Common use of Adjustment of subordinated Clause in Contracts

Adjustment of subordinated. component class principal balances On each distribution day, the aggregate amount of any · realized subordinated losses on the mortgage loans in a pool, or · excess of the aggregate principal allocations to the related group’s target-rate classes over the aggregate principal distributions to those classes, that, in accordance with “Adjustments to class balances” above, would reduce the principal balances of the group’s subordinated component classes in order of subordination if the pool and the related groups were considered a separate series, will instead reduce · the principal balances of the subordinated composite classes in order of subordination, and · the aggregate principal balance of the group’s subordinated component classes, by that amount. Such reduction in the aggregate principal balance of a group’s subordinated component classes will result in adjustments to the principal balance of the subordinated component classes of each group so the ratio of the principal balances of the component classes from each group will be the same for each subordinated composite class. Example: Assume subordinated composite classes B-1 through B-6, each with a principal balance of $1,000. There are two groups, I and II, and the aggregate principal balance of each group’s subordinated component classes is $3,000. Then for each subordinated composite class, the ratio of the principal balance of its group I component class to the principal balance of its group II component class must be 1 to 1. Consequently, both the group I and the group II component class of each subordinated composite class will have a principal balance of $500. Now assume a $750 subordinated loss in pool I. Then · the principal balance of class B-6 will be reduced by $750, to $250, which will reduce the aggregate principal balance of the subordinated composite classes to $5,250, · the aggregate principal balance of the group I subordinated component classes will be reduced by $750, to $2,250, while the aggregate principal balance of the group II subordinated component classes will remain at $3,000; · the ratio of the aggregate principal balance of the group I subordinated component classes to the aggregate principal balance of the group II subordinated component classes will be $2,250 to $3,000, or 3 to 4; · for classes B-1 through B-5, the principal balance of the composite class will remain at $1,000, but the principal balance of its group I component class will be approximately $428.57, and the principal balance of its group II component class will be approximately $571.43 (a ratio of 3 to 4); and · class B-6’s principal balance of $250 will be comprised of a group I component class with a principal balance of approximately $107.14, and a group II component class with a principal balance of approximately $142.86 (a ratio of 3 to 4). If subordinated losses on a mortgage pool for a distribution day exceed the aggregate principal balance of the subordinated component classes of the related group, the aggregate principal balance of such component classes will be reduced to zero, and the aggregate principal balance of the subordinated component classes of the other groups will be reduced by the excess. Example: Suppose that in the series in the preceding example, the group I subordinated component classes and the group II subordinated component classes each have an aggregate initial principal balance of $3,000, and that each subordinated composite class, B-1 through B-6 has a principal balance of $1,000. Now suppose that there are $4,000 of subordinated losses on the mortgage loans in pool II’s target-rate strip, but no losses on the mortgage loans in pool I’s target-rate strip. Then the entire $4,000 of losses will be allocated to the subordinated classes, reducing the principal balance of classes B-3 through B-6 to zero. Classes B-1 and B-2 will each retain a principal balance of $1,000, comprised of a group I component class with a principal balance of $1,000 and a group II component class with a principal balance of $0. The principal balance of the subordinated group I component classes will thus be reduced by $1,000 even though there are no losses on the pool I target-rate strip. Subject to “- Undercollateralization” below, if realized subordinated losses on a distribution day exceed the aggregate principal balance of the subordinated classes, the aggregate principal balance of the senior classes in each group will be reduced by the group’s proportionate share of the excess losses, based on the proportions of all the losses for that distribution day in the mortgage loan pools. Example: Assume that for a distribution day, there are $2,250 of realized subordinated losses in pool I and $4,500 of realized subordinated losses in pool II. The aggregate principal balance of the subordinated classes is only $6,000. Then the principal balance of the subordinated classes will be reduced to $0, and the remaining $750 of losses will reduce the aggregate principal balance of the senior classes of group I by $250 (or 1/3 of $750), and will reduce the aggregate principal balance of the senior classes of group II by $500 (or 2/3 of $750). The principal balances of the component classes of the subordinated classes are irrelevant for these purposes.

Adjustment of subordinated. component class principal balances On each distribution day, the aggregate amount of any · realized subordinated losses on the mortgage loans in a pool, or · excess of the aggregate principal allocations to the related group’s target-rate classes over the aggregate principal distributions to those classes, that, in accordance with “Adjustments to class balances” above, would reduce the principal balances of the group’s subordinated component classes in order of subordination if the pool and the related groups were considered a separate series, will instead reduce · the principal balances of the subordinated composite classes in order of subordination, and · the aggregate principal balance of the group’s subordinated component classes, by that amount. Such reduction in the aggregate principal balance of a group’s subordinated component classes will result in adjustments to the principal balance of the subordinated component classes of each group so the ratio of the principal balances of the component classes from each group will be the same for each subordinated composite class. Example: Assume subordinated composite classes B-1 through B-6, each with a principal balance of $1,000. There are two groups, I and II, and the aggregate principal balance of each group’s subordinated component classes is $3,000. Then for each subordinated composite class, the ratio of the principal balance of its group I component class to the principal balance of its group II component class must be 1 to 1. Consequently, both the group I and the group II component class of each subordinated composite class will have a principal balance of $500. Now assume a $750 subordinated loss in pool I. Then · the principal balance of class B-6 will be reduced by $750, to $250, which will reduce the aggregate principal balance of the subordinated composite classes to $5,250, · the aggregate principal balance of the group I subordinated component classes will be reduced by $750, to $2,250, while the aggregate principal balance of the group II subordinated component classes will remain at $3,000; · the ratio of the aggregate principal balance of the group I subordinated component classes to the aggregate principal balance of the group II subordinated component classes will be $2,250 to $3,000, or 3 to 4; · for classes B-1 through B-5, the principal balance of the composite class will remain at $1,000, but the principal balance of its group I component class will be approximately $428.57, and the principal balance of its group II component class will be approximately $571.43 (a ratio of 3 to 4); and · class B-6’s principal balance of $250 will be comprised of a group I component class with a principal balance of approximately $107.14, and a group II component class with a principal balance of approximately $142.86 (a ratio of 3 to 4). If subordinated losses on a mortgage pool for a distribution day exceed the aggregate principal balance of the subordinated component classes of the related group, the aggregate principal balance of such component classes will be reduced to zero, and the aggregate principal balance of the subordinated component classes of the other groups will be reduced by the excess. Example: Suppose that in the series in the preceding example, the group I subordinated component classes and the group II subordinated component classes each have an aggregate initial principal balance of $3,000, and that each subordinated composite class, B-1 through B-6 has a principal balance of $1,000. Now suppose that there are $4,000 of subordinated losses on the mortgage loans in pool II’s target-rate strip, but no losses on the mortgage loans in pool I’s target-rate strip. Then the entire $4,000 of losses will be allocated to the subordinated classes, reducing the principal balance of classes B-3 through B-6 to zero. Classes B-1 and B-2 will each retain a principal balance of $1,000, comprised of a group I component class with a principal balance of $1,000 and a group II component class with a principal balance of $0. The principal balance of the subordinated group I component classes will thus be reduced by $1,000 even though there are no losses on the pool I target-rate strip. Subject to “- Undercollateralization” below, if realized subordinated losses on a distribution day exceed the aggregate principal balance of the subordinated classes, the aggregate principal balance of the senior classes in each group will be reduced by the group’s proportionate proportional share of the excess losses, based on the proportions of all the losses for that distribution day in the mortgage loan pools. Example: Assume that for a distribution day, there are $2,250 of realized subordinated losses in pool I and $4,500 of realized subordinated losses in pool II. The aggregate principal balance of the subordinated classes is only $6,000. Then the principal balance of the subordinated classes will be reduced to $0, and the remaining $750 of losses will reduce the aggregate principal balance of the senior classes of group I by $250 (or 1/3 of $750), and will reduce the aggregate principal balance of the senior classes of group II by $500 (or 2/3 of $750). The principal balances of the component classes of the subordinated classes are irrelevant for these purposes.

Adjustment of subordinated. component class principal balances On each distribution day, the aggregate amount of any · realized subordinated losses on the mortgage loans in a pool, or · excess of the aggregate principal allocations to the related group’s target-rate classes over the aggregate principal distributions to those classes, that, in accordance with “Adjustments to class balances” above, would reduce the principal balances of the group’s subordinated component classes in order of subordination if the pool and the related groups were considered a separate series, will instead reduce · the principal balances of the subordinated composite classes in order of subordination, and · the aggregate principal balance of the group’s subordinated component classes, by that amount. Such reduction in the aggregate principal balance of a group’s subordinated component classes will result in adjustments to the principal balance of the subordinated component classes of each group so the ratio of the principal balances of the component classes from each group will be the same for each subordinated composite class. Example: Assume subordinated composite classes B-1 through B-6, each with a principal balance of $1,000. There are two groups, I and II, and the aggregate principal balance of each group’s subordinated component classes is $3,000. Then for each subordinated composite class, the ratio of the principal balance of its group I component class to the principal balance of its group II component class must be 1 to 1. Consequently, both the group I and the group II component class of each subordinated composite class will have a principal balance of $500. Now assume a $750 subordinated loss in pool I. Then · the principal balance of class B-6 will be reduced by $750, to $250, which will reduce the aggregate principal balance of the subordinated composite classes to $5,250, · the aggregate principal balance of the group I subordinated component classes will be reduced by $750, to $2,250, while the aggregate principal balance of the group II subordinated component classes will remain at $3,000; · the ratio of the aggregate principal balance of the group I subordinated component classes to the aggregate principal balance of the group II subordinated component classes will be $2,250 to $3,000, or 3 to 4; · for classes B-1 through B-5, the principal balance of the composite class will remain at $1,000, but the principal balance of its group I component class will be approximately $428.57, and the principal balance of its group II component class will be approximately $571.43 (a ratio of 3 to 4); and · class B-6’s principal balance of $250 will be comprised of a group I component class with a principal balance of approximately $107.14, and a group II component class with a principal balance of approximately $142.86 (a ratio of 3 to 4). If subordinated losses on a mortgage pool for a distribution day exceed the aggregate principal balance of the subordinated component classes of the related group, the aggregate principal balance of such component classes will be reduced to zero, and the aggregate principal balance of the subordinated component classes of the other groups will be reduced by the excess. Example: Suppose that in the series in the preceding example, the group I subordinated component classes and the group II subordinated component classes each have an aggregate initial principal balance of $3,000, and that each subordinated composite class, B-1 through B-6 has a principal balance of $1,000. Now suppose that there are $4,000 of subordinated losses on the mortgage loans in pool II’s target-rate strip, but no losses on the mortgage loans in pool I’s target-rate strip. Then the entire $4,000 of losses will be allocated to the subordinated classes, reducing the principal balance of classes B-3 through B-6 to zero. Classes B-1 and B-2 will each retain a principal balance of $1,000, comprised of a group I component class with a principal balance of $1,000 and a group II component class with a principal balance of $0. The principal balance of the subordinated group I component classes will thus be reduced by $1,000 even though there are no losses on the pool I target-rate strip. Subject to “- – Undercollateralization” below, if realized subordinated losses on a distribution day exceed the aggregate principal balance of the subordinated classes, the aggregate principal balance of the senior classes in each group will be reduced by the group’s proportionate share of the excess losses, based on the proportions of all the losses for that distribution day in the mortgage loan pools. Example: Assume that for a distribution day, there are $2,250 of realized subordinated losses in pool I and $4,500 of realized subordinated losses in pool II. The aggregate principal balance of the subordinated classes is only $6,000. Then the principal balance of the subordinated classes will be reduced to $0, and the remaining $750 of losses will reduce the aggregate principal balance of the senior classes of group I by $250 (or 1/3 of $750), and will reduce the aggregate principal balance of the senior classes of group II by $500 (or 2/3 of $750). The principal balances of the component classes of the subordinated classes are irrelevant for these purposes.

Adjustment of subordinated. component class principal balances On each distribution day, the aggregate amount of any · realized subordinated losses on the mortgage loans in a pool, or · excess of the aggregate principal allocations to the related group’s target-rate classes over the aggregate principal distributions to those classes, that, in accordance with “Adjustments to class balances” above, would reduce the principal balances of the group’s subordinated component classes in order of subordination if the pool and the related groups were considered a separate series, will instead reduce · the principal balances of the subordinated composite classes in order of subordination, and · the aggregate principal balance of the group’s subordinated component classes, by that amount. Such reduction in the aggregate principal balance of a group’s subordinated component classes will result in adjustments to the principal balance of the subordinated component classes of each group so the ratio of the principal balances of the component classes from each group will be the same for each subordinated composite class. Example: Assume subordinated composite classes B-1 through B-6, each with a principal balance of $1,000. There are two groups, I and II, and the aggregate principal balance of each group’s subordinated component classes is $3,000. Then for each subordinated composite class, the ratio of the principal balance of its group I component class to the principal balance of its group II component class must be 1 to 1. Consequently, both the group I and the group II component class of each subordinated composite class will have a principal balance of $500. Now assume a $750 subordinated loss in pool I. Then · the principal balance of class B-6 will be reduced by $750, to $250, which will reduce the aggregate principal balance of the subordinated composite classes to $5,250, · the aggregate principal balance of the group I subordinated component classes will be reduced by $750, to $2,250, while the aggregate principal balance of the group II subordinated component classes will remain at $3,000; · the ratio of the aggregate principal balance of the group I subordinated component classes to the aggregate principal balance of the group II subordinated component classes will be $2,250 to $3,000, or 3 to 4; · for classes B-1 through B-5, the principal balance of the composite class will remain at $1,000, but the principal balance of its group I component class will be approximately $428.57, and the principal balance of its group II component class will be approximately $571.43 (a ratio of 3 to 4); and · class B-6’s principal balance of $250 will be comprised of a group I component class with a principal balance of approximately $107.14, and a group II component class with a principal balance of approximately $142.86 (a ratio of 3 to 4). If subordinated losses on a mortgage pool for a distribution day exceed the aggregate principal balance of the subordinated component classes of the related group, the aggregate principal balance of such component classes will be reduced to zero, and the aggregate principal balance of the subordinated component classes of the other groups will be reduced by the excess. Example: Suppose that in the series in the preceding example, the group I subordinated component classes and the group II subordinated component classes each have an aggregate initial principal balance of $3,000, and that each subordinated composite class, B-1 through B-6 has a principal balance of $1,000. Now suppose that there are $4,000 of subordinated losses on the mortgage loans in pool II’s target-rate strip, but no losses on the mortgage loans in pool I’s target-rate strip. Then the entire $4,000 of losses will be allocated to the subordinated classes, reducing the principal balance of classes B-3 through B-6 to zero. Classes B-1 and B-2 will each retain a principal balance of $1,000, comprised of a group I component class with a principal balance of $1,000 and a group II component class with a principal balance of $0. The principal balance of the subordinated group I component classes will thus be reduced by $1,000 even though there are no losses on the pool I target-rate strip. Subject to “- Undercollateralization” below, if realized subordinated losses on a distribution day exceed the aggregate principal balance of the subordinated classes, the aggregate principal balance of the senior classes in each group will be reduced by the group’s proportionate share of the excess losses, based on the proportions of all the losses for that distribution day in the mortgage loan pools. Example: Assume that for a distribution day, there are $2,250 of realized subordinated losses in pool I and $4,500 of realized subordinated losses in pool II. The aggregate principal balance of the subordinated classes is only $6,000. Then the principal balance of the subordinated classes will be reduced to $0, and the remaining $750 of losses will reduce the aggregate principal balance of the senior classes of group I by $250 (or 1/3 of $750), and will reduce the aggregate principal balance of the senior classes of group II by $500 (or 2/3 of $750). The principal balances of the component classes of the subordinated classes are irrelevant for these purposes.

Adjustment of subordinated. component class principal balances On each distribution day, the aggregate amount of any · realized subordinated losses on the mortgage loans in a pool, or · excess of the aggregate principal allocations to the related group’s target-rate classes over the aggregate principal distributions to those classes, that, in accordance with “Adjustments to class balances” above, would reduce the principal balances of the group’s subordinated component classes in order of subordination if the pool and the related groups were considered a separate series, will instead reduce · the principal balances of the subordinated composite classes in order of subordination, and · the aggregate principal balance of the group’s subordinated component classes, by that amount. Such reduction in the aggregate principal balance of a group’s subordinated component classes will result in adjustments to the principal balance of the subordinated component classes of each group so the ratio of the principal balances of the component classes from each group will be the same for each subordinated composite class. Example: Assume subordinated composite classes B-1 through B-6, each with a principal balance of $1,000. There are two groups, I and II, and the aggregate principal balance of each group’s subordinated component classes is $3,000. Then for each subordinated composite class, the ratio of the principal balance of its group I component class to the principal balance of its group II component class must be 1 to 1. Consequently, both the group I and the group II component class of each subordinated composite class will have a principal balance of $500. Now assume a $750 subordinated loss in pool I. Then · the principal balance of class B-6 will be reduced by $750, to $250, which will reduce the aggregate principal balance of the subordinated composite classes to $5,250, · the aggregate principal balance of the group I subordinated component classes will be reduced by $750, to $2,250, while the aggregate principal balance of the group II subordinated component classes will remain at $3,000; · the ratio of the aggregate principal balance of the group I subordinated component classes to the aggregate principal balance of the group II subordinated component classes will be $2,250 to $3,000, or 3 to 4; · for classes B-1 through B-5, the principal balance of the composite class will remain at $1,000, but the principal balance of its group I component class will be approximately $428.57, and the principal balance of its group II component class will be approximately $571.43 (a ratio of 3 to 4); and · class B-6’s principal balance of $250 will be comprised of a group I component class with a principal balance of approximately $107.14, and a group II component class with a principal balance of approximately $142.86 (a ratio of 3 to 4). If subordinated losses on a mortgage pool for a distribution day exceed the aggregate principal balance of the subordinated component classes of the related group, the aggregate principal balance of such component classes will be reduced to zero, and the aggregate principal balance of the subordinated component classes of the other groups will be reduced by the excess. Example: Suppose that in the series in the preceding example, the group I subordinated component classes and the group II subordinated component classes each have an aggregate initial principal balance of $3,000, and that each subordinated composite class, B-1 through B-6 has a principal balance of $1,000. Now suppose that there are $4,000 of subordinated losses on the mortgage loans in pool II’s target-rate strip, but no losses on the mortgage loans in pool I’s target-rate strip. Then the entire $4,000 of losses will be allocated to the subordinated classes, reducing the principal balance of classes B-3 through B-6 to zero. Classes B-1 and B-2 will each retain a principal balance of $1,000, comprised of a group I component class with a principal balance of $1,000 and a group II component class with a principal balance of $0. The principal balance of the subordinated group I component classes will thus be reduced by $1,000 even though there are no losses on the pool I target-rate strip. Subject to “- – Undercollateralization” below, if realized subordinated losses on a distribution day exceed the aggregate principal balance of the subordinated classes, the aggregate principal balance of the senior classes in each group will be reduced by the group’s proportionate share of the excess losses, based on the proportions of all the losses for that distribution day in the mortgage loan pools. Example: Assume that for a distribution day, there are $2,250 of realized subordinated losses in pool I and $4,500 of realized subordinated losses in pool II. The aggregate principal balance of the subordinated classes is only $6,000. Then the principal balance of the subordinated classes will be reduced to $0, and the remaining $750 of losses will reduce the aggregate principal balance of the senior classes of group I by $250 (or 1/3 of $750), and will reduce the aggregate principal balance of the senior classes of group II by $500 (or 2/3 of $750). The principal balances of the component classes of the subordinated classes are irrelevant for these purposes.