent) by Fitch,
Standard & Poors or Moodys.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of, this Certificate at the office or agency
appointed by the Trustee for that purpose in St. Xxxx, Minnesota. The Initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
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. In the event Master Servicer funds are
advanced with respect to any Mortgage Loan, such advance is reimbursable to
the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been
distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders
may be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without
limitation reimbursement to the Depositor and the Master Servicer of advances
made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. 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 the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
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 Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and there upon one or more new
Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same Class and 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, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar 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 or any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier
of (i) the maturity or other liquidation of the last Mortgage Loan subject
thereto or the disposition of all property acquired upon foreclosure or deed
in lieu of foreclosure of any Mortgage Loan, and (ii) the purchase by the
Holder of the Class SB Certificates or the Master Servicer, as described in
the Agreement, from the Trust Fund of all remaining Mortgage Loans and all
property acquired in respect of such Mortgage Loans or the Certificates, in
either case thereby effecting early retirement of the Certificates. The
Agreement permits, but does not require, the Holder of the Class SB
Certificates or the Master Servicer, as described in the Agreement, (i) to
purchase, at a price determined as provided in the Agreement, all remaining
Mortgage Loans and all property acquired in respect of any Mortgage Loan or
(ii) to purchase in whole, but not in part, all of the Certificates from the
Holders thereof, provided, that any such option may only be exercised if the
Stated Principal Balance before giving effect to the distributions to be made
on such Distribution Date of the Mortgage Loans, as of the Distribution Date
upon which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate
and hereby authorizes the transfer of registration of such interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
______________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of
assignor
______________________________________________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund
to____________________________________________________________________________
for the account of ___________________________________________________________
account number _______________________________________________________________
or, if mailed by check, to ___________________________________________________
Applicable statements should be mailed to:______________________________
______________________________________________________________________________
______________________________________________________________________________
This information is provided by ___________________________________,
the assignee named above, or ______________________________, as its agent.
EXHIBIT C
CLASS SB-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
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 (THE "CODE") COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS
UNDER THE SWAP AGREEMENT.
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 WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE
TO ANY EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR ANY PERSON
(INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT
MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN
ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A
"PLAN INVESTOR") UNLESS THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER
ARE PROVIDED WITH AN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER
TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
(OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), AND WILL NOT SUBJECT
THE TRUSTEE, THE DEPOSITOR OR THE MASTER 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 AGREEMENT, WHICH OPINION
OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE DEPOSITOR OR THE
MASTER SERVICER.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE
RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL
INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER,
ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH
ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. SB-[__]-1
Date of Pooling and Servicing Agreement Percentage Interest: [__]%
and Cut-off Date: October 27, 2006
First Distribution Date: November 27, Aggregate Initial Certificate
2006 Principal Balance
of the Class SB-[_] Certificates:
$___________________________
Master Servicer: Initial Certificate Principal Balance
Residential Funding Company, LLC of this Class SB-[_] Certificate:
$___________________________
Maturity Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS9
evidencing a percentage interest in the distributions
allocable to the Class SB-[_] Certificates with
respect to a Trust Fund consisting primarily of a
pool of [fixed] [adjustable] interest rate, first
[and junior] lien mortgage loans on one- to
four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
any of their affiliates. Neither this Certificate nor the underlying mortgage
loans are guaranteed or insured by any governmental agency or instrumentality
or by Residential Asset Securities Corporation, the Master Servicer, the
Trustee or any of their affiliates. None of the Depositor, the Master
Servicer or any of their affiliates will have any obligation with respect to
any certificate or other obligation secured by or payable from payments on
the Certificates.
This certifies that [Barclays Capital Inc.] is the registered owner of
the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of an
interest in a pool of [fixed] [adjustable] interest rate, first [and junior]
lien mortgage loans on one- to four-family residential properties (the
"Mortgage Loans"), sold by Residential Asset Securities Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement referred to below). The Trust Fund was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Depositor, the Master Servicer and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned
in the Agreement. This Certificate is 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, a distribution 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 (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of
the Percentage Interest evidenced by this Certificate and the amount of
interest and principal, if any, required to be distributed to Holders of
Class SB-[_] Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicer acting on behalf of the Trustee or by a Paying Agent appointed by
the Trustee in immediately available funds (by wire transfer or otherwise)
for the account of the Person entitled thereto if such Person shall have so
notified the Master Servicer or such Paying Agent, or by check mailed 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 of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in St. Xxxx, Minnesota. The
Notional Amount of this Class SB-[_] Certificate as of any date of
determination will be calculated as described in the Agreement. This
Class SB-[_] Certificate will accrue interest at the Pass-Through Rate on the
Notional Amount as indicated in the definition of Accrued Certificate
Interest in the Agreement. This Class SB-[_] Certificate will not accrue
interest on its Certificate Principal Balance.
No transfer of this Certificate or any interest therein shall be made
to any employee benefit plan or other plan or arrangement subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code, or
any person (including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition (each of the
foregoing, a "Plan Investor") unless the Trustee, the Depositor and the
Master Servicer are provided with an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of this Certificate is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code (or comparable provisions of any subsequent enactments), and will
not subject the Trustee, the Depositor or the Master 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 Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the
Depositor or the Master Servicer.
Any purported Certificate owner whose acquisition or holding of this
Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e) of the Pooling and Servicing Agreement shall
indemnify and hold harmless the Depositor, the Trustee, the Master Servicer,
any Subservicer, and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by such parties as a result of such
acquisition or holding.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
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. In the event Master Servicer funds are
advanced with respect to any Mortgage Loan, such advance is reimbursable to
the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been
distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Master Servicer from time to time for
purposes other than distributions to Certificateholders, such purposes
including without limitation reimbursement to the Depositor and the Master
Servicer of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. 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 the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
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 Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same Class and 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, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar 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 or any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier
of (i) the maturity or other liquidation of the last Mortgage Loan subject
thereto or the disposition of all property acquired upon foreclosure or deed
in lieu of foreclosure of any Mortgage Loan, and (ii) the purchase by the
Holder of the Class SB Certificates or the Master Servicer, as described in
the Agreement, from the Trust Fund of all remaining Mortgage Loans and all
property acquired in respect of such Mortgage Loans or the Certificates, in
either case thereby effecting early retirement of the Certificates. The
Agreement permits, but does not require, the Holder of the Class SB
Certificates or the Master Servicer, as described in the Agreement, (i) to
purchase, at a price determined as provided in the Agreement, all remaining
Mortgage Loans and all property acquired in respect of any Mortgage Loan or
(ii) to purchase in whole, but not in part, all of the Certificates from the
Holders thereof, provided, that any such option may only be exercised if the
Stated Principal Balance before giving effect to the distributions to be made
on such Distribution Date of the Mortgage Loans, as of the Distribution Date
upon which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class SB-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate
and hereby authorizes the transfer of registration of such interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
______________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of
assignor
______________________________________________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund
to____________________________________________________________________________
for the account of ___________________________________________________________
account number _______________________________________________________________
or, if mailed by check, to ___________________________________________________
Applicable statements should be mailed to:______________________________
______________________________________________________________________________
______________________________________________________________________________
This information is provided by ___________________________________,
the assignee named above, or ______________________________, as its agent.
EXHIBIT D
FORM OF CLASS R CERTIFICATE
THE CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS CONSTITUTING
THE AVAILABLE DISTRIBUTION AMOUNT UNTIL SUCH TIME AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN (THE "AGREEMENT").
THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE CLASS A, CLASS M AND
CLASS SB CERTIFICATES, TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL 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 (THE "CODE").
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 WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT (THE "AGREEMENT").
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 WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE
TO ANY EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR ANY PERSON
(INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL ACCOUNT, AN INVESTMENT
MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING "PLAN
ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A
"PLAN INVESTOR") UNLESS THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER
ARE PROVIDED WITH AN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRUSTEE, THE DEPOSITOR AND THE MASTER SERVICER
TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN ANY NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
(OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), AND WILL NOT SUBJECT
THE TRUSTEE, THE DEPOSITOR OR THE MASTER 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 AGREEMENT, WHICH OPINION
OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE DEPOSITOR OR THE
MASTER SERVICER.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS
CERTIFICATE (OR INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE
RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING AND SERVICING AGREEMENT SHALL
INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER SERVICER,
ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH
ACQUISITION OR HOLDING.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
MASTER SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) 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 XXXXXXX MAC, A MAJORITY OF ITS
BOARD OF DIRECTORS IS NOT SELECTED BY SUCH GOVERNMENTAL UNIT), (B) A FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF EITHER OF THE FOREGOING, (C) 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 UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING THE TAX IMPOSED BY
SECTION 511 OF THE CODE ON UNRELATED BUSINESS TAXABLE INCOME), (D) RURAL
ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN SECTION 1381(A)(2)(C) OF THE
CODE, (E) AN ELECTING LARGE PARTNERSHIP UNDER SECTION 775(A) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C), (D) OR (E)
BEING HEREIN REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (F) AN AGENT
OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE
THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR
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 OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
Certificate No. R-1 Percentage Interest: 100.00%
Date of Pooling and Servicing Agreement Master Servicer:
and Cut-off Date: October 27, 2006 Residential Funding Company, LLC
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS9
evidencing a percentage interest in the distributions
allocable to the Class R Certificates with respect to
a Trust Fund consisting primarily of mortgage loans
on one- to four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund
and does not represent an obligation of or interest in Residential Asset
Securities Corporation, the Master Servicer, the Trustee referred to below or
any of their affiliates. Neither this Certificate nor the underlying Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality
or by Residential Asset Securities Corporation, the Master Servicer, the
Trustee or any of their affiliates. None of the Depositor, the Master
Servicer or any of their affiliates will have any obligation with respect to
any certificate or other obligation secured by or payable from payments on
the Certificates.
This certifies that [Residential Funding Company, LLC] is the
registered owner of the Percentage Interest evidenced by this Certificate in
certain distributions with respect to the Trust Fund consisting primarily of
a pool of adjustable rate, first [and junior] lien mortgage loans on one- to
four-family residential properties (the "Mortgage Loans"), sold by
Residential Asset Securities Corporation (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement referred to
below). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement) among the Depositor, the
Master Servicer and U.S. Bank National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is
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, a distribution 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 (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"),
from the related Available Distribution Amount in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and, the
amount of interest and principal, if any, required to be distributed to the
Holders of Class R Certificates on such Distribution Date.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i)
each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer
of any Ownership Interest in this Certificate will be conditioned upon the
delivery to the Trustee of, among other things, an affidavit to the effect
that it is a United States Person and Permitted Transferee, (ii) any
attempted or purported transfer of any Ownership Interest in this Certificate
in violation of such restrictions will be absolutely null and void and will
vest no rights in the purported transferee, and (iv) if any person other than
a United States Person and a Permitted Transferee acquires any Ownership
Interest in this Certificate in violation of such restrictions, then the
Master Servicer will have the right, in its sole discretion and without
notice to the Holder of this Certificate, to sell this Certificate to a
purchaser selected by the Master Servicer, which purchaser may be the Master
Servicer, or any affiliate of the Master Servicer, on such terms and
conditions as the Master Servicer may choose.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in St. Xxxx, Minnesota. The Holder
of this Certificate may have additional obligations with respect to this
Certificate, including tax liabilities.
No transfer of this Class R Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event that such a transfer is to be
made, (i) the Trustee or the Depositor may require an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Securities Act of 1933, as amended, and of any applicable
statute of any state and (ii) the transferee shall execute an investment
letter in the form described by the Agreement. The Holder hereof desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee,
the Depositor, the Master Servicer and the Certificate Registrar acting on
behalf of the Trustee against any liability that may result if the transfer
is not so exempt or is not made in accordance with such Federal and state
laws.
Any Transferee of this Certificate will be deemed to have represented
by virtue of its purchase or holding of this Certificate (or interest
therein) that such transferee is not an employee benefit plan or other plan
or arrangement subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code or a person (including an insurance company
investing its general account, an investment manager, a named fiduciary or a
trustee of any such plan) who is using "plan assets" of any such plan to
effect such acquisition.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Home Equity Mortgage Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
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. In the event Master Servicer funds are
advanced with respect to any Mortgage Loan, such advance is reimbursable to
the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been
distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Master Servicer from time to time for
purposes other than distributions to Certificateholders, such purposes
including without limitation reimbursement to the Depositor and the Master
Servicer of advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. 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 the Certificate. The
Agreement also permits the amendment thereof in certain circumstances without
the consent of the Holders of any of the Certificates and, in certain
additional circumstances, without the consent of the Holders of certain
Classes of 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 Trustee in St. Xxxx, Minnesota, duly
endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same Class and 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, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicer, the Trustee or
the Certificate Registrar 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 or any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not
be entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
(Please print or typewrite name and address including postal zip code of
assignee) the beneficial interest evidenced by the within Trust Certificate
and hereby authorizes the transfer of registration of such interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
______________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of
assignor
______________________________________________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available fund
to____________________________________________________________________________
for the account of ___________________________________________________________
account number _______________________________________________________________
or, if mailed by check, to ___________________________________________________
Applicable statements should be mailed to:______________________________
______________________________________________________________________________
______________________________________________________________________________
This information is provided by ___________________________________,
the assignee named above, or ______________________________, as its agent.
EXHIBIT E
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement"), dated as of October 27, 2006, by and among U.S. BANK
NATIONAL ASSOCIATION, as trustee (including its successors under the Pooling
Agreement defined below, the "Trustee"), RESIDENTIAL ASSET SECURITIES
CORPORATION (together with any successor in interest, the "Company"),
RESIDENTIAL FUNDING COMPANY, LLC, as master servicer (together with any
successor in interest or successor under the Pooling Agreement referred to
below, the "Master Servicer") and XXXXX FARGO BANK, NATIONAL ASSOCIATION
(together with any successor in interest or any successor appointed
hereunder, the "Custodian").
W I T N E S S E T H T H A T:
WHEREAS, the Company, the Master Servicer, and the Trustee have entered
into a Pooling and Servicing Agreement, dated as of October 27, 2006,
relating to the issuance of Residential Asset Securities Corporation, Home
Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS9 (as
in effect on the date of this Agreement, the "Original Pooling Agreement,"
and as amended and supplemented from time to time, the "Pooling Agreement");
and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for
the purposes of receiving and holding certain documents and other instruments
delivered by the Company and the Master Servicer under the Pooling Agreement,
all upon the terms and conditions and subject to the limitations hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Company, the
Master Servicer and the Custodian hereby agree as follows:
ARTICLE I
Definitions
Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned in the Original Pooling Agreement, unless
otherwise required by the context herein.
ARTICLE II
Custody of Mortgage Documents
Section 2.1 Custodian to Act as Agent: Acceptance of Custodial Files. The
Company and the Master Servicer hereby direct the Trustee to appoint Xxxxx
Fargo Bank, National Association as the Custodian hereunder. The Custodian,
as the duly appointed agent of the Trustee for these purposes, acknowledges
receipt of the Custodial Files relating to the Mortgage Loans identified on
the schedule attached hereto (the "Custodial Files") and declares that it
holds and will hold the Custodial Files as agent for the Trustee, in trust,
for the use and benefit of all present and future Certificateholders.
Section 2.2 Recordation of Assignments. If any Custodial File includes one
or more assignments of the related Mortgages to the Trustee that have not
been recorded, each such assignment shall be delivered by the Custodian to
the Company for the purpose of recording it in the appropriate public office
for real property records, and the Company, at no expense to the Custodian,
shall promptly cause to be recorded in the appropriate public office for real
property records each such assignment and, upon receipt thereof from such
public office, shall return each such assignment to the Custodian.
Section 2.3 Review of Custodial Files.
(a) On or prior to the Closing Date, the Custodian shall deliver to the
Trustee an Initial Certification in the form annexed hereto as Exhibit One
evidencing receipt of a Custodial File for each Mortgage Loan listed on the
Schedule attached hereto (the "Mortgage Loan Schedule"). The parties hereto
acknowledge that certain documents referred to in Subsection 2.01(b)(i) of
the Pooling Agreement may be missing on or prior to the Closing Date and such
missing documents shall be listed as a Schedule to Exhibit One.
(b) Within 45 days after the Closing Date, the Custodian agrees, for the
benefit of Certificateholders, to review each Custodial File and to deliver
to the Trustee an Interim Certification in the form annexed hereto as Exhibit
Two to the effect that all documents required to be delivered pursuant to
Section 2.01 (b) of the Pooling Agreement have been executed and received and
that such documents relate to the Mortgage Loans identified on the Mortgage
Loan Schedule, except for any exceptions listed on Schedule A attached to
such Interim Certification. For purposes of such review, the Custodian shall
compare the following information in each Custodial File to the corresponding
information in the Mortgage Loan Schedule: (i) the loan number, (ii) the
borrower name and (iii) the original principal balance. In the event that any
Mortgage Note or Assignment of Mortgage has been delivered to the Custodian
by the Company in blank, the Custodian, upon the direction of the Company,
shall cause each such Mortgage Note to be endorsed to the Trustee and each
such Assignment of Mortgage to be completed in the name of the Trustee prior
to the date on which such Interim Certification is delivered to the Trustee.
Within 45 days of receipt of the documents required to be delivered pursuant
to Section 2.01(c) of the Pooling Agreement, the Custodian agrees, for the
benefit of the Certificateholders, to review each such document, and upon the
written request of the Trustee to deliver to the Trustee an updated Schedule
A to the Interim Certification. The Custodian shall be under no duty or
obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face, or that the MIN is accurate. If in performing the review required
by this Section 2.3 the Custodian finds any document or documents
constituting a part of a Custodial File to be missing or defective in respect
of the items reviewed as described in this Section 2.3(b), the Custodian
shall promptly so notify the Company, the Master Servicer and the Trustee.
(c) Upon receipt of all documents required to be in the Custodial Files the
Custodian shall deliver to the Trustee a Final Certification in the form
annexed hereto as Exhibit Three evidencing the completeness of the Custodial
Files.
Upon receipt of written request from the Trustee, the Company or the
Master Servicer, the Custodian shall as soon as practicable supply the
Trustee with a list of all of the documents relating to the Mortgage Loans
required to be delivered pursuant to Section 2.01(b) of the Pooling Agreement
not then contained in the Custodial Files.
Section 2.4_Notification of Breaches of Representations and Warranties. If
the Custodian discovers, in the course of performing its custodial functions,
a breach of a representation or warranty made by the Master Servicer or the
Company as set forth in the Pooling Agreement with respect to a Mortgage Loan
relating to a Custodial File, the Custodian shall give prompt written notice
to the Company, the Master Servicer and the Trustee.
Section 2.5 Custodian to Cooperate: Release of Custodial Files. Upon the
repurchase or substitution of any Mortgage Loan pursuant to Article II of the
Pooling Agreement or payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer shall
immediately notify the Custodian by delivering to the Custodian a Request for
Release (in the form of Exhibit Four attached hereto or a mutually acceptable
electronic form) and shall request delivery to it of the Custodial File. The
Custodian agrees, upon receipt of such Request for Release, promptly to
release to the Master Servicer the related Custodial File. Upon receipt of a
Request for Release from the Master Servicer, signed by a Servicing Officer,
stating that (i) the Master Servicer or a Subservicer, as the case may be,
has made a deposit into the Certificate Account in payment for the purchase
of the related Mortgage Loan in an amount equal to the Purchase Price for
such Mortgage Loan or (ii) the Company has chosen to substitute a Qualified
Substitute Mortgage Loan for such Mortgage Loan, the Custodian shall release
to the Master Servicer the related Custodial File. Upon written notification
of a substitution, the Master Servicer shall deliver to the Custodian and the
Custodian agrees to accept the Mortgage Note and other documents constituting
the Custodial File with respect to any Qualified Substitute Mortgage Loan,
upon receiving written notification from the Master Servicer of such
substitution.
From time to time as is appropriate for the servicing or foreclosures
of any Mortgage Loan, including, for this purpose, collection under any
Primary Insurance Policy or any Mortgage Pool Insurance Policy, the Master
Servicer shall deliver to the Custodian a Request for Release certifying as
to the reason for such release. Upon receipt of the foregoing, the Custodian
shall deliver the Custodial File or such document to the Master Servicer. All
Custodial Files so released to the Master Servicer shall be held by it in
trust for the Trustee for the use and benefit of all present and future
Certificateholders. The Master Servicer shall cause each Custodial File or
any document therein so released to be returned to the Custodian when the
need therefor by the Master Servicer no longer exists, unless (i) the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Custodial Account or (ii) the
Custodial File or such document has been delivered to an attorney, or to a
public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered to the Custodian an updated Request for Release signed
by a Servicing Officer certifying as to the name and address of the Person to
which such Custodial File or such document was delivered and the purpose or
purposes of such delivery. Immediately upon receipt of any Custodial File
returned to the Custodian by the Master Servicer, the Custodian shall deliver
a signed acknowledgement to the Master Servicer, confirming receipt of such
Custodial File.
Upon the written request of the Master Servicer, the Custodian will
send to the Master Servicer copies of any documents contained in the
Custodial File.
Section 2.6 Assumption Agreements. In the event that any assumption
agreement or substitution of liability agreement is entered into with respect
to any Mortgage Loan subject to this Agreement in accordance with the terms
and provisions of the Pooling Agreement, the Master Servicer shall notify the
Custodian that such assumption or substitution agreement has been completed
by forwarding to the Custodian the original of such assumption or
substitution agreement, which shall be added to the related Custodial File
and, for all purposes, shall be considered a part of such Custodial File to
the same extent as all other documents and instruments constituting parts
thereof.
ARTICLE III
Concerning the Custodian
Section 3.1_Custodian a Bailee and Agent of the Trustee. With respect to
each Mortgage Note, Mortgage and other documents constituting each Custodial
File which are delivered to the Custodian, the Custodian is exclusively the
bailee and agent of the Trustee and has no instructions to hold any Mortgage
Note or Mortgage for the benefit of any person other than the Trustee, holds
such documents for the benefit of Certificateholders and undertakes to
perform such duties and only such duties as are specifically set forth in
this Agreement. Except upon compliance with the provisions of Section 2.5 of
this Agreement, no Mortgage Note, Mortgage or other document constituting a
part of a Custodial File shall be delivered by the Custodian to the Company
or the Master Servicer or otherwise released from the possession of the
Custodian.
The Master Servicer shall promptly notify the Custodian in writing if
it shall no longer be a member of MERS, or if it otherwise shall no longer be
capable of registering and recording Mortgage Loans using MERS. In addition,
the Master Servicer shall (i) promptly notify the Custodian in writing when a
MERS Mortgage Loan is no longer registered with and recorded under MERS and
(ii) concurrently with any such deregistration of a MERS Mortgage Loan,
prepare, execute and record an original assignment from MERS to the Trustee
and deliver such assignment to the Custodian.
Section 3.2_Indemnification. The Company hereby agrees to indemnify and hold
the Custodian harmless from and against all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or any other expenses,
fees or charges of any character or nature, which the Custodian may incur or
with which the Custodian may be threatened by reason of its acting as
custodian under this Agreement, including indemnification of the Custodian
against any and all expenses, including attorney's fees if counsel for the
Custodian has been approved by the Company, and the cost of defending any
action, suit or proceedings or resisting any claim. Notwithstanding the
foregoing, it is specifically understood and agreed that in the event any
such claim, liability, loss, action, suit or proceeding or other expense, fee
or charge shall have been caused by reason of any negligent act, negligent
failure to act or willful misconduct on the part of the Custodian, or which
shall constitute a willful breach of its duties hereunder, the
indemnification provisions of this Agreement shall not apply.
Section 3.3_Custodian May Own Certificates. The Custodian in its individual
or any other capacity may become the owner or pledgee of Certificates with
the same rights it would have if it were not Custodian.
Section 3.4_Master Servicer to Pay Custodian's Fees and Expenses. The Master
Servicer covenants and agrees to pay to the Custodian from time to time, and
the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and
duties hereunder of the Custodian, and the Master Servicer shall pay or
reimburse the Custodian upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Custodian in accordance
with any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ), except any such expense, disbursement
or advance as may arise from its negligence or bad faith.
Section 3.5_Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it
as such obligations and duties relate to its acting as Custodian of the
Mortgage Loans. Upon receiving such notice of resignation, the Trustee shall
either take custody of the Custodial Files itself and give prompt notice
thereof to the Company, the Master Servicer and the Custodian, or promptly
appoint a successor Custodian by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Custodian and one
copy to the successor Custodian. If the Trustee shall not have taken custody
of the Custodial Files and no successor Custodian shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Custodian may petition any court of
competent jurisdiction for the appointment of a successor Custodian.
The Trustee, at the direction of the Master Servicer and the Company,
may remove the Custodian at any time. In such event, the Trustee shall
appoint, or petition a court of competent jurisdiction to appoint, a
successor Custodian hereunder. Any successor Custodian shall be a depository
institution subject to supervision or examination by federal or state
authority and shall be able to satisfy the other requirements contained in
Section 3.7 and shall be unaffiliated with the Master Servicer or the Company.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Company and the Master
Servicer of the appointment of any successor Custodian. No successor
Custodian shall be appointed by the Trustee without the prior approval of the
Company and the Master Servicer.
Section 3.6_Merger or Consolidation of Custodian. Any Person into which the
Custodian may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of
the Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided
that such successor is a depository institution subject to supervision or
examination by federal or state authority and is able to satisfy the other
requirements contained in Section 3.7 and is unaffiliated with the Master
Servicer or the Company.
Section 3.7_Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and
surplus of at least $15,000,000 and is qualified to do business in the
jurisdictions in which it will hold any Custodial File.
ARTICLE IV
Compliance with Regulation AB
Section 4.1_Intent of the Parties; Reasonableness. The parties hereto
acknowledge and agree that the purpose of this Article IV is to facilitate
compliance by the Company with the provisions of Regulation AB and related
rules and regulations of the Commission. The Company shall not exercise its
right to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance
with the Securities Act, the Exchange Act and the rules and regulations of
the Commission under the Securities Act and the Exchange Act. Each of the
parties hereto acknowledges that interpretations of the requirements of
Regulation AB may change over time, whether due to interpretive guidance
provided by the Commission or its staff, consensus among participants in the
mortgage-backed securities markets, advice of counsel, or otherwise, and
agrees to comply with requests made by the Company in good faith for delivery
of information under these provisions on the basis of evolving
interpretations of Regulation AB. The Custodian shall cooperate reasonably
with the Company to deliver to the Company (including any of its assignees or
designees), any and all disclosure, statements, reports, certifications,
records and any other information necessary in the reasonable, good faith
determination of the Company to permit the Company to comply with the
provisions of Regulation AB.
Section 4.2 Additional Representations and Warranties of the Custodian.
(a) The Custodian hereby represents and warrants that the information set
forth under the caption "Pooling and Servicing Agreement--Custodial
Arrangements" (the "Custodian Disclosure") in the preliminary prospectus
supplement relating to the Certificates and the final prospectus supplement
relating to the Certificates does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Custodian shall be deemed to represent to the Company as of the
date hereof and on each date on which information is provided to the Company
under Section 4.3 that, except as disclosed in writing to the Company prior
to such date: (i) there are no aspects of its financial condition that could
have a material adverse effect on the performance by it of its Custodian
obligations under this Agreement or any other Securitization Transaction as
to which it is the custodian; (ii) there are no material legal or
governmental proceedings pending (or known to be contemplated) against it;
and (iii) there are no affiliations, relationships or transactions relating
to the Custodian with respect to the Company or any sponsor, issuing entity,
servicer, trustee, originator, significant obligor, enhancement or support
provider or other material transaction party (as such terms are used in
Regulation AB) relating to the Securitization Transaction contemplated by the
Agreement, as identified by the Company to the Custodian in writing as of the
Closing Date (each, a "Transaction Party").
(c) If so requested by the Company on any date following the Closing Date,
the Custodian shall, within five Business Days following such request,
confirm in writing the accuracy of the representations and warranties set
forth in paragraph (a) of this Section or, if any such representation and
warranty is not accurate as of the date of such confirmation, provide
reasonably adequate disclosure of the pertinent facts, in writing, to the
requesting party. Any such request from the Company shall not be given more
than once each calendar quarter, unless the Company shall have a reasonable
basis for a determination that any of the representations and warranties may
not be accurate.
Section 4.3 Additional Information to Be Provided by the Custodian. For so
long as the Certificates are outstanding, for the purpose of satisfying the
Company's reporting obligation under the Exchange Act with respect to any
class of Certificates, the Custodian shall (a) notify the Company in writing
of any material litigation or governmental proceedings pending against the
Custodian that would be material to Certificateholders, and (b) provide to
the Company a written description of such proceedings. Any notices and
descriptions required under this Section 4.3 shall be given no later than
five Business Days prior to the Determination Date following the month in
which the Custodian has knowledge of the occurrence of the relevant event.
As of the date the Company or Master Servicer files each Report on Form 10-D
or Form 10-K with respect to the Certificates, the Custodian will be deemed
to represent that any information previously provided under this Section 4.3,
if any, is materially correct and does not have any material omissions unless
the Custodian has provided an update to such information. For purposes of
this Section 4.3, "Determination Date" shall mean, with respect to any
Distribution Date, the 20th day (or if such 20th day is not a Business Day,
the Business Day immediately following such 20th day) of the month of the
related Distribution Date and "Distribution Date" shall mean, the 25th day of
any month beginning in November 2006 or, if such 25th day is not a Business
Day, the Business Day immediately following such 25th day.
Section 4.4 Report on Assessment of Compliance and Attestation. On or before
March 15 of each calendar year, the Custodian shall:
(a) deliver to the Company a report (in form and substance reasonably
satisfactory to the Company) regarding the Custodian's assessment of
compliance with the Servicing Criteria during the immediately preceding
calendar year, as required under Rules 13a-18 and 15d-18 of the Exchange Act
and Item 1122 of Regulation AB. Such report shall be addressed to the
Company and signed by an authorized officer of the Custodian, and shall
address each of the Servicing Criteria specified on a certification
substantially in the form of Exhibit Five hereto; and
(b) deliver to the Company a report of a registered public accounting firm
reasonably acceptable to the Company that attests to, and reports on, the
assessment of compliance made by the Custodian and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act.
Section 4.5 Indemnification; Remedies.
(a) The Custodian shall indemnify the Company, each affiliate of the
Company, the Master Servicer and each broker dealer acting as underwriter,
placement agent or initial purchaser of the Certificates or each Person who
controls any of such parties (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective
present and former directors, officers, employees and agents of each of the
foregoing, and shall hold each of them harmless from and against any losses,
damages, penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in the Custodian Disclosure and any information,
report, certification, accountants' attestation or other material provided
under this Article IV by or on behalf of the Custodian (collectively, the
"Custodian Information"), or (B) the omission or alleged omission to state in
the Custodian Information a material fact required to be stated in the
Custodian Information or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
or
(ii) any failure by the Custodian to deliver any information, report,
certification, accountants' attestation or other material when and as
required under this Article IV.
(b) In the case of any failure of performance described in clause (ii) of
Section 4.5(a), the Custodian shall promptly reimburse the Company for all
costs reasonably incurred by the Company in order to obtain the information,
report, certification, accountants' letter or other material not delivered as
required by the Custodian.
ARTICLE V
Miscellaneous Provisions
Section 5.1_Notices. All notices, requests, consents and demands and other
communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar
notice in writing); in each case the notice will be deemed delivered when
received.
Section 5.2 Amendments. No modification or amendment of or supplement to
this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and none of the Company, the Master Servicer or
the Trustee shall enter into any amendment of or supplement to this Agreement
except as permitted by the Pooling Agreement. The Trustee shall give prompt
notice to the Custodian of any amendment or supplement to the Pooling
Agreement and furnish the Custodian with written copies thereof.
Section 5.3 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 5.4 Recordation of Agreement. To the extent permitted by applicable
law, this Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or 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 Master Servicer and at its
expense on direction by the Trustee (pursuant to the request of holders of
Certificates evidencing undivided interests in the aggregate of not less than
25% of the Trust Fund), but only upon direction accompanied by an Opinion of
Counsel reasonably satisfactory to the Master Servicer to the effect that the
failure to effect such recordation is likely to materially and adversely
affect 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 5.5 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.
[Signatures begin on following page]
IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Address: U.S. BANK NATIONAL ASSOCIATION,
as Trustee
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
By:__________________________________
Attention: Structured Finance/RASC Name:
Series 2006-KS9 Title:
Address: RESIDENTIAL ASSET SECURITIES
CORPORATION
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
By:___________________________________
Name: Xxx Xxxxxxxx
Title:Vice President
Address: RESIDENTIAL FUNDING COMPANY, LLC, as
Master Servicer
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
By:___________________________________
Name: Xxxxxx Xxxxxx
Title:Associate
Address: XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Custodian
Mortgage Document Custody
One Meridian Crossings - LL
Xxxxxxxxx, Xxxxxxxxx 00000
By:___________________________________
Name:
Title: Assistant Vice President
STATE OF MINNESOTA )
)ss.:
COUNTY OF XXXXXX )
On the ____ day of October 2006, before me, a notary public in
and for said State, personally appeared _____________, known to me to be a
_________ of U.S. BANK NATIONAL ASSOCIATION, a national banking association
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]
STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of October 2006, before me, a notary public in
and for said State, personally appeared ___________________, known to me to
be a ______________ of Residential Asset Securities Corporation, 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]
STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of October 2006, before me, a notary public in
and for said State, personally appeared ___________________, known to me to
be a ______________ of Residential Funding Company, LLC, a limited liability
company that executed the within instrument, and also known to me to be the
person who executed it on behalf of said limited liability company, and
acknowledged to me that such limited liability company 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]
STATE OF )
)ss.:
COUNTY OF )
On the ____ day of October 2006, before me, a notary public in
and for said State, personally appeared ______________________, known to me
to be a ______________________________ Xxxxx Fargo Bank, National
Association, 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 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]
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
October ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance/RASC Series 2006-KS9
Re: Custodial Agreement, dated as of October 27, 2006, by and
among U.S. Bank National Association, Residential Asset
Securities Corporation, Residential Funding Company, LLC
and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS9
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Custodial
File (which contains an original Mortgage Note or an original Lost Note
Affidavit with a copy of the related Mortgage Note) to the extent required in
Section 2.01(b) of the Pooling Agreement with respect to each Mortgage Loan
listed in the Mortgage Loan Schedule, with any exceptions listed on Schedule
A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial
Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
October ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance, RASC Series 2006-KS9
Re: Custodial Agreement, dated as of October 27, 2006, by and
among U.S. Bank National Association, Residential Asset
Securities Corporation, Residential Funding Company, LLC
and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS9
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Custodial File to the extent required pursuant to Section 2.01(b)
of the Pooling Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Custodial File and the
Mortgage Loan Schedule and has determined that: all required documents have
been executed and received and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule, with any exceptions listed on
Schedule A attached hereto.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial
Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
October ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance, RASC Series 2006-KS9
Re: Custodial Agreement, dated as of October 27, 2006, by and
among U.S. Bank National Association, Residential Asset
Securities Corporation, Residential Funding Company, LLC
and Xxxxx Fargo Bank, National Association, relating to
Mortgage Asset-Backed Pass-Through Certificates, Series
2006-KS9
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement, the undersigned, as Custodian, hereby certifies that it has
received a Custodial File with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule and it has reviewed the Custodial File and the
Mortgage Loan Schedule and has determined that: all required documents
referred to in Section 2.01(b) of the Pooling Agreement have been executed
and received and that such documents relate to the Mortgage Loans identified
on the Mortgage Loan Schedule.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial
Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by
you for the referenced pool, we request the release of the Mortgage Loan File
described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
______________________________
Residential Funding Company, LLC
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this
form for your files in accordance with the terms of the Pooling and Servicing
Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of
Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
___________________________
Name
___________________________
Title
___________________________
Date
EXHIBIT FIVE
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Custodian shall
address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria":
----------------------------------------------------------------------------------------
APPLICABLE
SERVICING CRITERIA 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.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(1)(ii) such servicing activities.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Any requirements in the transaction
agreements to maintain a back-up servicer for
1122(d)(1)(iii) the pool assets are maintained.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(1)(iv) agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
CASH COLLECTION AND ADMINISTRATION
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Payments on pool assets 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
1122(d)(2)(i) transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Disbursements made via wire transfer on
behalf of an obligor or to an investor are
1122(d)(2)(ii) made only by authorized personnel.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(2)(iii) specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
The related accounts for the transaction,
such as cash reserve accounts or accounts
established as a form of
overcollateralization, are separately
maintained (e.g., with respect to commingling
of cash) as set forth in the transaction
1122(d)(2)(iv) agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(2)(v) Securities Exchange Act.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Unissued checks are safeguarded so as to
1122(d)(2)(vi) prevent unauthorized access.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(2)(vii) specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
INVESTOR REMITTANCES AND REPORTING
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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 pool assets serviced by
1122(d)(3)(i) the servicer.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Amounts due to investors are allocated and
remitted in accordance with timeframes,
distribution priority and other terms set
1122(d)(3)(ii) forth in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Disbursements made to an investor are posted
within two business days to the servicer's
investor records, or such other number of
1122(d)(3)(iii) days specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Amounts remitted to investors per the
investor reports agree with cancelled checks,
or other form of payment, or custodial bank
1122(d)(3)(iv) statements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
POOL ASSET ADMINISTRATION
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Collateral or security on pool assets is
maintained as required by the transaction
1122(d)(4)(i) agreements or related asset pool documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Pool assets and related documents are
safeguarded as required by the transaction
1122(d)(4)(ii) agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Any additions, removals or substitutions to
the asset pool are made, reviewed and
approved in accordance with any conditions or
1122(d)(4)(iii) requirements in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Payments on pool assets, including any
payoffs, made in accordance with the related
pool asset documents are posted to the
servicer's obligor records maintained no more
than two business days after receipt, or such
other number of days specified in the
transaction agreements, and allocated to
principal, interest or other items (e.g.,
escrow) in accordance with the related pool
1122(d)(4)(iv) asset documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
The servicer's records regarding the pool
assets agree with the servicer's records with
respect to an obligor's unpaid principal
1122(d)(4)(v) balance.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Changes with respect to the terms or status
of an obligor's pool asset (e.g., loan
modifications or re-agings) are made,
reviewed and approved by authorized personnel
in accordance with the transaction agreements
1122(d)(4)(vi) and related pool asset documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(4)(vii) established by the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Records documenting collection efforts are
maintained during the period a pool asset is
delinquent in accordance with the transaction
agreements. Such records are maintained on at
least a monthly basis, or such other period
specified in the transaction agreements, and
describe the entity's activities in
monitoring delinquent pool assets including,
for example, phone calls, letters and payment
rescheduling plans in cases where delinquency
is deemed temporary (e.g., illness or
1122(d)(4)(viii) unemployment).
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Adjustments to interest rates or rates of
return for pool assets with variable rates
are computed based on the related pool asset
1122(d)(4)(ix) documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Regarding any funds held in trust for an
obligor (such as escrow accounts): (A) such
funds are analyzed, in accordance with the
obligor's pool asset documents, on at least
an annual basis, or such other period
specified in the transaction agreements; (B)
interest on such funds is paid, or credited,
to obligors in accordance with applicable
pool asset documents and state laws; and (C)
such funds are returned to the obligor within
30 calendar days of full repayment of the
related pool asset, or such other number of
1122(d)(4)(x) days specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(4)(xi) specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(4)(xii) or omission.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Disbursements made on behalf of an obligor
are posted within two business days to the
obligor's records maintained by the servicer,
or such other number of days specified in the
1122(d)(4)(xiii) transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Delinquencies, charge-offs and uncollectible
accounts are recognized and recorded in
1122(d)(4)(xiv) accordance with the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Any external enhancement or other support,
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as
1122(d)(4)(xv) set forth in the transaction agreements.
----------------------------------------------------------------------------------------
EXHIBIT F-1
GROUP I LOAN SCHEDULE
[FILED HEREWITH AS EXHIBIT 99.1]
EXHIBIT F-2
GROUP II LOAN SCHEDULE
[FILED HEREWITH AS EXHIBIT 99.1]
EXHIBIT G
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by
you for the referenced pool, we request the release of the Mortgage Loan File
described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
______________________________
Residential Funding Company, LLC
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this
form for your files in accordance with the terms of the Pooling and Servicing
Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of
Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
___________________________
Name
___________________________
Title
___________________________
Date
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or beneficial
owner of the Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS9, Class R (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State of
________________] [the United States], on behalf of which he makes this
affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified organization"
or an electing large partnership as of [date of transfer] within the meaning
of Section 860E(e)(5) and 775, respectively, of the Internal Revenue Code of
1986, as amended (the "Code") or an electing large partnership under Section
775(a) of the Code, (ii) will endeavor to remain other than a disqualified
organization for so long as it retains its ownership interest in the Class R
Certificates, and (iii) is acquiring the Class R Certificates for its own
account or for the account of another Owner from which it has received an
affidavit and agreement in substantially the same form as this affidavit and
agreement. (For this purpose, a "disqualified organization" means an electing
large partnership under Section 775 of the Code, 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 rural
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. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class R Certificates to disqualified organizations or an
electing large partnership under the Code, that applies to all transfers of
Class R Certificates after March 31, 1988; (ii) that such tax would be on the
transferor (or, with respect to transfers to electing large partnerships, on
each such partnership), or, if such transfer is through an agent (which
person includes a broker, nominee or middleman) for a disqualified
organization, on the agent; (iii) that the person (other than with respect to
transfers to electing large partnerships) 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 not a disqualified organization
and, at the time of transfer, such person does not have actual knowledge that
the affidavit is false; and (iv) that the Class R Certificates may be
"noneconomic residual interests" within the meaning of Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a "pass-through entity"
holding Class R Certificates if either the pass-through entity is an electing
large partnership under Section 775 of the Code or if at any time during the
taxable year of the pass-through entity a disqualified organization 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. That the Owner is aware that the Trustee will not register the transfer
of any Class R Certificates unless the transferee, or the transferee's agent,
delivers to it an affidavit and agreement, among other things, in
substantially the same form as this affidavit and agreement. 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. That the Owner has reviewed the restrictions set forth on the face of
the Class R -__ Certificates and the provisions of Section 5.02(f) of the
Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clause (iii)(A) and (iii)(B) of Section 5.02(f) which
authorize the Trustee to deliver payments to a person other than the Owner
and negotiate a mandatory sale by the Trustee in the event the Owner holds
such Certificates in violation of Section 5.02(f)). The Owner expressly
agrees to be bound by and to comply with such restrictions and provisions.
7. That 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 not a disqualified
organization.
8. The Owner's Taxpayer Identification Number is ____________________.
9. This affidavit and agreement relates only to the Class R Certificates
held by the Owner and not to any other holder of the Class R Certificates.
The Owner understands that the liabilities described herein relate only to
the Class R Certificates.
10. That no purpose of the Owner relating to the transfer of any of the
Class R Certificates by the Owner is or will be to impede the assessment or
collection of any tax; in making this representation, the Owner warrants that
the Owner is familiar with (i) Treasury Regulation 1.860E-1(c) and recent
amendments thereto, effective as of July 19, 2002, and (ii) the preamble
describing the adoption of the amendments to such regulation, which is
attached hereto as Annex I.
11. That 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. In this regard, the Owner hereby represents
to and for the benefit of the person from whom it acquired the Class R
Certificate that the Owner intends to pay taxes associated with holding such
Class R Certificate as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class R
Certificate.
12. That the Owner has no present knowledge or expectation that it will
become insolvent or subject to a bankruptcy proceeding for so long as any of
the Class R Certificates remain outstanding.
13. The Owner is either (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity treated as a corporation or a
partnership for U.S. federal income tax purposes and created or organized in,
or under the laws of, the United States, any state thereof or the District of
Columbia (other than a partnership that is not treated as a United States
person under any applicable Treasury regulations), (iii) an estate that is
described in Section 7701(a)(30)(D) of the Code, or (iv) a trust that is
described in Section 7701(a)(30)(E) of the Code.
14. The Owner hereby agrees that it will not cause income from the Class R
Certificates to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Owner or
another United States taxpayer.
15. The Owner hereby certifies, represents and warrants to, and covenants
with the Depositor, the Trustee and the Master Servicer that the following
statements in (a) or (b) are accurate:
(a) The Certificates are not being acquired by, and will not be
transferred to, any employee benefit plan or other plan or arrangement
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"), or any
person (including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who is
using "plan assets" of any such plan to effect such acquisition (each
of the foregoing, a "Plan Investor"); or
(b) The Owner has provided the Trustee, the Depositor and the Master
Servicer with an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the Master Servicer to the
effect that the purchase or holding of Certificates is permissible under
applicable law, will not constitute or result in any nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), and will not subject the
Trustee, the Depositor, or the Master 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, which Opinion of Counsel shall not be at the expense of the
Trustee, the Depositor or the Master Servicer.
In addition, the Owner hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee and the Master Servicer that
the Owner will not transfer such Certificates to any Plan Investor or person
unless either such Plan Investor or person meets the requirements set forth
in either (a) or (b) above.
Capitalized terms used but not defined herein shall have the meanings
assigned in the Pooling and Servicing Agreement.
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
[Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of ______________ 200__.
[NAME OF OWNER]
By: ___________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
______________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer],
known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to
me that he executed the same as his free act and deed and the free act and
deed of the Owner.
Subscribed and sworn before me this _______________ day
of ___________, 200_.
__________________________________________
NOTARY PUBLIC
COUNTY OF ______________________________
STATE OF ________________________________
My Commission expires the ___ day of
__________, 20__
ANNEX I TO EXHIBIT H-1
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9004]
RIN 1545-AW98
Real Estate Mortgage Investment Conduits
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to safe harbor
transfers of noneconomic residual interests in real estate mortgage
investment conduits (REMICs). The final regulations provide additional
limitations on the circumstances under which transferors may claim safe
harbor treatment.
DATES: Effective Date: These regulations are effective July 19, 2002.
Applicability Date: For dates of applicability, see Sec. 1.860E-(1)(c)(10).
FOR FURTHER INFORMATION CONTACT: Xxxxxxxx Xxxxxxxxxx at (000) 000-0000 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information in this final rule has been reviewed and,
pending receipt and evaluation of public comments, approved by the Office of
Management and Budget (OMB) under 44 U.S.C. 3507 and assigned control number
1545-1675.
The collection of information in this regulation is in Sec.
1.860E-1(c)(5)(ii). This information is required to enable the IRS to verify
that a taxpayer is complying with the conditions of this regulation. The
collection of information is mandatory and is required. Otherwise, the
taxpayer will not receive the benefit of safe harbor treatment as provided in
the regulation. The likely respondents are businesses and other for-profit
institutions.
Comments on the collection of information should be sent to the Office
of Management and Budget, Attn: Desk Officer for the Department of the
Treasury, Office of Information and Regulatory Affairs, Xxxxxxxxxx, XX,
00000, with copies to the Internal Revenue Service, Attn: IRS Reports
Clearance Officer, W:CAR:MP:FP:S, Xxxxxxxxxx, XX 00000. Comments on the
collection of information should be received by September 17, 2002. Comments
are specifically requested concerning:
o Whether the collection of information is necessary for the proper
performance of the functions of the Internal Revenue Service,
including whether the information will have practical utility;
o The accuracy of the estimated burden associated with the collection of
information (see below);
o How the quality, utility, and clarity of the information to be
collected may be enhanced;
o How the burden of complying with the collection of information may be
minimized, including through the application of automated collection
techniques or other forms of information technology; and
o Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of service to provide information.
An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid control
number assigned by the Office of Management and Budget.
The estimated total annual reporting burden is 470 hours, based on an
estimated number of respondents of 470 and an estimated average annual burden
hours per respondent of one hour.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the administration
of any internal revenue law. Generally, tax returns and tax return
information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains final regulations regarding the proposed
amendments to 26 CFR part 1 under section 860E of the Internal Revenue Code
(Code). The regulations provide the circumstances under which a transferor of
a noneconomic REMIC residual interest meeting the investigation and
representation requirements may avail itself of the safe harbor by satisfying
either the formula test or the asset test.
Final regulations governing REMICs, issued in 1992, contain rules
governing the transfer of noneconomic REMIC residual interests. In general, a
transfer of a noneconomic residual interest is disregarded for all tax
purposes if a significant purpose of the transfer is to enable the transferor
to impede the assessment or collection of tax. A purpose to impede the
assessment or collection of tax (a wrongful purpose) exists if the
transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its
share of the REMIC's taxable income. Under a safe harbor, the transferor of
a REMIC noneconomic residual interest is presumed not to have a wrongful
purpose if two requirements are satisfied: (1) the transferor conducts a
reasonable investigation of the transferee's financial condition (the
investigation requirement); and (2) the transferor secures a representation
from the transferee to the effect that the transferee understands the tax
obligations associated with holding a residual interest and intends to pay
those taxes (the representation requirement).
The IRS and Treasury have been concerned that some transferors of
noneconomic residual interests claim they satisfy the safe harbor even in
situations where the economics of the transfer clearly indicate the
transferee is unwilling or unable to pay the tax associated with holding the
interest. For this reason, on February 7, 2000, the IRS published in the
Federal Register (65 FR 5807) a notice of proposed rulemaking (REG-100276-97;
REG-122450-98) designed to clarify the safe harbor by adding the "formula
test," an economic test. The proposed regulation provides that the safe
harbor is unavailable unless the present value of the anticipated tax
liabilities associated with holding the residual interest does not exceed the
sum of: (1) The present value of any consideration given to the transferee to
acquire the interest; (2) the present value of the expected future
distributions on the interest; and (3) the present value of the anticipated
tax savings associated with holding the interest as the REMIC generates
losses.
The notice of proposed rulemaking also contained rules for FASITs.
Section 1.860H-6(g) of the proposed regulations provides requirements for
transfers of FASIT ownership interests and adopts a safe harbor by reference
to the safe harbor provisions of the REMIC regulations. In February 2001,
the IRS published Rev. Proc. 2001-12 (2001-3 I.R.B. 335) to set forth an
alternative safe harbor that taxpayers could use while the IRS and the
Treasury considered comments on the proposed regulations. Under the
alternative safe harbor, if a transferor meets the investigation requirement
and the representation requirement but the transfer fails to meet the formula
test, the transferor may invoke the safe harbor if the transferee meets a
two-prong test (the asset test). A transferee generally meets the first prong
of this test if, at the time of the transfer, and in each of the two years
preceding the year of transfer, the transferee's gross assets exceed $100
million and its net assets exceed $10 million. A transferee generally meets
the second prong of this test if it is a domestic, taxable corporation and
agrees in writing not to transfer the interest to any person other than
another domestic, taxable corporation that also satisfies the requirements of
the asset test. A transferor cannot rely on the asset test if the transferor
knows, or has reason to know, that the transferee will not comply with its
written agreement to limit the restrictions on subsequent transfers of the
residual interest.
Rev. Proc. 2001-12 provides that the asset test fails to be satisfied
in the case of a transfer or assignment of a noneconomic residual interest to
a foreign branch of an otherwise eligible transferee. If such a transfer or
assignment were permitted, a corporate taxpayer might seek to claim that the
provisions of an applicable income tax treaty would resource excess inclusion
income as foreign source income, and that, as a consequence, any U.S. tax
liability attributable to the excess inclusion income could be offset by
foreign tax credits. Such a claim would impede the assessment or collection
of U.S. tax on excess inclusion income, contrary to the congressional purpose
of assuring that such income will be taxable in all events. See, e.g.,
sections 860E(a)(1), (b), (e) and 860G(b) of the Code.
The Treasury and the IRS have learned that certain taxpayers
transferring noneconomic residual interests to foreign branches have
attempted to rely on the formula test to obtain safe harbor treatment in an
effort to impede the assessment or collection of U.S. tax on excess inclusion
income. Accordingly, the final regulations provide that if a noneconomic
residual interest is transferred to a foreign permanent establishment or
fixed base of a U.S. taxpayer, the transfer is not eligible for safe harbor
treatment under either the asset test or the formula test. The final
regulations also require a transferee to represent that it will not cause
income from the noneconomic residual interest to be attributable to a foreign
permanent establishment or fixed base.
Section 1.860E-1(c)(8) provides computational rules that a taxpayer may
use to qualify for safe harbor status under the formula test. Section
1.860E-1(c)(8)(i) provides that the transferee is presumed to pay tax at a
rate equal to the highest rate of tax specified in section 11(b). Some
commentators were concerned that this presumed rate of taxation was too high
because it does not take into consideration taxpayers subject to the
alternative minimum tax rate. In light of the comments received, this
provision has been amended in the final regulations to allow certain
transferees that compute their taxable income using the alternative minimum
tax rate to use the alternative minimum tax rate applicable to corporations.
Additionally, Sec. 1.860E-1(c)(8)(iii) provides that the present values
in the formula test are to be computed using a discount rate equal to the
applicable Federal short-term rate prescribed by section 1274(d). This is a
change from the proposed regulation and Rev. Proc. 2001-12. In those
publications the provision stated that "present values are computed using a
discount rate equal to the applicable Federal rate prescribed in section
1274(d) compounded semiannually" and that "[a] lower discount rate may be
used if the transferee can demonstrate that it regularly borrows, in the
course of its trade or business, substantial funds at such lower rate from an
unrelated third party." The IRS and the Treasury Department have learned
that, based on this provision, certain taxpayers have been attempting to use
unrealistically low or zero interest rates to satisfy the formula test,
frustrating the intent of the test. Furthermore, the Treasury Department and
the IRS believe that a rule allowing for a rate other than a rate based on an
objective index would add unnecessary complexity to the safe harbor. As a
result, the rule in the proposed regulations that permits a transferee to use
a lower discount rate, if the transferee can demonstrate that it regularly
borrows substantial funds at such lower rate, is not included in the final
regulations; and the Federal short-term rate has been substituted for the
applicable Federal rate. To simplify taxpayers' computations, the final
regulations allow use of any of the published short-term rates, provided that
the present values are computed with a corresponding period of compounding.
With the exception of the provisions relating to transfers to foreign
branches, these changes generally have the proposed applicability date of
February 4, 2000, but taxpayers may choose to apply the interest rate formula
set forth in the proposed regulation and Rev. Proc. 2001-12 for transfers
occurring before November 19, 2002.
It is anticipated that when final regulations are adopted with respect
to FASITs, Sec. 1.860H-6(g) of the proposed regulations will be adopted in
substantially its present form, with the result that the final regulations
contained in this document will also govern transfers of FASIT ownership
interests with substantially the same applicability date as is contained in
this document.
Effect on Other Documents
Rev. Proc. 2001-12 (2001-3 I.R.B. 335) is obsolete for transfers of
noneconomic residual interests in REMICs occurring on or after November 19,
2002.
Special Analyses
It is hereby certified that these regulations will not have a
significant economic impact on a substantial number of small entities. This
certification is based on the fact that it is unlikely that a substantial
number of small entities will hold REMIC residual interests. Therefore, a
Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5
U.S.C. chapter 6) is not required. It has been determined that this Treasury
decision is not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment is not required. It also has been
determined that sections 553(b) and 553(d) of the Administrative Procedure
Act (5 U.S.C. chapter 5) do not apply to these regulations.
Drafting Information
The principal author of these regulations is Xxxxxxxx Xxxxxxxxxx.
However, other personnel from the IRS and Treasury Department participated in
their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record keeping requirements.
26 CFR Part 602
Reporting and record keeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
______________, 20__
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS9
Re: Mortgage Asset-Backed Pass-Through Certificates, Series
2006-KS9
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
________________________ (the "Seller") to ______________________ (the
"Purchaser") of $___________ Initial Certificate Principal Balance of
Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS9, Class R
(the "Certificates"), pursuant to Section 5.02 of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of October 27,
2006 among Residential Asset Securities Corporation, as depositor (the
"Depositor"), Residential Funding Company, LLC, as master servicer, and U.S.
Bank National Association, as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling
and Servicing Agreement. The Seller hereby certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to the transfer of the Certificate by
the Seller to the Purchaser is or will be to impede the assessment or
collection of any tax.
2. The Seller understands that the Purchaser has delivered to the Trustee
and the Master Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit H-1. The Seller
does not know or believe that any representation contained therein is false.
3. The Seller has at the time of the transfer 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 Seller has determined that the Purchaser has historically
paid its debts as they become 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 Seller understands that the transfer of a Class R
Certificate may not be respected for United States income tax purposes (and
the Seller may continue to be liable for United States income taxes
associated therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Transferee is not
both a United States Person and a Permitted Transferee.
Very truly yours,
_______________________________________
(Seller)
By: ____________________________________
Name: __________________________________
Title: ___________________________________
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 0000-XX0
Xxxxxxxxxxx Funding Company, LLC
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Residential Funding Company, LLC Series 2006-KS9
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS9, Class [SB] [R]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate
Principal Balance of Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-KS9, Class [SB] [R] (the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of October 27, 2006 among Residential Asset Securities
Corporation, as depositor (the "Depositor"), Residential Funding Company,
LLC, as master servicer (the "Master Servicer"), and U.S. Bank National
Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor, the Trustee and the Master Servicer
that:
1. The Purchaser 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 Purchaser 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 Purchaser 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 Purchaser has been furnished with, and has had an opportunity to
review (a) [a copy of the Private Placement Memorandum, dated
___________________, 20__, relating to the Certificates (b)] a
copy of the Pooling and Servicing Agreement and [b] [c] such
other information concerning the Certificates, the Mortgage Loans
and the Depositor as has been requested by the Purchaser from the
Depositor or the Seller and is relevant to the Purchaser's
decision to purchase the Certificates. The Purchaser has had any
questions arising from such review answered by the Depositor or
the Seller to the satisfaction of the Purchaser. [If the
Purchaser did not purchase the Certificates from the Seller in
connection with the initial distribution of the Certificates and
was provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale")
of the Certificates by the Depositor, the Purchaser acknowledges
that such Memorandum was provided to it by the Seller, that the
Memorandum was prepared by the Depositor solely for use in
connection with the Original Sale and the Depositor did not
participate in or facilitate in any way the purchase of the
Certificates by the Purchaser from the Seller, and the Purchaser
agrees that it will look solely to the Seller and not to the
Depositor with respect to any damage, liability, claim or expense
arising out of, resulting from or in connection with (a) error or
omission, or alleged error or omission, contained in the
Memorandum, or (b) any information, development or event arising
after the date of the Memorandum.]
5. The Purchaser 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 Act or any state
securities law, or that would require registration or
qualification pursuant thereto. The Purchaser will not sell or
otherwise transfer any of the Certificates, except in compliance
with the provisions of the Pooling and Servicing Agreement.
6. The Purchaser hereby certifies, represents and warrants to, and
covenants with the Depositor, the Trustee and the Master Servicer
that the following statements in (a) or (b) are correct:
(a) The Purchaser is not an employee benefit plan or other plan or
arrangement 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"),
or any person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such
plan) who is using "plan assets" of any such plan to effect such
acquisition (each of the foregoing, a "Plan Investor"); or
(b) the Purchaser has provided the Trustee, the Depositor and the
Master Servicer with an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of Certificates is
permissible under applicable law, will not constitute or result in any
nonexempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor or the Master 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, which Opinion of Counsel shall not be an expense
of the Trustee, the Depositor or the Master Servicer.
In addition, the Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor, the Trustee and the Master Servicer
that the Purchaser will not transfer such Certificates to any Plan Investor
or person unless either such Plan Investor or person meets the requirements
set forth in either (a) or (b) above.
Very truly yours,
____________________________________
(Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS9
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS9, Class [SB] [R]
Ladies and Gentlemen:
In connection with the sale by __________ (the "Seller") to
__________ (the "Purchaser") of $__________ Initial Certificate Principal
Balance of Home Equity Mortgage Asset- Backed Pass-Through Certificates,
Series 2006-KS9, Class [SB] [R] (the "Certificates"), issued pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of October 27, 2006 among Residential Asset Securities Corporation,
as depositor (the "Depositor"), Residential Funding Company, LLC, as master
servicer, and U.S. Bank National Association, as trustee (the "Trustee").
The Seller hereby certifies, represents and warrants to, and covenants with,
the Depositor and the Trustee that:
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.
Very truly yours,
____________________________________
(Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT K
TEXT OF AMENDMENT TO POOLING AND SERVICING
AGREEMENT PURSUANT TO SECTION 11.01(e) FOR A
LIMITED GUARANTY
ARTICLE XIII
Subordinate Certificate Loss Coverage; Limited Guaranty
Section 13.01. Subordinate Certificate Loss Coverage; Limited
Guaranty. (a) Subject to subsection (c) below, prior to the later of the
third Business Day prior to each Distribution Date or the related
Determination Date, the Master Servicer shall determine whether it or any
Subservicer will be entitled to any reimbursement pursuant to Section 3.10 on
such Distribution Date for Advances or Subservicer Advances previously made,
(which will not be Advances or Subservicer Advances that were made with
respect to delinquencies which were subsequently determined to be Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses) and, if so, the Master Servicer shall demand payment
from Residential Funding of an amount equal to the amount of any Advances or
Subservicer Advances reimbursed pursuant to Section 3.10, to the extent such
Advances or Subservicer Advances have not been included in the amount of the
Realized Loss in the related Mortgage Loan, and shall distribute the same to
the Class SB Certificateholders in the same manner as if such amount were to
be distributed pursuant to Section 4.02.
(b) Subject to subsection (c) below, prior to the later of the
third Business Day prior to each Distribution Date or the related
Determination Date, the Master Servicer shall determine whether any Realized
Losses (other than Excess Special Hazard Losses, Excess Bankruptcy Losses,
Excess Fraud Losses and Extraordinary Losses) will be allocated to the
Class SB Certificates on such Distribution Date pursuant to Section 4.05,
and, if so, the Master Servicer shall demand payment from Residential Funding
of the amount of such Realized Loss and shall distribute the same to the
Class SB Certificateholders in the same manner as if such amount were to be
distributed pursuant to Section 4.02; provided, however, that the amount of
such demand in respect of any Distribution Date shall in no event be greater
than the sum of (i) the additional amount of Accrued Certificate Interest
that would have been paid for the Class SB Certificateholders on such
Distribution Date had such Realized Loss or Losses not occurred plus (ii) the
amount of the reduction in the Certificate Principal Balances of the Class SB
Certificates on such Distribution Date due to such Realized Loss or Losses.
Notwithstanding such payment, such Realized Losses shall be deemed to have
been borne by the Certificateholders for purposes of Section 4.05. Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses and
Extraordinary Losses allocated to the Class SB Certificates will not be
covered by the Subordinate Certificate Loss Obligation.
(c) Demands for payments pursuant to this Section shall be made
prior to the later of the third Business Day prior to each Distribution Date
or the related Determination Date by the Master Servicer with written notice
thereof to the Trustee. The maximum amount that Residential Funding shall be
required to pay pursuant to this Section on any Distribution Date (the
"Amount Available") shall be equal to the lesser of (X) ________ minus the
sum of (i) all previous payments made under subsections (a) and (b) hereof
and (ii) all draws under the Limited Guaranty made in lieu of such payments
as described below in subsection (d) and (Y) the then outstanding Certificate
Principal Balances of the Class SB Certificates, or such lower amount as may
be established pursuant to Section 13.02. Residential Funding's obligations
as described in this Section are referred to herein as the "Subordinate
Certificate Loss Obligation."
(d) The Trustee will promptly notify GMAC LLC of any failure of
Residential Funding to make any payments hereunder and shall demand payment
pursuant to the limited guaranty (the "Limited Guaranty"), executed by GMAC
LLC, of Residential Funding's obligation to make payments pursuant to this
Section, in an amount equal to the lesser of (i) the Amount Available and
(ii) such required payments, by delivering to GMAC LLC a written demand for
payment by wire transfer, not later than the second Business Day prior to the
Distribution Date for such month, with a copy to the Master Servicer.
(e) All payments made by Residential Funding pursuant to this
Section or amounts paid under the Limited Guaranty shall be deposited
directly in the Certificate Account, for distribution on the Distribution
Date for such month to the Class SB Certificateholders.
(f) The Depositor shall have the option, in its sole
discretion, to substitute for either or both of the Limited Guaranty or the
Subordinate Certificate Loss Obligation another instrument in the form of a
corporate guaranty, an irrevocable letter of credit, a surety bond, insurance
policy or similar instrument or a reserve fund; provided that (i) the
Depositor obtains (subject to the provisions of Section 10.01(f) as if the
Depositor was substituted for the Master Servicer solely for the purposes of
such provision) an Opinion of Counsel (which need not be an opinion of
independent counsel) to the effect that obtaining such substitute corporate
guaranty, irrevocable letter of credit, surety bond, insurance policy or
similar instrument or reserve fund will not cause either (a) any federal tax
to be imposed on the Trust Fund, including without limitation, any federal
tax imposed on "prohibited transactions" under Section 860(F)(a)(1) of the
Code or on "contributions after the startup date" under Section 860(G)(d)(1)
of the Code or (b) the Trust Fund to fail to qualify as a REMIC at any time
that any Certificate is outstanding, and (ii) no such substitution shall be
made unless (A) the substitute Limited Guaranty or Subordinate Certificate
Loss Obligation is for an initial amount not less than the then current
Amount Available and contains provisions that are in all material respects
equivalent to the original Limited Guaranty or Subordinate Certificate Loss
Obligation (including that no portion of the fees, reimbursements or other
obligations under any such instrument will be borne by the Trust Fund),
(B) the long term debt obligations of any obligor of any substitute Limited
Guaranty or Subordinate Certificate Loss Obligation (if not supported by the
Limited Guaranty) shall be rated at least the lesser of (a) the rating of the
long term debt obligations of GMAC LLC as of the date of issuance of the
Limited Guaranty and (b) the rating of the long term debt obligations of GMAC
LLC at the date of such substitution and (C) if the Class SB Certificates
have been rated, the Depositor obtains written confirmation from each Rating
Agency that rated the Class SB Certificates at the request of the Depositor
that such substitution shall not lower the rating on the Class SB
Certificates below the lesser of (a) the then-current rating assigned to the
Class SB Certificates by such Rating Agency and (b) the original rating
assigned to the Class SB Certificates by such Rating Agency. Any replacement
of the Limited Guaranty or Subordinate Certificate Loss Obligation pursuant
to this Section shall be accompanied by a written Opinion of Counsel to the
substitute guarantor or obligor, addressed to the Master Servicer and the
Trustee, that such substitute instrument constitutes a legal, valid and
binding obligation of the substitute guarantor or obligor, enforceable in
accordance with its terms, and concerning such other matters as the Master
Servicer and the Trustee shall reasonably request. Neither the Depositor,
the Master Servicer nor the Trustee shall be obligated to substitute for or
replace the Limited Guaranty or Subordinate Certificate Loss Obligation under
any circumstance.
Section 13.02. Amendments Relating to the Limited Guaranty.
Notwithstanding Sections 11.01 or 13.01: (i) the provisions of this Article
XIII may be amended, superseded or deleted, (ii) the Limited Guaranty or
Subordinate Certificate Loss Obligation may be amended, reduced or canceled,
and (iii) any other provision of this Agreement which is related or
incidental to the matters described in this Article XIII may be amended in
any manner; in each case by written instrument executed or consented to by
the Depositor and Residential Funding but without the consent of any
Certificateholder and without the consent of the Master Servicer or the
Trustee being required unless any such amendment would impose any additional
obligation on, or otherwise adversely affect the interests of, the Master
Servicer or the Trustee, as applicable; provided that the Depositor shall
also obtain a letter from each Rating Agency that rated the Class SB
Certificates at the request of the Depositor to the effect that such
amendment, reduction, deletion or cancellation will not lower the rating on
the Class SB Certificates below the lesser of (a) the then-current rating
assigned to the Class SB Certificates by such Rating Agency and (b) the
original rating assigned to the Class SB Certificates by such Rating Agency,
unless (A) the Holder of 100% of the Class SB Certificates is Residential
Funding or an Affiliate of Residential Funding, or (B) such amendment,
reduction, deletion or cancellation is made in accordance with Section
11.01(e) and, provided further that the Depositor obtains (subject to the
provisions of Section 10.01(f) as if the Depositor was substituted for the
Master Servicer solely for the purposes of such provision), in the case of a
material amendment or supersession (but not a reduction, cancellation or
deletion of the Limited Guaranty or the Subordinate Certificate Loss
Obligation), an Opinion of Counsel (which need not be an opinion of
independent counsel) to the effect that any such amendment or supersession
will not cause either (a) any federal tax to be imposed on the Trust Fund,
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) the Trust Fund
to fail to qualify as a REMIC at any time that any Certificate is
outstanding. A copy of any such instrument shall be provided to the Trustee
and the Master Servicer together with an Opinion of Counsel that such
amendment complies with this Section 13.02.
EXHIBIT L
FORM OF LIMITED GUARANTY
RESIDENTIAL ASSET SECURITIES CORPORATION
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS9
__________, 20__
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS9
Ladies and Gentlemen:
WHEREAS, Residential Funding Company, LLC, a Delaware limited
liability company ("Residential Funding"), an indirect wholly-owned
subsidiary of GMAC LLC, a Delaware limited liability company ("GMAC"), plans
to incur certain obligations as described under Section 12.01 of the Pooling
and Servicing Agreement dated as of October 27, 2006 (the "Servicing
Agreement"), among Residential Asset Securities Corporation (the
"Depositor"), Residential Funding and U.S. Bank National Association (the
"Trustee") as amended by Amendment No. ___ thereto, dated as of ________,
with respect to the Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-KS9 (the "Certificates"); and
WHEREAS, pursuant to Section 12.01 of the Servicing Agreement,
Residential Funding agrees to make payments to the Holders of the Class SB
Certificates with respect to certain losses on the Mortgage Loans as
described in the Servicing Agreement; and
WHEREAS, GMAC desires to provide certain assurances with respect
to the ability of Residential Funding to secure sufficient funds and
faithfully to perform its Subordinate Certificate Loss Obligation;
NOW THEREFORE, in consideration of the premises herein contained
and certain other good and valuable consideration, the receipt of which is
hereby acknowledged, GMAC agrees as follows:
2. Provision of Funds. (a) GMAC agrees to contribute and deposit in the
Certificate Account on behalf of Residential Funding (or otherwise provide to
Residential Funding, or to cause to be made available to Residential
Funding), either directly or through a subsidiary, in any case prior to the
related Distribution Date, such moneys as may be required by Residential
Funding to perform its Subordinate Certificate Loss Obligation when and as
the same arises from time to time upon the demand of the Trustee in
accordance with Section 12.01 of the Servicing Agreement.
(b) The agreement set forth in the preceding clause (a) shall
be absolute, irrevocable and unconditional and shall not be affected by the
transfer by GMAC or any other person of all or any part of its or their
interest in Residential Funding, by any insolvency, bankruptcy, dissolution
or other proceeding affecting Residential Funding or any other person, by any
defense or right of counterclaim, set-off or recoupment that GMAC may have
against Residential Funding or any other person or by any other fact or
circumstance. Notwithstanding the foregoing, GMAC's obligations under clause
(a) shall terminate upon the earlier of (x) substitution for this Limited
Guaranty pursuant to Section 12.01(f) of the Servicing Agreement, or (y) the
termination of the Trust Fund pursuant to the Servicing Agreement.
3. Waiver. GMAC hereby waives any failure or delay on the part of
Residential Funding, the Trustee or any other person in asserting or
enforcing any rights or in making any claims or demands hereunder. Any
defective or partial exercise of any such rights shall not preclude any other
or further exercise of that or any other such right. GMAC further waives
demand, presentment, notice of default, protest, notice of acceptance and any
other notices with respect to this Limited Guaranty, including, without
limitation, those of action or non-action on the part of Residential Funding
or the Trustee.
4. Modification, Amendment and Termination. This Limited Guaranty may be
modified, amended or terminated only by the written agreement of GMAC and the
Trustee and only if such modification, amendment or termination is permitted
under Section 12.02 of the Servicing Agreement. The obligations of GMAC
under this Limited Guaranty shall continue and remain in effect so long as
the Servicing Agreement is not modified or amended in any way that might
affect the obligations of GMAC under this Limited Guaranty without the prior
written consent of GMAC.
5. Successor. Except as otherwise expressly provided herein, the
guarantee herein set forth shall be binding upon GMAC and its respective
successors.
6. Governing Law. This Limited Guaranty shall be governed by the laws of
the State of New York.
7. Authorization and Reliance. GMAC understands that a copy of this
Limited Guaranty shall be delivered to the Trustee in connection with the
execution of Amendment No. __ to the Servicing Agreement and GMAC hereby
authorizes the Depositor and the Trustee to rely on the covenants and
agreements set forth herein.
8. Definitions. Capitalized terms used but not otherwise defined herein
shall have the meaning given them in the Servicing Agreement.
9. Counterparts. This Limited Guaranty may be executed in any number of
counterparts, each of which shall be deemed to be an original and such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, GMAC has caused this Limited Guaranty to be
executed and delivered by its respective officers thereunto duly authorized
as of the day and year first above written.
GENERAL MOTORS ACCEPTANCE
CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
Acknowledged by:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Name:_______________________________
Title:______________________________
RESIDENTIAL ASSET SECURITIES
CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS9
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS9 Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by
U.S Bank National Association (the "Trustee") to _______________________ (the
"Lender") of _______________ (the "Mortgage Loan") pursuant to Section
3.13(d) of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of October 27, 2006 among Residential Asset Securities
Corporation, as depositor (the "Depositor"), Residential Funding Company,
LLC, as master servicer, and the Trustee. All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Lender hereby certifies, represents and warrants
to, and covenants with, the Master Servicer and the Trustee that:
(ii) the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or
otherwise comply with, or facilitate a refinancing under, the laws of such
jurisdiction;
(iii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely
to comply with, or facilitate the transaction under, such local laws;
(iv) the Mortgage Loan following the proposed assignment will be modified to
have a rate of interest at least 0.25 percent below or above the rate of
interest on such Mortgage Loan prior to such proposed assignment; and
(v) such assignment is at the request of the borrower under the related
Mortgage Loan.
Very truly yours,
____________________________________
(Lender)
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT N
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the
undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with the agreements
pursuant to which the Rule 144A Securities were issued, the Seller hereby
certifies the following facts: Neither the Seller nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, that would
constitute a distribution of the Rule 144A Securities under the Securities
Act of 1933, as amended (the "1933 Act"), or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the 1933
Act or require registration pursuant thereto, and that the Seller has not
offered the Rule 144A Securities to any person other than the Buyer or
another "qualified institutional buyer" as defined in Rule 144A under the
0000 Xxx.
2. The Buyer, pursuant to Section 5.02 of the Pooling and Servicing
Agreement (the "Agreement"), dated as of October 27, 2006 among Residential
Funding Company, LLC, as master servicer (the "Master Servicer"), Residential
Asset Securities Corporation, as depositor (the "Depositor"), and U.S. Bank
National Association, as trustee (the "Trustee") warrants and represents to,
and covenants with, the Seller, the Trustee and the Master Servicer as
follows:
a. The Buyer understands that the Rule 144A Securities have not been
registered under the 1933 Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding the Rule
144A Securities that it has requested from the Seller, the Trustee or
the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the
1933 Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is defined
in Rule 144A under the 1933 Act and has completed either of the forms
of certification to that effect attached hereto as Annex I or Annex
II. The Buyer is aware that the sale to it is being made in reliance
on Rule 144A. The Buyer is acquiring the Rule 144A Securities for its
own account or the accounts of other qualified institutional buyers,
understands that such Rule 144A Securities 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.
3. The Buyer of Class SB Certificates or Class R Certificates:
a. is not an employee benefit plan or other plan or arrangement subject to
the prohibited transaction provisions of ERISA or Section 4975 of the
Code, or any person (including an insurance company investing its
general account, an investment manager, a named fiduciary or a trustee
of any such plan) who is using "plan assets" of any such plan to effect
such acquisition; or
b. has provided the Trustee, the Depositor and the Master Servicer with
the Opinion of Counsel described in Section 5.02(e)(i) of the
Agreement, which shall be acceptable to and in form and substance
satisfactory to the Trustee, the Depositor, and the Master Servicer to
the effect that the purchase or holding of this Certificate is
permissible under applicable law, will not constitute or result in any
nonexempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code (or comparable provisions of any subsequent
enactments), and will not subject the Trustee, the Depositor, or the
Master 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 Agreement, which Opinion of Counsel shall not
be an expense of the Trustee, the Depositor or the Master Servicer.
4. This document may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
______________________________ ______________________________
Print Name of Seller Print Name of Purchaser
By:___________________________________ By: ___________________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No.___________________________________ No.____________________________________
Date:_________________________________ Date:__________________________________
ANNEX I TO EXHIBIT N
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $______________________ in securities
(except for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Buyer satisfies the criteria in the category
marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over any such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State or
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
___ Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
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, or
(b) employee benefit plans within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, but is not a
trust fund that includes as participants individual retirement
accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a
dealer, (iii) 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.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are consolidated
with the Buyer in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such
securities were not included if the Buyer is a majority-owned, consolidated
subsidiary of another enterprise and the Buyer is not itself a reporting
company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
____ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees that,
in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer 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 Buyer agrees that the Buyer will not purchase
securities for a third party unless the Buyer 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 Buyer will notify each of the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice is given, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification as of the date of such purchase.
__________________________________________
Print Name of Buyer
By: ____________________________________
Name:
Title:
Date: ____________________________________
ANNEX II TO EXHIBIT N
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
8. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
9. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and
(ii) as marked below, the Buyer alone, or the Buyer's Family of Investment
Companies, owned at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such
securities was used.
____ The Buyer owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which owned
in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
10. 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).
11. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) bank deposit notes and certificates of deposit,
(iii) loan participations, (iv) repurchase agreements, (v) securities owned
but subject to a repurchase agreement and (vi) currency, interest rate and
commodity swaps.
12. The Buyer is familiar with Rule 144A and understands that each of the
parties to which this certification is made are relying and will continue to
rely on the statements made herein because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition, the Buyer will only purchase
for the Buyer's own account.
13. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
__________________________________________
Print Name of Buyer
By: ____________________________________
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date: ____________________________________
EXHIBIT O
SWAP AGREEMENT
[FILED HEREWITH AS EXHIBIT 10.3]
EXHIBIT P
FORM OF ERISA REPRESENTATION LETTER
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 0000-XX0
Xxxxxxxxxxx Funding Company, LLC
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Residential Asset Securities Corporation Series 2006-KS9
Re: Home Equity Mortgage Asset-Backed Pass-Through
Certificates,
Series 2006-KS9, Class [__]
Ladies and Gentlemen:
[____________________________________] (the "Purchaser") intends to
purchase from [______________________________] (the "Seller") $[____________]
Initial Certificate Principal Balance of Home Equity Mortgage Asset-Backed
Pass-Through Certificates, Series 2006-KS9, Class ____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of October 27, 2006 among Residential Asset
Securities Corporation, as the depositor (the "Depositor"), Residential
Funding Company, LLC, as master servicer (the "Master Servicer") and U.S.
Bank National Association, as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling
and Servicing Agreement. The Purchaser hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee and the Master
Servicer that:
(a) The Purchaser is not an employee benefit plan or other plan or
arrangement 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"), or any
person (including an insurance company investing its general account, an
investment manager, a named fiduciary or a trustee of any such plan) who
is using "plan assets" of any such plan to effect such acquisition (each of
the foregoing, a "Plan Investor"); or
(b) The Purchaser has provided the Trustee, the Depositor and the
Master Servicer with the Opinion of Counsel described in Section
5.02(e)(i) of the Agreement, which shall be acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master
Servicer to the effect that the purchase or holding of Certificates is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code (or comparable provisions of any subsequent enactments),
and will not subject the Trustee, the Depositor or the Master 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, which Opinion of Counsel shall not be at
the expense of the Trustee, the Depositor or the Master Servicer.
In addition, the Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor, the Trustee and the Master Servicer
that the Purchaser will not transfer such Certificates to any Plan Investor
or person unless such Plan Investor or person meets the requirements set
forth in either (a) or (b) above.
.
Very truly yours,
_______________________________________
(Purchaser)
By: ____________________________________
Name: __________________________________
Title: ___________________________________
EXHIBIT Q
FORM OF SB-AM SWAP AGREEMENT
DATE: October 27, 2006
TO: U.S. Bank National Association, not in its
individual capacity but solely as trustee
for the benefit of RASC Series 2006-KS9
Trust, acting on behalf of the Class A
Certificateholders and Class M
Certificateholders under the Pooling and
Servicing Agreement identified below ("PARTY
A")
ATTENTION: RASC Series 2006-KS9
FROM: U.S. Bank National Association, not in its
individual capacity but solely as trustee
for the benefit of RASC Series 2006-KS9
Trust, acting on behalf of the Class SB
Certificateholders under the Pooling and
Servicing Agreement identified below ("PARTY
B")
SUBJECT: Payment Swap Confirmation and Agreement
REFERENCE NUMBER
The purpose of this letter agreement (the "Agreement") is to confirm the
terms and conditions of the Transaction entered into on the Trade Date
specified below (the "Transaction") between Party A and Party B. 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.
o This Agreement is subject to and incorporates the 2000 ISDA Definitions
(the "Definitions"), as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"). 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. 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. Terms used and not otherwise defined herein,
in the ISDA Form Master Agreement or the Definitions shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of October
27, 2006, among Residential Asset Securities Corporation, as depositor,
Residential Funding Company, LLC, as master servicer, and U.S. Bank National
Association, as trustee (the "Pooling and Servicing Agreement"). Each
reference to a "Section" or to a "Section" "of this Agreement" will be
construed as a reference to a Section of the 1992 ISDA Form Master
Agreement. Each capitalized term used herein that is not defined herein or
in the 1992 ISDA Form Master Agreement shall have the meaning defined in the
Pooling and Servicing Agreement. Notwithstanding anything herein to the
contrary, should any provision of this Agreement conflict with any provision
of the Pooling and Servicing Agreement, the provision of the Pooling and
Servicing Agreement shall apply.
o The terms of the particular Transaction to which this Confirmation
relates are as follows:
Trade Date:
Effective Date:
Termination Date: November 25, 2036 subject to adjustment in
accordance with the Business Day
Convention.
Business Days: California, Minnesota, Texas, New York,
Illinois.
Business Day Convention: Following.
PARTY A PAYMENTS:
Party A Payment Dates: Each Distribution Date under the Pooling
and Servicing Agreement.
Party A Payment Amounts: On each Party A Payment Date, the amount,
if any, equal to the aggregate amount of
Net Swap Payments and Swap Termination
Payments owed to the Swap Counterparty
remaining unpaid after application of the
sum of (A) from the Adjusted Available
Distribution Amount that would have
remained had the Adjusted Available
Distribution Amount been applied on such
Distribution Date to make the
distributions for such Distribution Date
under Section 4.02(c) clauses (i) through
(x) of the Pooling and Servicing
Agreement, of (I) Accrued Certificate
Interest on the Class SB Certificates,
(II) the amount of any
Overcollateralization Reduction Amount and
(III) for each Distribution Date after the
Certificate Principal Balance of each
Class of Class A Certificates and Class M
Certificates has been reduced to zero, the
Overcollateralization Amount, (B) from
prepayment charges on deposit in the
Certificate Amount, any prepayment charges
received on the Mortgage Loans during the
related Prepayment Period and (C) from the
amount distributable with respect to the
REMIC III Regular Interest IO.
PARTY B PAYMENTS:
Party B Payment Dates: Each Distribution Date under the Pooling
and Servicing Agreement
Party B Payment Amounts: On each Party B Payment Date, an amount
equal to the lesser of (a) the Available
Distribution Amount remaining on such
Distribution Date after the distributions
on such Distribution Date under
Section 4.02(c) clauses (i) through (vi)
of the Pooling and Servicing Agreement and
(b) the aggregate unpaid Basis Risk
Shortfalls allocated to the Class A
Certificateholders and the Class M
Certificateholders for such Distribution
Date.
o 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 ISDA Form Master Agreement relating to such Transaction, as
applicable.
o Provisions Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
o Termination Provisions. For purposes of the ISDA Form Master Agreement:
|X| "Specified Entity" is not applicable to Party A or Party B for any
purpose.
|X| "Specified Transaction" is not applicable to Party A or Party B for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to
Party A or Party B.
|X| The "Cross Default" provisions of Section 5(a)(vi) shall not apply to
Party A or Party B.
|X| The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to Party A or Party B.
|X| With respect to Party A and Party B, the "Bankruptcy" provision of
Section 5(a)(vii)(2) of the ISDA Form Master Agreement will be
deleted in its entirety.
|X| The "Automatic Early Termination" provision of Section 6(a) will not
apply to Party A or to Party B.
|X| Payments on Early Termination. For the purpose of Section 6(e) of the
ISDA Form Master Agreement:
o Market Quotation will apply.
o The Second Method will apply.
|X| "Termination Currency" means United States Dollars.
|X| The provisions of Sections 5(a)(ii), 5(a)(iii) and 5(a)(iv) shall not
apply to Party A or Party B.
|X| Tax Event. The provisions of Section 2(d)(i)(4) and 2(d)(ii) of the
ISDA Form Master Agreement shall not apply to Party A and Party A
shall not be required to pay any additional amounts referred to
therein.
o Tax Representations.
|X| Payer Representations. For the purpose of Section 3(e) of the ISDA Form
Master Agreement, each of Party A and Party B will 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:
o the accuracy of any representations made by the other party pursuant to
Section 3(f) of the ISDA Form Master Agreement;
o the satisfaction of the agreement contained in Sections 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 Sections 4(a)(i) or 4(a)(iii) of
the ISDA Form Master Agreement; and
o 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 to its legal or commercial
position.
|X| Payee Representations. For the purpose of Section 3(f) of the ISDA Form
Master Agreement, Party A and Party B make the following
representations: None
o Documents to be Delivered. For the purpose of Section 4(a) (i) and
4(a) (iii):
o Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH TO
TO DELIVER CERTIFICATE BE DELIVERED
DOCUMENT
Party A and Any documents Promptly after the earlier of
Party B required or (i) reasonable demand by either
reasonably requested party or (ii) learning that such
to allow the other form or document is required
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
o Other documents to be delivered are:
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH COVERED BY
TO DELIVER CERTIFICATE TO BE DELIVERED SECTION 3(D)
DOCUMENT REPRESENTATION
Party A and Party B Any documents required Upon execution Yes
by the receiving party and delivery of
to evidence the this Agreement
authority of the and such
delivering party for it Confirmation
to execute and deliver
this Agreement, any
Confirmation to which it
is a party, and to
evidence the authority
of the delivering party
to perform its
obligations under this
Agreement and such
Confirmation.
Party A and Party B A certificate of an Upon the Yes
authorized officer of execution and
the party, as to the delivery of
incumbency and authority this Agreement
of the respective and such
officers of the party Confirmation
signing this Agreement
o Miscellaneous. Miscellaneous
|X| Address for Notices: For the purposes of Section 12(a) of this
Agreement:
Address for notices or communications to Party
A:
Address: RASC Series 2006-KS9 Trust
c/o U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
with a copy to: Residential Funding Company, LLC
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to Party B:
Address: RASC Series 2006-KS9 Trust
c/o U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
with a copy to: Residential Funding Company, LLC
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(For all purposes)
|X| Process Agent. For the purpose of Section 13(c):
Party A: Not Applicable
Party B: Not Applicable
|X| Offices. The provisions of Section 10(a) will not apply to this
Agreement; neither Party A nor Party B have any Offices other
than as set forth in the Notices Section.
|X| Multibranch Party. For the purpose of Section 10(c) of the ISDA Form
Master Agreement, neither Party A nor Party B is a Multibranch.
Party.
|X| Calculation Agent. The Calculation Agent is Residential Funding
Company, LLC.
|X| Credit Support Document.
Not Applicable
|X| Credit Support Provider.
Not Applicable
|X| Governing Law. The parties to this ISDA Agreement hereby agree that the
law of the State of New York shall govern their rights and duties
in whole, without regard to the conflict of law provision
thereof, other than New York General Obligations Law Sections
5-1401 and 5-1402.
|X| Non-Petition. Party A and Party B each hereby irrevocably and
unconditionally agrees that it will not institute against, or
join any other person in instituting against or cause any other
person to institute against RASC Series 2006-KS9 Trust, Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS9, or the
other party any bankruptcy, reorganization, arrangement,
insolvency, or similar proceeding under the laws of the United
States, or any other jurisdiction for the non-payment of any
amount due hereunder or any other reason until the payment in
full of the Certificates and the expiration of a period of one
year plus ten days (or, if longer, the applicable preference
period) following such payment.
|X| 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.
|X| [Intentionally Omitted].
|X| Waiver of Jury Trial. Each party to this Agreement respectively 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.
|X| 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 ISDA Form Master Agreement shall not apply for purposes of
this Transaction.
|X| This Agreement may be executed in several counterparts, each of which
shall be deemed an original but all of which together shall
constitute one and the same instrument.
|X| Trustee Liability Limitations. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and
delivered by U.S. Bank National Association, not individually or
personally but solely as Trustee of Party A and Party B, in the
exercise of the powers and authority conferred and vested in it
and that U.S. Bank National Association shall perform its duties
and obligations hereunder in accordance with the standard of care
set forth in Article VIII of the Pooling and Servicing Agreement,
(b) each of the representations, undertakings and agreements
herein made on the part of Party A and Party B is made and
intended not as personal representations, undertakings and
agreements by U.S. Bank National Association but is made and
intended for the purpose of binding only Party A and Party B, (c)
nothing herein contained shall be construed as creating any
liability on U.S. Bank 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; provided that nothing in
this paragraph shall relieve U.S. Bank National Association from
performing its duties and obligations hereunder and under the
Pooling and Servicing Agreement in accordance with the standard
of care set forth therein, and (d) under no circumstances shall
U.S. Bank National Association be personally liable for the
payment of any indebtedness or expenses of Party A or Party B or
be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by Party
A or Party B under this Agreement or any other related documents;
provided, that nothing in this paragraph shall relieve U.S. Bank
National Association from performing its duties and obligations
hereunder and under the Pooling and Servicing Agreement in
accordance with the standard of care set forth herein and therein.
o "Affiliate". Party A and Party B shall be deemed to not have any
Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii).
o 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:--
o Nonreliance. (i) 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 and (ii) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting advisors to
the extent it has deemed necessary, and it has made its own investment,
hedging and trading decisions based upon its own judgment and upon any advice
from such advisors as it has deemed necessary and not upon any view expressed
by the other party.
o Evaluation and Understanding.
|X| It has the capacity to evaluate (internally or through independent
professional advice) the Transaction and has made its own decision to enter
into the Transaction and has been directed by the Pooling and Servicing
Agreement to enter into this Transaction; and
|X| 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.
o Purpose. 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.
o Status of Parties. The other party is not acting as agent, fiduciary or
advisor for it in respect of the Transaction.
o Eligible Contract Participant. 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 it constitutes an "eligible contract participant" as
such term is defined in Section 1(a)12 of the Commodity Exchange Act, as
amended."
o Account Details and Settlement Information:
PAYMENTS TO PARTY A:
Payments to Party A shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class A Certificateholders, Class M
Certificateholders and Class B Certificateholders.
PAYMENTS TO PARTY B:
Payments to Party B shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class SB Certificateholders.
Please sign and return to us a copy of this Agreement.
Very truly yours,
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
trustee for the benefit of RASC Series
2006-KS9 Trust, acting on behalf of the
Class SB Certificateholders
By: ___________________________________
Name:
Title:
AGREED AND ACCEPTED AS OF THE TRADE DATE
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
trustee for the benefit of RASC Series
2006-KS9 Trust, acting on behalf of the
Class A Certificateholders and Class M
Certificateholders
By: ____________________________________
Name:
Title:
EXHIBIT R
ASSIGNMENT AGREEMENT
[FILED HEREWITH AS EXHIBIT 10.2]
EXHIBIT S
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Trustee shall
address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria":
----------------------------------------------------------------------------------------
APPLICABLE
SERVICING CRITERIA 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.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(1)(ii) such servicing activities.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Any requirements in the transaction
agreements to maintain a back-up servicer for
1122(d)(1)(iii) the pool assets are maintained.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(1)(iv) agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
CASH COLLECTION AND ADMINISTRATION
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Payments on pool assets are deposited into
the appropriate custodial bank accounts and
related bank clearing accounts no more than |X| (as to
two business days following receipt, or such accounts held by
other number of days specified in the Trustee)
1122(d)(2)(i) transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Disbursements made via wire transfer on
behalf of an obligor or to an investor are |X| (as to
1122(d)(2)(ii) made only by authorized personnel. investors only)
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(2)(iii) specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
The related accounts for the transaction,
such as cash reserve accounts or accounts
established as a form of |X| (as to
overcollateralization, are separately accounts held by
maintained (e.g., with respect to commingling Trustee)
of cash) as set forth in the transaction
1122(d)(2)(iv) agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(2)(v) Securities Exchange Act.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Unissued checks are safeguarded so as to
1122(d)(2)(vi) prevent unauthorized access.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(2)(vii) specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
INVESTOR REMITTANCES AND REPORTING
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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 pool assets serviced by
1122(d)(3)(i) the servicer.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Amounts due to investors are allocated and
remitted in accordance with timeframes,
distribution priority and other terms set
1122(d)(3)(ii) forth in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Disbursements made to an investor are posted
within two business days to the servicer's
investor records, or such other number of
1122(d)(3)(iii) days specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Amounts remitted to investors per the
investor reports agree with cancelled checks,
or other form of payment, or custodial bank
1122(d)(3)(iv) statements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
POOL ASSET ADMINISTRATION
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Collateral or security on pool assets is
maintained as required by the transaction
1122(d)(4)(i) agreements or related asset pool documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Pool assets and related documents are
safeguarded as required by the transaction
1122(d)(4)(ii) agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Any additions, removals or substitutions to
the asset pool are made, reviewed and
approved in accordance with any conditions or
1122(d)(4)(iii) requirements in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Payments on pool assets, including any
payoffs, made in accordance with the related
pool asset documents are posted to the
servicer's obligor records maintained no more
than two business days after receipt, or such
other number of days specified in the
transaction agreements, and allocated to
principal, interest or other items (e.g.,
escrow) in accordance with the related pool
1122(d)(4)(iv) asset documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
The servicer's records regarding the pool
assets agree with the servicer's records with
respect to an obligor's unpaid principal
1122(d)(4)(v) balance.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Changes with respect to the terms or status
of an obligor's pool asset (e.g., loan
modifications or re-agings) are made,
reviewed and approved by authorized personnel
in accordance with the transaction agreements
1122(d)(4)(vi) and related pool asset documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(4)(vii) established by the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Records documenting collection efforts are
maintained during the period a pool asset is
delinquent in accordance with the transaction
agreements. Such records are maintained on at
least a monthly basis, or such other period
specified in the transaction agreements, and
describe the entity's activities in
monitoring delinquent pool assets including,
for example, phone calls, letters and payment
rescheduling plans in cases where delinquency
is deemed temporary (e.g., illness or
1122(d)(4)(viii) unemployment).
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Adjustments to interest rates or rates of
return for pool assets with variable rates
are computed based on the related pool asset
1122(d)(4)(ix) documents.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Regarding any funds held in trust for an
obligor (such as escrow accounts): (A) such
funds are analyzed, in accordance with the
obligor's pool asset documents, on at least
an annual basis, or such other period
specified in the transaction agreements; (B)
interest on such funds is paid, or credited,
to obligors in accordance with applicable
pool asset documents and state laws; and (C)
such funds are returned to the obligor within
30 calendar days of full repayment of the
related pool asset, or such other number of
1122(d)(4)(x) days specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(4)(xi) specified in the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
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
1122(d)(4)(xii) or omission.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Disbursements made on behalf of an obligor
are posted within two business days to the
obligor's records maintained by the servicer,
or such other number of days specified in the
1122(d)(4)(xiii) transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Delinquencies, charge-offs and uncollectible
accounts are recognized and recorded in
1122(d)(4)(xiv) accordance with the transaction agreements.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Any external enhancement or other support,
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as
1122(d)(4)(xv) set forth in the transaction agreements.
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EXHIBIT T-1
FORM OF FORM 10-K CERTIFICATION
I, [identify the certifying individual], certify that:
1. I have reviewed the annual report on Form 10-K for the fiscal year
[____], and all reports on Form 8-K containing distribution or servicing
reports filed in respect of periods included in the year covered by that
annual report, of the trust (the "Trust") created pursuant to the Pooling and
Servicing Agreement dated as of October 27, 2006 (the "P&S Agreement") among
Residential Asset Securities Corporation (the "Depositor"), Residential
Funding Company, LLC (the "Master Servicer") and U.S. Bank National
Association (the "Trustee");
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the servicing information required to be
provided to the Trustee by the Master Servicer under the P&S Agreement for
inclusion in these reports is included in these reports;
4. I am responsible for reviewing the activities performed by the Master
Servicer under the P&S Agreement and based upon my knowledge and the annual
compliance review required under the P&S Agreement, and, except as disclosed
in the reports, the Master Servicer has fulfilled its obligations under the
P&S Agreement; and
5. The reports disclose all significant deficiencies relating to the
Master Servicer's compliance with the minimum servicing standards based upon
the report provided by an independent public accountant, after conducting a
review in compliance with the Uniform Single Attestation Program for Mortgage
Bankers as set forth in the P&S Agreement, that is included in these reports.
In giving the certifications above, I have reasonably relied on the
information provided to me by the following unaffiliated parties: [the
Trustee].
IN WITNESS WHEREOF, I have duly executed this certificate as of
_________, 20__.
____________________________
Name:
Title:
* to be signed by the senior officer in charge of the servicing functions of
the Master Servicer
EXHIBIT T-2
FORM OF BACK-UP CERTIFICATE TO FORM 10-K CERTIFICATION
The undersigned, a Responsible Officer of [______________] (the
"Trustee") certifies that:
1. The Trustee has performed all of the duties specifically required to be
performed by it pursuant to the provisions of the Pooling and Servicing
Agreement dated as of October 27, 2006 (the "Agreement") by and among
Residential Asset Securities Corporation, as depositor, Residential
Funding Company, LLC, as master servicer, and the Trustee in accordance
with the standards set forth therein.
2. Based on my knowledge, the list of Certificateholders as shown on the
Certificate Register as of the end of each calendar year that is
provided by the Trustee pursuant to Section 4.03(e)(I) of the Agreement
is accurate as of the last day of the 20[ ] calendar year.
Capitalized terms used and not defined herein shall have the meanings
given such terms in the Agreement.
IN WITNESS WHEREOF, I have duly executed this certificate as of
_________, 20__.
____________________________
Name:
Title:
EXHIBIT U
INFORMATION TO BE PROVIDED BY THE MASTER SERVICER TO THE RATING AGENCIES
RELATING TO REPORTABLE MODIFIED MORTGAGE LOANS
Account number
Transaction Identifier
Unpaid Principal Balance prior to Modification
Next Due Date
Monthly Principal and Interest Payment
Total Servicing Advances
Current Interest Rate
Original Maturity Date
Original Term to Maturity (Months)
Remaining Term to Maturity (Months)
Trial Modification Indicator
Mortgagor Equity Contribution
Total Servicer Advances
Trial Modification Term (Months)
Trial Modification Start Date
Trial Modification End Date
Trial Modification Period Principal and Interest Payment
Trial Modification Interest Rate
Trial Modification Term
Rate Reduction Indicator
Interest Rate Post Modification
Rate Reduction Start Date
Rate Reduction End Date
Rate Reduction Term
Term Modified Indicator
Modified Amortization Period
Modified Final Maturity Date
Total Advances Written Off
Unpaid Principal Balance Written Off
Other Past Due Amounts Written Off
Write Off Date
Unpaid Principal Balance Post Write Off
Capitalization Indicator
Mortgagor Contribution
Total Capitalized Amount
Modification Close Date
Unpaid Principal Balance Post Capitalization Modification
Next Payment Due Date per Modification Plan
Principal and Interest Payment Post Modification
Interest Rate Post Modification
Payment Made Post Capitalization
Delinquency Status to Modification Plan
EXHIBIT V
FORM OF CERTIFICATE TO BE GIVEN BY CERTIFICATE OWNER
Euroclear Cedel, societe anonyme
000 Xxxxxxxxx Xxxxxxxx 00 Xxxxxxxxx Xxxxx-Xxxxxxxx
Xxxxxxxxx
X-0000 Xxxxxxxx, Xxxxxxx X-0000 Xxxxxxxxxx
Re: Residential Asset Securities Corporation, Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS9, Class
SB, issued pursuant to the Pooling and Servicing Agreement dated
as of October 27, 2006 among Residential Asset Securities
Corporation, Residential Funding Company, LLC, and
U.S. Bank National Association, as Trustee (the "Certificates").
This is to certify that as of the date hereof and except as set forth
below, the beneficial interest in the Certificates held by you for our
account is owned by persons that are not U.S. persons (as defined in Rule 901
under the Securities Act of 1933, as amended).
The undersigned undertakes to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating
to the Certificates held by you in which the undersigned has acquired, or
intends to acquire, a beneficial interest in accordance with your operating
procedures if any applicable statement herein is not correct on such date. In
the absence of any such notification, it may be assumed that this
certification applies as of such date.
[This certification excepts beneficial interests in and does not relate
to U.S. $_________ principal amount of the Certificates appearing in your
books as being held for our account but that we have sold or as to which we
are not yet able to certify.]
We understand that this certification is required in connection with
certain securities laws in the United States of America. If administrative
or legal proceedings are commenced or threatened in connection with which
this certification is or would be relevant, we irrevocably authorize you to
produce this certification or a copy thereof to any interested party in such
proceedings.
Dated: _________________,*/ By:_________________________ ,
Account Holder
EXHIBIT W
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL
U.S. Bank National Association
Re: Residential Asset Securities Corporation, Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS9,
Class SB, issued pursuant to the Pooling and Servicing Agreement
dated as of October 27, 2006 among Residential Asset Securities
Corporation, Residential Funding Company, LLC, and U.S. Bank
National Association, as Trustee (the "Certificates").
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from
member organizations appearing in our records as persons being entitled to a
portion of the principal amount set forth below (our "Member Organizations")
as of the date hereof, $____________ principal amount of the Certificates is
owned by persons (a) that are not U.S. persons (as defined in Rule 901 under
the Securities Act of 1933. as amended (the "Securities Act")) or (b) who
purchased their Certificates (or interests therein) in a transaction or
transactions that did not require registration under the Securities Act.
We further certify (a) that we are not making available herewith for
exchange any portion of the related Temporary Regulation S Global Class SB
Certificate excepted in such certifications and (b) that as of the date
hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by them with respect to
any portion of the part submitted herewith for exchange are no longer true
and cannot be relied upon as of the date hereof
We understand that this certification is required in connection with
certain securities laws of the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to
produce this certification or a copy hereof to any interested party in such
proceedings.
Date: ___________________* Yours faithfully,
* To be dated no earlier By: ________________________________________
than the Effective Date. Xxxxxx Guaranty Trust Company of New York,
Brussels Office, as Operator of the Euroclear
Clearance System
Cedel, Societe anonyme
* Certification must be dated on or after the 15th day before the date of
the Euroclear or Cedel certificate to which this certification releases.