Common use of Undersubordination Clause in Contracts

Undersubordination. If on a distribution day before the subordination depletion date, the principal balances of all the senior target-rate classes of any group (but not the principal balances of all the group’s subordinated component classes) have been reduced to zero, and there is undersubordination (as defined below), then on that distribution day, before any distributions are made, · the pool distribution amount of the group will be reduced by an amount (the reduction amount) equal to the lesser of (1) unscheduled principal payments on the related pool’s target-rate strip received by the Trust during the preceding month and (2) the excess, determined without regard to this section “- Undersubordination,” of the pool distribution amount over the amount required to be used to reimburse any ratio-stripped PO classes, · the principal allocation to each class in the group will be reduced by the class’s proportionate share, based on principal balances, of the reduction amount, · the pool distribution amount of each group whose senior target-rate classes have not been reduced to zero will be increased by a proportionate share of the reduction amount based on the aggregate principal balance of the senior target-rate classes of each such group, and · the aggregate principal allocation for the senior target-rate classes of each group whose senior target-rate classes have not been reduced to zero will be increased by the portion of the reduction amount added to its pool distribution amount, which increased aggregate allocation will be further allocated among the senior target-rate classes in accordance with the rules in “Allocations among the senior target-rate classes” above. There is undersubordination on a distribution day if either · the subordination level of the senior classes (without regard to group) on that distribution day is less than 200% of the initial subordination level of the senior classes, or · the aggregate scheduled principal balance of the mortgage loans in any pool that are delinquent 60 days or more (including for this purpose mortgage loans in foreclosure and real estate owned by the Trust as a result of Mortgagor default), averaged over the last six months, is 50% or more of the principal balance of the related group’s subordinated component classes.

Undersubordination. If on a distribution day before the subordination depletion date, the principal balances of all the senior target-rate classes of any group (but not the principal balances of all the group’s subordinated component classes) have been reduced to zero, and there is undersubordination (as defined below), then on that distribution day, before any distributions are made, · the pool distribution amount of the group will be reduced by an amount (the reduction amount) equal to the lesser of (1) unscheduled principal payments on the related pool’s target-rate strip received by the Trust during the preceding month and (2) the excess, determined without regard to this section “- – Undersubordination,” of the pool distribution amount over the amount required to be used to reimburse any ratio-stripped PO classes, · the principal allocation to each class in the group will be reduced by the class’s proportionate share, based on principal balances, of the reduction amount, · the pool distribution amount of each group whose senior target-rate classes have not been reduced to zero will be increased by a proportionate share of the reduction amount based on the aggregate principal balance of the senior target-rate classes of each such group, and · the aggregate principal allocation for the senior target-rate classes of each group whose senior target-rate classes have not been reduced to zero will be increased by the portion of the reduction amount added to its pool distribution amount, which increased aggregate allocation will be further allocated among the senior target-rate classes in accordance with the rules in “Allocations among the senior target-rate classes” above. There is undersubordination on a distribution day if either · the subordination level of the senior classes (without regard to group) on that distribution day is less than 200% of the initial subordination level of the senior classes, or · the aggregate scheduled principal balance of the mortgage loans in any pool that are delinquent 60 days or more (including for this purpose mortgage loans in foreclosure and real estate owned by the Trust as a result of Mortgagor default), averaged over the last six months, is 50% or more of the principal balance of the related group’s subordinated component classes.

Undersubordination. If on a distribution day before the subordination depletion date, the principal balances of all the senior target-rate classes of any group (but not the principal balances of all the group’s subordinated component classes) have been reduced to zero, and there is undersubordination (as defined below), then on that distribution day, before any distributions are made, · the pool distribution amount of the group will be reduced by an amount (the reduction amount) equal to the lesser of (1) unscheduled principal payments on the related pool’s target-rate strip received by the Trust during the preceding month and (2) the excess, determined without regard to this section “- – Undersubordination,” of the pool distribution amount over the amount required to be used to reimburse any ratio-stripped PO classes, · the principal allocation to each class in the group will be reduced by the class’s proportionate share, based on principal balances, of the reduction amount, · the pool distribution amount of each group whose senior target-rate classes have not been reduced to zero will be increased by a proportionate share of the reduction amount based on the aggregate principal balance of the senior target-rate classes of each such group, and · the aggregate principal allocation for the senior target-rate classes of each group whose senior target-rate classes have not been reduced to zero will be increased by the portion of the reduction amount added to its pool distribution amount, which increased aggregate allocation will be further allocated among the senior target-rate classes in accordance with the rules in “Allocations among the senior target-rate classes” above. There is undersubordination on a distribution day if either · the subordination level of the senior classes (without regard to group) on that distribution day is less than 200% of the initial subordination level of the senior classes, or · the aggregate scheduled principal balance of the mortgage loans in any pool that are delinquent 60 days or more (including for this purpose mortgage loans in foreclosure and real estate owned by the Trust as a result of Mortgagor default), averaged over the last six months, is 50% or more of the principal balance of the related group’s subordinated component classes. For this purpose, mortgage loans delinquent 60 days or more include mortgage loans in foreclosure, real estate owned by the Trust as a result of homeowner default, and mortgage loans that during the preceding year were 60 days or more delinquent and while so delinquent were subject to a modification pursuant to section 3.19(b).