================================================================================
Popular ABS, Inc.
Depositor
Equity One, Inc., a Delaware corporation
A Seller and the Servicer
Popular Financial Funding, LLC
Equity One, Incorporated
Equity One, Inc., a Minnesota corporation
Equity One Consumer Loan Company, Inc.
and
Popular Financial Services, LLC
Sellers
and
JPMorgan Chase Bank, N.A.
Trustee
-----------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of October 31, 2004
----------------------------------
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-5
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT..........................................................1
ARTICLE I DEFINITIONS.........................................................6
60+ DAY DELINQUENT LOAN....................................................6
ADJUSTABLE CLASS AF CAP....................................................6
ADJUSTED MORTGAGE RATE.....................................................6
ADJUSTED NET MORTGAGE RATE.................................................6
ADVANCE....................................................................6
AGGREGATE CLASS B EARLY DISTRIBUTION AMOUNT................................6
AGREEMENT..................................................................6
ALLOCATION PERCENTAGE......................................................6
AMOUNT HELD FOR FUTURE DISTRIBUTION........................................6
APPLIED REALIZED LOSS AMOUNT...............................................7
AVAILABLE FUNDS............................................................7
BALLOON LOANS..............................................................7
BANKRUPTCY CODE............................................................7
BASIC PRINCIPAL DISTRIBUTION AMOUNT........................................7
BENEFICIAL OWNER...........................................................7
BOOK-ENTRY CERTIFICATES....................................................7
BUSINESS DAY...............................................................7
CERTIFICATES...............................................................7
CERTIFICATE ACCOUNT........................................................8
CERTIFICATE BALANCE........................................................8
CERTIFICATEHOLDER OR HOLDER................................................8
CERTIFICATE REGISTER.......................................................8
CERTIFICATE REGISTRAR......................................................8
CLASS......................................................................8
CLASS AF CERTIFICATES......................................................8
CLASS AF-1 CERTIFICATE.....................................................8
CLASS AF-2 CERTIFICATE.....................................................8
CLASS AF-3 CERTIFICATE.....................................................9
CLASS AF-4 CERTIFICATE.....................................................9
CLASS AF-5 CERTIFICATE.....................................................9
CLASS AF-6 CERTIFICATE.....................................................9
CLASS AF-6 LOCKOUT DISTRIBUTION AMOUNT.....................................9
CLASS AF-6 LOCKOUT PERCENTAGE..............................................9
CLASS AF-6 PRO RATA DISTRIBUTION AMOUNT....................................9
CLASS AF PRINCIPAL DISTRIBUTION AMOUNT.....................................9
CLASS AV-1 PRINCIPAL DISTRIBUTION AMOUNT..................................10
CLASS AV-1A CERTIFICATE...................................................10
CLASS AV-1B CERTIFICATE...................................................10
CLASS AV-1B REALIZED LOSS AMORTIZATION AMOUNT.............................10
CLASS AV-1B APPLIED REALIZED LOSS AMOUNT..................................10
CLASS AV-2 CERTIFICATE....................................................10
CLASS AV-2 PRINCIPAL DISTRIBUTION AMOUNT..................................10
CLASS B-1 APPLIED REALIZED LOSS AMOUNT....................................10
CLASS B-1 CERTIFICATE.....................................................11
CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT...................................11
i
CLASS B-1 REALIZED LOSS AMORTIZATION AMOUNT...............................11
CLASS B-2 APPLIED REALIZED LOSS AMOUNT....................................11
CLASS B-2 CERTIFICATE.....................................................11
CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT...................................11
CLASS B-2 REALIZED LOSS AMORTIZATION AMOUNT...............................12
CLASS B-3 APPLIED REALIZED LOSS AMOUNT....................................12
CLASS B-3 CERTIFICATE.....................................................12
CLASS B-3 PRINCIPAL DISTRIBUTION AMOUNT...................................12
CLASS B-3 REALIZED LOSS AMORTIZATION AMOUNT...............................12
CLASS CERTIFICATE BALANCE.................................................12
CLASS INTEREST SHORTFALL..................................................13
CLASS M-1 APPLIED REALIZED LOSS AMOUNT....................................13
CLASS M-1 CERTIFICATE.....................................................13
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT...................................13
CLASS M-1 REALIZED LOSS AMORTIZATION AMOUNT...............................13
CLASS M-2 APPLIED REALIZED LOSS AMOUNT....................................13
CLASS M-2 CERTIFICATE.....................................................13
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT...................................14
CLASS M-2 REALIZED LOSS AMORTIZATION AMOUNT...............................14
CLASS M-3 APPLIED REALIZED LOSS AMOUNT....................................14
CLASS M-3 CERTIFICATE.....................................................14
CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT...................................14
CLASS M-3 REALIZED LOSS AMORTIZATION AMOUNT...............................14
CLASS M-4 APPLIED REALIZED LOSS AMOUNT....................................15
CLASS M-4 CERTIFICATE.....................................................15
CLASS M-4 PRINCIPAL DISTRIBUTION AMOUNT...................................15
CLASS M-4 REALIZED LOSS AMORTIZATION AMOUNT...............................15
CLASS R CERTIFICATES......................................................15
CLASS UNPAID INTEREST AMOUNTS.............................................15
CLASS X CERTIFICATE.......................................................15
CLOSING DATE..............................................................16
CLOSING PLACE.............................................................16
CODE......................................................................16
COLLATERAL................................................................16
COLLATERAL VALUE..........................................................16
COMBINED LOAN-TO-VALUE RATIO..............................................16
CORPORATE TRUST OFFICE....................................................16
CORRESPONDING CLASS.......................................................16
COUNTERPARTY..............................................................16
CUSTODIAL AGREEMENT.......................................................16
CUSTODIAN.................................................................16
CUT-OFF DATE..............................................................17
CUT-OFF DATE GROUP I PRINCIPAL BALANCE....................................17
CUT-OFF DATE GROUP II PRINCIPAL BALANCE...................................17
CUT-OFF DATE GROUP II-A PRINCIPAL BALANCE.................................17
CUT-OFF DATE GROUP II-B PRINCIPAL BALANCE.................................17
CUT-OFF DATE POOL PRINCIPAL BALANCE.......................................17
CUT-OFF DATE PRINCIPAL BALANCE............................................17
DEFECTIVE LOAN............................................................17
DEFICIENT VALUATION.......................................................17
DEFINITIVE CERTIFICATES...................................................17
ii
DELETED LOAN..............................................................17
DENOMINATION..............................................................17
DEPOSITOR.................................................................17
DEPOSITORY................................................................18
DEPOSITORY PARTICIPANT....................................................18
DETERMINATION DATE........................................................18
DISTRIBUTION ACCOUNT......................................................18
DISTRIBUTION ACCOUNT DEPOSIT DATE.........................................18
DISTRIBUTION DATE.........................................................18
DUE DATE..................................................................18
DUE PERIOD................................................................18
ELIGIBLE ACCOUNT..........................................................18
EQUITY ONE-DELAWARE.......................................................19
EQUITY ONE-MINNESOTA......................................................19
EQUITY ONE-NEW HAMPSHIRE..................................................19
EQUITY ONE-PENNSYLVANIA...................................................19
ERISA.....................................................................19
ERISA QUALIFYING UNDERWRITING.............................................19
ERISA-RESTRICTED CERTIFICATE..............................................19
ESCROW ACCOUNT............................................................19
EVENT OF DEFAULT..........................................................19
EXCESS PROCEEDS...........................................................19
EXPENSE RATE..............................................................19
EXTRA PRINCIPAL DISTRIBUTION AMOUNT.......................................20
FDIC......................................................................20
FHLMC.....................................................................20
FIRREA....................................................................20
FITCH.....................................................................20
FIXED CLASS AF CAP........................................................20
FNMA......................................................................20
GROUP.....................................................................20
GROUP I INTEREST REMITTANCE AMOUNT........................................20
GROUP I LOANS.............................................................20
GROUP II-A INTEREST REMITTANCE AMOUNT.....................................20
GROUP II-A TRIGGER EVENT..................................................20
GROUP II-B INTEREST REMITTANCE AMOUNT.....................................21
GROUP II LOANS............................................................21
GROUP II-A LOANS..........................................................21
GROUP II-B LOANS..........................................................21
GROUP PRINCIPAL BALANCE...................................................21
INDIRECT PARTICIPANT......................................................21
INITIAL CERTIFICATE ACCOUNT DEPOSIT.......................................21
INSURANCE POLICY..........................................................21
INSURANCE PROCEEDS........................................................21
INSURED EXPENSES..........................................................21
INTEREST ACCRUAL PERIOD...................................................21
INTEREST DISTRIBUTION AMOUNT..............................................22
INVESTMENT LETTER.........................................................22
LATEST POSSIBLE MATURITY DATE.............................................22
LAST SCHEDULED DISTRIBUTION DATE..........................................22
LIBOR.....................................................................22
iii
LIBOR DETERMINATION DATE..................................................22
LIQUIDATED LOAN...........................................................22
LIQUIDATION PROCEEDS......................................................23
LOANS.....................................................................23
LOAN SCHEDULE.............................................................23
MAJORITY IN INTEREST......................................................23
MERS (R)..................................................................23
MERS (R) SYSTEM...........................................................24
MIN.......................................................................24
MOM LOAN..................................................................24
MONTHLY EXCESS CASHFLOW AMOUNT............................................24
MONTHLY EXCESS INTEREST AMOUNT............................................24
MONTHLY STATEMENT.........................................................24
XXXXX'X...................................................................24
MORTGAGE..................................................................24
MORTGAGED PROPERTY........................................................24
MORTGAGE FILE.............................................................24
MORTGAGE NOTE.............................................................24
MORTGAGE RATE.............................................................24
MORTGAGOR.................................................................24
NET PREPAYMENT INTEREST SHORTFALLS........................................25
NET PRINCIPAL SHORTFALL AMOUNT............................................25
NET REALIZED LOSSES:......................................................25
NET RECOVERY REALIZED LOSSES..............................................25
NET WAC CAP...............................................................25
NET WAC CAP ACCOUNT.......................................................26
NET WAC CAP CARRYOVER.....................................................26
NET WAC CAP DEPOSIT AMOUNT................................................26
NET WAC RATE..............................................................26
NONRECOVERABLE ADVANCE....................................................26
NOTICE OF FINAL DISTRIBUTION..............................................26
OFFERED CERTIFICATES......................................................26
OFFICER'S CERTIFICATE.....................................................26
OPINION OF COUNSEL........................................................26
OPTIONAL TERMINATION DATE.................................................27
OPTIONAL TERMINATION......................................................27
ORIGINAL LOAN.............................................................27
OTS.......................................................................27
OUTSTANDING...............................................................27
OUTSTANDING LOAN..........................................................27
OVERCOLLATERALIZATION AMOUNT..............................................27
OVERCOLLATERALIZATION DEFICIENCY..........................................27
OVERCOLLATERALIZATION RELEASE AMOUNT......................................27
OWNERSHIP INTEREST........................................................28
PASS-THROUGH RATE.........................................................28
PAYING AGENT..............................................................28
PERCENTAGE INTEREST.......................................................28
PERMITTED INVESTMENTS.....................................................28
PERMITTED TRANSFEREE......................................................29
PERSON....................................................................29
PLAN......................................................................29
iv
POOL PRINCIPAL BALANCE....................................................30
POPULAR FINANCIAL.........................................................30
POPULAR FUNDING...........................................................30
POST-STEPDOWN CROSS-COLLATERALIZATION PRINCIPAL DISTRIBUTION AMOUNT.......30
POST-STEPDOWN REMAINING PRINCIPAL DISTRIBUTION AMOUNT.....................30
PRE-STEPDOWN CROSS-COLLATERALIZATION PRINCIPAL DISTRIBUTION AMOUNT........30
PRE-STEPDOWN REMAINING PRINCIPAL DISTRIBUTION AMOUNT......................30
PREPAYMENT INTEREST EXCESS................................................30
PREPAYMENT INTEREST SHORTFALL.............................................30
PREPAYMENT PERIOD.........................................................30
PRIMARY MORTGAGE INSURANCE POLICY.........................................30
PRINCIPAL DISTRIBUTION AMOUNT.............................................31
PRINCIPAL PREPAYMENT......................................................31
PRINCIPAL PREPAYMENT IN FULL..............................................31
PRINCIPAL REMITTANCE AMOUNT...............................................31
PROSPECTUS SUPPLEMENT.....................................................31
PUBLICLY OFFERED CERTIFICATES.............................................31
PURCHASE PRICE............................................................31
PTCE 95-60................................................................32
RATING AGENCY.............................................................32
REALIZED LOSS AMOUNT......................................................32
REALIZED LOSSES...........................................................32
REALIZED LOSS AMORTIZATION AMOUNT.........................................32
RECORD DATE...............................................................32
REFERENCE BANKS...........................................................32
REFINANCE LOAN............................................................33
RELIEF ACT................................................................33
RELIEF ACT REDUCTIONS.....................................................33
REMAINING INTEREST REMITTANCE AMOUNT......................................33
REMAINING PRINCIPAL DISTRIBUTION AMOUNT...................................33
REMIC.....................................................................33
REMIC 1...................................................................33
REMIC 2...................................................................33
REMIC 1 ACCRUAL CLASS.....................................................33
REMIC CHANGE OF LAW.......................................................33
REMIC PROVISIONS..........................................................33
REO PROPERTY..............................................................34
REQUEST FOR RELEASE.......................................................34
REQUIRED INSURANCE POLICY.................................................34
RESERVE FUND..............................................................34
RESPONSIBLE OFFICER.......................................................34
RULE 144A LETTER..........................................................34
SCHEDULED PAYMENT.........................................................34
SECOND LIEN LOAN..........................................................34
SECURITIES ACT............................................................34
SELLERS...................................................................34
SENIOR CERTIFICATES.......................................................34
SENIOR ENHANCEMENT PERCENTAGE.............................................34
SENIOR PRINCIPAL DISTRIBUTION AMOUNT......................................35
SENIOR SPECIFIED ENHANCEMENT PERCENTAGE...................................35
SERVICER..................................................................35
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SERVICER ADVANCE DATE.....................................................35
SERVICING ADVANCES........................................................35
SERVICING AMOUNT..........................................................35
SERVICING FEE.............................................................35
SERVICING FEE RATE........................................................35
SERVICING OFFICER.........................................................35
S&P.......................................................................35
STARTUP DAY...............................................................36
STATED PRINCIPAL BALANCE..................................................36
STEPDOWN DATE.............................................................36
SUBORDINATE CERTIFICATES..................................................36
SUBSERVICER...............................................................36
SUBSTITUTE LOAN...........................................................36
SUBSTITUTION ADJUSTMENT AMOUNT............................................36
TARGETED OVERCOLLATERALIZATION AMOUNT.....................................36
TAX MATTERS PERSON........................................................37
TAX MATTERS PERSON CERTIFICATE............................................37
TERMINATION PRICE.........................................................37
TRANSFER..................................................................37
TRANSFER AFFIDAVIT........................................................37
TRANSFEROR CERTIFICATE....................................................37
TRIGGER EVENT.............................................................37
TRUSTEE...................................................................38
TRUSTEE FEE...............................................................38
TRUSTEE FEE RATE..........................................................38
TRUST FUND................................................................38
TRUSTEE PERMITTED WITHDRAWAL AMOUNT.......................................38
UNPAID REALIZED LOSS AMOUNT...............................................38
UNDERWRITER EXEMPTION.....................................................39
UNDERWRITERS..............................................................39
VOTING RIGHTS.............................................................39
YIELD MAINTENANCE AGREEMENT...............................................39
YIELD MAINTENANCE STATED TERMINATION......................................39
ARTICLE II CONVEYANCE OF LOANS; REPRESENTATIONS AND WARRANTIES................39
SECTION 2.01. CONVEYANCE OF LOANS........................................39
SECTION 2.02. ACCEPTANCE BY TRUSTEE OF THE LOANS.........................42
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS
AND THE SERVICER.........................................44
SECTION 2.03A. ADDITIONAL OBLIGATIONS OF EQUITY ONE-DELAWARE..............46
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AS TO
THE LOANS................................................46
SECTION 2.05. DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS............................................47
SECTION 2.06. EXECUTION AND DELIVERY OF CERTIFICATES.....................47
SECTION 2.07. REMIC MATTERS..............................................47
SECTION 2.08. COVENANTS OF THE SERVICER..................................48
ARTICLE III ADMINISTRATION AND SERVICING OF LOANS.............................48
SECTION 3.01. SERVICER TO SERVICE LOANS..................................48
SECTION 3.02. SUBSERVICING; ENFORCEMENT OF THE OBLIGATIONS OF
SERVICERS................................................49
SECTION 3.03. RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN RESPECT OF
THE SERVICER.............................................49
SECTION 3.04. TRUSTEE TO ACT AS SERVICER.................................50
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SECTION 3.05. COLLECTION OF LOAN PAYMENTS; CERTIFICATE ACCOUNT;
DISTRIBUTION ACCOUNT.....................................50
SECTION 3.06. PAYMENT OF TAXES, ASSESSMENTS, HAZARD INSURANCE
PREMIUMS AND SIMILAR ITEMS; ESCROW ACCOUNTS..............52
SECTION 3.07. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE LOANS......................................53
SECTION 3.08. PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT
AND DISTRIBUTION ACCOUNT.................................53
SECTION 3.09. MAINTENANCE OF HAZARD INSURANCE; MAINTENANCE OF
PRIMARY INSURANCE POLICIES...............................54
SECTION 3.10. ENFORCEMENT OF DUE-ON-SALE CLAUSES;
ASSUMPTION AGREEMENTS....................................55
SECTION 3.11. REALIZATION UPON DEFAULTED LOANS; REPURCHASE AND
SALE OF CERTAIN LOANS....................................56
SECTION 3.12. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
SERVICER TO BE HELD FOR THE TRUSTEE......................58
SECTION 3.13. SERVICING COMPENSATION.....................................58
SECTION 3.14. ACCESS TO CERTAIN DOCUMENTATION............................59
SECTION 3.15. ANNUAL STATEMENT AS TO COMPLIANCE..........................59
SECTION 3.16. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
STATEMENT; FINANCIAL STATEMENTS..........................59
SECTION 3.17. ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.............60
SECTION 3.18. RESERVED...................................................60
SECTION 3.19. DELINQUENT LOANS...........................................60
ARTICLE IIIA RESERVE FUND AND NET WAC CAP ACCOUNT............................60
SECTION 3A.01. RESERVED...................................................60
SECTION 3A.02. RESERVE FUND AND YIELD MAINTENANCE AGREEMENT...............60
SECTION 3A.03. NET WAC CAP ACCOUNT......................................61
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER.........................62
SECTION 4.01. ADVANCES...................................................62
SECTION 4.02. PRIORITIES OF DISTRIBUTION AND ALLOCATION..................63
SECTION 4.02A. RECOVERIES.................................................71
SECTION 4.03. MONTHLY STATEMENTS TO CERTIFICATEHOLDERS...................72
SECTION 4.04. REPORTING..................................................75
SECTION 5.01. THE CERTIFICATES...........................................75
SECTION 5.02. CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.................................75
SECTION 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES..........80
SECTION 5.04. PERSONS DEEMED OWNERS......................................80
SECTION 5.05. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES................................................80
SECTION 5.06. MAINTENANCE OF OFFICE OR AGENCY............................80
ARTICLE VI THE DEPOSITOR AND THE SERVICER.....................................81
SECTION 6.01. RESPECTIVE LIABILITIES OF THE DEPOSITOR AND THE SERVICER...81
SECTION 6.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER...81
SECTION 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SELLERS,
THE SERVICER AND OTHERS..................................81
SECTION 6.04. LIMITATION ON RESIGNATION OF SERVICER......................82
SECTION 6.05. INDEMNIFICATION............................................82
ARTICLE VII...................................................................82
vii
DEFAULT.......................................................................82
SECTION 7.01. EVENTS OF DEFAULT..........................................82
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR...................84
SECTION 7.03. NOTIFICATION TO CERTIFICATEHOLDERS.........................85
SECTION 7.04. SURVIVABILITY OF SERVICER LIABILITIES......................85
ARTICLE VIII CONCERNING THE TRUSTEE..........................................85
SECTION 8.01. DUTIES OF TRUSTEE..........................................85
SECTION 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE......................86
SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR LOANS...............88
SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES...............................88
SECTION 8.05. TRUSTEE'S FEES AND EXPENSES................................88
SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.......................89
SECTION 8.07. RESIGNATION AND REMOVAL OF TRUSTEE.........................89
SECTION 8.08. SUCCESSOR TRUSTEE..........................................90
SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE.........................90
SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE..............90
SECTION 8.11. TAX MATTERS................................................92
SECTION 8.12. PERIODIC FILINGS...........................................93
SECTION 8.13. APPOINTMENT OF CUSTODIANS..................................93
SECTION 8.14. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.............................................94
SECTION 8.15. SUITS FOR ENFORCEMENT......................................94
SECTION 8.16. DERIVATIVE TRANSACTIONS....................................94
ARTICLE IX TERMINATION........................................................95
SECTION 9.01. TERMINATION UPON LIQUIDATION OR PURCHASE OF ALL LOANS......95
SECTION 9.02. FINAL DISTRIBUTION ON THE CERTIFICATES.....................95
SECTION 9.03. ADDITIONAL TERMINATION REQUIREMENTS........................96
ARTICLE X MISCELLANEOUS PROVISIONS............................................97
SECTION 10.01. AMENDMENT..................................................97
SECTION 10.02. RECORDATION OF AGREEMENT; COUNTERPARTS.....................98
SECTION 10.03. GOVERNING LAW..............................................98
SECTION 10.04. INTENTION OF PARTIES.......................................98
SECTION 10.05. NOTICES...................................................100
SECTION 10.06. SEVERABILITY OF PROVISIONS................................101
SECTION 10.07. ASSIGNMENT................................................101
SECTION 10.08. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS................101
SECTION 10.09. INSPECTION AND AUDIT RIGHTS...............................102
SECTION 10.10. CERTIFICATES NONASSESSABLE AND FULLY PAID.................102
SECTION 10.11. THE CLOSING...............................................102
SECTION 10.12. INTERPRETATION............................................102
SECTION 10.13. RESERVED..................................................102
SECTION 10.14. NO PARTNERSHIP............................................103
SECTION 10.15. PROTECTION OF ASSETS......................................103
SECTION 10.16. EXECUTION OF YIELD MAINTENANCE AGREEMENT..................103
SCHEDULE I...........................................................S-I-1
SCHEDULE IIA.......................................................S-IIA-1
viii
SCHEDULE IIB.......................................................S-IIB-1
SCHEDULE IIC.......................................................S-IIC-1
SCHEDULE IID.......................................................S-IID-1
SCHEDULE IIE.......................................................S-IIE-1
SCHEDULE IIF.......................................................S-IIF-1
SCHEDULE IIX.......................................................S-IIX-1
SCHEDULE IIIA.....................................................S-IIIA-1
SCHEDULE IIIB.....................................................S-IIIB-1
SCHEDULE IIIC.....................................................S-IIIC-1
SCHEDULE IIID.....................................................S-IIID-1
SCHEDULE IIIE.....................................................S-IIIE-1
SCHEDULE IIIF.....................................................S-IIIF-1
SCHEDULE IV...........................................................IV-1
SCHEDULE V.............................................................V-1
SCHEDULE VI...........................................................VI-1
SCHEDULE VII.........................................................VII-1
EXHIBIT A-1..........................................................A-1-1
EXHIBIT A-2..........................................................A-2-1
EXHIBIT A-3 .........................................................A-3-1
EXHIBIT A-4 .........................................................A-4-1
EXHIBIT B-1..........................................................B-1-1
EXHIBIT B-2 .........................................................B-2-1
EXHIBIT C..............................................................C-1
EXHIBIT D..............................................................D-1
EXHIBIT E..............................................................E-1
EXHIBIT F..............................................................F-1
ix
EXHIBIT G..............................................................G-1
EXHIBIT H..............................................................H-1
EXHIBIT I..............................................................I-1
EXHIBIT J..............................................................J-1
EXHIBIT K..............................................................K-1
EXHIBIT L..............................................................L-1
EXHIBIT M..............................................................M-1
x
THIS POOLING AND SERVICING AGREEMENT, dated as of October 31, 2004, by and among
Popular ABS, Inc., a Delaware corporation, as depositor (the "DEPOSITOR"),
Equity One, Inc., a Delaware corporation, as a seller (in such capacity, "EQUITY
ONE-DELAWARE") and as servicer (in such capacity, the "SERVICER"), Popular
Financial Funding, LLC, a Delaware limited liability company ("POPULAR
FUNDING"), Equity One, Incorporated, a Pennsylvania corporation ("EQUITY
ONE-PENNSYLVANIA"), Popular Financial Services, LLC, a Delaware limited
liability company ("POPULAR FINANCIAL"), Equity One, Inc., a Minnesota
corporation ("EQUITY ONE-MINNESOTA"), Equity One Consumer Loan Company, Inc., a
New Hampshire corporation ("EQUITY ONE-NEW HAMPSHIRE" and, together with Equity
One-Delaware, Popular Funding, Equity One-Pennsylvania, Popular Financial and
Equity One-Minnesota, the "SELLERS"), and JPMorgan Chase Bank, National
Association, a banking association organized under the laws of the United
States, as trustee (the "TRUSTEE").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund (exclusive of the Net
WAC Cap Account, the Reserve Fund and the Yield Maintenance Agreement) for
federal income tax purposes will consist of two REMICs ("REMIC 1" and "REMIC
2"). The Certificates will represent the entire beneficial ownership interest in
the Trust Fund. The assets of the Trust Fund (exclusive of the Net WAC Cap
Account, the Reserve Fund and the Yield Maintenance Agreement) will constitute
the assets of REMIC 1 and REMIC 1 will issue seventeen uncertificated regular
interests that will be held as the sole assets of REMIC 2. The Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV-1A, Class AV-1B
and Class AV-2 Certificates (with respect to the Class AF-1, Class AV-1A, Class
AV-1B and Class AV-2 Certificates, exclusive of any associated rights to receive
payments in the form of Net WAC Cap Carryover), the Class M-1, Class M-2, Class
M-3 and Class M-4 Certificates, the Class B-1, Class B-2 and Class B-3
Certificates (with respect to the Class B-1, Class B-2 and Class B-3
Certificates, exclusive of any associated rights to receive payments in the form
of Net WAC Cap Carryover) and the Class X Certificates will represent the
"regular interests" in REMIC 2. The Class M-1, Class M-2, Class M-3, Class M-4,
Class B-1, Class B-2 and Class B-3 Certificates are subordinate to and provide
credit enhancement for the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class AV-1A, Class AV-1B and Class AV-2 Certificates. The
Class M-2, Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3 Certificates
are subordinate to and provide credit enhancement for the Class M-1
Certificates. The Class M-3, Class M-4, Class B-1, Class B-2 and Class B-3
Certificates are subordinate to and provide credit enhancement for the Class M-2
Certificates. The Class M-4, Class B-1, Class B-2 and Class B-3 Certificates are
subordinate to and provide credit enhancement for the Class M-3 Certificates.
The Class B-1, Class B-2 and Class B-3 Certificates are subordinate to and
provide credit enhancement for the Class M-4 Certificates. The Class B-2 and
Class B-3 Certificates are subordinate to and provide credit enhancement for the
Class B-1 Certificates. The Class B-3 Certificates are subordinate to and
provide credit enhancement for the Class B-2 Certificates. The Class R-1 and
Class R-2 Interests will be the residual interests in each of REMIC 1 and REMIC
2. All interests created hereby will be retired on or before the Latest Possible
Maturity Date.
REMIC 1
REMIC 1 will be evidenced by a single uncertificated residual interest,
ownership of which shall be evidenced by the Class R Certificate, and by the
REMIC 1- Accrual Class, the Class 1-Group 1 Interest, the Class 1-Group II-A
Interest, the Class 1-Group II-B Interest and the Class 1-AF1, Class 1-AF2,
Class 1-AF3, Class 1-AF4, Class 1-AF5, Class 1-AF6, Class 1-AV1A, Class 1-AV1B,
Class 1-AV2, Class 1-M1, Class 1-M2, Class 1-M3, Class 1-M4, Class 1-B1, Class
1-B2 and Class 1-B3 Interests, which will be uncertificated and non-transferable
and are hereby designated as the "regular interests" in REMIC 1 for federal
income tax purposes and will have the following designations, initial principal
balances, pass-through rates, and corresponding classes of REMIC 2 certificates
("CORRESPONDING CLASSES"):
-----------------------------------------------------------------------------------------------------------------------------------
REMIC 1 Interests Initial Balance Pass-Through Rate Corresponding Class
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AF1 (1/4 Corresponding Class' initial Class Net WAC Rate AF-1
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AF2 (1/4 Corresponding Class' initial Class Net WAC Rate AF-2
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AF3 (1/4 Corresponding Class' initial Class Net WAC Rate AF-3
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AF4 (1/4 Corresponding Class' initial Class Net WAC Rate AF-4
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AF5 (1/4 Corresponding Class' initial Class Net WAC Rate AF-5
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AF6 (1/4 Corresponding Class' initial Class Net WAC Rate AF-6
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AV1A (1/4 Corresponding Class' initial Class Net WAC Rate AV-1A
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AV1B (1/4 Corresponding Class' initial Class Net WAC Rate AV-1B
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-AV2 (1/4 Corresponding Class' initial Class Net WAC Rate AV-2
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-M1 (1/4 Corresponding Class' initial Class Net WAC Rate M-1
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-M2 (1/4 Corresponding Class' initial Class Net WAC Rate M-2
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-M3 (1/4 Corresponding Class' initial Class Net WAC Rate M-3
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-M4 (1/4 Corresponding Class' initial Class Net WAC Rate M-4
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-B1 (1/4 Corresponding Class' initial Class Net WAC Rate B-1
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-B2 (1/4 Corresponding Class' initial Class Net WAC Rate B-2
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-B3 (1/4 Corresponding Class' initial Class Net WAC Rate B-3
Certificate Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-Group I (1/4 Cut-off Date Group I Principal (1) N/A
Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-Group II-A (1/4 Cut-off Date Group II-A Principal (2) N/A
Balance)
-----------------------------------------------------------------------------------------------------------------------------------
Class 1-Group II-B (1/4 Cut-off Date Group II-B Principal (3) N/A
Balance)
-----------------------------------------------------------------------------------------------------------------------------------
2
-----------------------------------------------------------------------------------------------------------------------------------
REMIC 1 Interests Initial Balance Pass-Through Rate Corresponding Class
-----------------------------------------------------------------------------------------------------------------------------------
REMIC 1 Accrual Class (1/2 Cut-off Date Pool Principal Balance) Net WAC Rate N/A
-----------------------------------------------------------------------------------------------------------------------------------
(1) For any Distribution Date and the related Interest Accrual Period, the
Class 1-Group I Interest shall accrue interest at a per annum rate
equal to the weighted average Adjusted Net Mortgage Rate of the Group I
Loans as of the first day of the related Due Period, weighted on the
basis of the aggregate principal balance of the Group I Loans as of the
first day of the related Due Period.
(2) For any Distribution Date and the related Interest Accrual Period, the
Class 1-Group II-A Interest shall accrue interest at a per annum rate
equal to the weighted average Adjusted Net Mortgage Rate of the Group
II-A Loans as of the first day of the related Due Period, weighted on
the basis of the aggregate principal balance of the Group II-A Loans as
of the first day of the related Due Period.
(3) For any Distribution Date and the related Interest Accrual Period, the
Class 1-Group II-B Interest shall accrue interest at a per annum rate
equal to the weighted average Adjusted Net Mortgage Rate of the Group
II-B Loans as of the first day of the related Due Period, weighted on
the basis of the aggregate principal balance of the Group II-B Loans as
of the first day of the related Due Period.
On each Distribution Date, the Interest Remittance Amounts for Group I,
Group II-A and Group II-B shall be distributed as interest on the regular
interests in REMIC 1 at the Pass-Through Rates shown above, provided, however,
that interest that accrues on the REMIC 1 Accrual Class for any Interest Accrual
Period shall be deferred and added to the balance of the REMIC 1 Accrual Class
in an amount equal to 25% of the Extra Principal Distribution Amount for the
related Distribution Date.
On each Distribution Date, Available Funds remaining after the
distributions described in the immediately preceding paragraph have been made,
shall be distributed in the following order and priority:
1. Concurrently, to the Class 1-AF1, Class 1-AF2, Class 1-AF3, Class
1-AF4, Class 1-AF5, Class 1-AF6, Class 1-AV1A, Class 1-AV1B, Class
1-AV2, Class 1-M1, Class 1-M2, Class 1-M3, Class 1-M4, Class 1-B1,
Class 1-B2 and Class 1-B3 Interests until the balance of each such
Interest equals 25% of the Class Certificate Balance of the
Corresponding Class of Certificates immediately after such Distribution
Date;
2. Concurrently, to the Class 1-Group I, Class 1-Group II-A and Class
1-Group II-B Interests, until
a. the balance of the Class 1-Group I Interest equals 25% of the
Cut-off Date Group I Principal Balance, determined as of the
first day of the related Due Period;
b. the balance of the Class 1-Group II-A Interest equals 25% of
the Cut-off Date Group II-A Principal Balance, determined as
of the first day of the related Due Period; and
c. the balance of the Class 1-Group II-B Interest equals 25% of
the Cut-off Date Group II-B Principal Balance, determined as
of the first day of the related Due Period;
3. To the REMIC 1 Accrual Class until its balance is reduced to zero.
3
Realized Losses shall be allocated among the regular interests in REMIC
1 in the same manner in which principal is distributed.
REMIC 2
The following table sets forth characteristics of the Certificates,
each of which, except for the Class R Certificates, is hereby designated a
"regular interest" in REMIC 2, together with the minimum denominations and
integral multiples in excess thereof in which such Classes shall be issuable
(except that one Certificate of each Class of Certificates may be issued in a
different amount and, in addition, one Class R Certificate representing the Tax
Matters Person Certificate may be issued in a different amount):
------------------------------------------------------------------------------------------------------------------------------------
Initial Class Pass-Through Rate(1) Minimum Integral Multiples in
Certificate Balance Denomination Excess of Minimum
------------------------------------------------------------------------------------------------------------------------------------
Class AF-1 $ 146,850,000 LIBOR + 0.190% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AF-2 $ 32,230,000 3.735% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AF-3 $ 47,700,000 4.000% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AF-4 $ 43,020,000 4.655% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AF-5 $ 22,758,000 5.482% (2) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AF-6 $ 23,800,000 4.747% (3) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AV-1A $ 108,716,000 LIBOR + 0.330% (4) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AV-1B $ 27,180,000 LIBOR + 0.380% (5) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class AV-2 $ 47,150,000 LIBOR + 0.340% (6) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class M-1 $ 39,110,000 5.255% (7) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class M-2 $ 31,890,000 5.700% (8) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class M-3 $ 8,120,000 5.700% (9) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class M-4 $ 8,120,000 5.700% (10) $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class B-1 $ 4,510,000 LIBOR + 1.650% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class B-2 $ 4,510,000 LIBOR + 2.400% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class B-3 $ 6,020,000 LIBOR + 3.500% $25,000 $1
------------------------------------------------------------------------------------------------------------------------------------
Class X (11) (12) N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
Class R $0 N/A N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
(1) As to any Distribution Date, this rate shall equal the lesser of (a)
the lesser of (i) the rate per annum set forth above and (ii) 14.00%,
and (b) the applicable Net WAC Cap.
(2) After the Optional Termination Date, this rate will increase to 5.982%.
(3) After the Optional Termination Date, this rate will increase to 5.247%.
(4) After the Optional Termination Date, this rate will increase to LIBOR +
0.660%.
(5) After the Optional Termination Date, this rate will increase to LIBOR +
0.760%.
(6) After the Optional Termination Date, this rate will increase to LIBOR +
0.680%.
(7) After the Optional Termination Date, this rate will increase to 5.755%.
(8) After the Optional Termination Date, this rate will increase to 6.200%.
4
(9) After the Optional Termination Date, this rate will increase to 6.200%.
(10) After the Optional Termination Date, this rate will increase to 6.200%.
(11) On each Distribution Date, the Class X Certificates will have a
notional balance equal to the Pool Principal Balance.
(12) As to any Distribution Date, the Pass-Through Rate for the Class X
Certificates shall equal the excess of: (a) the Net WAC Rate over (b)
the product of: (i) four and (ii) the weighted average of the
Pass-Through Rates of the REMIC 1 regular interests, where each of the
REMIC 1 Accrual Class, the Class 1-Group I Interest, the Class 1-Group
II-A Interest and the Class 1-Group II-B Interest is subject to a cap
equal to zero and the Pass-Through Rate on each other regular interest
in REMIC 1 is subject to a cap equal to the Pass-Through Rate on its
Corresponding Class.
All fixed interest rates set forth in this Agreement are calculated
based on a 360-day year consisting of twelve 30-day months (30/360). All
adjustable interest rates set forth in this Agreement are calculated based on a
360-day year and the actual number of days elapsed in the related Interest
Accrual Period.
5
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
60+ Day Delinquent Loan
-----------------------
Each Loan with respect to which any portion of a Scheduled Payment is,
as of the last day of the prior Due Period, 60 days or more contractually past
due (assuming 30 day months), each Loan in foreclosure, all REO Property and
each Loan for which the Mortgagor has filed for bankruptcy after the Closing
Date.
Adjustable Class AF Cap
-----------------------
The Net WAC Cap with respect to the Class AF-1 Certificates.
Adjusted Mortgage Rate
----------------------
As to each Loan, and at any time, the per annum rate equal to the
Mortgage Rate less the Servicing Fee Rate.
Adjusted Net Mortgage Rate
--------------------------
As to each Loan, and at any time, the per annum rate equal to the
Mortgage Rate less the related Expense Rate.
Advance
-------
The payment required to be made by the Servicer with respect to any
Distribution Date pursuant to Section 4.01, the amount of any such payment being
equal to the aggregate of payments of principal and interest (net of the
Servicing Fee) on the Loans that were due on such Loans' respective Due Dates in
the related Due Period and not received as of the close of business on the
Determination Date in the month of such Distribution Date, other than the
aggregate amount of any such delinquent payments that the Servicer, in its good
faith judgment, has determined would not be recoverable out of Insurance
Proceeds, Liquidation Proceeds or otherwise from the related Loans.
Aggregate Class B Early Distribution Amount
-------------------------------------------
As of any Distribution Date, the aggregate sum of all amounts paid to
the Class B-1, Class B-2 and Class B-3 Certificates on prior Distribution Dates
pursuant to clauses (xxvii), (xviii) and (xxix) of Section 4.02(d).
Agreement
---------
This Pooling and Servicing Agreement, together with all of the exhibits
and schedules hereto, and all amendments or supplements of any of the foregoing.
Allocation Percentage
---------------------
With respect to any Distribution Date and any Group, the percentage
equivalent of a fraction, the numerator of which is (a) the Principal Remittance
Amount for that Group for that Distribution Date, and the denominator of which
is (b) the sum of the Principal Remittance Amounts for all Groups for that
Distribution Date.
Amount Held for Future Distribution
-----------------------------------
As to any Distribution Date and the Offered Certificates, the aggregate
amount held in the Certificate Account at the close of business on the related
Determination Date on account of (a)
6
Principal Prepayments received after the Prepayment Period corresponding to such
Distribution Date and Liquidation Proceeds and Recoveries received in the month
of such Distribution Date and (b) all Scheduled Payments due after the Loans'
respective Due Dates in the related Due Period.
Applied Realized Loss Amount
----------------------------
With respect to (a) the Class M-1 Certificates, the Class M-1 Applied
Realized Loss Amount, (b) the Class M-2 Certificates, the Class M-2 Applied
Realized Loss Amount, (c) the Class M-3 Certificates, the Class M-3 Applied
Realized Loss Amount, (d) the Class M-4 Certificates, the Class M-4 Applied
Realized Loss Amount, (e) the Class B-1 Certificates, the Class B-1 Applied
Realized Loss Amount, (f) the Class B-2 Certificates, the Class B-2 Applied
Realized Loss Amount, (g) the Class B-3 Certificates, the Class B-3 Applied
Realized Loss Amount and (h) the Class AV-1B Certificates, the Class AV-1B
Applied Realized Loss Amount .
Available Funds
---------------
As to any Distribution Date, the sum of (a) the aggregate amount held
in the Certificate Account at the close of business on the related Determination
Date net of the Amount Held for Future Distribution and net of amounts permitted
to be withdrawn from the Certificate Account pursuant to clauses (i)-(viii),
inclusive, of Section 3.08(a) and amounts permitted to be withdrawn from the
Distribution Account pursuant to clauses (i) and (ii) of Section 3.08(b), (b)
the amount of the related Advance, if any, and (c) the aggregate of the Purchase
Prices and Substitution Adjustment Amounts received on or before the related
Distribution Account Deposit Date and (d) with respect to the initial
Distribution Date, the Initial Certificate Account Deposit.
Balloon Loans
-------------
Loans with balloon payments.
Bankruptcy Code
---------------
The United States Bankruptcy Reform Act of 1978, as amended, and
related rules promulgated thereunder.
Basic Principal Distribution Amount
-----------------------------------
With respect to any Distribution Date and any Group, the amount by
which (a) the Principal Remittance Amount for that Group for that Distribution
Date exceeds (b) the product of (i) the Overcollateralization Release Amount, if
any, for that Distribution Date and (ii) the Allocation Percentage for that
Group for that Distribution Date.
Beneficial Owner
----------------
With respect to any Book-Entry Certificate, the Person who is the
beneficial owner of such Book-Entry Certificate.
Book-Entry Certificates
-----------------------
The Offered Certificates.
Business Day
------------
Any day other than (a) a Saturday or a Sunday or (b) a day on which
banking institutions in New York City, or in the city where the chief executive
office of the Servicer is located, are authorized or obligated by law or
executive order to be closed.
Certificates
------------
The Offered Certificates, the Class R Certificates and the Class X
Certificates.
7
Certificate Account
-------------------
The separate Eligible Account created and maintained by the Servicer
pursuant to Section 3.05 with a depository institution in the name of the
Servicer for the benefit of the Trustee on behalf of the Certificateholders and
designated "Certificate Account, Equity One, Inc., as trustee for the registered
holders of Popular ABS, Inc., Mortgage Pass-Through Certificates Series 2004-5."
Certificate Balance
-------------------
With respect to any Offered Certificate at any time, the maximum dollar
amount of principal to which the Holder thereof is then entitled hereunder, such
amount being equal to the Denomination thereof reduced by the sum of (a) all
amounts previously distributed to that Offered Certificate as payments of
principal, and (b) with respect to any Offered Certificate that is a Class B-3,
Class B-2, Class B-1, Class M-4, Class M-3, Class M-2, Class M-1 or Class AV-1B
Certificate, that Offered Certificate's pro rata share of the cumulative amount
of Applied Realized Loss Amounts with respect to such Class for all prior
Distribution Dates.
Certificateholder or Holder
---------------------------
The person in whose name a Certificate is registered in the Certificate
Register, except that, solely for the purpose of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the Depositor or any
affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification of
the Depositor or any affiliate of the Depositor in determining which
Certificates are registered in the name of an affiliate of the Depositor.
Certificate Register
--------------------
The register maintained pursuant to Section 5.02.
Certificate Registrar
---------------------
JPMorgan Chase Bank, N.A. and its successors and, if a successor
certificate registrar is appointed hereunder, such successor.
Class
-----
All Certificates bearing the same class designation as set forth in the
Preliminary Statement.
Class AF Certificates
---------------------
The Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5 and
Class AF-6 Certificates.
Class AF-1 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-1 and designated as a Class AF-1
Certificate.
Class AF-2 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-1 and designated as a Class AF-2
Certificate.
8
Class AF-3 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-1 and designated as a Class AF-3
Certificate.
Class AF-4 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-1 and designated as a Class AF-4
Certificate.
Class AF-5 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-1 and designated as a Class AF-5
Certificate.
Class AF-6 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-1 and designated as a Class AF-6
Certificate.
Class AF-6 Lockout Distribution Amount
--------------------------------------
As of any Distribution Date (a) prior to the December 2013 Distribution
Date, the lesser of (i) the product of (A) the applicable Class AF-6 Lockout
Percentage for such Distribution Date and (B) the Class AF-6 Pro Rata
Distribution Amount for such Distribution Date and (ii) the Class Certificate
Balance of the Class AF-6 Certificates immediately prior to that Distribution
Date and (b) on or after the December 2013 Distribution Date, the Class AF
Principal Distribution Amount for such Distribution Date.
Class AF-6 Lockout Percentage
-----------------------------
With respect to any Distribution Date occurring below, the
corresponding percentage set forth opposite such Distribution Date:
--------------------------------------------------------------------------------
Distribution Date Occurring In Class AF-6 Lockout Percentage
--------------------------------------------------------------------------------
December 2004 - November 2007 0%
--------------------------------------------------------------------------------
December 2007 - November 2009 45%
--------------------------------------------------------------------------------
December 2009 - November 2010 80%
--------------------------------------------------------------------------------
December 2010 - November 2011 100%
--------------------------------------------------------------------------------
December 2011 - November 2013 300%
--------------------------------------------------------------------------------
Class AF-6 Pro Rata Distribution Amount
---------------------------------------
As of any Distribution Date, the product of (a) a fraction, the
numerator of which is the Class Certificate Balance of the Class AF-6
Certificates immediately prior to such Distribution Date and the denominator of
which is the sum of the Class Certificate Balances of all classes of the Class
AF Certificates immediately prior to such Distribution Date and (b) the Class AF
Principal Distribution Amount for such Distribution Date.
Class AF Principal Distribution Amount
--------------------------------------
As of any Distribution Date (a) prior to the Stepdown Date or with
respect to which a Trigger Event is in effect, the lesser of (i) the Principal
Distribution Amount for the Group I Loans and (ii) the aggregate of the Class
Certificate Balances of the Class AF Certificates immediately prior to that
Distribution Date and (b) on or after the Stepdown Date and as long as a Trigger
Event is not in effect, the lesser of (i) the aggregate of the Class Certificate
Balances of the Class AF Certificates immediately prior to that Distribution
Date and (ii) the product of (A) the Allocation Percentage of the Group I Loans
and (B) the Senior Principal Distribution Amount.
9
Class AV-1 Principal Distribution Amount
----------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the lesser of (a) the sum of (i) the Class
Certificate Balance of the Class AV-1A Certificates and (ii) the Class
Certificate Balance of the Class AV-1B Certificates, each immediately prior to
that Distribution Date and (b) the product of (i) the Allocation Percentage of
the Group II-A Loans and (ii) the Senior Principal Distribution Amount.
Class AV-1A Certificate
-----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-2 and designated as a Class AV-1A
Certificate.
Class AV-1B Certificate
-----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-2 and designated as a Class AV-1B
Certificate.
Class AV-1B Realized Loss Amortization Amount
---------------------------------------------
As to the Class AV-1B Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class AV-1B Certificates
as of that Distribution Date and (b) the excess of (i) the Monthly Excess
Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (iii) of Section 4.02(d) for that Distribution Date.
Class AV-1B Applied Realized Loss Amount
----------------------------------------
As to the Class AV-1B Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class AV-1B Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class
M-1 Applied Realized Loss Amount, the Class M-2 Applied Realized Loss Amount,
the Class M-3 Applied Realized Loss Amount, the Class M-4 Applied Realized Loss
Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied
Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each
case as of that Distribution Date.
Class AV-2 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-2 and designated as a Class AV-2
Certificate.
Class AV-2 Principal Distribution Amount
----------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the lesser of (a) the Class Certificate
Balance of the Class AV-2 Certificates immediately prior to that Distribution
Date and (b) the product of (i) the Allocation Percentage of the Group II-B
Loans and (ii) the Senior Principal Distribution Amount.
Class B-1 Applied Realized Loss Amount
--------------------------------------
As to the Class B-1 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class B-1 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class
B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount,
in each case as of that Distribution Date.
10
Class B-1 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-4 and designated as a Class B-1
Certificate.
Class B-1 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the
Class Certificate Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on that
Distribution Date), (v) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on that Distribution Date) and (vi) the Class Certificate
Balance of the Class B-1 Certificates immediately prior to that Distribution
Date over (b) the lesser of (i) the product of (A) 91.40% and (B) the Pool
Principal Balance as of the last day of the related Due Period and (ii) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (A) 0.50% and (B) the Cut-off Date Pool Principal Balance.
Class B-1 Realized Loss Amortization Amount
-------------------------------------------
As to the Class B-1 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class B-1 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (xviii)
of Section 4.02(d) for that Distribution Date.
Class B-2 Applied Realized Loss Amount
--------------------------------------
As to the Class B-2 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class B-2 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the Class B-3
Applied Realized Loss Amount as of that Distribution Date.
Class B-2 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-4 and designated as a Class B-2
Certificate.
Class B-2 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the
Class Certificate Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on that
Distribution Date), (v) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on that Distribution Date), (vi) the Class Certificate
Balance of the Class B-1 Certificates (after taking into account the payment of
the Class B-1 Principal Distribution Amount on that Distribution Date) and (vii)
the Class Certificate Balance of the Class B-2 Certificates immediately prior to
that Distribution Date over (b) the
11
lesser of (i) the product of (A) 92.90% and (B) the Pool Principal Balance as of
the last day of the related Due Period and (ii) the Pool Principal Balance as of
the last day of the related Due Period minus the product of (A) 0.50% and (B)
the Cut-off Date Pool Principal Balance.
Class B-2 Realized Loss Amortization Amount
-------------------------------------------
As to the Class B-2 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class B-2 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (xxi)
of Section 4.02(d) for that Distribution Date.
Class B-3 Applied Realized Loss Amount
--------------------------------------
As to the Class B-3 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class B-3 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the Realized Loss Amount as
of that Distribution Date.
Class B-3 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-4 and designated as a Class B-3
Certificate.
Class B-3 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the
Class Certificate Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on that
Distribution Date), (v) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on that Distribution Date), (vi) the Class Certificate
Balance of the Class B-1 Certificates (after taking into account the payment of
the Class B-1 Principal Distribution Amount on that Distribution Date), (vii)
the Class Certificate Balance of the Class B-2 Certificates (after taking into
account the payment of the Class B-2 Principal Distribution Amount on that
Distribution Date) and (viii) the Class Certificate Balance of the Class B-3
Certificates immediately prior to that Distribution Date over (b) the lesser of
(i) the product of (A) 94.90% and (B) the Pool Principal Balance as of the last
day of the related Due Period and (ii) the Pool Principal Balance as of the last
day of the related Due Period minus the product of (A) 0.50% and (B) the Cut-off
Date Pool Principal Balance.
Class B-3 Realized Loss Amortization Amount
-------------------------------------------
As to the Class B-3 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class B-3 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (xxiv)
of Section 4.02(d) for that Distribution Date.
Class Certificate Balance
-------------------------
With respect to any Class of Offered Certificates and as to any
Distribution Date, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date. The Class Certificate Balance of the Class R
Certificates shall be zero.
12
Class Interest Shortfall
------------------------
As to any Distribution Date and any Class of Offered Certificates, the
amount by which the amount described in the definition of Interest Distribution
Amount for such Class exceeds the amount of interest actually distributed on
such Class on such Distribution Date.
Class M-1 Applied Realized Loss Amount
--------------------------------------
As to the Class M-1 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class M-1 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class
M-2 Applied Realized Loss Amount, the Class M-3 Applied Realized Loss Amount,
the Class M-4 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss
Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied
Realized Loss Amount, in each case as of that Distribution Date.
Class M-1 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-3 and designated as a Class M-1
Certificate.
Class M-1 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date) and (ii) the Class Certificate Balance of the Class M-1
Certificates immediately prior to that Distribution Date over (b) the lesser of
(i) the product of (A) 73.90% and (B) the Pool Principal Balance as of the last
day of the related Due Period and (ii) the Pool Principal Balance as of the last
day of the related Due Period minus the product of (A) 0.50% and (B) the Cut-off
Date Pool Principal Balance.
Class M-1 Realized Loss Amortization Amount
-------------------------------------------
As to the Class M-1 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class M-1 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (vi) of
Section 4.02(d) for that Distribution Date.
Class M-2 Applied Realized Loss Amount
--------------------------------------
As to the Class M-2 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class M-2 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class
M-3 Applied Realized Loss Amount, the Class M-4 Applied Realized Loss Amount,
the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss
Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that
Distribution Date.
Class M-2 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-3 and designated as a Class M-2
Certificate.
13
Class M-2 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date) and (iii) the Class Certificate
Balance of the Class M-2 Certificates immediately prior to that Distribution
Date over (b) the lesser of (i) the product of (A) 84.50% and (B) the Pool
Principal Balance as of the last day of the related Due Period and (ii) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (A) 0.50% and (B) the Cut-off Date Pool Principal Balance.
Class M-2 Realized Loss Amortization Amount
-------------------------------------------
As to the Class M-2 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class M-2 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (ix) of
Section 4.02(d) for that Distribution Date.
Class M-3 Applied Realized Loss Amount
--------------------------------------
As to the Class M-3 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class M-3 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class
M-4 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount,
the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized
Loss Amount, in each case as of that Distribution Date.
Class M-3 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-3 and designated as a Class M-3
Certificate.
Class M-3 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the M-2 Certificates (after taking into account the payment of the
Class M-2 Principal Distribution Amount on that Distribution Date) and (iv) the
Class Certificate Balance of the Class M-3 Certificates immediately prior to
that Distribution Date over (b) the lesser of (i) the product of (A) 87.20% and
(B) the Pool Principal Balance as of the last day of the related Due Period and
(ii) the Pool Principal Balance as of the last day of the related Due Period
minus the product of (A) 0.50% and (B) the Cut-off Date Pool Principal Balance.
Class M-3 Realized Loss Amortization Amount
-------------------------------------------
As to the Class M-3 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class M-3 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (xii)
of Section 4.02(d) for that Distribution Date.
14
Class M-4 Applied Realized Loss Amount
--------------------------------------
As to the Class M-4 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of all Principal Distribution Amounts on that Distribution
Date, but prior to the application of the Class M-4 Applied Realized Loss
Amount, if any, on that Distribution Date) and (b) the excess of (i) the
Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class
B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and
the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution
Date.
Class M-4 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit A-3 and designated as a Class M-4
Certificate.
Class M-4 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Senior Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the M-2 Certificates (after taking into account the payment of the
Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the
Class Certificate Balance of the Class M-3 Certificates (after taking into
account the payment of the Class M-3 Principal Distribution Amount on that
Distribution Date) and (v) the Class Certificate Balance of the Class M-4
Certificates immediately prior to that Distribution Date over (b) the lesser of
(i) the product of (A) 89.90% and (B) the Pool Principal Balance as of the last
day of the related Due Period and (ii) the Pool Principal Balance as of the last
day of the related Due Period minus the product of (A) 0.50% and (B) the Cut-off
Date Pool Principal Balance.
Class M-4 Realized Loss Amortization Amount
-------------------------------------------
As to the Class M-4 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class M-4 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (xv) of
Section 4.02(d) for that Distribution Date.
Class R Certificates
--------------------
The certificates representing the single "residual interest" in each of
REMIC 1 and REMIC 2, substantially in the form attached hereto as Exhibit B-1.
Class Unpaid Interest Amounts
-----------------------------
As to any Distribution Date and any Class of Offered Certificates, the
amount by which the aggregate Class Interest Shortfalls for such Class on prior
Distribution Dates exceeds the amount of Class Unpaid Interest Amounts
distributed on such Class on prior Distribution Dates plus interest on such
amount at the related Pass-Through Rate.
Class X Certificate
-------------------
Any Certificate executed and authenticated by the Trustee substantially
in the form attached hereto as Exhibit B-2 and designated as a Class X
Certificate.
15
Closing Date
------------
November 24, 0000
Xxxxxxx Xxxxx
-------------
The offices of Messrs. Stradley, Ronon, Xxxxxxx & Xxxxx, LLP, 0000 Xxx
Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
Code
----
The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collateral
----------
The assets constituting the Loans, Mortgage Files and the Trust Fund,
and any and all contractual, legal, equitable or other rights in connection
therewith, and all proceeds thereof (but not including payments of interest and
principal due and payable with respect to the Loans on or before the Cut-off
Date).
Collateral Value
----------------
With respect to any Loan, other than Refinance Loans, an amount equal
to the lesser of (a) the appraised value of the related Mortgaged Property based
on an appraisal obtained by the originator from an independent fee appraiser at
the time of the origination of such Loan, and (b) if the Loan was originated
either in connection with the acquisition of the Mortgaged Property by the
borrower or within one year after acquisition of the Mortgaged Property by the
borrower, the purchase price paid by such borrower for the Mortgaged Property.
In the case of Refinance Loans, the Collateral Value is the appraised value of
the Mortgaged Property based upon the appraisal obtained at the time of
refinancing.
Combined Loan-to-Value Ratio
----------------------------
With respect to any Loan and as to any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of such Loan at the date of origination plus, in the case of a Second
Lien Loan, the outstanding principal balance of the related first lien mortgage
loan on the date of origination of such Second Lien Loan, and the denominator of
which is the Collateral Value of the related Mortgaged Property.
Corporate Trust Office
----------------------
The designated office of the Trustee in the State of New York 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 Agreement is located at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (Attention: Institutional Trust Services/Global Debt, Popular ABS 2004-5,
facsimile number: 212-623-5930) and which is the address to which notices to and
correspondence with the Trustee should be directed.
Corresponding Class
-------------------
As defined in the Preliminary Statement.
Counterparty
------------
Wachovia Bank, National Association.
Custodial Agreement
-------------------
As defined in Section 8.13.
Custodian
---------
As defined in Section 8.13.
16
Cut-off Date
------------
October 31, 2004.
Cut-off Date Group I Principal Balance
--------------------------------------
The aggregate of the Cut-off Date Principal Balances of the Group I
Loans as of the close of business on the Cut-off Date (approximately
$418,637,676).
Cut-off Date Group II Principal Balance
---------------------------------------
The aggregate of the Cut-off Date Principal Balances of the Group II
Loans as of the close of business on the Cut-off Date (approximately
$183,047,487).
Cut-off Date Group II-A Principal Balance
-----------------------------------------
The aggregate of the Cut-off Date Principal Balances of the Group II-A
Loans as of the close of business on the Cut-off Date (approximately
$135,896,113).
Cut-off Date Group II-B Principal Balance
-----------------------------------------
The aggregate of the Cut-off Date Principal Balances of the Group II-B
Loans as of the close of business on the Cut-off Date (approximately
$47,151,374).
Cut-off Date Pool Principal Balance
-----------------------------------
The sum of the Cut-off Date Group I Principal Balance and the Cut-off
Date Group II Principal Balance (approximately $601,685,163).
Cut-off Date Principal Balance
------------------------------
As to any Loan, the Stated Principal Balance thereof as of the close of
business on the Cut-off Date.
Defective Loan
--------------
Any Loan which is required to be repurchased pursuant to Section 2.02
or 2.03.
Deficient Valuation
-------------------
With respect to any Loan, a valuation of the related Mortgaged Property
by a court of competent jurisdiction in an amount less than the then outstanding
principal balance of the Loan, which valuation results from a proceeding
initiated under the Bankruptcy Code.
Definitive Certificates
-----------------------
Any Certificate issued in lieu of a Book-Entry Certificate pursuant to
Section 5.02(e).
Deleted Loan
------------
As defined in Section 2.03(c).
Denomination
------------
With respect to each Offered Certificate, Class X Certificate or Class
R Certificate, the amount set forth on the face thereof as the "Initial
Certificate Balance of this Certificate" or the "Percentage Interest."
Depositor
---------
Popular ABS, Inc., a Delaware corporation, or its successor in
interest.
17
Depository
----------
The initial Depository shall be The Depository Trust Company, the
nominee of which is Cede & Co., as the registered Holder of the Book-Entry
Certificates. 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.
Depository Participant
----------------------
A broker, dealer, bank or other financial institution or other Person
for whom from time to time a Depository effects book-entry transfers and pledges
of securities deposited with the Depository.
Determination Date
------------------
As to any Distribution Date, the 21st day of each month or, if such day
is not a Business Day, the next preceding Business Day; provided, however, that
the Determination Date in each month will be at least two Business Days
preceding the related Distribution Date.
Distribution Account
--------------------
The separate Eligible Account created and maintained by the Trustee
pursuant to Section 3.05 in the name of the Trustee for the benefit of the
Certificateholders and designated "Distribution Account, JPMorgan Chase Bank,
N.A., as trustee for the registered holders of Popular ABS, Inc. Mortgage
Pass-Through Certificates, Series 2004-5." Funds in the Distribution Account
shall be held uninvested in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Distribution Account Deposit Date
---------------------------------
As to any Distribution Date, 9:00 a.m. New York City time on the
Business Day immediately preceding such Distribution Date.
Distribution Date
-----------------
The 25th day of each calendar month after the initial issuance of the
Certificates, or if such day is not a Business Day, the next succeeding Business
Day, commencing on December 27, 2004.
Due Date
--------
With respect to any Loan, the date on which scheduled payments of
interest and/or principal are due thereon, which date is a set day, but not
necessarily the first day, of each month.
Due Period
----------
With respect to any Distribution Date, the calendar month prior to the
month of such Distribution Date.
Eligible Account
----------------
Any of (a) an account or accounts maintained with a federal or state
chartered depository institution or trust company, the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (b) an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC (to the limits established by the FDIC) and the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders have a claim with respect to the funds in such
account or a perfected first priority 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 or trust company in which such account is maintained, or (c) a trust
account or accounts maintained with (i) the trust department of a federal or
state
18
chartered depository institution or (ii) a trust company, acting in its
fiduciary capacity or (d) any other account acceptable to each Rating Agency, as
evidenced by a letter from such Rating Agency to the Trustee, without reduction
or withdrawal of the then current ratings of the Certificates. Eligible Accounts
may bear interest, and may include, if otherwise qualified under this
definition, accounts maintained with the Trustee.
Equity One-Delaware
-------------------
Equity One, Inc., a Delaware corporation.
Equity One-Minnesota
--------------------
Equity One, Inc., a Minnesota corporation.
Equity One-New Hampshire
------------------------
Equity One Consumer Loan Company, Inc., a New Hampshire corporation.
Equity One-Pennsylvania
-----------------------
Equity One, Incorporated, a Pennsylvania corporation.
ERISA
-----
The Employee Retirement Income Security Act of 1974, as amended.
ERISA Qualifying Underwriting
-----------------------------
A best efforts or firm commitment underwriting or private placement
that meets the requirements (without regard to the ratings requirement or other
requirements that the securities or the investor must satisfy) of the
Underwriter Exemption, or any substantially similar administrative exemption
granted by the U.S. Department of Labor.
ERISA-Restricted Certificate
----------------------------
Any of the Class B-3 Certificates, Class X Certificates or Class R
Certificates; any Certificate of a Class that ceases to satisfy the applicable
rating requirements of the Underwriter Exemption.
Escrow Account
--------------
The Eligible Account or Eligible Accounts established and maintained by
the Servicer pursuant to Section 3.06(a).
Event of Default
----------------
As defined in Section 7.01.
Excess Proceeds
---------------
With respect to any Liquidated Loan, the amount, if any, by which the
sum of any Liquidation Proceeds of such Loan received in the calendar month in
which such Loan became a Liquidated Loan, net of any amounts previously
reimbursed to the Servicer as Nonrecoverable Advance(s) with respect to such
Loan pursuant to Section 3.08(a)(iii), exceeds (a) the unpaid principal balance
of such Liquidated Loan as of the Due Date in the calendar month in which such
Loan became a Liquidated Loan plus (b) accrued interest at the Mortgage Rate
from the Due Date as to which interest was last paid or advanced (and not
reimbursed) to Certificateholders up to the Due Date in the calendar month in
which such Loan became a Liquidated Loan.
Expense Rate
------------
As to each Loan, the sum of (a) the Servicing Fee Rate and (b) the
Trustee Fee Rate.
19
Extra Principal Distribution Amount
-----------------------------------
As of any Distribution Date, the lesser of (a) the Monthly Excess
Interest Amount for that Distribution Date and (b) the Overcollateralization
Deficiency for that Distribution Date.
FDIC
----
The Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC
-----
The Federal Home Loan Mortgage Corporation, 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.
FIRREA
------
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
Fitch
-----
Fitch Ratings or any successor thereto. For purposes of Section
10.05(b) the address for notices to Fitch shall be Fitch, Inc., 0 Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Backed
Securities Group, or such other address as Fitch may hereafter furnish to the
Depositor or the Servicer.
Fixed Class AF Cap
------------------
The Net WAC Cap with respect to the Class AF-2, Class AF-3, Class AF-4,
Class AF-5 and Class AF-6 Certificates.
FNMA
----
Xxxxxx Xxx, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
Group
-----
Any of the Group I Loans, the Group II Loans, the Group II-A Loans or
the Group II-B Loans, as the case may be.
Group I Interest Remittance Amount
----------------------------------
With respect to any Determination Date, the sum, without duplication,
of (a) all interest collected or advanced on the Group I Loans during the
related Due Period and (b) the portion of any Substitution Adjustment Amount,
Termination Price, Purchase Price, or Liquidation Proceeds, relating to interest
with respect to the Group I Loans and received during the related Due Period.
Group I Loans
-------------
The mortgage loans identified as such on the Loan Schedule.
Group II-A Interest Remittance Amount
--------------------------------------
With respect to any Determination Date, the sum, without duplication,
of (a) all interest collected or advanced on the Group II-A Loans during the
related Due Period and (b) the portion of any Substitution Adjustment Amount,
Termination Price, Purchase Price, or Liquidation Proceeds, relating to interest
with respect to the Group II-A Loans and received during the related Due Period.
Group II-A Trigger Event
------------------------
With respect to any Distribution Date, if (a) on any Distribution Date
prior to the Stepdown Date, the aggregate amount of Realized Losses incurred
since the Cut-off Date through the last
20
day of the related Due Period divided by the Cut-off Date Pool Principal Balance
exceeds 3.00% (or 3.25% if the Class Certificate Balances for the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no part of
that reduction was due to the application of Realized Losses) or (b) on any
Distribution Date on or after the Stepdown Date, a Trigger Event is in effect.
Group II-B Interest Remittance Amount
-------------------------------------
With respect to any Determination Date, the sum, without duplication,
of (a) all interest collected or advanced on the Group II-B Loans during the
related Due Period and (b) the portion of any Substitution Adjustment Amount,
Termination Price, Purchase Price, or Liquidation Proceeds, relating to interest
with respect to the Group II-B Loans and received during the related Due Period.
Group II Loans
--------------
The Group II-A Loans and the Group II-B Loans.
Group II-A Loans
----------------
The mortgage loans identified as such on the Loan Schedule.
Group II-B Loans
----------------
The mortgage loans identified as such on the Loan Schedule.
Group Principal Balance
-----------------------
With respect to any Distribution Date and any Group, the aggregate of
the Stated Principal Balances of the Loans in such Group that were Outstanding
Loans (including Loans in foreclosure and REO Properties) on their Due Dates in
the related Due Period.
Indirect Participant
--------------------
A broker, dealer, bank or other financial institution or other Person
that clears through or maintains a custodial relationship with a Depository
Participant.
Initial Certificate Account Deposit
-----------------------------------
As defined in Section 2.01(a).
Insurance Policy
----------------
With respect to any Loan included in the Trust Fund, any insurance
policy, and including all riders and endorsements thereto in effect, including
any replacement policy or policies for any Insurance Policies.
Insurance Proceeds
------------------
Proceeds paid by an insurer pursuant to any Insurance Policy, in each
case other than any amount included in such Insurance Proceeds in respect of
Insured Expenses.
Insured Expenses
----------------
Expenses covered by an Insurance Policy.
Interest Accrual Period
-----------------------
With respect to the Class AF-1, Class AV-1A, Class AV-1B, Class AV-2,
Class B-1, Class B-2 and Class B-3 Certificates and with respect to the
interests in REMIC 1 and REMIC 2, and any Distribution Date, the period
commencing on the Distribution Date in the calendar month prior to the month of
such Distribution Date (or on the Closing Date with respect to the first
Distribution Date) and ending on the day preceding such Distribution Date. With
respect to the Class AF-2, Class AF-3, Class
21
AF-4, Class AF-5, Class AF-6, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates and any Distribution Date, the calendar month preceding the month
of such Distribution Date.
Interest Distribution Amount
----------------------------
With respect to any Distribution Date and each Class of the Offered
Certificates, the amount of interest accrued during the related Interest Accrual
Period at the Pass-Through Rate for such Class on the related Class Certificate
Balance, reduced by such Class' pro rata share of the amount of (a) Net
Prepayment Interest Shortfalls and (b) Relief Act Reductions incurred on the
Loans during the related Due Period (each such Class' pro rata share to be based
on the amount of interest to which such Class would have been entitled
notwithstanding such Net Prepayment Interest Shortfalls and Relief Act
Reductions).
Investment Letter
-----------------
As defined in Section 5.02(b).
Latest Possible Maturity Date
-----------------------------
The Distribution Date following the third anniversary of the scheduled
maturity date of the Loan having the latest scheduled maturity date as of the
Cut-off Date.
Last Scheduled Distribution Date
--------------------------------
The Distribution Date in December 2034.
LIBOR
-----
As of any LIBOR Determination Date, the London interbank offered rate
for one-month United States dollar deposits which appears in the Dow Xxxxx
Telerate Page 3750 as of 11:00 a.m., London time, on that date. If the rate does
not appear on Dow Xxxxx Telerate Page 3750, the rate for that day will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m. (London time), on
that day to prime banks in the London interbank market. The Trustee will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two quotations are provided, the rate for
that day will be the arithmetic mean of the quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If fewer than two quotations
are provided as requested, the rate for that day will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Trustee in
consultation with the Servicer, at approximately 11:00 a.m. (New York City time)
on that day for loans in United States dollars to leading European banks.
LIBOR Determination Date
------------------------
With respect to any Interest Accrual Period for the Class AF-1, Class
AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2 and Class B-3 Certificates,
the second London business day preceding the commencement of such Interest
Accrual Period. For purposes of determining LIBOR, a "London business day" is
any day on which dealings in deposits of United States dollars are transacted in
the London interbank market.
Liquidated Loan
---------------
With respect to any Distribution Date, a defaulted Loan (including any
REO Property) that was liquidated in a calendar month preceding the month of
such Distribution Date and as to which the Servicer has determined (in
accordance with this Agreement) that it has received all amounts it expects to
receive in connection with the liquidation of such Loan, including the final
disposition of an REO Property.
22
Liquidation Proceeds
--------------------
Amounts, including Insurance Proceeds, received in connection with the
partial or complete liquidation of defaulted Loans, whether through trustee's
sale, foreclosure sale or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property other than Recoveries, less the
Servicing Amount applicable to such defaulted Loans.
Loans
-----
The Group I Loans and the Group II Loans.
Loan Schedule
-------------
As of any date, the list of Loans included in the Trust Fund on such
date, attached hereto as Schedule I (as from time to time amended by the
Servicer to reflect the addition of Substitute Loans and the deletion of Deleted
Loans pursuant to the provisions of this Agreement), setting forth the following
information with respect to each Loan:
(a) an indication that such Loan is a Group I Loan, Group II-A Loan or
Group II-B Loan;
(b) the loan number;
(c) the Mortgagor's name and the state in which the Mortgaged Property
is located, including the zip code;
(d) the maturity date;
(e) the Cut-off Date Principal Balance;
(f) the first payment date of the Loan;
(g) lien position (either first or second);
(h) the Scheduled Payment in effect as of the Cut-off Date;
(i) the current Mortgage Rate;
(j) the principal balance of the Loan at origination; and
(k) if applicable, the MIN assigned to such Loan.
Such schedule shall also set forth the total of the amounts described
under (e) above for the Group I Loans, the Group II-A Loans, the Group II-B
Loans and all of the Loans.
Majority in Interest
--------------------
As to each Class of Offered Certificates, the Holders of Certificates
of such Class evidencing, in the aggregate, at least 51% of the Percentage
Interests evidenced by all Certificates of such Class.
MERS (R)
--------
Mortgage Electronic Registration Systems, Inc., or its successors in
interest.
23
MERS (R) System
---------------
That certain electronic registry system maintained by MERSCORP, Inc.,
or its successors in interest.
MIN
---
The Mortgage Identification Number assigned by MERS (R) to a MOM Loan.
MOM Loan
--------
Any Loan as to which MERS (R) is acting as mortgagee solely as nominee
for the originator of such Loan and its successors and assigns.
Monthly Excess Cashflow Amount
------------------------------
The sum of the Monthly Excess Interest Amount, the
Overcollateralization Release Amount and the Remaining Principal Distribution
Amount.
Monthly Excess Interest Amount
------------------------------
As to any Distribution Date, an amount equal to any Remaining Interest
Remittance Amount remaining after the distributions set forth in clauses (iv)(A)
through (iv)(G) of Section 4.02(a).
Monthly Statement
-----------------
The statement prepared by the Trustee pursuant to Section 4.03.
Moody's
-------
Xxxxx'x Investors Service, Inc., or any successor thereto. For purposes
of Section 10.05(b) the address for notices to Moody's shall be Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Monitoring Department, or such other address as Moody's may
hereafter furnish to the Depositor or the Servicer.
Mortgage
--------
The mortgage, deed of trust or other instrument creating a first or
second lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
Mortgaged Property
------------------
The underlying property securing a Loan.
Mortgage File
-------------
The mortgage documents listed in Section 2.01 hereof pertaining to a
particular Loan and any additional documents delivered to the Trustee to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Note
-------------
The original executed note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Loan, together with any amendment or
modification thereto.
Mortgage Rate
-------------
The annual rate of interest borne by a Mortgage Note as set forth
therein.
Mortgagor
---------
The obligor(s) on a Mortgage Note.
24
Net Prepayment Interest Shortfalls
----------------------------------
As to any Distribution Date, the amount by which the aggregate of
Prepayment Interest Shortfalls during the related Due Period exceeds an amount
equal to the aggregate Servicing Fee for such Distribution Date before reduction
of the Servicing Fee in respect of such Prepayment Interest Shortfalls.
Net Principal Shortfall Amount
------------------------------
As to any Distribution Date, the amount by which (a) the sum of the
Class Certificate Balances of the Offered Certificates (calculated after giving
effect to all other distributions to the Offered Certificates for that
Distribution Date) exceeds (b) the Pool Principal Balance as of the end of the
related Due Period.
Net Realized Losses:
--------------------
For any Class of Subordinated Certificates or the Class AV-1B
Certificates and any Distribution Date, the excess of (a) the amount of
unreimbursed Realized Losses previously allocated to that Class over (b) the sum
of (i) the amount of any increases to the Class Certificate Balance of that
Class pursuant to Section 4.02A due to Recoveries and (ii) Realized Loss
Amortization Amounts previously distributed to such Class.
Net Recovery Realized Losses
----------------------------
For any Class of Subordinated Certificates or the Class AV-1B
Certificates and any Distribution Date, the excess of Net Realized Losses for
such Distribution Date over the Realized Loss Amortization Amount distributed to
that Class on that Distribution Date.
Net WAC Cap
-----------
As to any Distribution Date, the per annum rate equal to: (a) with
respect to the Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, the weighted average Adjusted Net Mortgage Rate of the Group I
Loans as of the first day of the Due Period relating to that Distribution Date,
weighted on the basis of the aggregate principal balance of the Group I Loans as
of the first day of the related Due Period (calculated on the basis of a 360-day
year made up of twelve 30-day months); (b) with respect to the Class AF-1
Certificates, the weighted average Adjusted Net Mortgage Rate of the Group I
Loans as of the first day of the Due Period relating to that Distribution Date,
weighted on the basis of the aggregate principal balance of the Group I Loans as
of the first day of the related Due Period (calculated on the basis of a 360-day
year and the actual number of days elapsed in the related Interest Accrual
Period), (c) with respect to the Class AV-1A and Class AV-1B Certificates, the
weighted average Adjusted Net Mortgage Rate of the Group II-A Loans as of the
first day of the Due Period relating to that Distribution Date, weighted on the
basis of the aggregate principal balance of the Group II-A Loans as of the first
day of the related Due Period (calculated on the basis of a 360-day year and the
actual number of days elapsed in the related Interest Accrual Period), (d) with
respect to the Class AV-2 Certificates, the weighted average Adjusted Net
Mortgage Rate of the Group II-B Loans as of the first day of the Due Period
relating to that Distribution Date, weighted on the basis of the aggregate
principal balance of the Group II-B Loans as of the first day of the related Due
Period (calculated on the basis of a 360-day year and the actual number of days
elapsed in the related Interest Accrual Period), (e) with respect to the Class
X-0, Xxxxx X-0, Class M-3 and Class M-4 Certificates, the lesser of (1) the
Fixed Class AF Cap or (2) the weighted average Adjusted Net Mortgage Rate of the
Loans as of the first day of the Due Period relating to that Distribution Date,
weighted on the basis of the aggregate principal balance of the Loans as of the
first day of the related Due Period (calculated on the basis of a 360-day year
made up of twelve 30-day months) and (f) with respect to the Class B-1, Class
B-2 and Class B-3 Certificates, the lesser of (1) the Adjustable Class AF Cap or
(2) the weighted average Adjusted Net Mortgage Rate of the Loans as of the first
day of the Due Period relating to that Distribution Date, weighted on the basis
of the aggregate principal balance of the Loans as of the first day of the
related Due Period (calculated on the basis of a 360-day year and the actual
number of days elapsed in the related Interest Accrual Period).
25
Net WAC Cap Account
-------------------
The account established and maintained pursuant to Section 3A.03.
Net WAC Cap Carryover
---------------------
With respect to the Class AF-1, Class AV-1A, Class AV-1B, Class AV-2,
Class B-1, Class B-2 and Class B-3 Certificates and any Distribution Date, the
sum of (a) the excess, if any, of the Interest Distribution Amount for such
Class for such Distribution Date, calculated at its Pass-Through Rate (without
regard to the applicable Net WAC Cap), over the actual Interest Distribution
Amount for such Class for such Distribution Date, and (b) any related Net WAC
Cap Carryover remaining unpaid from the prior Distribution Date, together with
interest accrued thereon at its Pass-Through Rate (without regard to the
applicable Net WAC Cap) during the related Interest Accrual Period.
Net WAC Cap Deposit Amount
--------------------------
As to any Distribution Date, an amount equal to the sum of (a) the
aggregate Net WAC Cap Carryover for such Distribution Date plus (b) the amount,
if any, needed to increase the aggregate amount on deposit in the Net WAC Cap
Account (after giving effect to all payments to be made pursuant to Section
4.02(f)) to $10,000.
Net WAC Rate
------------
As to any Distribution Date, a rate equal to the weighted average of
the Adjusted Net Mortgage Rates of all Outstanding Loans, such weighted average
to be calculated based on the principal balances of such Outstanding Loans as of
the first day of the related Due Period on the basis of either (a) a 360-day
year and the actual number of days elapsed in the related Interest Accrual
Period or (b) a 360-day year made up of twelve 30-day months, as applicable.
Nonrecoverable Advance
----------------------
Any portion of an Advance previously made or proposed to be made by the
Servicer that, in the good faith judgment of the Servicer, will not be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise.
Notice of Final Distribution
----------------------------
The notice to be provided pursuant to Section 9.02 to the effect that
final distribution on any of the Certificates shall be made only upon
presentation and surrender thereof.
Offered Certificates
--------------------
The certificates representing "regular interests" in REMIC 2, which are
designated as the Senior Certificates and the Subordinate Certificates.
Officer's Certificate
---------------------
A certificate (a) signed by the Chairman of the Board, the Vice
Chairman of the Board, the President, a Managing Director, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Depositor or the Servicer, or (b), if provided for in this Agreement, signed by
a Servicing Officer, as the case may be, and delivered to the Depositor and the
Trustee, as the case may be, as required by this Agreement.
Opinion of Counsel
------------------
A written opinion of counsel, who may be counsel for the Depositor or
the Servicer, including, in-house counsel, reasonably acceptable to the Trustee;
provided, however, that with respect to the interpretation or application of the
REMIC Provisions, such counsel must (a) in fact be independent of the Depositor
and the Servicer, (b) not have any direct financial interest in the Depositor or
the Servicer
26
or in any affiliate of either, and (c) not be connected with the Depositor or
the Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Optional Termination Date
-------------------------
The first Distribution Date following the date on which the Optional
Termination may be exercised by the Servicer.
Optional Termination
--------------------
The termination of the trust created hereunder in connection with the
purchase of the Loans pursuant to Section 9.01(a) hereof.
Original Loan
-------------
The mortgage loan refinanced in connection with the origination of a
Refinance Loan.
OTS
---
The Office of Thrift Supervision.
Outstanding
-----------
With respect to the Certificates as of any date of determination, all
Certificates theretofore executed and authenticated under this Agreement except
(a) Certificates theretofore canceled by the Trustee or delivered to the Trustee
for cancellation; and (b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Loan
----------------
As of any Due Date, a Loan with a Stated Principal Balance greater than
zero, which was not the subject of a Principal Prepayment in Full prior to such
Due Date and which did not become a Liquidated Loan prior to such Due Date.
Overcollateralization Amount
----------------------------
As of any Distribution Date, (a) the Pool Principal Balance as of the
last day of the immediately preceding Due Period minus (b) the aggregate Class
Certificate Balance of all Classes of Offered Certificates (after taking into
account all distributions of principal on that Distribution Date).
Overcollateralization Deficiency
--------------------------------
As of any Distribution Date, the excess, if any, of (a) the Targeted
Overcollateralization Amount for that Distribution Date over (b) the
Overcollateralization Amount for that Distribution Date, calculated for this
purpose after taking into account the reduction on that Distribution Date of the
Class Certificate Balances of all Classes of Offered Certificates resulting from
the distribution of the related Basic Principal Distribution Amount on that
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on that Distribution Date.
Overcollateralization Release Amount
------------------------------------
With respect to any Distribution Date on or after the Stepdown Date on
which a Trigger Event is not in effect, the lesser of (a) the Principal
Remittance Amount for that Distribution Date and (b) the excess, if any, of (i)
the Overcollateralization Amount for that Distribution Date, assuming that 100%
of the Principal Remittance Amount is applied as a principal payment on the
Certificates on that Distribution Date, over (ii) the Targeted
Overcollateralization Amount for that Distribution Date. With respect to any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Release Amount will be zero.
27
Ownership Interest
------------------
As to any Class R Certificate, any ownership 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.
Pass-Through Rate
-----------------
With respect to each Class of Certificates and each regular interest in
REMIC 1 and REMIC 2, as set forth in the Preliminary Statement.
Paying Agent
------------
JPMorgan Chase Bank, N.A. and its successors and, if a successor paying
agent is appointed hereunder, such successor.
Percentage Interest
-------------------
As to any Offered Certificate, the percentage interest evidenced
thereby in distributions required to be made to such Offered Certificate, such
percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class. With
respect to the Class X Certificates and the Class R Certificates, the
"Percentage Interest" specified on the face thereof.
Permitted Investments
---------------------
(a) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any state of the United
States or the District of Columbia receiving the highest long-term debt rating
of each Rating Agency rating the Offered Certificates, or such lower rating as
will not result in the downgrading or withdrawal of the ratings then assigned to
the Offered Certificates by each such Rating Agency; (c) commercial or finance
company paper which is then receiving the highest commercial or finance company
paper rating of each such Rating Agency, or such lower rating as will not result
in the downgrading or withdrawal of the ratings then assigned to the Offered
Certificates by each such Rating Agency; (d) certificates of deposit, demand or
time deposits, or bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long term
unsecured debt obligations of such depository institution or trust company (or
in the case of the principal depository institution in a holding company system,
the commercial paper or long-term unsecured debt obligations of such holding
company, but only if Xxxxx'x is not a Rating Agency) are then rated one of the
two highest long-term and the highest short-term ratings of each such Rating
Agency for such securities, or such lower ratings as will not result in the
downgrading or withdrawal of the rating then assigned to the Offered
Certificates by any such Rating Agency; (e) demand or time deposits or
certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC; (f)
guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Offered Certificates by any such Rating Agency;
(g) repurchase obligations with respect to any security described in clauses (a)
and (b) above, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (d) above; (h)
securities (other than stripped bonds, stripped coupons or instruments sold at a
purchase price in excess of 115% of the face amount thereof) bearing interest or
sold at a discount issued by any corporation incorporated under the laws of the
United States or any state thereof which, at the time of such investment, have
one of the two highest ratings of each such Rating Agency (except if the Rating
Agency is Moody's or S&P, the rating shall be the highest commercial paper
rating of Moody's or S&P, as applicable, for such securities), or such lower
rating as will not result in the downgrading or
28
withdrawal of the rating then assigned to the Offered Certificates by any such
Rating Agency, as evidenced by a signed writing delivered by each such Rating
Agency; (i) interests in any money market fund which at the date of acquisition
of the interests in the fund and throughout the time those interests are held in
the fund has the highest applicable rating of each such Rating Agency or such
lower rating as will not result in the downgrading or withdrawal of the ratings
then assigned to the Offered Certificates by each such Rating Agency; (j) short
term investment funds sponsored by any trust company or national banking
association incorporated under the laws of the United States or any state
thereof which on the date of acquisition has been rated by each such Rating
Agency in its highest applicable rating category or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned to the
Offered Certificates by each such Rating Agency; and (k) such other investments
having a specified stated maturity and bearing interest or sold at a discount
acceptable to each such Rating Agency as will not result in the downgrading or
withdrawal of the rating then assigned to the Offered Certificates by any Rating
Agency, as evidenced by a signed writing to such effect delivered by each such
Rating Agency; provided that no such instrument shall be a Permitted Investment
if such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument.
Permitted Transferee
--------------------
Any person other than (a) the United States, any State or political
subdivision thereof, or any agency or instrumentality of any of the foregoing,
(b) a foreign government, International Organization or any agency or
instrumentality of either of the foregoing, (c) an organization (except certain
farmers' cooperatives described in section 521 of the Code) which is exempt from
tax imposed by Chapter 1 of the Code (including the tax imposed by section 511
of the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(l) of the Code) with respect to any Class R
Certificate, (d) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (e) a Person that is not (i) a citizen or resident of
the United States, (ii) a corporation or partnership (or other entity properly
treated as a corporation or partnership for U.S. federal income tax purposes)
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States Persons have authority to control all substantial
decisions of the trust, unless such Person listed in clause (i), (ii), (iii) or
(iv) above has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI and (f) any other Person so designated by
the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Class R Certificate to such Person may cause any REMIC hereunder
to fail to qualify as one or more REMICs at any time that the Certificates are
outstanding. The terms "United States," "State" and "International Organization"
shall have the meanings set forth in section 7701 of the Code or successor
provisions. A corporation will not be treated as an instrumentality of the
United States or of any State or political subdivision thereof for these
purposes if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.
Person
------
Any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Plan
----
As defined in Section 5.02(b)
29
Pool Principal Balance
----------------------
With respect to any Distribution Date, the sum of the Group Principal
Balances for the Group I Loans and the Group II Loans.
Popular Financial
-----------------
Popular Financial Services, LLC, a Delaware limited liability company.
Popular Funding
---------------
Popular Financial Funding, LLC, a Delaware limited liability company.
Post-Stepdown Cross-collateralization Principal Distribution Amount
-------------------------------------------------------------------
With respect to any Distribution Date is an amount equal to the sum of
the Principal Distribution Amounts for all Groups remaining after giving effect
to the distributions set forth in clauses (i), (ii) and (iii) of Section 4.02(c)
hereof (capped at a maximum amount equal to the Senior Principal Distribution
Amount remaining after giving effect to the distributions set forth in clauses
(i), (ii) and (iii) of Section 4.02(c) hereof).
Post-Stepdown Remaining Principal Distribution Amount
-----------------------------------------------------
With respect to any Distribution Date is an amount equal to the sum of
the Principal Distribution Amounts for all Groups remaining after giving effect
to the distributions set forth in clauses (i), (ii), (iii) and (iv) of Section
4.02(c) hereof.
Pre-Stepdown Cross-collateralization Principal Distribution Amount
------------------------------------------------------------------
With respect to any Distribution Date is an amount equal to the sum
of the Principal Distribution Amounts for all Groups remaining after giving
effect to the distributions set forth in clauses (i), (ii) and (iii) of Section
4.02(b) hereof.
Pre-Stepdown Remaining Principal Distribution Amount
----------------------------------------------------
With respect to any Distribution Date is an amount equal to the sum of
the Principal Distribution Amounts for all Groups remaining after giving effect
to the distributions set forth in clauses (i), (ii), (iii) and (iv) of Section
4.02(b) hereof.
Prepayment Interest Excess
--------------------------
As to any Principal Prepayment on a Loan received by the Servicer
subsequent to its Due Date in the related Prepayment Period, all amounts paid by
the related Mortgagor in respect of interest on such Principal Prepayment that
are intended to cover the period on and after the Due Date. All Prepayment
Interest Excess shall be paid to the Servicer as additional servicing
compensation.
Prepayment Interest Shortfall
-----------------------------
As to any Distribution Date and any Principal Prepayment on a Loan
received by the Servicer on or before its Due Date in the related Prepayment
Period, the amount, if any, by which one month's interest at the related
Adjusted Mortgage Rate on such Principal Prepayment, exceeds the amount of
interest paid in connection with such Principal Prepayment.
Prepayment Period
-----------------
With respect to any Distribution Date, the calendar month prior to the
month of such Distribution Date.
Primary Mortgage Insurance Policy
---------------------------------
Each policy of primary mortgage guaranty insurance or any replacement
policy therefor with respect to any Loan.
30
Principal Distribution Amount
-----------------------------
With respect to any Distribution Date and any Group, the sum of (a) the
Basic Principal Distribution Amount for that Group for that Distribution Date
and (b) the product of the Extra Principal Distribution Amount for that
Distribution Date and the Allocation Percentage for that Group for that
Distribution Date.
Principal Prepayment
--------------------
Any payment of principal by a Mortgagor on a Loan that is received in
advance of its scheduled Due Date and is not accompanied by an amount
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment. Partial Principal Prepayments shall be
applied by the Servicer in accordance with the terms of the related Mortgage
Note.
Principal Prepayment in Full
----------------------------
Any Principal Prepayment made by a Mortgagor of the entire principal
balance of a Loan.
Principal Remittance Amount
---------------------------
As to any Distribution Date and any Group, the sum of (a) the principal
portion of each Scheduled Payment due on each Loan in that Group on such Loan's
Due Date in the related Due Period and received by the Servicer on or prior to
the related Determination Date, including any Advances with respect thereto, (b)
the Stated Principal Balance of each Loan in that Group that was sold or
repurchased by a Seller or the Servicer pursuant to this Agreement as of such
Distribution Date, (c) the Substitution Adjustment Amount in connection with any
Deleted Loan in that Group received with respect to such Distribution Date, (d)
any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of
principal of Loans in that Group that are not yet Liquidated Loans received
during the related Due Period, (e) with respect to each Loan in that Group that
became a Liquidated Loan during the related Due Period, the amount of
Liquidation Proceeds allocable to principal received during the related Due
Period with respect to such Loan, (f) all Principal Prepayments on Loans in that
Group received during the related Prepayment Period, (g) on the Distribution
Date on which the Trust Fund is to be terminated in accordance with Section 9.01
hereof that portion of the Termination Price allocable to principal of Loans in
that Group, and (h) all Recoveries relating to Liquidated Loans from that Group
received during the related Due Period, if any.
Prospectus Supplement
---------------------
The Prospectus Supplement dated November 18, 2004 relating to the
Publicly Offered Certificates.
Publicly Offered Certificates
-----------------------------
The Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
M-4, Class B-1 and Class B-2 Certificates.
Purchase Price
--------------
With respect to any Loan required to be repurchased by a Seller
pursuant to Section 2.02 or 2.03 hereof, or purchased or sold at the option of
the Servicer pursuant to Section 3.11 hereof, an amount equal to the sum of (a)
100% of the Stated Principal Balance of the Loan on the date of such purchase or
sale, (b) accrued interest thereon at the applicable Mortgage Rate (or at the
applicable Adjusted Mortgage Rate if (i) the purchaser or seller is the Servicer
or (ii) the purchaser is a Seller and Equity One-Delaware is the Servicer) from
the date through which interest was last paid by the Mortgagor or advanced (and
not reimbursed) by the Servicer to the Determination Date in the month in which
the Purchase Price is to be distributed to Certificateholders, and (c) any costs
and damages incurred by the Trust Fund in connection with such Loan prior to the
date of such purchase or sale.
00
XXXX 00-00
----------
As defined in Section 5.02(b).
Rating Agency
-------------
Xxxxx'x, S&P and Fitch. If any of these organizations or a successor
thereof is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable Person, as is
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss Amount
--------------------
With respect to each Distribution Date, the excess, if any, of (a) the
aggregate of the Class Certificate Balances of the Offered Certificates (after
giving effect to all distributions on such Distribution Date) over (b) the Pool
Principal Balance at the end of the related Due Period.
Realized Losses
---------------
With respect to any Distribution Date, the sum of (a) the aggregate
amount, if any, by which (i) the outstanding principal balance of each Loan that
became a Liquidated Loan during the related Due Period (such principal balance
determined immediately before such Loan became a Liquidated Loan) exceeds (ii)
the Liquidation Proceeds allocable to principal received during the related Due
Period in connection with the liquidation of such Loan which have not
theretofore been used to reduce the Stated Principal Balance of such Loan, and
(b) any Deficient Valuations.
Realized Loss Amortization Amount
---------------------------------
With respect to (a) the Class M-1 Certificates, the Class M-1 Realized
Loss Amortization Amount, (b) the Class M-2 Certificates, the Class M-2 Realized
Loss Amortization Amount, (c) the Class M-3 Certificates, the Class M-3 Realized
Loss Amortization Amount, (d) the Class M-4 Certificates, the Class M-4 Realized
Loss Amortization Amount, (e) the Class B-1 Certificates, the Class B-1 Realized
Loss Amortization Amount, (f) the Class B-2 Certificates, the Class B-2 Realized
Loss Amortization Amount, (g) the Class B-3 Certificates, the Class B-3 Realized
Loss Amortization Amount and (h) the Class AV-1B Certificates, the Class AV-1B
Realized Loss Amortization Amount.
Record Date
-----------
With respect to the Class AF-2, Class AF-3, Class AF-4, Class AF-5,
Class AF-6, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates and any
Distribution Date, the close of business on the last Business Day of the
calendar month immediately preceding such Distribution Date. With respect to the
Class AF-1, Class AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2 and Class
B-3 Certificates and any Distribution Date, the close of business on the
Business Day immediately preceding such Distribution Date.
Recovery
--------
With respect to any Distribution Date and Loan that became a Liquidated
Loan in a month preceding the month prior to the Distribution Date, an amount
received in respect of principal on such Loan which has previously been
allocated as a Realized Loss to a Class or Classes of Certificates, net of
reimbursable expenses.
Reference Banks
---------------
Any three (3) major banks engaged in transactions in Eurodollar
deposits in the international Eurocurrency market selected by the Trustee after
consultation with the Servicer.
32
Refinance Loan
--------------
Any Loan originated for the purpose of refinancing an existing mortgage
loan.
Relief Act
----------
The Servicemembers Civil Relief Act, as amended.
Relief Act Reductions
---------------------
With respect to any Distribution Date and any Loan as to which there
has been a reduction in the amount of interest collectible thereon for the most
recently ended calendar month as a result of the application of the Relief Act,
the amount, if any, by which (a) interest collectible on such Loan for the most
recently ended calendar month is less than (b) interest accrued thereon for such
month pursuant to the Mortgage Note without taking into account the application
of the Relief Act.
Remaining Interest Remittance Amount
------------------------------------
With respect to any Distribution Date, an amount equal to the sum of
any Group I Interest Remittance Amount, Group II-A Interest Remittance Amount
and Group II-B Interest Remittance Amount remaining after giving effect to the
distributions set forth in clauses (i), (ii) and (iii) of Section 4.02(a).
Remaining Principal Distribution Amount
---------------------------------------
With respect to any Distribution Date, the sum of (a) the Pre-Stepdown
Remaining Principal Distribution Amount remaining after the distributions set
forth in clauses (v)(A) through (v)(G) of Section 4.02(b) and (b) the
Post-Stepdown Remaining Principal Distribution Amount remaining after the
distributions set forth in clauses (v)(A) through (v)(G) of Section 4.02(c),
each for that Distribution Date.
REMIC
-----
A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC 1
-------
As defined in the Preliminary Statement.
REMIC 2
-------
As defined in the Preliminary Statement.
REMIC 1 Accrual Class
---------------------
As defined in the Preliminary Statement.
REMIC Change of Law
-------------------
Any proposed, temporary or final regulation, revenue ruling, revenue
procedure or other official announcement or interpretation relating to REMICs
and the REMIC Provisions issued after the Closing Date.
REMIC Provisions
----------------
Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of part
IV of subchapter M of chapter 1 of subtitle A of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be in
effect from time to time, as well as provisions of applicable state laws.
33
REO Property
------------
A Mortgaged Property acquired by the Trust Fund through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Loan.
Request for Release
-------------------
The Request for Release submitted by the Servicer to the Trustee,
substantially in the form of Exhibit J.
Required Insurance Policy
-------------------------
With respect to any Loan, any insurance policy that is required to be
maintained from time to time under this Agreement.
Reserve Fund
------------
The account established and maintained by the Trustee pursuant to
Section 3A.02.
Responsible Officer
-------------------
When used with respect to the Trustee, any officer assigned to the
Corporate Trust Division of the Trustee (or any successor thereto), including
any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement.
Rule 144A Letter
----------------
As defined in Section 5.02(b).
Scheduled Payment
-----------------
The scheduled monthly payment on a Loan due on any Due Date allocable
to principal and/or interest on such Loan.
Second Lien Loan
----------------
Any Loan secured by a mortgage that is second in lien priority.
Securities Act
--------------
The Securities Act of 1933, as amended.
Sellers
-------
Collectively, the following entities, their successors and assigns,
each in its capacity as a Seller of the Loans to the Depositor: Popular Funding;
Equity One-Delaware; Equity One-Pennsylvania; Equity One-Minnesota; Equity
One-New Hampshire and Popular Financial.
Senior Certificates
-------------------
The Class AF Certificates and the Class AV-1A, Class AV-1B and Class
AV-2 Certificates.
Senior Enhancement Percentage
-----------------------------
With respect to any Distribution Date, the percentage obtained by
dividing (a) the sum of (i) the aggregate Class Certificate Balance of the
Subordinate Certificates and (ii) the Overcollateralization Amount, in each case
before taking into account the distribution of the Principal Distribution
Amounts on that Distribution Date by (b) the Pool Principal Balance as of the
last day of the related Due Period.
34
Senior Principal Distribution Amount
------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the lesser of (a) the Principal
Distribution Amount and (b) the excess of (i) the sum of the Class Certificate
Balances of the Senior Certificates immediately prior to that Distribution Date
over (ii) the lesser of (A) the product of (x) 60.90% and (y) the Pool Principal
Balance as of the last day of the related Due Period and (B) the Pool Principal
Balance as of the last day of the related Due Period minus the product of (x)
0.50% and (y) the Cut-off Date Pool Principal Balance.
Senior Specified Enhancement Percentage
---------------------------------------
As of any date of determination thereof, 39.10%.
Servicer
--------
Equity One, Inc., a Delaware corporation, and its successors and
assigns, in its capacity as servicer hereunder.
Servicer Advance Date
---------------------
As to any Distribution Date, the 18th day of the month in which such
Distribution Date occurs, or if such day is not a Business Day, the next
succeeding Business Day.
Servicing Advances
------------------
All customary, reasonable and necessary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of a Mortgaged Property, (b) the foreclosure,
trustee's sale, or other liquidation of any Mortgage or Mortgaged Property, (c)
any expenses reimbursable to the Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (d) the management
and liquidation of any REO Property, (e) compliance with the obligations
described in Section 3.06 and (f) any payments made by the Servicer pursuant to
Section 3.09.
Servicing Amount
----------------
The sum of (a) the Servicing Fee, (b) unreimbursed Advances and (c)
unreimbursed Servicing Advances.
Servicing Fee
-------------
As to each Loan and any Distribution Date, an amount payable out of
each full payment of interest received on such Loan and equal to one-twelfth of
the Servicing Fee Rate multiplied by the Stated Principal Balance of such Loan
as of the Due Date in the month of such Distribution Date (prior to giving
effect to any Scheduled Payments due on such Loan on such Due Date), subject to
reduction as provided in Section 3.13.
Servicing Fee Rate
------------------
With respect to each Loan, 0.50% per annum.
Servicing Officer
-----------------
Any officer of the Servicer involved in, or responsible for, the
administration and servicing of the Loans whose name and facsimile signature
appear on a list of servicing officers furnished to the Trustee by the Servicer
on the Closing Date pursuant to this Agreement, as such list may from time to
time be amended.
S&P
---
Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. For purposes of Section 10.05(b) the address for notices to S&P
shall be Standard & Poor's Ratings
35
Services, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Surveillance, or such other address as S&P may hereafter
furnish to the Depositor and the Servicer.
Startup Day
-----------
The Closing Date.
Stated Principal Balance
------------------------
As to any Loan, the unpaid principal balance of such Loan as of its
most recent Due Date as specified in the amortization schedule at the time
relating thereto (before any adjustment to such amortization schedule by reason
of any moratorium or similar waiver or grace period) after giving effect to any
previous partial Principal Prepayments and Liquidation Proceeds allocable to
principal (other than with respect to any Liquidated Loan) and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment by
the related Mortgagor.
Stepdown Date
-------------
The earlier of (a) the Distribution Date on which the Class Certificate
Balances of the Senior Certificates have been reduced to zero or (b) the later
to occur of (i) the Distribution Date in December 2007 (the 37th Distribution
Date) or (ii) the first Distribution Date on which the Senior Enhancement
Percentage is greater than or equal to the Senior Specified Enhancement
Percentage.
Subordinate Certificates
------------------------
The Class M-1, Class M-2, Class M-3, Class M-4, Class B-1, Class B-2
and Class B-3 Certificates.
Subservicer
-----------
Any person to whom the Servicer has contracted for the servicing of all
or a portion of the Loans pursuant to Section 3.02.
Substitute Loan
---------------
A Loan substituted by a Seller for a Deleted Loan(s) which must, on the
date of such substitution, as confirmed in a Request for Release, substantially
in the form of Exhibit J, (a) have a Stated Principal Balance not in excess of,
and not more than 10% less than, the Stated Principal Balance(s) of the Deleted
Loans (such Stated Principal Balances to be measured as of the respective Due
Dates in the month of substitution); (b) have an interest rate that is
determined in the same manner as that of the Deleted Loans(s); (c) have a
Mortgage Rate not lower than, and not more than 1% per annum higher than, that
of the Deleted Loan(s); (d) have a Combined Loan-to-Value Ratio not higher than
that of the Deleted Loan(s); (e) have a debt to income ratio not higher than
that of the Deleted Loan(s); (f) have been originated pursuant to the same
underwriting standards as the Deleted Loan(s); (g) have a remaining term to
maturity not greater than, and not more than one year less than, that of the
Deleted Loan(s); and (h) comply, as of the date of substitution, with each
representation and warranty set forth or referred to in Section 2.03.
Substitution Adjustment Amount
------------------------------
The meaning ascribed to such term pursuant to Section 2.03.
Targeted Overcollateralization Amount
-------------------------------------
As of any Distribution Date, (a) prior to the Stepdown Date, the sum of
(i) 2.55% of the Cut-off Date Pool Principal Balance and (ii) the Aggregate
Class B Early Distribution Amount, and (b) on and after the Stepdown Date, the
lesser of (i) the sum of (A) 2.55% of the Cut-off Date Pool Principal Balance
and (B) the Aggregate Class B Early Distribution Amount and (ii) the greater of
(A) the excess of (I) 10.10% of the Pool Principal Balance as of the last day of
the related Due Period over (II) the excess
36
of (x) the sum of the Class Certificate Balances of the Class B-1, Class B-2 and
Class B-3 Certificates as of the Closing Date over (y) the aggregate of
distributions made in respect of principal to the Class B-1, Class B-2 and Class
B-3 Certificates on all prior Distribution Dates and (B) 0.50% of the Cut-off
Date Pool Principal Balance. With respect to any Distribution Date on which a
Trigger Event is in effect, the Targeted Overcollateralization Amount will be
equal to the Targeted Overcollateralization Amount for the immediately preceding
Distribution Date.
Tax Matters Person
------------------
The person designated as "tax matters person" in the manner provided
under Treasury regulation ss.1.860F-4(d) and temporary Treasury regulation
ss.301.6231(a)(7)-1T. Initially, the Tax Matters Person shall be the Trustee.
Tax Matters Person Certificate
------------------------------
The Class R Certificate with a Denomination of .00001%.
Termination Price
-----------------
As defined in Section 9.01.
Transfer
--------
Any direct or indirect transfer or sale of any Ownership Interest in a
Class R Certificate.
Transfer Affidavit
------------------
As defined in Section 5.02(c).
Transferor Certificate
----------------------
As defined in Section 5.02(b).
Trigger Event
-------------
With respect to any Distribution Date, if (a) the six-month rolling
average of 60+ Day Delinquent Loans equals or exceeds 42.00% of the Senior
Enhancement Percentage or (b) the aggregate amount of Realized Losses incurred
since the Cut-off Date through the last day of the related Due Period divided by
the Cut-off Date Pool Principal Balance exceeds the applicable percentages set
forth below with respect to that Distribution Date:
-------------------------------------------------------------------------------------------------------------------------
Distribution Date Occurring In Percentage
-------------------------------------------------------------------------------------------------------------------------
December 2007 - November 2008 3.00% (or 3.25% if the Class Certificate Balances of the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no
part of that reduction was due to the application of Realized Loss
Amounts) for the first month plus an additional 1/12th of 1.50% (or
1/12th of 2.00% if the Class Certificate Balances of the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no
part of that reduction was due to the application of Realized Loss
Amounts) for each month thereafter
-------------------------------------------------------------------------------------------------------------------------
December 2008 - November 2009 4.50% (or 5.25% if the Class Certificate Balances of the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no
part of that reduction was due to the application of Realized Loss
Amounts) for the first month plus an additional 1/12th of 0.75% (or
1/12th of 1.50% if the Class Certificate Balances of the Class B-1,
-------------------------------------------------------------------------------------------------------------------------
37
-------------------------------------------------------------------------------------------------------------------------
Distribution Date Occurring In Percentage
-------------------------------------------------------------------------------------------------------------------------
Class B-2 and Class B-3 Certificates have been reduced to zero and no part
of that reduction was due to the application of Realized Loss Amounts) for
each month thereafter
-------------------------------------------------------------------------------------------------------------------------
December 2009 - November 2010 5.25% (or 6.75% if the Class Certificate Balances of the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no
part of that reduction was due to the application of Realized Loss
Amounts) for the first month plus an additional 1/12th of 0.75% (or
1/12th of 1.00% if the Class Certificate Balances of the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no
part of that reduction was due to the application of Realized Loss
Amounts) for each month thereafter
-------------------------------------------------------------------------------------------------------------------------
December 2010 and thereafter 6.00% (or 7.75% if the Class Certificate Balances of the Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero and no
part of that reduction was due to the application of Realized Loss
Amounts)
-------------------------------------------------------------------------------------------------------------------------
Trustee
-------
JPMorgan Chase Bank, N.A. and its successors and, if a successor
trustee is appointed hereunder, such successor.
Trustee Fee
-----------
As to any Distribution Date, an amount equal to one-twelfth of the
Trustee Fee Rate multiplied by the Pool Principal Balance as of such
Distribution Date.
Trustee Fee Rate
----------------
With respect to each Loan, 0.02% per annum.
Trust Fund
----------
The corpus of the trust created hereunder consisting of (a) the Loans
and all interest and principal received, or receivable, on or with respect
thereto after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof and all interest and principal payments
on such Loans received prior to the Cut-off Date in respect of installments of
interest and principal due thereafter; (b) the Certificate Account, the
Distribution Account, the Net WAC Cap Account, the Reserve Fund and all amounts
deposited therein pursuant to the applicable provisions of this Agreement; (c)
property that secured a Loan and has been acquired by foreclosure, deed-in-lieu
of foreclosure or otherwise; (d) the Yield Maintenance Agreement and (e) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing.
Trustee Permitted Withdrawal Amount
-----------------------------------
Means an aggregate amount not to exceed (a) with respect to costs
associated with the transitioning of servicing, $75,000 per servicing transition
event and (b) with respect to amounts (other than the Trustee Fee) which are
payable to the Trustee pursuant to Section 8.05 hereof, $150,000 per annum.
Unpaid Realized Loss Amount
---------------------------
For any Class of Subordinate Certificates or the Class AV-1B
Certificates and as to any Distribution Date, the excess of (a) the cumulative
amount of Applied Realized Loss Amounts with
38
respect to that Class for all prior Distribution Dates over (b) the cumulative
amount of Realized Loss Amortization Amounts with respect to that Class for all
prior Distribution Dates.
Underwriter Exemption
---------------------
Prohibited Transaction Exemption 2002-41, 67 Fed Reg. 54487 (August 22,
2002), or any successor thereto.
Underwriters
------------
Greenwich Capital Markets, Inc. and Friedman, Billings, Xxxxxx & Co.,
Inc.
Voting Rights
-------------
The portion of the voting rights of all of the Certificates, which is
allocated to any Certificate. With respect to any date of determination, the
Offered Certificates shall be allocated 100% of all Voting Rights. The Voting
Rights allocated to each Class of the Offered Certificates shall be the
fraction, expressed as a percentage, the numerator of which is the Class
Certificate Balance of such Class then outstanding and the denominator of which
is the aggregate Stated Principal Balance of the Loans then outstanding. The
Voting Rights allocated to each Class of Certificates shall be allocated among
the Certificates of each such Class in accordance with their respective
Percentage Interests. The Class X and the Class R Certificates will not have any
Voting Rights.
Yield Maintenance Agreement
---------------------------
The Master Agreement (including the Schedule thereto and the
Transactions thereunder each evidenced by a Confirmation (each as defined in the
Yield Maintenance Agreement) dated as of November 24, 2004, by and between the
Counterparty and the Trustee not in its individual capacity, but solely as
trustee for the benefit of the Certificateholders of the Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5.
Yield Maintenance Stated Termination
------------------------------------
September 25, 2007 subject to the Following Business Day Convention (as
such term is defined in the Yield Maintenance Agreement).
ARTICLE II
CONVEYANCE OF LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Loans.
----------------------------------
(a) Subject to its substitution and repurchase obligations hereunder,
each Seller, concurrently with the execution and delivery hereof, hereby
irrevocably sells, transfers, grants, bargains, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest of
such Seller in and to that portion of the Loans listed on the Loan Schedule that
pertains to such Seller, including all interest and principal received or
receivable by such Seller on or with respect to such Loans after the Cut-off
Date and all interest and principal payments on such Loans received on or prior
to the Cut-off Date in respect of installments of interest and principal due
thereafter, but not including payments of principal and interest due and payable
on such Loans on or before the Cut-off Date. On or prior to the Closing Date,
each Seller shall deliver to the Depositor or, at the Depositor's direction, to
the Trustee or other designee of the Depositor, the Mortgage File for each Loan
listed in that portion of the Loan Schedule that pertains to such Seller. Such
delivery of the Mortgage Files shall be made against payment by the Depositor of
the purchase price, previously agreed to by such Seller and the Depositor, for
the
39
Loans listed on the Loan Schedule that pertain to such Seller. With respect to
any Loan that does not require the first payment of principal or interest
thereon to be made on or before such Loan's Due Date in the month prior to the
first Distribution Date, such Seller shall deposit into the Certificate Account
on the Closing Date, an amount equal to one month's interest at the related
Mortgage Rate on the Cut-off Date Principal Balance of such Loan (the "Initial
Certificate Account Deposit"). The Sellers, for the benefit of the Depositor,
shall, in connection with the conveyance described in this Section 2.01(a),
deliver to the Depositor on or prior to the Closing Date the financing
statements described in Schedule VI. The Sellers shall also arrange for the
delivery to the Depositor or its assignee, as applicable, of any appropriate
Uniform Commercial Code continuation statements as may be necessary in
connection with the financing statements referenced in the foregoing sentence.
(b) The Depositor, concurrently with the execution and delivery hereof,
hereby irrevocably sells, transfers, grants, bargains, assigns, sets over and
otherwise conveys to the Trustee for the benefit of the Certificateholders,
without recourse, all the right, title and interest of the Depositor in and to
the Trust Fund together with the Depositor's right to require the Sellers to
cure any breach of a representation or warranty made herein by the Sellers or to
repurchase or substitute for any affected Loan in accordance herewith. In
addition, the Depositor, for the benefit of the Trustee and the
Certificateholders, shall, in connection with the conveyance described in this
Section 2.01(b), deliver to the Trustee on or prior to the Closing Date the
financing statements described in Schedule VII. The Depositor shall also arrange
for the delivery to the Trustee of any appropriate Uniform Commercial Code
continuation statements as may be necessary in connection with the financing
statements referenced in the foregoing sentence.
(c) In connection with the sale, transfer and assignment set forth in
clause (b) above, the Depositor has delivered or caused to be delivered to the
Trustee or a Custodian for the Trustee on or before the Closing Date or shall
deliver or cause to be delivered to the Trustee or a Custodian for the Trustee
on or before such later date as is set forth below, for the benefit of the
Certificateholders the following documents or instruments with respect to each
Loan so sold, transferred and assigned:
(i) the original Mortgage Note endorsed (by manual or
facsimile signature) as follows: "Pay to the order of JPMorgan Chase
Bank, N.A. as trustee for the benefit of the Certificateholders of
Popular ABS, Inc. Mortgage Pass-Through Certificates Series 2004-5
without recourse," with all intervening endorsements and all riders and
modifications showing a complete chain of endorsement from the
originator to the Person endorsing it to the Trustee (each such
endorsement being sufficient to transfer all right, title and interest
of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note);
(ii) except as provided below, the original recorded Mortgage;
(iii) an original recorded assignment of the Mortgage (which
may be included in a blanket assignment or assignments), duly executed
by the appropriate Seller and the Depositor, which assignment will not
be delivered on or before the Closing Date, but shall be delivered
within the time period set forth in this Section 2.01, together with,
except as provided below, all interim recorded assignments of such
Mortgage, if any, all riders or modifications to such Mortgage, if any,
(each such assignment to be in recordable form and sufficient to effect
the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates, with the original to be
recorded by the Servicer as follows: the Servicer shall promptly send
such assignments for recording, and shall return the original recorded
assignment to the Trustee once returned as recorded by the applicable
recording office);
40
(iv) the original of each assumption,
modification, written assurance or substitution agreement,
if any; and
(v) except as provided below, the original or
duplicate original lender's title policy and all riders
thereto.
Notwithstanding the foregoing, in lieu of providing the documents
described in clause (iii) above, the Depositor may at its discretion provide
evidence that the related Mortgage is held through the MERS (R) System. With
respect to any MOM Loan, the original recorded Mortgage that is provided shall
note the MIN of such MOM Loan. Certain Mortgages were or may be, at the sole
discretion of the Servicer, originally recorded in the name of MERS (R), solely
as nominee for the applicable Seller and its successors or assigns; furthermore,
subsequent assignments of such Mortgages were or may be, at the sole discretion
of the Servicer, registered electronically through the MERS (R) System. For
certain other Loans, (i) the Mortgage was recorded in the name of the Seller,
(ii) record ownership was later assigned to MERS (R), solely as nominee for that
Seller, and (iii) subsequent assignments of the Mortgage were or may be, at the
sole discretion of the Servicer, registered electronically through the MERS (R)
System. For each of these Loans, MERS (R) serves as mortgagee of record on the
Mortgage solely as a nominee in an administrative capacity on behalf of the
Trustee, and does not have any beneficial interest in the Loan.
In the event that in connection with any Loan the Depositor cannot
deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments, if any, or (c) the lender's title policy (together with all riders
thereto) satisfying the requirements of clause (ii), (iii) or (v) above,
respectively, concurrently with the execution and delivery hereof because such
document or documents have not been returned from the applicable public
recording office in the case of clause (ii) or (iii) above, or because the title
policy has not been delivered to either the Servicer or the Depositor by the
applicable title insurer in the case of clause (v) above, and, in the case of
the assignments, if any, of the Mortgage to the Trustee as required under (iii)
above, the Depositor shall promptly deliver to the Trustee, in the case of
clause (ii) or (iii) above, such original recorded Mortgage or such original
recorded assignment, if any, as the case may be, with evidence of recording
indicated thereon upon receipt thereof from the public recording office, or a
copy thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery of the original recorded Mortgage and each
such original recorded assignment, if any, or a copy thereof, certified, if
appropriate, by the relevant recording office, and each title policy as required
by clause (v) above be made later than one year following the Closing Date;
provided, however, in the event the Depositor is unable to deliver within one
year following the Closing Date each original recorded Mortgage, and each such
original recorded assignment, if any, or each such title policy by reason of the
fact that any such documents have not been returned by the appropriate recording
office, or, in the case of each such assignment, if any, because the related
original recorded Mortgage or any related interim recorded assignment have not
been returned by the appropriate recording office or, in the case of each title
policy, because the title insurer has not received the recording information
from the appropriate recording office for such original recorded Mortgage or
original recorded assignment, if any, has not been returned by the appropriate
recording office, the Depositor shall deliver such documents to the Trustee as
promptly as possible upon receipt thereof and, in any event, within 720 days
following the Closing Date. The Depositor shall forward or cause to be forwarded
to the Trustee (a) from time to time additional original documents evidencing an
assumption or modification of a Loan and (b) any other documents required to be
delivered by the Depositor or the Servicer to the Trustee. In the event that the
original recorded Mortgage is not delivered and, in connection with the payment
in full of the related Loan, the public recording office requires the
presentation of a "lost instruments affidavit and indemnity" or any equivalent
document, because only a copy of the Mortgage can be delivered with the
instrument of satisfaction or reconveyance, the Servicer shall execute and
deliver or cause to be executed and delivered such a document to the public
recording office. In the case where a public recording office retains the
41
original recorded Mortgage or in the case where an original recorded Mortgage is
lost after recordation in a public recording office, the appropriate Seller
shall deliver to the Trustee a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
As promptly as practicable subsequent to such transfer and assignment,
and in any event, within thirty (30) days thereafter, the Servicer shall (i)
affix the Trustee's name to each assignment of Mortgage, if any, as the assignee
thereof as Trustee for the benefit of the Certificateholders, (ii) cause such
assignment, if any, to be in proper form for recording in the appropriate public
office for real property records and (iii) cause to be delivered for recording
in the appropriate public office for real property records the assignments, if
any, of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgages as to which the information required to prepare such
assignment in recordable form has not yet been received, the Servicer's
obligation to do so and to deliver the same for such recording shall be as soon
as practicable after receipt of such information and in any event within thirty
(30) days after receipt thereof.
In the case of Loans that have been prepaid in full as of the Closing
Date the Depositor, in lieu of delivering the above documents to the Trustee,
will deposit in the Certificate Account the portion of such payment that is
required to be deposited in the Certificate Account pursuant to Section 3.05
hereof.
(d) The Depositor, the Sellers, the Servicer and the Trustee understand
and agree that it is not intended that any Loan be included in the Trust Fund
that is a "High-Cost Home Loan" as defined by the Homeownership and Equity
Protection Act of 1994 or any other applicable predatory or abusive lending
laws.
SECTION 2.02. Acceptance by Trustee of the Loans.
-------------------------------------------------
The Trustee acknowledges receipt of the documents identified in the
initial certification in the form annexed hereto as Exhibit D and declares that
it holds and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets as are included in the Trust Fund, in trust for the exclusive use and
benefit of all present and future Certificateholders. The Trustee acknowledges
that it will maintain possession of the Mortgage Notes in the State of Texas,
unless otherwise permitted by the Rating Agencies. In the event that the Trustee
desires to maintain possession of the Mortgage Notes in a state (other than the
State of Texas) constituting one of the United States of America, the Trustee
shall, at least thirty (30) days prior to discontinuing possession of the
Mortgage Notes in the State of Texas, provide (i) a notice of such intention to
the Rating Agencies and the Sellers and (ii) an Opinion of Counsel stating that
such relocation of the Mortgage Notes and the possession by the Trustee of the
Mortgage Notes in such other state will not (a) destroy or impair the perfection
by the Trustee of the security interests assigned and granted to the Trustee
pursuant to the provisions of Section 10.04 or (b) subject any REMIC to any
state tax.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Servicer and the Sellers an initial certification in the form
annexed hereto as Exhibit D. Based on its review and examination, and only as to
the documents identified in such initial certification, the Trustee shall
acknowledge that such documents appear regular on their face and relate to the
Loans listed in the Loan Schedule or shall indicate any noted deviations. The
Trustee, at the time of delivery of the initial certification, shall be under no
duty or obligation (i) 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 in the real estate records or that they are other
than what they purport to be on their face or (ii) to determine whether the
Mortgage File shall
42
include any of the documents listed in Section 2.01(c), except for the Mortgage
Note. Should there be any exceptions to the Trustee's initial certification as
to the Mortgage Notes, the appropriate Seller shall have thirty (30) days from
the Closing Date to cure such exception or deliver a Mortgage File or Mortgage
Files for a Substitute Loan or Substitute Loans in accordance with Section
2.03(c). A Seller may cure an exception based on absence of a Mortgage Note for
a Loan by delivering an executed copy of an Affidavit of Lost Note in the form
attached as Annex I to Exhibit D hereto to the Trustee.
Not later than 90 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Servicer and the Sellers a final certification in
the form annexed hereto as Exhibit E, with any applicable exceptions noted
thereon. At any time upon request (but not more frequently than once per
calendar month), the Trustee shall deliver to the Depositor, the Servicer and
the Sellers, an updated schedule of open exceptions in electronic or written
format.
If the Trustee finds any document constituting a part of a Mortgage
File which does not meet the requirements of Section 2.01, the Trustee shall
list such as an exception in the final certification; provided, however that the
Trustee shall not make any determination as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or is sufficient to effect the assignment of
and transfer to the assignee thereof under the mortgage to which the assignment
relates. In performing any such review, the Trustee may conclusively rely on the
Depositor as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the Trustee's review of the Mortgage
Files is limited solely to confirming that the documents listed in Section
2.01(c) have been received and further confirming that any and all documents
delivered pursuant to Section 2.01(c) have been executed and relate to the Loans
identified in the Loan Schedule. The Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form, whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction. The appropriate Seller shall promptly correct or cure such defect
within 90 days from the date it was so notified of such defect and, if such
Seller does not correct or cure such defect within such period, such Seller
shall either (a) substitute for the related Loan a Substitute Loan, which
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03, or (b) purchase such Loan from the Trustee within 90
days from the date such Seller was notified of such defect in writing at the
Purchase Price of such Loan; provided, however, that in no event shall such
substitution or purchase occur more than 540 days from the Closing Date, except
that if the substitution or purchase of a Loan pursuant to this provision is
required by reason of a delay in delivery of any comments by the appropriate
recording office, and there is a dispute between either the Servicer or such
Seller and the Trustee over the location or status of the recorded document,
then such substitution or purchase shall occur within 720 days from the Closing
Date; provided, that any Loan that does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code shall be subject to a
substitution or repurchase as provided in Section 2.05(b) of this Agreement. The
Trustee shall deliver a report to each Rating Agency within 720 days from the
Closing Date indicating a list of all documents in each Mortgage File in the
possession of the Trustee. Any such substitution pursuant to (a) above or
purchase pursuant to (b) above shall not be effected prior to the delivery to
the Trustee of the Opinion of Counsel required by Section 2.05 hereof, if any,
and any substitution pursuant to (a) above shall not be effected prior to the
additional delivery to the Trustee of a Request for Release substantially in the
form of Exhibit J. No substitution is permitted to be made in any calendar month
after the Determination Date for such month. The Purchase Price for any such
Loan shall be deposited by such Seller in the Certificate Account on or prior to
the Distribution Account Deposit Date for the Distribution Date in the month
following the month of repurchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit J, the Trustee shall
release the related Mortgage File to such Seller and shall execute and deliver
at such Seller's request such instruments of transfer or assignment
43
prepared by such Seller, in each case without recourse, as shall be necessary to
vest in such Seller, or a designee, the Trustee's interest in any Loan released
pursuant hereto.
If, pursuant to the foregoing provisions, a Seller repurchases a Loan
that is registered on the MERS (R) System, the Servicer shall cause MERS (R) to
execute and deliver an assignment of the related Mortgage in recordable form to
transfer the Mortgage from MERS (R) to such Seller and shall cause such Mortgage
to be removed from registration on the MERS (R) System in accordance with MERS'
(R) rules and regulations or (ii) cause MERS (R) to designate on the MERS (R)
System the Seller as the beneficial holder of such Loan.
The Trustee shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
Mortgage File as come into the possession of the Servicer from time to time.
It is understood and agreed that the obligation of the appropriate
Seller to substitute for or to purchase any Loan which does not meet the
requirements of Section 2.01 above shall constitute the sole and exclusive
remedy respecting such defect available to the Trustee, the Depositor and any
Certificateholder against any Seller.
SECTION 2.03. Representations, Warranties and Covenants of the Sellers
----------------------------------------------------------------------
and the Servicer.
-----------------
(a) (i) Equity One-Delaware, Equity One-Pennsylvania, Equity
One-Minnesota, Equity One-New Hampshire, Popular Funding and Popular
Financial, in their capacities as Sellers, hereby make the
representations and warranties set forth in Schedules IIA through IIF
respectively, and by this reference incorporated herein, to the
Depositor and the Trustee, as of the Closing Date or if so specified
therein, as of the Cut-off Date; and
(ii) The Servicer hereby makes the representations and warranties
set forth in Schedule IIX, and by this reference incorporated herein,
to the Depositor and the Trustee, as of the Closing Date or if so
specified therein, as of the Cut-off Date.
(b) Equity One-Delaware, Equity One-Pennsylvania, Equity One-Minnesota,
Equity One-New Hampshire, Popular Funding and Popular Financial, in their
capacities as Sellers, hereby make the representations and warranties set forth
in Schedules IIIA through IIIF respectively, and by this reference incorporated
herein, to the Depositor and the Trustee, as of the Closing Date or if so
specified therein, as of the Cut-off Date.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(b) that materially and
adversely affects the interests of the Certificateholders in any Loan, the party
discovering such breach shall give prompt notice thereof to the other parties.
Each Seller, for itself and not jointly and severally for all other Sellers,
hereby covenants that within 90 days of the earlier of its discovery or its
receipt of written notice from any party of a breach of any representation or
warranty made pursuant to Section 2.03(b) with respect to any Loan listed on the
Loan Schedule that pertains to such Seller, such Seller may, and if such breach
materially and adversely affects the interests of the Certificateholders such
Seller shall, cure such breach in all material respects, and if such breach is
not so cured, may or shall, as the case may be, (i) if such 90-day period
expires prior to the second anniversary of the Closing Date, remove such Loan (a
"DELETED LOAN") from the Trust Fund and substitute in its place a Substitute
Loan, in the manner and subject to the conditions set forth in this Section or
(ii) repurchase the affected Loan or Loans from the Trustee at the Purchase
Price in the
44
manner set forth below; provided, however, that any such substitution pursuant
to (i) above shall not be effected prior to the delivery to the Trustee of the
Opinion of Counsel required by Section 2.05 hereof, if any, and any such
substitution pursuant to (i) above shall not be effected prior to the additional
delivery to the Trustee of a Request for Release substantially in the form of
Exhibit J and the Mortgage File for any such Substitute Loan. Notwithstanding
the preceding sentence, any Loan that does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code shall be subject to
substitution or repurchase as provided in Section 2.05(b) of this Agreement. The
appropriate Seller shall promptly reimburse the Servicer and the Trustee for any
expenses reasonably incurred by the Servicer or the Trustee in respect of
enforcing the remedies for such breach. With respect to the representations and
warranties described in this Section which are made to the best of a Seller's
knowledge, if it is discovered by either the Depositor, the appropriate Seller
or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Loan or the interests of the Certificateholders therein, notwithstanding
such Seller's lack of knowledge with respect to the substance of such
representation or warranty, such inaccuracy shall be deemed a breach by such
Seller of the applicable representation or warranty.
Notwithstanding any provision of the preceding paragraph to the
contrary, the parties agree that a breach of a representation or warranty set
forth in Section 47, 50, 51 or 57-62 of Schedules IIIA through IIIF shall be
deemed to materially and adversely affect the interests of the
Certificateholders in the related Loan and the related Seller shall be required
to repurchase or substitute for such Loan in accordance with the provisions of
this Section 2.03.
With respect to any Substitute Loan or Loans, such Seller shall deliver
to the Trustee for the benefit of the Certificateholders, the Mortgage Note, the
Mortgage, the related assignment of the Mortgage, if any, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note
endorsed and the Mortgage assigned as required by Section 2.01. No substitution
is permitted to be made in any calendar month after the Determination Date for
such month. Scheduled Payments due with respect to Substitute Loans in the month
of substitution shall not be part of the Trust Fund and will be retained by the
appropriate Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to the relevant Class will include the monthly
payment due on any Deleted Loan for such month and thereafter the appropriate
Seller shall be entitled to retain all amounts received in respect of such
Deleted Loan. The Servicer shall amend the Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Loan and the
substitution of the Substitute Loan or Loans and the Servicer shall deliver the
amended Loan Schedule to the Trustee. Upon such substitution, the Substitute
Loan or Loans shall be subject to the terms of this Agreement in all respects,
and the appropriate Seller shall be deemed to have made with respect to such
Substitute Loan or Loans, as of the date of substitution, the representations
and warranties made pursuant to Section 2.03(b). Upon any such substitution and
the deposit to the Certificate Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release the Mortgage File held for the benefit of
the Certificateholders relating to such Deleted Loan to the appropriate Seller
and shall execute and deliver at the appropriate Seller's direction such
instruments of transfer or assignment prepared by such Seller, in each case
without recourse, as shall be necessary to vest title in such Seller, or its
designee, with respect to the Trustee's interest in any Deleted Loan substituted
for pursuant to this Section 2.03.
For any month in which the appropriate Seller substitutes one or more
Substitute Loans for one or more Deleted Loans, the Servicer will determine the
amount (if any) by which the aggregate Stated Principal Balance of all such
Substitute Loans is less than the aggregate Stated Principal Balance of all such
Deleted Loans (such Stated Principal Balances to be measured as of the
respective Due Dates in the month of substitution). The amount of such shortage
(the "SUBSTITUTION ADJUSTMENT AMOUNT") plus an amount equal to the sum of (a)
the aggregate of any unreimbursed Advances with respect to such
45
Deleted Loans and (b) any costs and damages incurred by the Trust Fund in
connection with such Deleted Loan prior to the date of such substitution shall
be deposited in the Certificate Account by such Seller on or before the
Distribution Account Deposit Date for the Distribution Date in the month
following the month during which the related Loan became required to be
purchased or replaced hereunder.
In the event that the appropriate Seller shall have repurchased a Loan,
the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.05 on or before the Distribution Account Deposit Date for
the Distribution Date in the month following the month during which such Seller
became obligated hereunder to repurchase or replace such Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05 and receipt of a Request for Release in the form of Exhibit J,
the Trustee shall release the related Mortgage File held for the benefit of the
Certificateholders to such Seller, and the Trustee shall execute and deliver at
such Seller's direction such instruments of transfer or assignment prepared by
such Seller, in each case without recourse, as shall be necessary to transfer
title from the Trustee. It is understood and agreed that the obligation under
this Agreement of any Seller to cure, repurchase or replace any Loan as to which
a breach of a representation or warranty has occurred and is continuing shall
constitute the sole and exclusive remedy against such Sellers respecting such
breach of a representation and warranty available to Certificateholders, the
Depositor or the Trustee on their behalf.
(d) The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Mortgage Files to the Trustee for
the benefit of the Certificateholders.
SECTION 2.03A. Additional Obligations of Equity One-Delaware.
-------------------------------------------------------------
(a) In addition to the representations and warranties made by Equity
One-Delaware in its capacity as a Seller, as described in Section 2.03 and set
forth in Schedules IIA and IIIA, Equity One-Delaware hereby represents and
warrants to the Depositor and the Trustee that all of the representations and
warranties of the other Sellers described in Section 2.03 and set forth in
Schedules IIB through IIF and IIIB through IIIF are true and accurate in all
respects.
(b) Equity One-Delaware hereby covenants that it shall comply with the
repurchase and substitution obligations described in Section 2.02 and 2.03 in
the event that (i) a breach of any of the representations and warranties set
forth in Schedules IIIB through IIIF occurs and (ii) the related Seller defaults
on its repurchase and substitution obligations under Sections 2.02 and 2.03.
SECTION 2.04. Representations and Warranties of the Depositor as to the
-----------------------------------------------------------------------
Loans
-----
The Depositor hereby represents and warrants to the Trustee with
respect to each Loan that as of the Closing Date, and following the transfer of
the Loans to it by the Sellers, the Depositor had good title to the Loans and
the Mortgage Notes were subject to no offsets, defenses or counterclaims.
The Depositor, concurrently with the execution and delivery hereof,
hereby irrevocably sells, transfers, assigns, sets over, grants, bargains and
otherwise conveys to the Trustee for the benefit of the Certificateholders,
without recourse, all of its rights, title and interest with respect to the
Loans including, without limitation, the representations and warranties of the
Sellers made pursuant to Sections 2.03(a) and 2.03(b) hereof, together with all
rights of the Depositor to require any applicable Seller to cure any breach
thereof or to repurchase or substitute for any affected Loan in accordance with
this Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee. Upon discovery by the Depositor or the
46
Trustee of a breach of any of the foregoing representations and warranties set
forth in this Section 2.04, which breach materially and adversely affects the
interest of the Certificateholders, the party discovering such breach shall give
prompt written notice to the other parties and to each Rating Agency.
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
---------------------------------------------------------------
Substitutions.
--------------
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made more than 90
days after the Closing Date unless the appropriate Seller delivers to the
Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of either the Trustee or the Trust Fund, addressed to the Trustee, to
the effect that such substitution will not (i) result in the imposition of the
tax on "prohibited transactions" on the Trust Fund or contributions after the
Startup Day, as defined in Sections 860F(a)(2) and 860G(d) of the Code,
respectively, and/or (ii) cause the Trust Fund to fail to qualify as one or more
REMICs at any time that any Certificates are outstanding.
(b) Upon discovery by the Depositor, the appropriate Seller, the
Servicer or the Trustee that any Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering such
fact shall promptly (and in any event within five (5) Business Days of
discovery) give written notice thereof to the other parties. In connection
therewith, the Trustee shall require the appropriate Seller, at such Seller's
option, to either (i) substitute, if the conditions in Section 2.03(c) with
respect to substitutions are satisfied, a Substitute Loan for the affected Loan
within 90 days from the discovery or (ii) repurchase the affected Loan within 90
days of such discovery in the same manner as it would repurchase a Loan for a
breach of representation or warranty made pursuant to Section 2.03. The Trustee
shall reconvey to such Seller the Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would release a Loan
repurchased for breach of a representation or warranty contained in Section
2.03.
SECTION 2.06. Execution and Delivery of Certificates.
-----------------------------------------------------
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment and in payment
therefor, has executed and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing directly or indirectly the
entire ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund
and exercise the rights referred to above for the benefit of all present and
future Certificateholders and to perform the duties set forth in this Agreement
to the best of its ability, to the end that the interests of the
Certificateholders may be adequately and effectively protected.
SECTION 2.07. REMIC Matters.
----------------------------
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. The "tax matters person" with respect to each REMIC created
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters Person
Certificate. The Trust Fund's fiscal year shall be the calendar year and, for
purposes of section 860C of the Code, the taxable income of each REMIC created
hereunder shall be computed under an accrual method of accounting.
The Trustee shall treat each of the Net WAC Cap Account and the Reserve
Fund as a separate and distinct outside reserve fund within the meaning of
ss.1.860G-2(h) of the Income Tax Regulations. Neither the Net WAC Cap Account,
the Reserve Fund nor the Yield Maintenance Agreement shall be treated as an
asset of any REMIC. The Trustee shall treat the rights of the Holders of
47
the Class AF-1, Class AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2 and
Class B-3 Certificates to receive payments in respect of Net WAC Cap Carryover
as rights in a limited recourse interest rate cap contract. The Holders of the
Class X Certificates will own each of the Net WAC Cap Account and the Reserve
Fund. The Class AF-1, Class AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2
and Class B-3 Certificates shall be treated as representing ownership of not
only a regular interest in a REMIC but also ownership of an interest in an
interest rate cap contract.
The Trustee shall treat the payment of any Net WAC Cap Carryover as
paid first to the Class X Certificates, deposited by the Class X Holders in the
Net WAC Cap Account and then paid from the Net WAC Cap Account to the relevant
Offered Certificates. The Trustee shall treat the Offered Certificates as
"contractual rights coupled with regular interests" within the meaning of
ss.1.860G-2(i) of the Income Tax Regulations. In determining the issue price of
the regular interests issued to Holders of Offered Certificates, the Trustee
shall assume that each interest rate cap contract has a value of $10,000.
SECTION 2.08. Covenants of the Servicer.
----------------------------------------
The Servicer hereby covenants to the Depositor and the Trustee as
follows:
(a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any affiliate
of the Depositor or the Trustee and prepared by the Servicer pursuant to this
Agreement will contain any untrue statement of a material fact or omit to state
a material fact necessary to make such information, certificate, statement or
report not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING
OF LOANS
SECTION 3.01. Servicer to Service Loans.
----------------------------------------
For and on behalf of the Certificateholders, the Servicer shall service
and administer the Loans in accordance with the terms of this Agreement and
customary and usual standards of practice of prudent mortgage loan servicers. In
connection with such servicing and administration, the Servicer shall have full
power and authority, acting alone and/or through Subservicers as provided in
Section 3.02 hereof, to do or cause to be done any and all things that it may
deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof, (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and Recoveries and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Loan; provided that the Servicer shall not take any action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Loan or the rights and interests of the Depositor, the
Trustee and the Certificateholders under this Agreement. The Servicer shall
represent and protect the interests of the Trust Fund in the same manner as it
protects its own interests in mortgage loans in its own portfolio in any claim,
proceeding or litigation regarding a Loan, and shall not make or permit any
modification, waiver or amendment of any Loan which would cause the Trust Fund
to
48
fail to qualify as one or more REMICs or result in the imposition of any tax
under Section 860F(a) or Section 860G(d) of the Code. Without limiting the
generality of the foregoing, the Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Servicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by either or both of them as are
necessary or appropriate to enable the Servicer to service and administer the
Loans to the extent that the Servicer is not permitted to execute and deliver
such documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer. In addition, upon the request of the Servicer from
time to time the Trustee shall execute and deliver to the Servicer one or more
powers of attorney in the form attached hereto as Exhibit M.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
-------------------------------------------------------------
Servicers.
----------
(a) The Servicer may arrange for the subservicing of any Loan by a
Subservicer pursuant to a subservicing agreement; provided, however, that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Loans in a manner consistent with the
servicing arrangements contemplated hereunder. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer on behalf of the Servicer. Notwithstanding the provisions of any
subservicing agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Subservicer or reference
to actions taken through a Subservicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Loans. All actions of each Subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Servicer with the
same force and effect as if performed directly by the Servicer. Each
subservicing agreement, if any, shall provide that any successor servicer
(including, without limitation, the Trustee acting in such capacity) shall have
the right to terminate such subservicing agreement without the payment of any
fees or other amounts to the subservicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the Loans
that are received by a Subservicer regardless of whether such payments are
remitted by the Subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
-----------------------------------------------------------------------
Servicer.
---------
The Depositor may, but is not obligated to, enforce the obligations of
the Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Servicer hereunder and in
connection with any such defaulted obligation to exercise the related rights of
the Servicer hereunder; provided that the Servicer shall not be relieved of any
of its obligations hereunder by virtue of such performance by the Depositor or
its designee. Neither the Trustee nor the Depositor shall have any
responsibility or liability for any action or failure to act by the Servicer nor
shall the Trustee or the Depositor be obligated to supervise the performance of
the Servicer hereunder or otherwise.
49
SECTION 3.04. Trustee to Act as Servicer.
-----------------------------------------
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.09 hereof or any acts or
omissions of the predecessor Servicer hereunder, (ii) obligated to make Advances
if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Loans hereunder including, but not
limited to, repurchases or substitutions of Loans pursuant to Section 2.02 or
2.03 hereof, (iv) responsible for expenses of the Servicer pursuant to Section
2.03 or (v) deemed to have made any representations and warranties of the
Servicer hereunder). Any such assumption shall be subject to Section 7.02
hereof. If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee or its successor
shall succeed to any rights and obligations of the Servicer under each
subservicing agreement.
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement or substitute subservicing agreement and the
Loans then being serviced thereunder 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 substitute subservicing agreement to the assuming
party.
SECTION 3.05. Collection of Loan Payments; Certificate Account;
---------------------------------------------------------------
Distribution Account.
---------------------
(a) The Servicer shall make reasonable efforts in accordance with the
customary and usual standards of practice of prudent mortgage servicers to
collect all payments called for under the terms and provisions of the Loans to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charge
or any prepayment charge or penalty interest in connection with the prepayment
of a Loan and (ii) extend the due dates for payments due on a Mortgage Note for
a period not greater than 180 days; provided, however, that the Servicer cannot
extend the maturity of any such Loan past the date on which the final payment is
due on the latest maturing Loan as of the Cut-off Date. In the event of any such
arrangement, the Servicer shall make Advances on the related Loan in accordance
with the provisions of Section 4.01 during the scheduled period in accordance
with the amortization schedule of such Loan without modification thereof by
reason of such arrangements. The Servicer shall not be required to institute or
join in litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law.
(b) The Servicer shall establish and maintain a Certificate Account
into which the Servicer shall deposit or cause to be deposited within one
Business Day of receipt, except as otherwise specifically provided herein, the
following payments and collections remitted by Subservicers or received by it in
respect of the Loans subsequent to the Cut-off Date (other than in respect of
principal and interest due on the Loans on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Loans,
including Principal Prepayments;
50
(ii) all payments on account of interest on the Loans, net of
the related Servicing Fee;
(iii) all Insurance Proceeds and Liquidation Proceeds, other
than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures, and all Recoveries;
(iv) any amount required to be deposited by the Servicer
pursuant to Section 3.05(d) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.09(c) and, in respect of net monthly rental
income from REO Property, pursuant to Section 3.11 hereof;
(vi) all Substitution Adjustment Amounts;
(vii) all Advances made by the Servicer pursuant to Section
4.01; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, late payment
charges or assumption fees, if collected, need not be remitted by the Servicer.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time withdraw or direct the institution maintaining the
Certificate Account to withdraw such amount from the Certificate Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the Trustee or such
other institution maintaining the Certificate Account which describes the
amounts deposited in error in the Certificate Account. The Servicer shall
maintain adequate records with respect to all withdrawals made pursuant to this
Section. All funds deposited in the Certificate Account shall be held in trust
for the Certificateholders until withdrawn in accordance with Section 3.08.
(c) The Trustee shall establish and maintain, for the benefit of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Servicer to the
Trustee pursuant to Section 3.08(a)(ix); and
(ii) any other amounts deposited hereunder which are required
to be deposited in the Distribution Account.
In the event that the Servicer shall remit any amount not required to
be remitted, it may at any time direct the Trustee to withdraw such amount from
the Distribution Account, any provision herein to the contrary notwithstanding.
Such direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee uninvested in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Servicer.
51
(d) Each institution at which the Certificate Account is maintained
shall invest the funds therein as directed in writing by the Servicer in
Permitted Investments, which shall mature not later than, the second Business
Day next preceding the Distribution Account Deposit Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
account or a fund for which such institution or affiliate thereof serves as an
investment advisor, administrator, shareholder servicing agent and/or custodian
or subcustodian, then such Permitted Investment shall mature not later than the
Business Day next preceding such Distribution Account Deposit Date) and shall
not be sold or disposed of prior to its maturity. All such Permitted Investments
shall be made in the name of the Trustee, for the benefit of the
Certificateholders. So long as no Event of Default shall have occurred and be
continuing, all income and gain net of any losses realized from any such
investment of funds on deposit in the Certificate Account shall be for the
benefit of the Servicer as servicing compensation and shall be remitted to it
monthly as provided herein. If an Event of Default has occurred and is
continuing, all income and gain net of any losses realized from Permitted
Investments made with funds on deposit in the Certificate Account shall be
deposited into the Certificate Account without right of reimbursement. The
amount of any realized losses in the Certificate Account in respect of any such
investments shall promptly be deposited by the Servicer (from its own funds) in
the Certificate Account. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of any investment or lack
of investment of funds held in the Certificate Account and made in accordance
with this Section 3.05.
(e) The Servicer shall give notice to the Trustee, each Seller, each
Rating Agency and the Depositor of any proposed change of the location of the
Certificate Account prior to any change thereof. The Trustee shall give notice
to the Servicer, each Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Distribution Account prior to any change
thereof.
SECTION 3.06. Payment of Taxes, Assessments, Hazard Insurance Premiums
----------------------------------------------------------------------
and Similar Items; Escrow Accounts.
-----------------------------------
(a) The Servicer shall require Mortgagors to pay all taxes,
assessments, hazard insurance premiums, flood insurance premiums, condominium
association dues or comparable items for the account of the Mortgagors. To the
extent required by the Seller at the time the related Loan was originated and
not violative of current law, the Servicer shall establish and maintain one or
more accounts (each, an "ESCROW ACCOUNT") and deposit and retain therein all
collections from the Mortgagors (or advances by the Servicer) for the payment of
taxes, assessments, hazard insurance premiums, condominium association dues or
comparable items for the account of the Mortgagors. Nothing herein shall require
the Servicer to compel a Mortgagor to establish an Escrow Account in violation
of applicable law or if the Seller of the related Loan did not require the
establishment of an Escrow Account at the time the Loan was originated.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.09 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums determined to be overages, to pay interest, if required by law or the terms
of the related Mortgage or Mortgage Note, to Mortgagors on balances in the
Escrow Account or to clear and terminate the Escrow Account at the termination
of this Agreement in accordance with Section 9.01 hereof. The Escrow Accounts
shall not be a part of the Trust Fund.
(b) The Servicer shall advance any payments referred to in Section
3.06(a) that are not timely paid by the Mortgagors on the date when the tax,
premium or other cost for which such payment is intended is due, but the
Servicer shall be required so to advance only to the extent that such
52
advances, in the good faith judgment of the Servicer, are required to be made to
protect the lien of the Mortgage and will be recoverable by the Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise. The amount of any such
advances made by the Servicer for the purpose of maintaining any hazard or flood
insurance shall not, for the purpose of calculating monthly distributions to the
Certificateholders or remittances to the Trustee for their benefit, be added to
the principal balance of the related Loan, notwithstanding that the terms of the
Loan so permit. Any advance made by the Servicer pursuant to this Section 3.06
shall be recoverable as a Servicing Advance to the extent permitted by Section
3.08.
SECTION 3.07. Access to Certain Documentation and Information Regarding
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the Loans.
----------
(a) The Servicer shall afford the Depositor, the Trustee and each
Rating Agency reasonable access to all records and documentation regarding the
Loans and all accounts, insurance information and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated by the
Servicer.
(b) Upon reasonable advance notice in writing, the Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and reasonable access to information and
documentation regarding the Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the OTS or other regulatory authorities
with respect to investment in the Certificates; provided that the Servicer shall
be entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Certificate Account and
--------------------------------------------------------------------
Distribution Account.
---------------------
(a) The Servicer may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously
retained by the Servicer) the servicing compensation to which it is
entitled pursuant to Section 3.13, and, subject to Section 3.05(d), to
pay to the Servicer, as additional servicing compensation, earnings on
or investment income with respect to funds in or credited to the
Certificate Account;
(ii) to reimburse the Servicer for unreimbursed Advances made
by it, such right of reimbursement pursuant to this subclause (ii)
being limited to amounts received on the Loan(s) in respect of which
any such Advance was made, excluding any Purchase Price proceeds
received from the Servicer pursuant to Section 3.11 and subject to
Section 9.01;
(iii) to reimburse the Servicer for any Nonrecoverable Advance
previously made, except that the Servicer shall no longer be entitled
to reimbursement for any Nonrecoverable Advance on a Loan as of the
date the Servicer purchases such Loan from the Trust Fund pursuant to
Section 3.11 or Section 9.01;
(iv) to reimburse the Servicer for Insured Expenses from the
related Insurance Proceeds;
(v) to reimburse the Servicer for (a) unreimbursed Servicing
Advances, the Servicer's right to reimbursement pursuant to this clause
(a) with respect to any Loan being limited to amounts received on such
Loan(s) which represent late recoveries of the payments for
53
which such Servicing Advances were made pursuant to Section 3.01 or
Section 3.06 and (b) for unpaid Servicing Fees as provided in Section
3.11 hereof;
(vi) to pay to the purchaser, with respect to each Loan or
property acquired in respect thereof that has been purchased pursuant
to Section 2.02, 2.03 or 3.11, all amounts received thereon after the
date of such purchase;
(vii) to (A) reimburse the Sellers, the Servicer or the
Depositor for expenses incurred by any of them that are reimbursable
pursuant to Section 6.03 hereof or (B) to pay to the Trustee any
Trustee Permitted Withdrawal Amounts;
(viii) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the Available Funds for such Distribution
Date and remit such amounts to the Trustee for deposit in the
Distribution Account; and
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
The Servicer shall keep and maintain separate accounting, on a Loan by
Loan basis, for the purpose of justifying any withdrawal from the Certificate
Account pursuant to such subclauses (i), (ii), (iv), (v) and (vi). Prior to
making any withdrawal from the Certificate Account pursuant to subclause (iii),
the Servicer shall deliver to the Trustee an Officer's Certificate of a
Servicing Officer indicating the amount of any previous Advance determined by
the Servicer to be a Nonrecoverable Advance and identifying the related
Loans(s), and their respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account to
make the distributions specified in this Agreement (and to withhold from the
amounts so withdrawn, the amount of any taxes that it is authorized to withhold
pursuant to the last paragraph of Section 8.11). In addition, the Trustee may
from time to time make withdrawals from the Distribution Account for the
following purposes:
(i) to the extent not remitted by the Servicer pursuant to
Section 3.08(a)(vii)(B) above within a reasonable period of time after
request by the Trustee, to remit (prior to making any other
distributions from amounts held in the Distribution Account) to itself
any Trustee Permitted Withdrawal Amounts;
(ii) to withdraw and return to the Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of Primary
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Insurance Policies.
-------------------
(a) The Servicer shall require Mortgagors to maintain, for each Loan,
hazard insurance with extended coverage (i) in the case of a Loan secured by a
Mortgage creating a first lien on the related Mortgaged Property, in an amount
that is at least equal to the original principal balance of such
54
Loan or the maximum insurable value of the improvements on such Mortgaged
Property, whichever is less, and (ii) in the case of a Second Lien Loan, in an
amount equal to the lesser of the combined principal balance of such Second Lien
Loan and the related first lien mortgage loan or the maximum insurable value of
the improvements on the related Mortgaged Property. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. Any amounts collected by the Servicer
under any such policies (other than the amounts to be applied to the restoration
or repair of the improvements on the related Mortgaged Property or amounts
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Certificate Account. 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 other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
is located at the time of origination of the Loan in a federally designated
special flood hazard area and such area is participating in the national flood
insurance program, the Servicer shall require the related Mortgagor to maintain
flood insurance with respect to such Loan. Such flood insurance shall be in an
amount equal to the original principal balance of the related Loan.
(b) The Servicer shall not be required to have Mortgagors maintain any
Primary Mortgage Insurance Policy with respect to any Loan, but may do so as
allowed by law, and shall allow the cancellation of any such Primary Mortgage
Insurance Policy as required by law. The Servicer shall not take any action
which would result in non-coverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder. If any Mortgagor fails to pay the premiums for its
Primary Mortgage Insurance Policy, if any, the Servicer may, but shall not be
required to, pay such premiums. Any payment made by the Servicer pursuant to
this Section 3.09(b) shall be recoverable as a Servicing Advance to the extent
permitted by Section 3.08.
(c) In connection with its activities as Servicer of the Loans, the
Servicer agrees to present on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Loans. Any amounts collected by the Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Certificate
Account.
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
------------------------------------------------------------
Agreements.
-----------
(a) When any property subject to a Mortgage has been conveyed by the
Mortgagor, the Servicer, to the extent that it has knowledge of such conveyance,
may, at its discretion, but is not required to, 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. The Servicer is authorized, subject to Section 3.10(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Loan shall continue to be covered (if so covered before the Servicer enters such
agreement) by the applicable Required Insurance Policies. The Servicer, subject
to Section 3.10(b), is also authorized with the prior approval of the insurers
under any Required Insurance Policies to enter into a substitution of liability
agreement with such Person, pursuant to which the original Mortgagor is released
from liability and such Person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Notwithstanding the foregoing, the Servicer shall not
be deemed to be in default under this Section by reason of any transfer or
assumption which the Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
55
(b) In any case in which a Mortgaged Property has been conveyed to a
Person by a Mortgagor, and such Person is to enter into an assumption agreement
or modification agreement or supplement to the Mortgage Note or Mortgage that
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 Loan, the
Servicer shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to execute 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. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Servicer in accordance with its
underwriting standards as then in effect. Together with each such substitution,
assumption or other agreement or instrument delivered to the Trustee for
execution by it, the Servicer shall deliver an Officer's Certificate signed by a
Servicing Officer stating that the requirements of this subsection have been met
in connection therewith. The Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. Any fee
collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.
SECTION 3.11. Realization Upon Defaulted Loans; Repurchase and Sale of
----------------------------------------------------------------------
Certain Loans.
--------------
The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable, in its sole
discretion, and as shall be normal and usual in its general mortgage servicing
activities and meet the requirements of the insurer under any Required Insurance
Policy; provided, however, that the Servicer shall not be required to expend its
own funds in connection with any foreclosure 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 Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Certificate Account). The Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds. If the Servicer
has knowledge that a Mortgaged Property which the Servicer is contemplating
acquiring in foreclosure or by deed in lieu of foreclosure is located within a
one mile radius of any site with environmental or hazardous waste risks known to
the Servicer, the Servicer will, prior to acquiring the Mortgaged Property,
consider such risks and only take action in accordance with its established
environmental review procedures.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee for the benefit of the Certificateholders,
or its nominee, on behalf of the Certificateholders. The Trustee's name shall be
placed on the title to such REO Property solely as the Trustee hereunder and not
in its individual capacity. The Servicer shall ensure that the title to such REO
Property references this Agreement and the Trustee's capacity thereunder. As
described more fully
56
below, the Servicer shall have the sole discretion to determine whether an
immediate sale of an REO Property or continued management of such REO Property
is in the best interest of the Certificateholders. In order to facilitate sales
of REO Properties by the Servicer, upon the Servicer's request, the Trustee
shall promptly provide the Servicer with appropriate limited durable powers of
attorney or such other documentation as may reasonably be required by the
Servicer or purchasers of REO Properties to consummate such sales. Pursuant to
its efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the interests of the Certificateholders, rent the same, or any part thereof, as
the Servicer, in its sole discretion, deems to be in the best interest of the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer shall prepare for and deliver to the Trustee a statement with respect
to each REO Property that has been rented showing the aggregate rental income
received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly income, if any, from such REO Property shall be deposited in the
Certificate Account no later than the close of business on each Determination
Date. The Servicer shall perform the tax reporting and withholding required by
Sections 1445 and 6050J of the Code with respect to foreclosures and
abandonments, the tax reporting required by Section 6050H of the Code with
respect to the receipt of mortgage interest from individuals and any tax
reporting required by Section 6050P of the Code with respect to the cancellation
of indebtedness by certain financial entities, by preparing such tax and
information returns as may be required, in the form required, and delivering the
same to the Trustee for filing.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Loan, the Servicer shall dispose of such Mortgaged Property prior to the close
of the third taxable year of the Trust Fund following the taxable year of the
Trust Fund in which the Trust Fund acquired such Mortgaged Property, unless the
Trustee shall have been supplied with an Opinion of Counsel (which Opinion of
Counsel shall not be at the expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of any REMIC hereunder as defined in section 860F of the Code or
cause any REMIC to fail to qualify as one or more REMICs at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject any REMIC to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property under Section 860G(c) of the Code or otherwise, unless
the Servicer has agreed, in its sole discretion, to indemnify and hold harmless
the Trust Fund with respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Loan shall be
subject to a determination by the Servicer, in its sole discretion, that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding.
The proceeds from any liquidation of a Loan, as well as any income from
an REO Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees related to such Liquidated Loan; second, to reimburse the
Servicer for any unreimbursed Advances; third, to accrued and unpaid interest
(to the extent no Advance has been made for such amount or any such Advance has
been reimbursed) on the Loan or
57
related REO Property, at the Adjusted Net Mortgage Rate to the Due Date
occurring in the calendar month preceding the month in which such amounts are
required to be distributed; and fourth, as a recovery of principal of the Loan.
Excess Proceeds, if any, from the liquidation of a Liquidated Loan will be
retained by the Servicer as additional servicing compensation pursuant to
Section 3.13.
The Servicer, in its sole discretion, shall have the right to sell any
Loan in the Trust Fund as to which the Servicer reasonably believes that default
in payment is imminent at a price equal to the Purchase Price. In addition, the
Servicer, in its sole discretion, shall have the right to purchase for its own
account or for resale as set forth herein from the Trust Fund any Loan which is
91 days or more delinquent at a price equal to the Purchase Price. The Purchase
Price for any Loan purchased or sold hereunder shall be deposited in the
Certificate Account and the Trustee, upon receipt of a Request for Release from
the Servicer substantially in the form of Exhibit J, shall release or cause to
be released to the Servicer the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the purchaser, in
each case without recourse, as shall be necessary to vest in the purchaser any
Loan released pursuant hereto and the purchaser shall succeed to all the
Trustee's right, title and interest in and to such Loan and all security and
documents related thereto. Such assignment shall be a sale and assignment
outright and not for security. The purchaser shall thereupon own such Loan, and
all security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
SECTION 3.12. Documents, Records and Funds in Possession of Servicer to
-----------------------------------------------------------------------
be Held for the Trustee.
------------------------
Notwithstanding any other provisions of this Agreement, the Servicer
shall transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Loan coming into the possession of the Servicer from
time to time and shall account fully to the Trustee for any funds received by
the Servicer or which otherwise are collected by the Servicer as Liquidation
Proceeds, Insurance Proceeds or Recoveries in respect of any Loan. All Mortgage
Files and funds collected or held by, or under the control of, the Servicer in
respect of any Loans, whether from the collection of principal and interest
payments or from Liquidation Proceeds or Recoveries, including but not limited
to, any funds on deposit in the Certificate Account, shall be held by the
Servicer for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable provisions of this
Agreement. The Servicer also agrees that it shall not create, incur or subject
any Mortgage File or any funds that are deposited in the Certificate Account,
Distribution Account, or any funds that otherwise are or may become due or
payable to the Trustee for the benefit of the Certificateholders, to any claim,
lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of setoff
against any Mortgage File or any funds collected on, or in connection with, a
Loan, except, however, that the Servicer shall be entitled to set off against
and deduct from any such funds any amounts that are properly due and payable to
the Servicer under this Agreement.
SECTION 3.13. Servicing Compensation.
-------------------------------------
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Certificate Account an amount equal to
the Servicing Fee for each Loan, provided that the aggregate Servicing Fee for
the Loans with respect to any Distribution Date shall be reduced (i) by an
amount equal to the aggregate of the Prepayment Interest Shortfalls, if any,
with respect to such Distribution Date, up to the full amount of the aggregate
Servicing Fee, and (ii) with respect to the first Distribution Date, an amount
equal to any amount to be deposited into the Certificate Account by the Sellers
pursuant to Section 2.01(a) and not so deposited.
58
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments made with funds on deposit in the Certificate Account shall be
retained by the Servicer to the extent not required to be deposited in the
Certificate Account pursuant to Section 3.05 hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided in this Agreement.
SECTION 3.14. Access to Certain Documentation.
----------------------------------------------
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising certain Certificateholders and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Loans required by applicable regulations of
the OTS and the FDIC. Such access shall be afforded without charge, but only
upon reasonable and prior written request and during normal business hours at
the offices designated by the Servicer. Nothing in this Section shall limit the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
SECTION 3.15. Annual Statement as to Compliance.
------------------------------------------------
The Servicer shall deliver to the Depositor and the Trustee on or
before 120 days after the end of the Servicer's fiscal year, commencing with the
fiscal year in which the Cut-off Date occurs, an Officer's Certificate stating,
as to the signer thereof, that (i) a review of the activities of the Servicer
during the preceding fiscal year and of the performance of the Servicer under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.
SECTION 3.16. Annual Independent Public Accountants' Servicing
--------------------------------------------------------------
Statement; Financial Statements.
--------------------------------
On or before 120 days after the end of the Servicer's fiscal year,
commencing with the fiscal year in which the Cut-off Date occurs, the Servicer
at its expense shall cause a nationally or regionally recognized firm of
independent public accountants (who may also render other services to the
Servicer, the Seller or any affiliate thereof) which is a member of the American
Institute of Certified Public Accountants to furnish a statement to the Trustee
and the Depositor to the effect that such firm has examined certain documents
and records relating to the servicing of the Loans under this Agreement and
that, on the basis of such examination, conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FNMA and FHLMC, such servicing has been
conducted in compliance with this Agreement except for such significant
exceptions or errors in records that, in the opinion of such firm, the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC requires it to report. In rendering such
statement, such firm may rely, as to matters relating to direct servicing of
mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FNMA and FHLMC (rendered within one year of such
59
statement) of independent public accountants with respect to the related
Subservicer. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided such
statement is delivered by the Servicer to the Trustee.
SECTION 3.17. Errors and Omissions Insurance; Fidelity Bonds.
-------------------------------------------------------------
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of FNMA or FHLMC for persons performing servicing
for mortgage loans purchased by FNMA or FHLMC. In the event that any such policy
or bond ceases to be in effect, the Servicer shall obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the requirements
set forth above as of the date of such replacement.
SECTION 3.18. RESERVED.
-----------------------
SECTION 3.19. Delinquent Loans.
-------------------------------
For all purposes in this Agreement and the Exhibits and Schedules
attached hereto, the determination as to whether a Loan is delinquent shall be
based on the number of days that payments on such Loan are contractually past
due, assuming 30-day months. For example, a payment due on the first day of a
month is not 30 days delinquent until the first day of the following month.
ARTICLE IIIA
RESERVE FUND AND NET WAC CAP ACCOUNT
SECTION 3A.01 RESERVED.
-----------------------
SECTION 3A.02 Reserve Fund and Yield Maintenance Agreement.
-----------------------------------------------------------
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class AV-1A, Class
AV-1B and Class AV-2 Certificates, the Reserve Fund to cover certain payments to
the Class AV-1A, Class AV-1B and Class AV-2 Certificates. The Reserve Fund shall
be an Eligible Account, and funds on deposit in such fund shall be held separate
and apart from, and shall not be commingled with, any other moneys, including
without limitation, other moneys held by the Trustee pursuant to this Agreement.
The Reserve Fund shall be treated as an "outside reserve fund" under applicable
Treasury regulations and will not be part of any REMIC. Any investment earnings
on the Reserve Fund will be treated as owned by the Holders of the Class X
Certificates and will be taxable to the Holders of the Class X Certificates.
Distributions made to any outside reserve fund under this document shall be
treated as made to the Class X Certificateholders.
(b) In addition, on the Closing Date, the Yield Maintenance Agreement
will be entered into by the Counterparty and the Trustee, for the benefit of the
Holders of the Class AV-1A, Class AV-1B and Class AV-2 Certificates. On each
Distribution Date, the Trustee will deposit into the Reserve Fund any amounts
received pursuant to the Yield Maintenance Agreement. Pursuant to the terms of
the Yield Maintenance Agreement, amounts received thereunder will be allocable
to either the Class AV-1A, Class AV-1B or Class AV-2 Certificates and the
Trustee shall maintain records tracking such allocation. The Trustee shall
collect payments due under and otherwise enforce the terms of the Yield
Maintenance Agreement. The Trustee shall make withdrawals from the Reserve Fund
to make distributions pursuant to Section 4.02(g). Notwithstanding anything to
the contrary contained herein, in no event shall the Trustee
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in its fiduciary capacity be liable to the Holders of the Class AV-1A, Class
AV-1B and Class AV-2 Certificates, be required to make any deposit from its own
funds into the Reserve Fund, or be required to take any action against the
Counterparty in connection with any delay in payment of amounts due under the
Yield Maintenance Agreement caused by any government action as further described
in clause (j) of Part I of the Schedule to the Yield Maintenance Agreement
during the grace period specified therein.
(c) The Trustee shall invest the funds in the Reserve Fund as directed
in writing by the Holders of the Class X Certificates in Permitted Investments,
which shall mature not later than, the second Business Day preceding each
Distribution Date (except that if such Permitted Investment is an obligation of
the institution that maintains such account or a fund for which such institution
or affiliate thereof serves as an investment advisor, administrator, shareholder
servicing agent and/or custodian or subcustodian, then such Permitted Investment
shall mature not later than the Business Day next preceding such Distribution
Date) and shall not be sold or disposed of prior to their maturity. All
Permitted Investments made with funds from the Reserve Fund shall be made in the
name of the Trustee, for the benefit of the Holders of the Class AV-1A, Class
AV-1B and Class AV-2 Certificates. All income and gain net of any losses
realized from any such investment of funds on deposit in the Reserve Fund shall
be deposited in the Reserve Fund. The Trustee in its fiduciary capacity shall
not be liable for the amount of any loss incurred in respect of any investment
or lack of investment of funds held in the Reserve Fund and made in accordance
with this Section 3A.02.
(d) Upon termination of the Trust Fund, any amounts remaining in the
Reserve Fund shall be distributed to the Holders of the Class X Certificates.
(e) In the event that the Yield Maintenance Agreement is terminated
prior to the Yield Maintenance Stated Termination and the Counterparty has not
obtained a replacement counterparty to assume its obligations thereunder
pursuant to the terms of the Yield Maintenance Agreement, the Trustee shall
obtain a replacement yield maintenance agreement acceptable to the Servicer and
shall apply any amounts received from the Counterparty under the Yield
Maintenance Agreement in connection with its termination, to the extent
necessary, to obtain such replacement. In no event whatsoever shall the Trustee
be responsible for costs and expenses incurred in connection with obtaining a
replacement yield maintenance agreement or for any fees, costs or expenses
payable thereunder.
(f) If, upon termination of the Trust Fund pursuant to the provisions
of Article IX hereof, the "Notional Amount," as set forth in Appendix A to any
of the Confirmations relating to the Yield Maintenance Agreement, is greater
than zero, the Trustee shall, as of the date of such termination, assign to
Equity One, Inc. all of its right, title and interest in and to the Yield
Maintenance Agreement and any payments thereunder (subject to applicable
regulations and account opening procedures).
(g) For any Distribution Date on which there is a payment under the
Yield Maintenance Agreement based on a notional balance in excess of the
aggregate Class Certificate Balance of the Class AV-1A, Class AV-1B or Class
AV-2 Certificates, as applicable, the amount representing such excess payment,
to the extent not otherwise distributed pursuant to Section 4.02(g)(i), shall
not be an asset of the Trust Fund and, instead, shall be paid into and
distributed out of a separate trust created by this Agreement for the benefit of
the Class X Certificates and shall be distributed to the Class X Certificates
pursuant to Section 4.02(g)(ii).
SECTION 3A.03. Net WAC Cap Account
----------------------------------
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class AF-1, Class
AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2 and Class B-3 Certificates,
the Net WAC Cap Account and deposit therein the amount of
61
$10,000 paid to the Trustee by the Depositor. The Net WAC Cap Account shall be
an Eligible Account, and funds on deposit therein shall be held separate and
apart from, and shall not be commingled with, any other moneys, including
without limitation, other moneys held by the Trustee pursuant to this Agreement.
The Net WAC Cap Account shall be treated as an "outside reserve fund" under
applicable Treasury regulations and will not be part of any REMIC. Any
investment earnings on the Net WAC Cap Account will be treated as owned by the
Holders of the Class X Certificates and will be taxable to the Holders of the
Class X Certificates. Distributions made to any outside reserve fund under this
document shall be treated as made to the Class X Certificateholders.
(b) On each Distribution Date, the Trustee shall deposit amounts in the
Net WAC Cap Account pursuant to Section 4.02(d)(xxvi). The amount required to be
deposited into the Net WAC Cap Account on any Distribution Date will equal the
aggregate Net WAC Cap Deposit Amount for the Class AF-1, Class AV-1A, Class
AV-1B, Class AV-2, Class B-1, Class B-2 and Class B-3 Certificates. The Trustee
shall make withdrawals from the Net WAC Cap Account to make distributions
pursuant to Section 4.02(f).
(c) The Trustee shall invest the funds in the Net WAC Cap Account as
directed in writing by the Holders of the Class X Certificates in Permitted
Investments, which shall mature not later than, the second Business Day
preceding each Distribution Date (except that if such Permitted Investment is an
obligation of the institution that maintains such account or a fund for which
such institution or affiliate thereof serves as an investment advisor,
administrator, shareholder servicing agent and/or custodian or subcustodian,
then such Permitted Investment shall mature not later than the Business Day next
preceding such Distribution Date) and shall not be sold or disposed of prior to
their maturity. Any investment earnings on such amounts shall be payable to the
Holders of the Class X Certificates. The Holders of the Class X Certificates
shall be treated as the owners of the Net WAC Cap Account for federal tax
purposes. The Trustee in its fiduciary capacity shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in the Net WAC Cap Account and made in accordance with this
Section 3A.03(c).
(d) Upon termination of the Trust Fund, any amounts remaining in the
Net WAC Cap Account shall be distributed to the Holders of the Class X
Certificates.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
SECTION 4.01. Advances.
-----------------------
The Servicer shall determine on or before each Servicer Advance Date
whether it is required to make an Advance pursuant to the definition thereof. If
the Servicer determines it is required to make an Advance, it shall, on or
before the Servicer Advance Date, either (i) deposit into the Certificate
Account an amount equal to the Advance or (ii) make an appropriate entry in its
records relating to the Certificate Account that any Amount Held for Future
Distribution has been used by the Servicer in discharge of its obligation to
make any such Advance. Any funds so applied shall be replaced by the Servicer by
deposit in the Certificate Account no later than the close of business on the
next Servicer Advance Date. The Servicer shall be entitled to be reimbursed from
the Certificate Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Loan shall continue if such Loan has been foreclosed or otherwise
terminated and the Mortgaged Property has not been liquidated.
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SECTION 4.02. Priorities of Distribution and Allocation.
--------------------------------------------------------
(a) Interest. On each Distribution Date, the Trustee will distribute:
(i) from the Group I Interest Remittance Amount for that
Distribution Date, in the following order of priority, to the extent
available:
(A) first, to the Trustee, any amounts then due and
owing representing fees of the Trustee based on the aggregate
Stated Principal Balance of the Group I Loans and, to the
extent not paid by Trustee Permitted Withdrawal Amounts,
expenses and indemnity amounts due and owing to the Trustee
relating to the Group I Loans;
(B) second, to the Servicer, an amount equal to the
sum of (1) the Servicing Fee relating to the Group I Loans,
except to the extent previously paid with permitted
withdrawals from the Certificate Account, and (2) any other
amounts expended by the Servicer in connection with the Group
I Loans and reimbursable thereto under this Agreement but not
previously reimbursed;
(C) third, concurrently, to the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, pro rata, the applicable Interest Distribution
Amounts for that Distribution Date;
(D) fourth, concurrently, to the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, pro rata, the applicable Class Unpaid Interest
Amounts, if any; and
(E) fifth, concurrently, to the Class AV-1A, Class
AV-1B and Class AV-2 Certificates, pro rata, an amount equal
to the excess, if any, of (1) the amount required to be
distributed pursuant to clause (a)(ii)(C) and clause
(a)(ii)(D) below (with respect to the Class AV-1A and Class
AV-1B Certificates) and clause (a)(iii)(C) and clause
(a)(iii)(D) below (with respect to the Class AV-2
Certificates) for that Distribution Date over (2) the amount
actually distributed pursuant to those clauses from the Group
II-A Interest Remittance Amount and the Group II-B Interest
Remittance Amount, respectively, to the extent not otherwise
paid.
(ii) from the Group II-A Interest Remittance Amount for that
Distribution Date, in the following order of priority, to the extent
available:
(A) first, to the Trustee, any amounts then due and
owing representing fees of the Trustee based on the aggregate
Stated Principal Balance of the Group II-A Loans and, to the
extent not paid by Trustee Permitted Withdrawal Amounts,
expenses and indemnity amounts due and owing to the Trustee
relating to the Group II-A Loans;
63
(B) second, to the Servicer, an amount equal to the
sum of (1) the Servicing Fee relating to the Group II-A Loans,
except to the extent previously paid with permitted
withdrawals from the Certificate Account, and (2) any other
amounts expended by the Servicer in connection with the Group
II-A Loans and reimbursable thereto under this Agreement but
not previously reimbursed;
(C) third, to the Class AV-1A and Class AV-1B
Certificates, pro rata, the applicable Interest Distribution
Amount for that Distribution Date;
(D) fourth, to the Class AV-1A and Class AV-1B
Certificates, pro rata, the applicable Class Unpaid Interest
Amount, if any; and
(E) fifth, concurrently, to the Class AF Certificates
and Class AV-2 Certificates, pro rata, an amount equal to the
excess, if any, of (1) the amount required to be distributed
pursuant to clause (a)(i)(C) and clause (a)(i)(D) above (with
respect to the Class AF Certificates) and clause (a)(iii)(C)
and clause (a)(iii)(D) below (with respect to the Class AV-2
Certificates) for that Distribution Date over (2) the amount
actually distributed pursuant to those clauses from the Group
I Interest Remittance Amount and the Group II-B Interest
Remittance Amount, respectively, to the extent not otherwise
paid.
(iii) from the Group II-B Interest Remittance Amount for that
Distribution Date, in the following order of priority, to the extent
available:
(A) first, to the Trustee, any amounts then due and
owing representing fees of the Trustee based on the aggregate
Stated Principal Balance of the Group II-B Loans and, to the
extent not paid by Trustee Permitted Withdrawal Amounts,
expenses and indemnity amounts due and owing to the Trustee
relating to the Group II-B Loans;
(B) second, to the Servicer, an amount equal to the
sum of (1) the Servicing Fee relating to the Group II-B Loans,
except to the extent previously paid with permitted
withdrawals from the Certificate Account, and (2) any other
amounts expended by the Servicer in connection with the Group
II-B Loans and reimbursable thereto under this Agreement but
not previously reimbursed;
(C) third, to the Class AV-2 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(D) fourth, to the Class AV-2 Certificates, the
applicable Unpaid Interest Amounts, if any; and
64
(E) fifth, concurrently to the Class AF Certificates,
Class AV-1A Certificates and Class AV-1B Certificates, pro
rata, an amount equal to the excess, if any, of (1) the amount
required to be distributed pursuant to clause (a)(i)(C) and
clause (a)(i)(D) above (with respect to the Class AF
Certificates) and clause (a)(ii)(C) and clause (a)(ii)(D)
above (with respect to the Class AV-1A Certificates and Class
AV-1B Certificates) for that Distribution Date over (2) the
amount actually distributed pursuant to those clauses from the
Group I Interest Remittance Amount and the Group II-A Interest
Remittance Amount, respectively, to the extent not otherwise
paid.
(iv) from the Remaining Interest Remittance Amount for that
Distribution Date, in the following order of priority, to the extent
available:
(A) first, to the Class M-1 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(B) second, to the Class M-2 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(C) third, to the Class M-3 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(D) fourth, to the Class M-4 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(E) fifth, to the Class B-1 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(F) sixth, to the Class B-2 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(G) seventh, to the Class B-3 Certificates, the
applicable Interest Distribution Amount for that Distribution
Date;
(H) eighth, the Monthly Excess Interest Amount for
that Distribution Date will be applied as described under
Section 4.02(d) hereof.
(b) Principal (pre-Stepdown Date or Trigger Event). On each Distribution Date
before the Stepdown Date or with respect to which a Trigger Event is in effect,
the Trustee shall distribute:
(i) from the Principal Distribution Amount for the Group I
Loans, in the following order of priority, to the extent available:
(A) first, the Class AF-6 Lockout Distribution Amount
to the Class AF-6 Certificates, until the Class Certificate
Balance thereof has been reduced to zero; and
(B) second, sequentially, to the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, in that
65
order, until the respective Class Certificate Balances thereof
have been reduced to zero.
(ii) from the Principal Distribution Amount for the Group II-A
Loans, in the following order of priority, to the extent available:
(A) if a Group II-A Trigger Event is not in effect,
to the Class AV-1A and Class AV-1B Certificates, pro rata,
until the respective Class Certificate Balances thereof have
been reduced to zero; and
(B) if a Group II-A Trigger Event is in effect,
sequentially, to the Class AV-1A and Class AV-1B Certificates,
in that order, until the respective Class Certificate Balances
thereof have been reduced to zero.
(iii) from the Principal Distribution Amount for the Group
II-B Loans, in the following order of priority, to the extent
available:
(A) to the Class AV-2 Certificates, until the Class
Certificate Balance thereof has been reduced to zero.
(iv) from the Pre-Stepdown Cross-collateralization Principal
Distribution Amount:
(A) concurrently, to (i) the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, in the order set forth in clause (b)(i) above,
(ii) the Class AV-1A and Class AV-1B Certificates, in the
order set forth in clause (b)(ii) above, and (iii) the Class
AV-2 Certificates, pro rata based on their respective Class
Certificate Balances outstanding after giving effect to the
distributions in clauses (b)(i), (b)(ii) and (b)(iii) above,
until their respective Class Certificate Balances have been
reduced to zero.
(v) from the Pre-Stepdown Remaining Principal Distribution
Amount, in the following order of priority, to the extent available:
(A) first, to the Class M-1 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
(B) second, to the Class M-2 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
(C) third, to the Class M-3 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
(D) fourth, to the Class M-4 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
(E) fifth, to the Class B-1 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
66
(F) sixth, to the Class B-2 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
(G) seventh, to the Class B-3 Certificates, until the
Class Certificate Balance thereof has been reduced to zero;
and
(H) eighth, any amount of the Pre-Stepdown Remaining
Principal Distribution Amount remaining after making all of
the distributions in clauses (b)(v)(A) through (b)(v)(G) above
will be applied as described in Section 4.02(d) hereof.
(c) Principal (post-Stepdown Date and no Trigger Event). On each Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the Trustee shall distribute:
(i) from the Principal Distribution Amount for the Group I
Loans, in the following order of priority, to the extent available:
(A) first, the Class AF-6 Lockout Distribution Amount
to the Class AF-6 Certificates, until the Class Certificate
Balance thereof has been reduced to zero; and
(B) second, the Class AF Principal Distribution
Amount after giving effect to the payment of the Class AF-6
Lockout Distribution Amount, sequentially, to the Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, in that order, until the respective Class
Certificate Balances thereof have been reduced to zero.
(ii) from the Principal Distribution Amount for the Group II-A
Loans, in the following order of priority, to the extent available:
(A) if a Group II-A Trigger Event is not in effect,
the Class AV-1 Principal Distribution Amount to the Class
AV-1A and Class AV-1B Certificates, pro rata, until the
respective Class Certificate Balances thereof have been
reduced to zero; and
(B) if a Group II-A Trigger Event is in effect, the
Class AV-1 Principal Distribution Amount, sequentially, to the
Class AV-1A and Class AV-1B Certificates, in that order, until
the respective Class Certificate Balances thereof have been
reduced to zero.
(iii) from the Principal Distribution Amount for the Group
II-B Loans, in the following order of priority, to the extent
available:
(A) the Class AV-2 Principal Distribution Amount to
the Class AV-2 Certificates, until the Class Certificate
Balance thereof has been reduced to zero.
(iv) from the Post-Stepdown Cross-collateralization Principal
Distribution Amount:
67
(A) concurrently, to (i) the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates, in the order set forth in clause (c)(i) above,
(ii) the Class AV-1A and Class AV-1B Certificates, in the
order set forth in clause (c)(ii) above, and (iii) the Class
AV-2 Certificates, pro rata based on their respective Class
Certificate Balances outstanding after giving effect to the
distributions in clauses (c)(i), (c)(ii) and (c)(iii) above,
until their respective Class Certificate Balances have been
reduced to zero.
(v) from the Post-Stepdown Remaining Principal Distribution
Amount, in the following order of priority, to the extent available:
(A) first, to the Class M-1 Certificates, the Class
M-1 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(B) second, to the Class M-2 Certificates, the Class
M-2 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(C) third, to the Class M-3 Certificates, the Class
M-3 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(D) fourth, to the Class M-4 Certificates, the Class
M-4 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(E) fifth, to the Class B-1 Certificates, the Class
B-1 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(F) sixth, to the Class B-2 Certificates, the Class
B-2 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(G) seventh, to the Class B-3 Certificates, the Class
B-3 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero; and
(H) eighth, any amount of the Post-Stepdown Remaining
Principal Distribution Amount remaining after making all of
the distributions in clauses (c)(v)(A) through (c)(v)(G) above
will be applied as described in Section 4.02(d) hereof.
(d) Excess Cashflow. On each Distribution Date, the Trustee shall distribute:
the Monthly Excess Cashflow Amount, to the extent available, to the parties, in
the amounts and in the priorities indicated:
68
(i) first, concurrently, to the Class AF-1, Class AF-2, Class
AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV-1A, Class AV-1B and
Class AV-2 Certificates, pro rata, any remaining applicable Interest
Distribution Amount for that Distribution Date;
(ii) second, concurrently, to the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AV-1A, Class
AV-1B and Class AV-2 Certificates, pro rata, any remaining Class Unpaid
Interest Amounts for the classes of Senior Certificates;
(iii) third, to fund the Extra Principal Distribution Amount
for that Distribution Date;
(iv) fourth, to fund the Class AV-1B Realized Loss
Amortization Amount for that Distribution Date;
(v) fifth, to the Class M-1 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(vi) sixth, to the Class M-1 Certificates, any remaining Class
Unpaid Interest Amount for the Class M-1 Certificates;
(vii) seventh, to fund the Class M-1 Realized Loss
Amortization Amount for that Distribution Date;
(viii) eighth, to the Class M-2 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(ix) ninth, to the Class M-2 Certificates, any remaining Class
Unpaid Interest Amount for the Class M-2 Certificates;
(x) tenth, to fund the Class M-2 Realized Loss Amortization
Amount for that Distribution Date;
(xi) eleventh, to the Class M-3 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(xii) twelfth, to the Class M-3 Certificates, any remaining
Class Unpaid Interest Amount for the Class M-3 Certificates;
(xiii) thirteenth, to fund the Class M-3 Realized Loss
Amortization Amount for that Distribution Date;
(xiv) fourteenth, to the Class M-4 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(xv) fifteenth, to the Class M-4 Certificates, any remaining
Class Unpaid Interest Amount for the Class M-4 Certificates;
(xvi) sixteenth, to fund the Class M-4 Realized Loss
Amortization Amount for that Distribution Date;
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(xvii) seventeenth, to the Class B-1 Certificates, any
remaining Interest Distribution Amount for that Distribution Date;
(xviii) eighteenth, to the Class B-1 Certificates, any
remaining Class Unpaid Interest Amount for the Class B-1 Certificates;
(xix) nineteenth, to fund the Class B-1 Realized Loss
Amortization Amount for that Distribution Date;
(xx) twentieth, to the Class B-2 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(xxi) twenty-first, to the Class B-2 Certificates, any
remaining Class Unpaid Interest amount for the Class B-2 Certificates;
(xxii) twenty-second, to fund the Class B-2 Realized Loss
Amortization Amount for that Distribution Date;
(xxiii) twenty-third, to the Class B-3 Certificates, any
remaining Interest Distribution Amount for that Distribution Date;
(xxiv) twenty-fourth, to the Class B-3 Certificates, any
remaining Class Unpaid Interest amount for the Class B-3 Certificates;
(xxv) twenty-fifth, to fund the Class B-3 Realized Loss
Amortization Amount for that Distribution Date;
(xxvi) twenty-sixth, for deposit into the Net WAC Cap Account,
the amount equal to (a) the Net WAC Cap Carryover for that Distribution
Date (the amount so deposited as limited by available funds), plus (b)
the amount, if any, sufficient to increase the aggregate amount on
deposit in the Net WAC Cap Account to $10,000 after giving effect to
any payments of Net WAC Cap Carryover to the Class AF-1, Class AV-1A,
Class AV-1B, Class AV-2, Class B-1, Class B-2 and Class B-3
Certificates on that Distribution Date;
(xxvii) twenty-seventh, to the Class B-3 Certificates as
principal, any remaining amounts, until the Class Certificate Balance
thereof has been reduced to zero;
(xxviii) twenty-eighth, to the Class B-2 Certificates as
principal, any remaining amounts, until the Class Certificate Balance
thereof has been reduced to zero;
(xxix) twenty-ninth, to the Class B-1 Certificates as
principal, any remaining amounts, until the Class Certificate Balance
thereof has been reduced to zero; and
(xxx) thirtieth, to the Class X and Class R Certificates, any
remaining Monthly Excess Cashflow Amount.
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(e) Realized Losses. Realized Losses shall be allocated first against the
Overcollateralization Amount, until the Overcollateralization Amount has been
reduced to zero. If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Class Certificate
Balance of the Offered Certificates exceeds the Pool Principal Balance as of the
end of the related Due Period, such excess will be allocated against the Class
B-3, Class B-2, Class B-1, Class M-4, Class M-3, Class M-2, Class M-1 and, only
with respect to any remaining Realized Losses relating to the Group II-A Loans,
Class AV-1B Certificates, in that order and until the respective Class
Certificate Balances thereof are reduced to zero.
(f) Net WAC Cap Carryover from Net WAC Cap Account. On each Distribution Date,
following all distributions, deposits and allocations made pursuant to
subsections (a) through (e) above, the Trustee shall distribute, pro rata, to
the Class AF-1, Class AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2 and
Class B-3 Certificates, the applicable Net WAC Cap Carryover for such
Distribution Date, if any, from the Net WAC Cap Account (to the extent of
available funds therein).
(g) Reserve Fund. On each Distribution Date, following all distributions and
deposits made pursuant to subsections (a) through (f), the Trustee will withdraw
all funds available in the Reserve Fund to make the following payments in the
following order of priority:
(i) first, to pay to the Class AV-1A, Class AV-1B and Class
AV-2 Certificates, to the extent of amounts available with respect to
that class, any remaining Net WAC Cap Carryover for the Class AV-1A,
Class AV-1B and Class AV-2 Certificates, respectively, to the extent
not paid out of the Net WAC Cap Account on such Distribution Date; and
(ii) second, to the holders of the Class X Certificates, all
remaining amounts.
SECTION 4.02A. Recoveries.
-------------------------
(a) With respect to the Class AV-1B Certificates or any Class of Subordinate
Certificates to which a Realized Loss has been allocated (including any such
Class for which the related Class Certificate Balance has been reduced to zero),
the Class Certificate Balance of such Class will be increased, up to the amount
of related Recoveries for such Distribution Date as follows:
(i) first, the Class Certificate Balance of the Class AV-1B
Certificates, to the extent of Recoveries on the Group II-A Loans only,
will be increased, up to the amount of Net Recovery Realized Losses for
such Class;
(ii) second, the Class Certificate Balance of the Class M-1
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class;
(iii) third, the Class Certificate Balance of the Class M-2
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class;
(iv) fourth, the Class Certificate Balance of the Class M-3
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class;
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(v) fifth, the Class Certificate Balance of the Class M-4
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class;
(vi) sixth, the Class Certificate Balance of the Class B-1
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class;
(vii) seventh, the Class Certificate Balance of the Class B-2
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class; and
(viii) eighth, the Class Certificate Balance of the Class B-3
Certificates will be increased, up to the amount of Net Recovery
Realized Losses for such Class.
(b) Any increase to the Class Certificate Balance of a Class of Certificates
shall increase the Certificate Balance of each Certificate in the related Class
pro rata in accordance with each Certificate's Percentage Interest.
SECTION 4.03. Monthly Statements to Certificateholders.
-------------------------------------------------------
(a) Not later than each Distribution Date, the Trustee shall post on its website
at xxx.xxxxxxxx.xxx/xxx, which posting shall be accessible to each
Certificateholder, the Servicer, the Depositor and each Rating Agency, a
statement setting forth with respect to the related distribution (provided,
however, that each Certificateholder, upon request to the Trustee, shall be
entitled to receive from the Trustee a paper copy of such statement if such
Certificateholder is unable to access the Trustee's website):
(i) with respect to each Group and in the aggregate, the
amount thereof allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments in full, partial
Principal Prepayments and Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any Class
Unpaid Interest Amount included in such distribution and any remaining
Class Unpaid Interest Amount after giving effect to such distribution;
(iii) if the distribution to the Holders of a 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 and the allocation thereof as between principal
and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal on
such Distribution Date;
(v) the Pool Principal Balance and the Group Principal
Balances for the following Distribution Date;
(vi) the amount of the Servicing Fee paid to or retained by
the Servicer with respect to such Distribution Date;
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(vii) the Pass-Through Rate for each Class of Offered
Certificates with respect to such Distribution Date;
(viii) the amount of Advances included in the distribution on
such Distribution Date and the aggregate amount of Advances outstanding
as of the close of business on such Distribution Date;
(ix) with respect to each Group and in the aggregate, the
number and aggregate principal amounts of Loans (A) contractually past
due (assuming 30 day months) (exclusive of Loans in foreclosure) (1) 1
to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days
and (B) in foreclosure (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90
days and (4) 91 or more days, as of the close of business on the last
day of the Prepayment Period preceding such Distribution Date;
(x) with respect to each Group and in the aggregate, and with
respect to any Loan that became an REO Property during the preceding
calendar month, the loan number and Stated Principal Balance of such
Loan as of the close of business on the last day of the Prepayment
Period preceding such Distribution Date and the date of acquisition
thereof;
(xi) with respect to each Group and in the aggregate, (A) the
total number and principal balance of any REO Properties (and market
value, if available) as of the close of business on the last day of the
Prepayment Period preceding such Distribution Date and (B) the total
number and cumulative principal balance of any Liquidated Loans (prior
to the reduction of the principal balance of any such Liquidated Loan
to zero);
(xii) with respect to each Group, the amount equal to the sum
of the Stated Principal Balances of the three Loans with the largest
individual Stated Principal Balances;
(xiii) with respect to the Class AF-1, Class AV-1A, Class
AV-1B, Class AV-2, Class B-1, Class B-2 and Class B-3 Certificates, the
amount of the Net WAC Cap Carryover to be paid to such Class from the
Net WAC Cap Account and the amount remaining unpaid;
(xiv) with respect to each Group, the aggregate principal
balance of Balloon Loans with original terms less than or equal to 36
months which are 60 or more days contractually past due (assuming 30
day months) (including Loans in foreclosure and REO Properties) on the
last day of the Prepayment Period preceding such Distribution Date;
(xv) with respect to each Group, the cumulative aggregate
amount of Realized Losses as of the last day of the Prepayment Period
preceding such Distribution Date;
(xvi) the amount of funds withdrawn from the Reserve Fund (for
each of the Class AV-1A, Class AV-1B and Class AV-2 Certificates) and
included in such distribution and the outstanding balance of the
Reserve Fund (and the amounts available for each of the Class AV-1A,
Class AV-1B and Class AV-2 Certificates), after giving effect to such
distribution;
(xvii) with respect to each Group, the number of Loans
repurchased by Sellers during the Due Period related to such
Distribution Date;
(xviii) with respect to each Group, the weighted average
Mortgage Rate of the Outstanding Loans, such weighted average to be
calculated based on the principal balances of such Outstanding Loans on
the first day of the Due Period related to such Distribution Date;
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(xix) with respect to each Group, the weighted average
maturity date of the Outstanding Loans;
(xx) the Targeted Overcollateralization Amount after giving
effect to such distribution;
(xxi) the amount of any Overcollateralization Release Amount
included in the distribution on such Distribution Date;
(xxii) with respect to each Group, the cumulative amount of
Realized Losses from the Cut-off Date through the last day of the Due
Period relating to such Distribution Date;
(xxiii) any Overcollateralization Deficiency after giving
effect to the distribution of principal on such Distribution Date;
(xxiv) whether a Trigger Event has occurred and is continuing,
and the cumulative Realized Losses, as a percentage of the original
Pool Principal Balance;
(xxv) the aggregate amount of 60+ Day Delinquent Loans as a
percentage of the current Pool Principal Balance;
(xxvi) the amount of funds collected by the Trustee under the
Yield Maintenance Agreement during the Due Period relating to such
Distribution Date;
(xxvii) the amount of Recoveries collected during the Due
Period relating to such Distribution Dates; and
(xxviii) the cumulative amount of Recoveries collected as of
such Distribution Date.
(b) The Trustee's responsibility for posting the above information on its
website is limited to the availability, timeliness and accuracy of the
information provided by the Servicer. On or before the 18th day of each calendar
month, commencing in the month of the first Distribution Date hereunder, or if
such day is not a Business Day, the next succeeding Business Day, the Servicer
shall deliver to the Trustee a report, in a form acceptable to the Trustee,
containing all of the necessary information for the Trustee to complete items
(i), (v), (vi), (viii)-(xii), (xiv), (xv), (xvii)-(xix), (xxii), (xxvii) and
(xxviii) of the statement described in (a) above. The Trustee shall be
responsible for obtaining the necessary information to complete items (ii),
(iii), (iv), (vii), (xiii), (xvi), (xx), (xxi), (xxiii)-(xxvi) of the statement
described in (a) above.
(c) Within a reasonable period of time after the end of each calendar year, but
in no case later than the time prescribed by the Code and applicable Treasury
regulations, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information set forth in clauses (a)(i), (a)(ii), (a)(vii) and (a)(xiii) of
this Section 4.03 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
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SECTION 4.04. Reporting.
------------------------
On each Distribution Date, the Servicer shall provide to the Trustee
current information of the type set forth in Schedule I hereto presented in a
format substantially similar to Exhibit K attached hereto and the Trustee shall
then forward such information to a reporting service mutually agreed upon by the
Servicer and the Trustee.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
-------------------------------
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in the minimum denominations,
integral multiples in excess thereof (except that one Certificate in each Class
may be issued in a different amount which must be in excess of the applicable
minimum denomination) and aggregate denominations per Class set forth in the
Preliminary Statement.
Subject to Section 9.02 hereof respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (a) by wire
transfer in immediately available funds to the account of such Holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least five Business Days prior to the related Record
Date and (ii) such Holder shall hold (A) 100% of the Class Certificate Balance
or Percentage Interest of any Class of Certificates or (B) Certificates of any
Class with an aggregate principal Denomination of not less than $1,000,000 or
(b) by check mailed by first class mail to such Certificateholder at the address
of such Holder appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the countersignature and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at the
direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
SECTION 5.02. Certificate Register; Registration of Transfer and
-----------------------------------------------------------------
Exchange of Certificates.
-------------------------
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.06 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and 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. Upon surrender for registration of transfer of any
Certificate, the Trustee shall execute
75
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates of the same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in the form of Exhibit G duly executed by the Holder thereof or his attorney
duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but 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 may be required.
All Certificates surrendered for registration of transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) Except for the initial transfer of the Class X Certificates and
Class R Certificates, no transfer of a Class X Certificate or Class R
Certificate shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under said Act
and such state securities laws. In the event that a transfer is to be made in
reliance upon an exemption from the Securities Act and such laws, in order to
assure compliance with the Securities Act and such laws, (i) the
Certificateholder desiring to effect such transfer and such Certificateholder's
prospective transferee shall each certify to the Trustee in writing the facts
surrounding the transfer, the Certificateholder by delivering a certificate in
substantially the form set forth in Exhibit G (the "TRANSFEROR CERTIFICATE") and
the Certificateholder's prospective transferee by delivering a letter in
substantially the form of either Exhibit H (the "INVESTMENT LETTER") or Exhibit
I (the "RULE 144A LETTER") or (ii) there shall be delivered to the Trustee at
the expense of the transferor an Opinion of Counsel that such transfer may be
made pursuant to an exemption from the Securities Act. The Depositor shall
provide to any Holder of a Class X Certificate or Class R Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Trustee and the Servicer shall cooperate with the Depositor in providing the
Rule 144A information referenced in the preceding sentence, including providing
to the Depositor such information regarding the Certificates, the Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Class X
Certificate or Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee and the Depositor, the Sellers and
the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless the
Trustee shall have received (i) a representation letter from the transferee
substantially in the form of Exhibit H or Exhibit I, to the effect that (x) such
transferee is not an employee benefit plan or arrangement subject to Section 406
of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor a
person acting on behalf of any such plan or arrangement, nor using the assets of
any such plan or arrangement to effect such transfer or (y) if the purchaser is
an insurance company and the ERISA-Restricted Certificate is not a Class R
Certificate and has been the subject of an ERISA Qualifying Underwriting, a
representation that
76
the purchaser is an insurance company which is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under Sections I and III of PTCE 95-60 or (ii) in the case of any such
ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan subject to ERISA, or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement, or using such plan's or arrangement's assets,
an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust Fund, addressed to
the Trustee to the effect that the purchase or holding of such ERISA-Restricted
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. Notwithstanding
anything else to the contrary herein, any purported transfer of an
ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the delivery to the Trustee of an Opinion of
Counsel satisfactory to the Trustee as described above shall be void and of no
effect.
In the case of an ERISA-Restricted Certificate that is a Book-Entry
Certificate, for purposes of clauses (i) or (ii) of the first sentence of the
preceding paragraph, such representations shall be deemed to have been made to
the Certificate Registrar and the Trustee by the transferee's acceptance of such
ERISA-Restricted Certificate.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
(c) 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
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) 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.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "TRANSFER AFFIDAVIT") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
F.
(iii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Class R
Certificate and (C) not to Transfer its Ownership
77
Interest in a Class R Certificate or to cause the Transfer of an
Ownership Interest in a Class R Certificate to any other Person if it
has actual knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of 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 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the Transfer was registered after receipt of the related Transfer
Affidavit, Transferor Certificate and either the Rule 144A Letter or
the Investment Letter. The Trustee shall be entitled but not obligated
to recover from any Holder of a Class R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Depositor shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the Sellers
or the Servicer, to the effect that the elimination of such restrictions will
not cause the Trust Fund hereunder to fail to qualify as one or more REMICs at
any time that the Certificates are outstanding or result in the imposition of
any tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class R Certificate hereby
consents to any amendment of this Agreement which, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (A) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (B) to provide for a means to compel the Transfer of a Class R
Certificate which is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Beneficial Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect
78
participating firms as representatives of the Beneficial Owners of the
Book-Entry Certificates for purposes of exercising the rights of Holders under
this Agreement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons shown on
the books of such indirect participating firms as direct or indirect Beneficial
Owners.
All transfers by Beneficial Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Beneficial Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Beneficial Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
If (x) (i) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee is unable to locate a
qualified successor, (y) the Depositor, at its sole option with the consent of
the Trustee, advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository or (z) after the occurrence of an Event
of Default or the resignation or removal of the Servicer, Beneficial Owners
representing at least 51% of the sum of the then outstanding Class Certificate
Balance of all Book-Entry Certificates together advise the Depository, either
directly or through the Depository Participants, and the Trustee in writing that
the continuation of a book-entry system through the Depository is no longer in
the best interests of the Beneficial Owners. Upon the occurrence of any of the
events described in the immediately preceding sentence, the Trustee shall notify
all Beneficial Owners of the occurrence of any such event and of the
availability of definitive, fully-registered Certificates (the "DEFINITIVE
CERTIFICATES") to Beneficial Owners requesting the same. Upon surrender to the
Trustee of the related Class of Certificates by the Depository, accompanied by
the instructions from the Depository for registration, the Trustee shall issue
the Definitive Certificates. Neither the Depositor nor the Trustee shall be
liable for any delay in delivery of such instruction and each may conclusively
rely on, and shall be protected in relying on, such instructions. The Depositor
shall provide the Trustee with an adequate inventory of certificates to
facilitate the issuance and transfer of Definitive Certificates. Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder; provided that the
Trustee shall not by virtue of its assumption of such obligations become liable
to any party for any act or failure to act of the Depository.
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SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
-----------------------------------------------------------------
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Servicer and the Trustee
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 that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute,
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and Percentage Interest. In connection with the issuance of any new Certificate
under this Section 5.03, 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)
connected therewith. Any replacement Certificate issued pursuant to this Section
5.03 shall constitute complete and indefeasible evidence of ownership, 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.
-------------------------------------
The Servicer, the Trustee and any agent of the Servicer or the Trustee
may treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Servicer, the
Trustee nor any agent of the Servicer or the Trustee shall be affected by any
notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
--------------------------------------------------------------
Addresses.
----------
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
SECTION 5.06. Maintenance of Office or Agency.
-----------------------------------------------
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates its Corporate Trust Office for such purposes. The Trustee will give
prompt written notice to the Certificateholders of any change in such location
of any such office or agency.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the
--------------------------------------------------------------
Servicer.
---------
The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
--------------------------------------------------------------
Servicer.
---------
The Depositor and the Servicer will each keep in full effect their
respective existence, rights and franchises as a corporation under the laws of
the United States or under the laws of one of the states thereof and will each
obtain and preserve their respective qualifications to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Sellers,
--------------------------------------------------------------------
the Servicer and Others.
------------------------
None of the Depositor, the Sellers, the Servicer or any of the
directors, officers, employees or agents of the Depositor, the Sellers or the
Servicer shall be under any liability to 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 Sellers, the Servicer or any such
Person against any breach of representations or warranties made by it herein or
protect the Depositor, the Sellers, the Servicer or any such Person from any
liability which would otherwise be imposed by reasons 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
Sellers, the Servicer and any director, officer, employee or agent of the
Depositor, the Sellers or the 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 Sellers, the Servicer and any
director, officer, employee or agent of the Depositor, the Sellers or the
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Loan or 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. None of the Depositor, the Sellers or the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and which in its opinion may
involve it in any expense or liability; provided, however, that any of the
Depositor, the Sellers or the Servicer may in its discretion undertake any such
action that it may deem necessary or desirable in respect of this Agreement and
the
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rights and duties of the parties hereto and interests of the Trustee and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor, the Sellers and the Servicer
shall be entitled to be reimbursed therefor out of the Certificate Account.
SECTION 6.04. Limitation on Resignation of Servicer.
-----------------------------------------------------
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor servicer and receipt by
the Trustee of a letter from each Rating Agency that such a resignation and
appointment will not result in a downgrading of the rating of any of the
Certificates or (b) upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination under clause (b)
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Servicer's responsibilities, duties, liabilities and obligations hereunder.
SECTION 6.05. Indemnification.
-------------------------------
The Servicer agrees to indemnify and hold the Trustee, the Depositor
and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Depositor or any
Certificateholder may sustain directly resulting from the negligence or willful
misconduct of the Servicer in the performance of its duties hereunder or in the
servicing of the Loans in compliance with the terms of this Agreement. The
Servicer shall not be liable or responsible for any of the representations,
covenants, warranties, responsibilities, duties or liabilities of any prior
servicer. The Servicer shall immediately notify the Trustee, the Depositor and
each Certificateholder if a claim is made by a third party for which any of such
parties could require indemnification from the Servicer under this Section 6.05,
and the Servicer shall assume (with the consent of the Trustee) the defense of
any such claim and advance all expenses in connection therewith, including
reasonable counsel fees, and promptly advance funds to pay, discharge and
satisfy any non-appealable, final judgment or decree which may be entered
against the Servicer, the Trustee, the Depositor and/or the Certificateholder in
respect of such claim. The indemnity provided for in this Section 6.05 shall
survive the termination of the Agreement.
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
---------------------------------
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to deposit in the Certificate
Account or remit to the Trustee any payment (other than a payment
required to be made under Section 4.01 hereof) required to be made with
respect to any Class of Certificates under the terms of this Agreement,
which failure shall continue unremedied for 5 days after the date upon
which written notice of such failure shall have been given (a) to the
Servicer by the Trustee or the Depositor or (b) to the Servicer, the
Depositor and the Trustee by the Holders of Certificates of such Class
evidencing not less than 25% of the Voting Rights allocated to such
Class;
(ii) any failure by the Servicer to duly observe or perform in
any material respect any other of the covenants or agreements on the
part of the Servicer contained in this Agreement, which failure shall
continue unremedied for a period of 30 days after the date on
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which written notice of such failure shall have been given (a) to the
Servicer by the Trustee or the Depositor or (b) to the Servicer, the
Depositor and the Trustee by the Holders of Certificates of any Class
evidencing not less than 25% of the Voting Rights allocated to such
Class;
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceeding, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 consecutive days;
(iv) the Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or all or substantially all of the property of
the Servicer;
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of, 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;
(vi) so long as the Servicer is a Seller, any failure by any
Seller to observe or perform in any material respect any of the other
covenants or agreements on the part of any Seller contained in this
Agreement, which failure shall continue unremedied for a period of 60
days after the date on which written notice of such failure shall have
been given to such Seller by the Trustee or the Depositor, or to such
Seller and the Trustee by the Holders of Certificates of any Class
evidencing not less than 25% of the Voting Rights allocated to such
Class; or
(vii) any failure of the Servicer to make any Advance in the
manner and at the time required to be made pursuant to Section 4.01
which continues unremedied for a period of 1 Business Day after the
date of such failure.
If an Event of Default described in clauses (i) to (vi) 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, the Trustee may, and at the direction of
the Holders of Certificates of any Class evidencing not less than 25% of the
Voting Rights allocated to such Class, by notice in writing to the Servicer
(with a copy to each Rating Agency) shall, terminate all of the rights and
obligations of the Servicer under this Agreement and in and to the Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. If an
Event of Default described in clause (vii) 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, the Trustee shall, by telephonic notice to the Servicer, followed
by notice in writing (with a copy to each Rating Agency), terminate all of the
rights and obligations of the Servicer under this Agreement and in and to the
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. On and after the receipt by the Servicer of such telephonic notice,
all authority and power of the Servicer hereunder, whether with respect to the
Loans or otherwise, shall pass to and be vested in the Trustee, as successor
Servicer. The Trustee shall, subject to 3.04 hereof, thereupon promptly make any
Advance described in clause (vii) hereof. The Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the 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 Loans and related documents, or otherwise.
Unless expressly provided in such written notice, no such termination shall
affect any obligation of the Servicer to pay amounts owed pursuant to Article
VIII. The Servicer agrees to cooperate with the Trustee in
83
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Certificate Account, or
thereafter be received with respect to the Loans.
The Trustee shall be entitled to be reimbursed from the Servicer (or by
the Trust Fund if the Servicer does not fulfill its obligations hereunder) for
all costs associated with the transfer of servicing from the predecessor
Servicer, including, without limitation, any costs or expenses associated with
the complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Trustee to correct
any errors or insufficiencies in the servicing data or otherwise to enable the
Trustee to service the Loans properly and effectively, costs reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, costs or expenses
associated with the transfer of all servicing files and costs of amending the
Agreement, if necessary. If the terminated Servicer does not pay such
reimbursement within thirty (30) days of its receipt of an invoice therefor,
such reimbursement shall be an expense of the Trust Fund and the Trustee shall
be entitled to receive such reimbursement from amounts on deposit in the
Certificate Account pursuant to Section 3.08(a)(vii)(B) or from the Distribution
Account pursuant to Section 3.08(b)(i), as applicable, in an amount not to
exceed the Trustee Permitted Withdrawal Amount and to receive all amounts in
excess of the Trustee Permitted Withdrawal Amount pursuant to Sections
4.02(a)(i)(A), 4.02(a)(ii)(A) and 4.02(a)(iii)(A).
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Loan which was due prior to the notice terminating
such Servicer's rights and obligations as Servicer hereunder and received after
such notice, that portion thereof to which such Servicer would have been
entitled pursuant to Sections 3.08(a)(i) through (viii), and any other amounts
payable to such Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
--------------------------------------------------------
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, subject to and to the extent
provided in Section 3.04, be the successor to the 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 Servicer by the terms and provisions hereof and
applicable law including the obligation to make Advances pursuant to Section
4.01. As compensation therefor, the Trustee shall be entitled to all funds
relating to the Loans that the Servicer would have been entitled to charge to
the Certificate Account or Distribution Account if the Servicer had continued to
act hereunder. Notwithstanding the foregoing, if the Trustee has become the
successor to the Servicer in accordance with Section 7.01 hereof, the Trustee
may, if it shall be unwilling to so act, or shall, if it is prohibited by
applicable law from making Advances pursuant to Section 4.01 hereof or if it is
otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Any successor to the Servicer shall be an institution
which is a FNMA and FHLMC approved seller/servicer in good standing, which has a
net worth of at least $10,000,000, and which is willing to service the Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer (other than liabilities of the Servicer under Section 6.03 hereof
incurred prior to termination of the Servicer under Section 7.01), with like
effect as if originally named as a party to this Agreement; and provided further
that no such delegation and assignment shall become effective unless each Rating
Agency acknowledges
84
that its rating of the Certificates in effect immediately prior to such
delegation and assignment will not be qualified or reduced as a result of such
delegation and assignment. Pending appointment of a successor to the Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, 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
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of the Servicing Fee permitted the Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Trustee nor any other successor servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer.
SECTION 7.03. Notification to Certificateholders.
-------------------------------------------------
(a) Upon any termination or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders and
to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
SECTION 7.04. Survivability of Servicer Liabilities.
----------------------------------------------------
Notwithstanding anything herein to the contrary, upon termination of
the Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
--------------------------------
The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge has occurred and remains uncured 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 Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that the Trustee shall not be
responsible for
85
the accuracy or content of any such resolution, certificate, statement, opinion,
report, document, order or other instrument.
Unless an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge shall have occurred and be continuing, 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 the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement which it believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder.
The Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer or other officers of the Trustee, unless it shall
be finally proven that the Trustee was negligent in ascertaining the pertinent
facts.
The Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with this
Agreement or with the direction of the Holders of Certificates evidencing not
less than 25% of the Voting Rights of the Certificates relating 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.
Subject to the other provisions of this Agreement and without limiting
the generality of this Section 8.01, the Trustee shall have no duty (A) to see
to any recording, filing, or depositing of this Agreement or any agreement
referred to herein or any financing statement or continuation statement
evidencing a security interest, or to see to the maintenance of any such
recording or filing or depositing or to any re-recording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust Fund other than from funds available in the
Certificate Account or (D) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties; provided, however, that the provisions of this
Section 8.01(iv) shall not apply during any period during which the Trustee is
acting in the capacity of servicer.
Notwithstanding anything contained in this Section 8.01 to the
contrary, 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.
SECTION 8.02 Certain Matters Affecting the Trustee.
---------------------------------------------------
Except as otherwise provided in Section 8.01:
(i) the Trustee (acting as Trustee, Tax Matters Person or as
agent of the Tax Matters Person for any REMIC) may request and rely
upon and shall be protected in acting or refraining from acting upon
any resolution, Officers' Certificate, Opinion of Counsel, 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 and the Trustee shall have no
86
responsibility to ascertain or confirm the genuineness of any signature
of any such party or parties;
(ii) the Trustee (acting as Trustee, Tax Matters Person or as
agent of the Tax Matters Person for any REMIC) may consult with
counsel, financial advisers or accountants and the advice of any such
counsel, financial advisers or accountants 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 not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(iv) 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 Holders of Certificates evidencing not less than
25% of the Voting Rights allocated to each Class of Certificates;
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 cost, expense or liability as a
condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Trustee and shall be repaid
pursuant to Sections 3.08(a)(vii)(B), 3.08(b)(i), 4.02(a)(i)(A),
4.02(a)(ii)(A) and 4.02(a)(iii)(A) hereof, as applicable;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants, custodians or attorneys, and the Trustee
shall not be responsible for any misconduct or negligence on the part
of any such agent, accountant, custodian or attorney appointed by the
Trustee with due care;
(vi) the Trustee shall not be required to risk or expend its
own funds or otherwise incur any financial liability in the performance
of any of its duties or in the exercise of any of its rights or powers
hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not assured to it, and none of the provisions contained in
this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement except during such time, if any, as
the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of the Servicer in accordance with the
terms of this Agreement;
(vii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement (other than as issuer of
the investment security);
(viii) the Trustee shall not be required to take notice or be
deemed to have knowledge of any Event of Default (except an event of
nonpayment by the Servicer) until a Responsible Officer of the Trustee
shall have received written notice thereof, and in the absence of
receipt of such notice, the Trustee may conclusively assume that there
is no default or Event of Default;
(ix) the Trustee shall be under no obligation to exercise any
of the trusts, rights or powers vested in it by this Agreement or to
institute, conduct or defend any litigation
87
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 satisfactory to the Trustee
against the costs, expenses and liabilities which may be incurred
therein or thereby;
(x) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(xi) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Fund created hereby or
the powers granted hereunder; and
(xii) anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special,
indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee has
been advised of the likelihood of such loss or damage and regardless of
the form of action.
SECTION 8.03. Trustee Not Liable for Certificates or Loans.
-----------------------------------------------------------
The recitals contained herein and in the Certificates shall be taken as
the statements of the Depositor or the Sellers, 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 or of any Loan or related document other than with respect to the
Trustee's execution and counter-signature of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any of the Certificates or of the proceeds of such Certificates or for the
use and application of any funds paid to the Depositor or the Servicer in
respect of the Loans or deposited in or withdrawn from the Certificate Account
by the Depositor or the Servicer. The Trustee shall not be responsible for the
legality or validity of this Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be issued
hereunder; provided, however, that the foregoing language shall not apply to the
Trustee's obligations under this Agreement.
SECTION 8.04. Trustee May Own Certificates.
------------------------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates, and may otherwise deal with the parties hereto
with the same rights as it would have if it were not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
------------------------------------------
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Distribution Account on each Distribution Date an
amount equal to the Trustee Fee (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) and expenses
for such Distribution Date. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability or expense (including reasonable attorney's fees)
(i) incurred in connection with any claim or legal action relating to (a) this
Agreement, (b) the Certificates or (c) the performance of any of the Trustee's
duties hereunder, other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence in the performance of any of the
Trustee's duties hereunder, (ii) resulting from any error in any tax or
information return prepared by the Servicer and (iii) incurred in connection
with Section 2.01(d) hereof. Such indemnity shall survive the termination of
this Agreement or the resignation or removal of the Trustee hereunder. Without
limiting the foregoing, the Servicer covenants and agrees, except as
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otherwise agreed upon in writing by the Depositor and the Trustee, and except
for any such expense, disbursement or advance as may arise from the Trustee's
negligence, bad faith or willful misconduct, to pay or reimburse the Trustee,
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement with respect
to the following: (A) the reasonable compensation and the expenses and
disbursements of its counsel not associated with the closing of the issuance of
the Certificates, (B) the reasonable compensation, expenses and disbursements of
any accountant, engineer or appraiser that is not regularly employed by the
Trustee, to the extent that the Trustee must engage such persons to perform acts
or services hereunder and (C) printing and engraving expenses in connection with
preparing any Definitive Certificates. Except as otherwise provided herein, the
Trustee shall not be entitled to payment or reimbursement for any routine
ongoing expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Certificate Registrar, Tax Matters Person or Paying Agent hereunder or
for any other expenses.
SECTION 8.06. Eligibility Requirements for Trustee.
---------------------------------------------------
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a 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 subject to
supervision or examination by federal or state authority and with a credit
rating which would not cause any one of the Rating Agencies to reduce their
respective then current ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction). If such
corporation or association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.06 the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07 hereof.
The entity serving as Trustee may have normal banking and trust relationships
with the Depositor and its affiliates or the Servicer and its affiliates;
provided, however, that such entity cannot be an affiliate of the Servicer other
than the Trustee in its role as successor to the Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
-------------------------------------------------
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor and the
Servicer and each Rating Agency not less than 60 days before the date specified
in such notice when, subject to Section 8.08, such resignation is to take
effect, and acceptance by a successor trustee in accordance with Section 8.08
meeting the qualifications set forth in Section 8.06. If no successor trustee
meeting such qualifications shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice or resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request thereto by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged as 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, or a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Servicer may
remove the Trustee, and shall, within 30 days after such removal, appoint a
successor
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trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to the Trustee, one copy of which shall be delivered to the
Servicer and one copy to the successor trustee.
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 by the successor trustee to the Servicer, one complete set to
the Trustee so removed and one complete set to the successor so appointed.
Notice of any removal of the Trustee shall be given to each Rating Agency by the
successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
--------------------------------
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor 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 Depositor, the Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, 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 into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be eligible under
the provisions of Section 8.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
------------------------------------------------------------
Notwithstanding any other provisions of this Agreement, 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 any Mortgage Note may at the
time be located, the 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
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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 and for the benefit of the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the prior written approval of the Servicer. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, or in the 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 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) to the extent necessary to effectuate the purposes of this
Section 8.10, all rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee
under this Agreement to advance funds on behalf of the Servicer, shall
be conferred or imposed upon and exercised or performed by the Trustee
and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
applicable Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder and such
appointment shall not, and shall not be deemed to, constitute any such
separate trustee or co-trustee as agent of the Trustee;
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee; and
(iv) the Servicer, and not the Trustee, shall be liable for
the payment of reasonable compensation, reimbursement and
indemnification to any such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and 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 and a copy thereof given to the
Servicer and the Depositor.
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
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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. Tax Matters.
--------------------------
It is intended that the assets with respect to which any REMIC election
is to be made, as set forth in the Preliminary Statement, shall constitute, and
that the conduct of matters relating to such assets shall be such as to qualify
such assets as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of each REMIC created hereunder and
that in such capacity it shall: (a) prepare and file, or cause to be prepared
and filed, in a timely manner, U.S. Real Estate Mortgage Investment Conduit
Income Tax Returns (Forms 1066 or any successor form adopted by the Internal
Revenue Service) and prepare and file or cause to be prepared and filed with the
Internal Revenue Service and applicable state or local tax authorities income
tax or information returns for each taxable year with respect to each REMIC
created hereunder, containing such information and at the times and in the
manner as may be required by the Code or regulations, rules or procedures issued
under the Code, or state or local tax laws, regulations, or rules, and furnish
or cause to be furnished to Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;
(c) make or cause to be made elections that such assets be treated as a REMIC on
the federal tax return for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and, if
necessary, state tax authorities, all information returns and reports as and
when required to be provided to them in accordance with the REMIC Provisions,
including without limitation, the calculation of any original issue discount
using the prepayment assumption described in the Prospectus Supplement; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a non-Permitted
Transferee, or a pass-through entity in which a non-Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control, conduct matters relating to such assets
at all times that any Certificates are outstanding so as to maintain the REMIC
status of each REMIC created hereunder under the REMIC Provisions; (g) not
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs created
hereunder; (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on each REMIC created hereunder
prior to its termination when and as the same shall be due and payable (but such
obligation shall not prevent the Trustee or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Trustee from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings); (i) ensure that federal, state or local income tax
or information returns shall be signed by the Trustee or such other person as
may be required to sign such returns by the Code or state or local laws,
regulations or rules; (j) maintain records relating to each REMIC created
hereunder, including, but not limited to, the income, expenses, assets, and
liabilities thereof and the fair market value and adjusted basis of the assets
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statements or information; and (k)
as and when necessary and
92
appropriate, represent each REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
each REMIC created hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of each REMIC created hereunder, and otherwise act on behalf of each
REMIC created hereunder in relation to any tax matter or controversy involving
it.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Loans. Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor, any such additional information
or data that the Trustee may, from time to time, reasonably request to enable
the Trustee to perform its duties as set forth herein. The Depositor hereby
indemnifies the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.
If any tax is imposed on "prohibited transactions" of any REMIC created
hereunder as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of any REMIC created hereunder as defined in Section
860G(c) of the Code, on any contribution to any REMIC created hereunder after
the Startup Day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax and all other
related costs shall be paid by (i) the Trustee, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Servicer, or if such tax arises out of or results from a
breach by the Servicer or a Seller of any of their obligations under this
Agreement, (iii) the Sellers, if any tax arises out of or results from any
Seller's obligation to repurchase a Loan pursuant to Section 2.02 or 2.03 or
(iv) in all other cases, or if the Trustee, the Servicer or a Seller fails to
honor its obligations under the preceding clause (i),(ii) or (iii), such tax
will be paid with amounts otherwise to be distributed to the Certificateholders,
as provided in Section 3.08(b).
SECTION 8.12. Periodic Filings.
-------------------------------
The Depositor shall prepare, execute and file all periodic reports
required under the Securities Exchange Act of 1934. In connection with the
preparation and filing of such periodic reports, the Servicer shall timely
provide to the Depositor all material information available to it which is
required to be included in such reports and not known to it to be in the
possession of the Depositor and such other information as the Depositor
reasonably may request from it and otherwise reasonably shall cooperate with the
Depositor. The Depositor shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to the
Depositor's inability or failure to obtain any information not resulting from
its own gross negligence or willful misconduct.
SECTION 8.13. Appointment of Custodians.
----------------------------------------
The Trustee may, with the consent of the Servicer, appoint one or more
custodians (each, a "CUSTODIAN") to hold all or a portion of the Trustee's
Mortgage Files as agent for the Trustee, by entering into a custodial agreement
("CUSTODIAL AGREEMENT"). The Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificateholders. The Trustee shall be liable
for the fees of any Custodian appointed hereunder. Each Custodian shall be a
depository institution subject to supervision by federal or
93
state authority and shall be qualified to do business in the jurisdiction in
which it holds any Trustee's Mortgage File.
SECTION 8.14. Trustee May Enforce Claims Without Possession
-----------------------------------------------------------
of Certificates.
----------------
All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, any such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
The Trustee shall afford the Sellers, the Depositor, the Servicer and
each Certificateholder, upon reasonable notice during normal business hours,
access to all records maintained by the Trustee in respect of its duties
hereunder and reasonable access to officers of the Trustee responsible for
performing such duties, or such other employees who can provide the information
required. Upon request, the Trustee shall furnish the Sellers, the Depositor,
the Servicer and each Certificateholder with its most recent financial
statements. The Trustee shall cooperate fully with the Sellers, the Servicer,
the Depositor and such Certificateholder and shall make available to the
Sellers, the Servicer, the Depositor and such Certificateholder for review and
copying at the expense of the party requesting such copies, such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Sellers, the Depositor, the Servicer and the Certificateholders
shall not have any responsibility or liability for any action or failure to act
by the Trustee and are not obligated to supervise the performance of the Trustee
under this Agreement or otherwise.
SECTION 8.15. Suits for Enforcement.
------------------------------------
In case an Event of Default or other default by the Servicer hereunder
shall occur and be continuing, the Trustee, in its discretion, may proceed to
protect and enforce its rights and the rights of the Certificateholders under
this Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Certificateholders.
SECTION 8.16. Derivative Transactions.
---------------------------------------
The Holders of a majority of the Percentage Interests of the Class R
Certificates may at any time, at their option, direct the Trustee to enter into
derivative transactions on behalf of, and for the benefit of, one or more
Classes of Certificates. All derivative transactions entered into by the Trustee
on behalf of Certificateholders will be subject to the receipt by the Trustee of
(a) Opinions of Counsel to the effect that the inclusion of the derivatives in
the Trust Fund will not (i) be inconsistent with the ERISA provisions set forth
in the Prospectus Supplement and in this Agreement, or cause the Publicly
Offered Certificates to fail to qualify for any applicable prohibited
transaction exemption, or (ii) disqualify any REMIC or result in a prohibited
transaction tax under the Code, and (b) written confirmation from each Rating
Agency that the inclusion of the derivative would not result in a downgrade of
its then current rating of any Class of Certificates.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or
---------------------------------------------
Purchase of all Loans.
----------------------
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase by the Servicer of all
Loans (and REO Properties) remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Stated Principal Balance of each Loan plus accrued and
unpaid interest thereon at the applicable Mortgage Rate and (ii) 100% of the
Stated Principal Balance of each Loan related to any REO Property plus accrued
and unpaid interest thereon at the applicable Mortgage Rate (the "TERMINATION
PRICE"); provided, however, that in no event shall the Termination Price be less
than (1) with respect to the Offered Certificates, 100% of their then
outstanding principal balance, (2) with respect to the Offered Certificates, any
accrued and unpaid interest thereon at the applicable Pass-Through Rate
(including any Class Unpaid Interest Amounts) and (3) with respect to the Class
AF-1, Class AV-1A, Class AV-1B, Class AV-2, Class B-1, Class B-2 and Class B-3
Certificates, any accrued and unpaid Net WAC Cap Carryover as of such
Distribution Date, or (b) the later of (i) the maturity or other liquidation of
the last Loan remaining in the Trust Fund (or any Advance with respect thereto)
and the disposition of all REO Property and (ii) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the 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 or (ii) the Latest Possible
Maturity Date. The right to purchase all Loans and REO Properties pursuant to
clause (a) above shall be conditioned upon the Pool Principal Balance, at the
time of any such repurchase, aggregating less than ten percent (10%) of the
Cut-off Date Pool Principal Balance. If the Servicer elects to exercise its
purchase right pursuant to clause (a) above, the Servicer's right to
reimbursement from the Trust Fund for any Advances previously made on the Loans
being purchased shall terminate as of the date the purchase of the Loans and REO
Properties is completed.
SECTION 9.02. Final Distribution on the Certificates.
-----------------------------------------------------
If on any Determination Date, the Servicer determines that there are no
Outstanding Loans and no other funds or assets in the Trust Fund other than the
funds in the Certificate Account, the Servicer shall direct the Trustee in
writing promptly to send a final distribution notice to each Certificateholder.
If the Servicer elects to terminate the Trust Fund pursuant to clause (a) of
Section 9.01, at least 20 days prior to the date notice is to be mailed to the
affected Certificateholders, the Servicer shall notify in writing the Depositor
and the Trustee of the date the Servicer intends to terminate the Trust Fund and
of the applicable repurchase price of the Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and not later than the 15th day of the month next preceding the month of
such final distribution. Any such notice shall specify (a) the Distribution Date
upon which final distribution on the Certificates will be made upon presentation
and surrender of Certificates at the office therein designated, (b) the amount
of principal to be included in such final distribution, (c) the location of the
office or agency at which such presentation and surrender must be made, and (d)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Servicer will give such notice
to each Rating Agency at the time such notice is given to Certificateholders.
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In the event such notice is given, the Servicer shall cause all funds
in the Certificate Account to be remitted to the Trustee for deposit in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Servicer the Mortgage Files for the Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 4.02 hereof, on the final Distribution Date and in proportion
to their respective Percentage Interests, with respect to Certificateholders of
the same Class, an amount equal to (i) as to the Offered Certificates, the Class
Certificate Balance of each Class thereof plus accrued interest thereon and (ii)
as to the Class R Certificates, the amount, if any, which remains on deposit in
the Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee 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 all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain a part of
the Trust Fund, on a pro-rata basis among the remaining Certificateholders. If
within one year after the second notice all Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets of the Trust Fund which remain subject
hereto.
SECTION 9.03. Additional Termination Requirements.
--------------------------------------------------
(a) In the event the Servicer exercises its purchase option as provided
in Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with an
Opinion of Counsel, at the expense of the Servicer, to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on any REMIC created
hereunder as defined 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
Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set
forth in the notice given by the Servicer under Section 9.02, the
Servicer shall prepare and the Trustee, at the expense of the Tax
Matters Person, shall adopt a plan of complete liquidation within the
meaning of section 860F(a)(4) of the Code which, as evidenced by an
Opinion of Counsel (which opinion shall not be an expense of the
Trustee or the Tax Matters Person), meets the requirements of a
qualified liquidation; and
(2) Within 90 days after the time of adoption of such a plan
of complete liquidation, the Trustee shall sell all of the assets of
the Trust Fund to the Servicer for cash in accordance with Section
9.01.
(b) The Trustee as agent for each REMIC created hereunder hereby agrees
to adopt and sign such a plan of complete liquidation upon the written request
of the Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as may
be reasonably requested by the Servicer.
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(c) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Servicer to prepare and the Trustee to adopt and sign a plan of
complete liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
-------------------------
This Agreement may be amended from time to time by the Depositor, the
Sellers, the Servicer and the Trustee, without the consent of any of the
Certificateholders, (a) to cure any ambiguity, (b) to correct or supplement any
provisions herein which may be defective or inconsistent with any other
provisions herein, (c) to conform this Agreement to the Prospectus Supplement,
(d) to make any other revisions relating to matters or questions arising under
this Agreement, provided that any such revisions shall not be inconsistent with
the provisions of this Agreement or (e) to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or helpful to (i) maintain
the qualification of the Trust Fund as one or more REMICs under the Code or (ii)
avoid or minimize the risk of imposition of any tax on any REMIC; provided that,
(x) in the case of clauses (a) - (d), that amendment will not adversely affect
in any material respect the interests of any Certificateholders covered by this
Agreement as evidenced either by an Opinion of Counsel to that effect or the
delivery to the Trustee of written notification from each Rating Agency that
provides, at the request of the Depositor, a rating for the Offered
Certificates, of the related series to the effect that that amendment or
supplement will not cause that Rating Agency to lower or withdraw the then
current rating assigned to those Certificates, and (y) in the case of clause
(e), the Trustee has received an Opinion of Counsel (which opinion shall not be
an expense of the Trustee or the Trust Fund) to the effect that the amendment is
necessary or helpful to (i) maintain the qualification of the Trust Fund as one
or more REMICs under the Code or (ii) avoid or minimize the risk of imposition
of any tax on any REMIC, as applicable.
This Agreement may also be amended from time to time by the Depositor,
the Sellers, the Servicer and the Trustee with the consent of the Holders of
Percentage Interests of at least 66% of each Class of Certificates affected
thereby for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (a) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the consent
of the Holder of such Certificate or (b) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all such Certificates then outstanding.
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 (which opinion shall not be an expense of the
Trustee or the Trust Fund) to the effect that such amendment will not cause the
Trust Fund to fail to qualify as one or more REMICs at any time that any
Certificates are outstanding. Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel (which opinion shall not be at the expense of the Trustee or the Trust
Fund) stating that the execution of such amendment is authorized or permitted by
this Agreement. The Trustee may, but shall not be obligated to, enter into any
such amendment that affects the Trustee's own rights, duties or immunities under
this Agreement.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.
97
It shall not be necessary for the consent of Certificateholders under
this Section 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.
SECTION 10.02. Recordation of Agreement; Counterparts.
------------------------------------------------------
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 Servicer at its expense, but only upon
direction by the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts, taken together, shall
constitute one and the same instrument.
SECTION 10.03. Governing Law.
-----------------------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND
THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
------------------------------------
It is the express intent of the parties hereto that the conveyance of
the Loans by the Sellers to the Depositor pursuant to Article II of this
Agreement be, and be construed as, an absolute sale thereof to the Depositor. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Sellers to the Depositor to secure a borrowing by the
Sellers from the Depositor. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Sellers or
any one of them, or if this Agreement is held or deemed to constitute or have
created a loan, lending transaction or an extension of credit by the Depositor
to the Sellers or any one of them, then and only then (i) this Agreement shall
be deemed, effective as of October 31, 2004, to be a security agreement within
the meaning of the Uniform Commercial Code of the State of New York and (ii) the
conveyance by the Sellers to the Depositor provided for in this Agreement shall
be deemed, effective as of October 31, 2004, to be an assignment and a grant by
the Sellers to the Depositor, and each of the Sellers does hereby grant and
assign to the Depositor, a security interest in, and lien upon, all of the
assets that constitute the Collateral, whether now owned or hereafter acquired.
The Sellers, for the benefit of the Depositor, shall, in connection
with the perfection of the security interest described in the preceding
paragraph of this Section 10.04, deliver to the Depositor on the Closing Date
the financing statements described in Schedule IV. The Sellers shall also
arrange for the delivery to the Depositor of any appropriate Uniform Commercial
Code continuation statements as may be necessary or appropriate to continue the
perfection of the security interest of the Depositor in the
98
Collateral, whether now owned or hereafter acquired. The Sellers, for the
benefit of the Depositor, shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement is held
or deemed to constitute or have created a loan, lending transaction or an
extension of credit by the Depositor to the Sellers or any one of them, then and
only then (i) this Agreement shall be deemed, effective as of October 31, 2004,
to be a security agreement within the meaning of the Uniform Commercial Code of
the State of New York and (ii) the conveyance by the Sellers to the Depositor
provided for in this Agreement shall be deemed, effective as of October 31,
2004, to be an assignment and a grant by the Sellers to the Depositor, and each
of the Sellers does hereby grant and assign to the Depositor, a security
interest in, and lien upon, all of the assets that constitute the Collateral,
whether now owned or hereafter acquired, such security interest shall 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. The Sellers
shall arrange for filing any appropriate Uniform Commercial Code financing
statements, continuation statements or other appropriate forms, notices or
documents in connection with any security interest granted or assigned to the
Depositor.
The Depositor does hereby assign the security interest in and lien on
the Collateral, whether now owned or hereafter acquired, to the Trustee for the
benefit of the Certificateholders. The Depositor shall arrange for filing of
such Uniform Commercial Code financing statements as are necessary to effect the
assignment of the security interest and lien to the Trustee for the benefit of
the Certificateholders.
It is the express intent of the parties hereto that the conveyance of
the Trust Fund by the Depositor to the Trustee pursuant to Article II of this
Agreement be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee to secure a borrowing by the
Depositor from the Trustee. However, in the event that, notwithstanding the
intent of the parties, the assets constituting the Trust Fund are held to be the
property of the Depositor, or if this Agreement is held or deemed to constitute
or have created a loan, lending transaction or an extension of credit by the
Trustee to the Depositor, then and only then (i) this Agreement shall be deemed,
effective as of October 31, 2004, to be a security agreement within the meaning
of the Uniform Commercial Code of the State of New York and (ii) the conveyance
by the Depositor to the Trustee provided for in this Agreement shall be deemed,
effective as of October 31, 2004, to be an assignment and a grant by the
Depositor to the Trustee, and the Depositor does hereby grant and assign to the
Trustee, for the benefit of the Certificateholders, a security interest in, and
lien upon, all of the assets that constitute the Collateral, whether now owned
or hereafter acquired.
The Depositor, for the benefit of the Trustee and the
Certificateholders, shall, in connection with the perfection of the security
interest described in the preceding paragraph of this Section 10.04, deliver to
the Trustee on the Closing Date the financing statements described in Schedule
V. The Depositor shall also arrange for the delivery to the Trustee of any
appropriate Uniform Commercial Code continuation statements as may be necessary
or appropriate to continue the perfection of the security interest of the
Trustee in the Trust Fund, and all of the proceeds thereof, whether now owned or
hereafter acquired. The Depositor, for the benefit of the Trustee and the
Certificateholders, shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement is held or
deemed to constitute or have created a loan, lending transaction or an extension
of credit by the Trustee to the Depositor, then and only then (i) this Agreement
shall be deemed, effective as of October 31, 2004, to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York and
(ii) the conveyance by the Depositor to the Trustee provided for in this
Agreement shall be deemed, effective as of October 31, 2004, to be an assignment
and a grant by the Depositor to the Trustee, and the Depositor does hereby grant
and assign to the Trustee, for the benefit of the Certificateholders, a security
interest in, and lien upon, all of the assets that constitute the Collateral,
whether now owned or hereafter acquired, such security interest shall be deemed
to be a perfected security interest of first
99
priority under applicable law and will be maintained as such throughout the term
of this Agreement. The Servicer shall, within ten (10) days of the Closing Date,
present to the appropriate filing offices in the jurisdictions set forth on
Schedules IV and V all of the financing statements delivered on the Closing Date
by the Sellers to the Depositor, the assignments thereof delivered by the
Depositor to the Trustee on the Closing Date and the financing statements
delivered by the Depositor to the Trustee on the Closing Date. The Servicer
shall arrange for filing any appropriate Uniform Commercial Code continuation
statements or other appropriate forms, notices or documents in connection with
any security interest granted or assigned to the Trustee.
SECTION 10.05. Notices.
-----------------------
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency and the Underwriters with respect to each of the following
of which it has actual knowledge:
1. any material change or amendment to this Agreement;
2. the occurrence of any Event of Default that has not been
cured;
3. the resignation or termination of the Servicer or the
Trustee and the appointment of any successor;
4. the repurchase or substitution of Loans pursuant to Section
2.03; and
5. the final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating Agency
and the Underwriters copies of the following:
1. each report to Certificateholders described in Section
4.03;
2. each annual statement as to compliance described in Section
3.15;
3. each annual independent public accountants' servicing
report described in Section 3.16; and
4. any notice of a purchase or sale of a Loan pursuant to
Section 2.02, 2.03 or 3.11.
(b) Except as expressly provided otherwise in this Agreement, all
directions, demands and notices hereunder shall be in writing and shall be
deemed to have been duly given when delivered to the following addresses or such
other addresses as may hereafter be furnished in writing to the Servicer and the
Trustee: (a) in the case of the Depositor, Popular ABS, Inc., 000 Xxxxxxxx
Xxxxxxxx, 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Chief
Financial Officer, facsimile number: (000) 000-0000, (b) in the case of the
Servicer, Equity One, Inc., 000 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000,
Attention: Chief Financial Officer, facsimile number: (000) 000-0000, (c) in the
case of any of the Sellers, to that Seller c/o Equity One, Inc., 000 Xxxxxxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention: Chief Financial Officer, facsimile
number: (000) 000-0000, (d) in the case of the Trustee, JPMorgan Chase Bank,
N.A., 4 New York Plaza, 6th Floor, New York, New York 10004, Attention:
Institutional Trust Services/Global Debt, Popular ABS 2004-5, facsimile number:
(000) 000-0000, (e) in the case of the Rating Agencies, the address specified
therefor in the definition corresponding to the name of such Rating Agency, and
(f) in the case of the Underwriters, (i) Greenwich Capital
100
Markets, Inc., 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention:
General Counsel, facsimile number: (000) 000-0000 and (ii) Friedman, Billings,
Xxxxxx & Co., Inc., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxx Xxxxxx, facsimile number: (000) 000-0000. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
Telephonic notice to the Servicer pursuant to Section 7.01 hereof shall be
deemed to have been duly given when the Trustee has delivered such notice via a
direct, in-person telephone conversation with the Chief Financial Officer of the
Servicer at (000) 000-0000 or such other telephone number as the Servicer may
provide to the Trustee in writing in accordance with the notice provisions of
this Section 10.05(b).
SECTION 10.06. Severability of Provisions.
------------------------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
--------------------------
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Servicer
without the prior written consent of the Trustee and the Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
----------------------------------------------------------
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as 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
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions 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 an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to 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
shall have any right in any manner whatever by virtue or by availing itself or
themselves of
101
any provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder or to enforce any right
under this Agreement, except in the manner herein provided and for the common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09. Inspection and Audit Rights.
-------------------------------------------
The Servicer agrees that, on reasonable prior notice, it will permit
and will cause each Subservicer to permit any representative of the Depositor or
the Trustee during the Servicer's normal business hours, to examine all the
books of account, records, reports and other papers of the Servicer relating to
the Loans, to make copies and extracts therefrom, to cause such books to be
audited by independent certified public accountants selected by the Depositor or
the Trustee and to discuss its affairs, finances and accounts relating to the
Loans with its officers, employees and independent public accountants (and by
this provision the Servicer hereby authorizes said accountants to discuss with
such representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor or the Trustee of any right under this
Section 10.09 shall be borne by the party requesting such inspection; all other
such expenses shall be borne by the Servicer or the related Subservicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
---------------------------------------------------------
It is the intention of the Depositor that the Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 10.11. The Closing.
---------------------------
The closing of the transactions contemplated by this Agreement shall
occur at 10:00 a.m. Philadelphia time on the Closing Date at the Closing Place.
SECTION 10.12. Interpretation.
------------------------------
Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, the part
the whole, (b) references to one gender includes all genders, (c) "or" has the
inclusive meaning frequently identified with the phrase "and/or," (d)
"including" has the inclusive meaning frequently identified with the phrase "but
not limited to" and (e) references to "hereunder," "hereof" or "herein" relate
to this Agreement. The section and other headings contained in this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect. Section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
SECTION 10.13. RESERVED.
------------------------
102
SECTION 10.14. No Partnership.
------------------------------
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Trustee and the Servicer shall be rendered as an independent contractor and
not as agent for the Certificateholders.
SECTION 10.15. Protection of Assets.
------------------------------------
(a) Except for transactions and activities entered into in connection
with the securitization that is the subject of this Agreement, the Trust Fund
created by this Agreement is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or sell
assets;
(3) engage in any business or activities.
(b) Each party to this agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid.
SECTION 10.16. Execution of Yield Maintenance Agreement.
--------------------------------------------------------
The Depositor hereby directs the Trustee to execute, deliver and
perform its obligations under the Yield Maintenance Agreement on the Closing
Date and thereafter on behalf of, and for the benefit of, the Holders of the
Class AV-1A, Class AV-1B and Class AV-2 Certificates. The Sellers, the
Depositor, the Servicer and the Holders of the Class AV-1A, Class AV-1B and
Class AV-2 Certificates (by their acceptance of such Certificates) acknowledge
and agree that the Trustee is executing, delivering and performing its
obligations under the Yield Maintenance Agreement and shall do so solely in its
capacity as Trustee of the Trust Fund and not in its individual capacity.
* * * * * *
103
IN WITNESS WHEREOF, the Depositor, the Trustee, each of the Sellers and
the Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
POPULAR ABS, INC., a Delaware corporation,
as Depositor
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
JPMORGAN CHASE BANK, N.A., a banking
association organized under the laws of the
United States, as Trustee
By: /s/ Xxxx X. XxXxxxxxx
--------------------------------------------
Xxxx X. XxXxxxxxx, Vice President
EQUITY ONE, INC., a Delaware corporation,
as a Seller and Servicer
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
EQUITY ONE, INCORPORATED, a Pennsylvania
corporation, as a Seller
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
EQUITY ONE, INC., a Minnesota corporation,
as a Seller
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
EQUITY ONE CONSUMER LOAN COMPANY, INC., a
New Hampshire corporation, as a Seller
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
SIGNATURE PAGE TO EQUITY ONE
POOLING AND SERVICING AGREEMENT 2004-5
POPULAR FINANCIAL SERVICES, LLC, a Delaware
limited liability company, as a Seller
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
POPULAR FINANCIAL FUNDING, LLC, a
Delaware limited liability company, as a
Seller
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and CFO
SIGNATURE PAGE TO EQUITY ONE
POOLING AND SERVICING AGREEMENT 2004-5
SCHEDULE I
Loan Schedule
SEE ATTACHED
S-I-1
SCHEDULE IIA
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of Equity One-Delaware
-----------------------------------------------------
Equity One-Delaware ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIA to the Depositor and the Trustee as of
the Closing Date or, if so specified herein, as of the Cut-off Date with respect
to the Loans being conveyed by Seller. Capitalized terms used but not otherwise
defined in this Schedule IIA shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT") relating
to the above-referenced Series, among Seller, the other Sellers and the Servicer
identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase Bank,
N.A., as trustee. The term "Agreement" shall be used in this Schedule to refer
to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a Delaware corporation and is validly
existing and in good standing under the laws of the State of Delaware
and is duly authorized and qualified to transact any and all business
contemplated by the Agreement to be conducted by Seller under the laws
of each state where a Mortgaged Property is located or is otherwise
exempt under applicable law from such qualification or is otherwise not
required under applicable law to effect such qualification.
(2) Seller has the full corporate power and authority to sell each Loan,
and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Agreement and has duly authorized
by all necessary corporate action on the part of Seller the execution,
delivery and performance of the Agreement; and the Agreement, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Agreement by Seller, the sale of the
Loans by Seller under the Agreement, the consummation of any other of
the transactions contemplated by the Agreement, and the fulfillment of
or compliance with the terms thereof are in the ordinary course of
business of Seller and will not (a) result in a material breach of any
term or provision of the charter or by-laws of Seller or (b) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which Seller is a party or by which
it may be bound or (c) constitute a material violation of any statute,
order or regulation applicable to Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of
any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair Seller's ability to
perform or meet any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
S-IIA-1
ability of Seller to sell the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Agreement
or the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required, Seller has
obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the Depositor as
a sale under applicable law; however, for financial reporting purposes
Seller intends to treat this transaction as the incurrence of debt by
Seller.
(7) Seller is not insolvent nor is Seller aware of any pending insolvency,
and Seller will not become insolvent as a result of its sale of the
Loans under the Agreement, and Seller's sale of the Loans to the
Depositor under the Agreement will not be made with any intent to
hinder, delay or defraud any of its creditors.
S-IIA-2
SCHEDULE IIB
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of Equity One-Minnesota
------------------------------------------------------
Equity One-Minnesota ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIB to the Depositor and the Trustee as of
the Closing Date or, if so specified herein, as of the Cut-off Date with respect
to the Loans being conveyed by Seller. Capitalized terms used but not otherwise
defined in this Schedule IIB shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT") relating
to the above-referenced Series, among Seller, the other Sellers and the Servicer
identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase Bank,
N.A., as trustee. The term "Agreement" shall be used in this Schedule to refer
to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a Minnesota corporation and is validly
existing and in good standing under the laws of the State of Minnesota
and is duly authorized and qualified to transact any and all business
contemplated by the Agreement to be conducted by Seller under the laws
of each state where a Mortgaged Property is located or is otherwise
exempt under applicable law from such qualification or is otherwise not
required under applicable law to effect such qualification.
(2) Seller has the full corporate power and authority to sell each Loan,
and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Agreement and has duly authorized
by all necessary corporate action on the part of Seller the execution,
delivery and performance of the Agreement; and the Agreement, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Agreement by Seller, the sale of the
Loans by Seller under the Agreement, the consummation of any other of
the transactions contemplated by the Agreement, and the fulfillment of
or compliance with the terms thereof are in the ordinary course of
business of Seller and will not (a) result in a material breach of any
term or provision of the charter or by-laws of Seller or (b) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which Seller is a party or by which
it may be bound or (c) constitute a material violation of any statute,
order or regulation applicable to Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of
any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair Seller's ability to
perform or meet any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
S-IIB-1
ability of Seller to sell the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Agreement
or the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required, Seller has
obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the Depositor as
a sale under applicable law; however, for financial reporting purposes
Seller intends to treat this transaction as the incurrence of debt by
Seller.
(7) Seller is not insolvent nor is Seller aware of any pending insolvency,
and Seller will not become insolvent as a result of its sale of the
Loans under the Agreement, and Seller's sale of the Loans to the
Depositor under the Agreement will not be made with any intent to
hinder, delay or defraud any of its creditors.
S-IIB-2
SCHEDULE IIC
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of Equity One-New Hampshire
----------------------------------------------------------
Equity One-New Hampshire ("SELLER") hereby makes the representations
and warranties set forth in this Schedule IIC to the Depositor and the Trustee
as of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller. Capitalized terms used but not
otherwise defined in this Schedule IIC shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a New Hampshire corporation and is validly
existing and in good standing under the laws of the State of New
Hampshire and is duly authorized and qualified to transact any and all
business contemplated by the Agreement to be conducted by Seller under
the laws of each state where a Mortgaged Property is located or is
otherwise exempt under applicable law from such qualification or is
otherwise not required under applicable law to effect such
qualification.
(2) Seller has the full corporate power and authority to sell each Loan,
and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Agreement and has duly authorized
by all necessary corporate action on the part of Seller the execution,
delivery and performance of the Agreement; and the Agreement, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Agreement by Seller, the sale of the
Loans by Seller under the Agreement, the consummation of any other of
the transactions contemplated by the Agreement, and the fulfillment of
or compliance with the terms thereof are in the ordinary course of
business of Seller and will not (a) result in a material breach of any
term or provision of the charter or by-laws of Seller or (b) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which Seller is a party or by which
it may be bound or (c) constitute a material violation of any statute,
order or regulation applicable to Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of
any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair Seller's ability to
perform or meet any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
S-IIC-1
ability of Seller to sell the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Agreement
or the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required, Seller has
obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the Depositor as
a sale under applicable law; however, for financial reporting purposes
Seller intends to treat this transaction as the incurrence of debt by
Seller.
(7) Seller is not insolvent nor is Seller aware of any pending insolvency,
and Seller will not become insolvent as a result of its sale of the
Loans under the Agreement, and Seller's sale of the Loans to the
Depositor under the Agreement will not be made with any intent to
hinder, delay or defraud any of its creditors.
S-IIC-2
SCHEDULE IID
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of Equity One-Pennsylvania
---------------------------------------------------------
Equity One-Pennsylvania ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IID to the Depositor and the Trustee as of
the Closing Date or, if so specified herein, as of the Cut-off Date with respect
to the Loans being conveyed by Seller. Capitalized terms used but not otherwise
defined in this Schedule IID shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT") relating
to the above-referenced Series, among Seller, the other Sellers and the Servicer
identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase Bank,
N.A., as trustee. The term "Agreement" shall be used in this Schedule to refer
to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a Pennsylvania corporation and is validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly authorized and qualified to transact any and
all business contemplated by the Agreement to be conducted by Seller
under the laws of each state where a Mortgaged Property is located or
is otherwise exempt under applicable law from such qualification or is
otherwise not required under applicable law to effect such
qualification.
(2) Seller has the full corporate power and authority to sell each Loan,
and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by the Agreement and has duly authorized
by all necessary corporate action on the part of Seller the execution,
delivery and performance of the Agreement; and the Agreement, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Agreement by Seller, the sale of the
Loans by Seller under the Agreement, the consummation of any other of
the transactions contemplated by the Agreement, and the fulfillment of
or compliance with the terms thereof are in the ordinary course of
business of Seller and will not (a) result in a material breach of any
term or provision of the charter or by-laws of Seller or (b) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which Seller is a party or by which
it may be bound or (c) constitute a material violation of any statute,
order or regulation applicable to Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of
any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair Seller's ability to
perform or meet any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
S-IID-1
ability of Seller to sell the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Agreement
or the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required, Seller has
obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the Depositor as
a sale under applicable law; however, for financial reporting purposes
Seller intends to treat this transaction as the incurrence of debt by
Seller.
(7) Seller is not insolvent nor is Seller aware of any pending insolvency,
and Seller will not become insolvent as a result of its sale of the
Loans under the Agreement, and Seller's sale of the Loans to the
Depositor under the Agreement will not be made with any intent to
hinder, delay or defraud any of its creditors.
S-IID-2
SCHEDULE IIE
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of Popular Financial
---------------------------------------------------
Popular Financial ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIE to the Depositor and the Trustee as of
the Closing Date or, if so specified herein, as of the Cut-off Date with respect
to the Loans being conveyed by Seller. Capitalized terms used but not otherwise
defined in this Schedule IIE shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT") relating
to the above-referenced Series, among Seller, the other Sellers and the Servicer
identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase Bank,
N.A., as trustee. The term "Agreement" shall be used in this Schedule to refer
to the Pooling and Servicing Agreement.
(1) Seller is duly formed as a Delaware limited liability company and is
validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by the Agreement to be conducted by Seller under
the laws of each state where a Mortgaged Property is located or is
otherwise exempt under applicable law from such qualification or is
otherwise not required under applicable law to effect such
qualification.
(2) Seller has the full power and authority to sell each Loan, and to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by the Agreement and has duly authorized by
all necessary corporate action on the part of Seller the execution,
delivery and performance of the Agreement; and the Agreement, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Agreement by Seller, the sale of the
Loans by Seller under the Agreement, the consummation of any other of
the transactions contemplated by the Agreement, and the fulfillment of
or compliance with the terms thereof are in the ordinary course of
business of Seller and will not (a) result in a material breach of any
term or provision of the operating agreement of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which Seller is a party
or by which it may be bound or (c) constitute a material violation of
any statute, order or regulation applicable to Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Seller; and Seller is not in breach or violation of
any material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair Seller's
ability to perform or meet any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
S-IIE-1
ability of Seller to sell the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Agreement
or the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required, Seller has
obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the Depositor as
a sale under applicable law; however, for financial reporting purposes
Seller intends to treat this transaction as the incurrence of debt by
Seller.
(7) Seller is not insolvent nor is Seller aware of any pending insolvency,
and Seller will not become insolvent as a result of its sale of the
Loans under the Agreement, and Seller's sale of the Loans to the
Depositor under the Agreement will not be made with any intent to
hinder, delay or defraud any of its creditors.
S-IIE-2
SCHEDULE IIF
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of Popular Funding
-------------------------------------------------
Popular Funding ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIF to the Depositor and the Trustee as of
the Closing Date or, if so specified herein, as of the Cut-off Date with respect
to the Loans being conveyed by Seller. Capitalized terms used but not otherwise
defined in this Schedule IIF shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT") relating
to the above-referenced Series, among Seller, the other Sellers and the Servicer
identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase Bank,
N.A., as trustee. The term "Agreement" shall be used in this Schedule to refer
to the Pooling and Servicing Agreement.
(1) Seller is duly formed as a Delaware limited liability company and is
validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by the Agreement to be conducted by Seller under
the laws of each state where a Mortgaged Property is located or is
otherwise exempt under applicable law from such qualification or is
otherwise not required under applicable law to effect such
qualification.
(2) Seller has the full power and authority to sell each Loan, and to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by the Agreement and has duly authorized by
all necessary corporate action on the part of Seller the execution,
delivery and performance of the Agreement; and the Agreement, assuming
the due authorization, execution and delivery thereof by the other
parties thereto, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of the Agreement by Seller, the sale of the
Loans by Seller under the Agreement, the consummation of any other of
the transactions contemplated by the Agreement, and the fulfillment of
or compliance with the terms thereof are in the ordinary course of
business of Seller and will not (a) result in a material breach of any
term or provision of the operating agreement of Seller or (b)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which Seller is a party
or by which it may be bound or (c) constitute a material violation of
any statute, order or regulation applicable to Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Seller; and Seller is not in breach or violation of
any material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair Seller's
ability to perform or meet any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
S-IIF-1
ability of Seller to sell the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Agreement
or the consummation of the transactions contemplated thereby, or if any
such consent, approval, authorization or order is required, Seller has
obtained the same.
(6) Seller intends to treat the conveyance of the Loans to the Depositor as
a sale under applicable law; however, for financial reporting purposes
Seller intends to treat this transaction as the incurrence of debt by
Seller.
(7) Seller is not insolvent nor is Seller aware of any pending insolvency,
and Seller will not become insolvent as a result of its sale of the
Loans under the Agreement, and Seller's sale of the Loans to the
Depositor under the Agreement will not be made with any intent to
hinder, delay or defraud any of its creditors.
S-IIF-2
SCHEDULE IIX
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Representations and Warranties of the Servicer
----------------------------------------------
Equity-One Delaware, in its capacity as Servicer, hereby makes the
representations and warranties set forth in this Schedule IIX to the Depositor
and the Trustee as of the Closing Date or, if so specified herein, as of the
Cut-off Date with respect to the Loans being conveyed by the Seller(s).
Capitalized terms used but not otherwise defined in this Schedule IIX shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"POOLING AND SERVICING AGREEMENT") relating to the above-referenced Series,
among Servicer, the Sellers identified therein, Popular ABS, Inc., as depositor,
and JPMorgan Chase Bank, N.A., as trustee. The term "Agreement" shall be used in
this Schedule to refer to the Pooling and Servicing Agreement.
(1) Servicer is duly organized as a Delaware corporation and is validly
existing and in good standing under the laws of the State of Delaware
and is duly authorized and qualified to transact any and all business
contemplated by the Agreement to be conducted by Servicer in any state
in which a Mortgaged Property is located or is otherwise not required
under applicable law to effect such qualification and, in any event, is
in compliance with the doing business laws of any such state, to the
extent necessary to ensure its ability to service the Loans in
accordance with the terms of the Agreement and to perform any of its
other obligations under the Agreement in accordance with the terms
thereof.
(2) Servicer has the full corporate power and authority to service each
Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by the Agreement and has duly
authorized by all necessary corporate action on the part of Servicer
the execution, delivery and performance of the Agreement; and the
Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Servicer, enforceable against Servicer in
accordance with its terms, except that (a) the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Servicer, the servicing
of the Loans by Servicer under the Agreement, the consummation of any
other of the transactions contemplated by the Agreement, and the
fulfillment of or compliance with the terms thereof are in the ordinary
course of business of Servicer and will not (a) result in a material
breach of any term or provision of the charter or by-laws of Servicer
or (b) materially conflict with, result in a material breach, violation
or acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which Servicer is a party
or by which it may be bound or (c) constitute a material violation of
any statute, order or regulation applicable to Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Servicer; and Servicer is not in breach or violation
of any material indenture or other material agreement or instrument, or
in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair
Servicer's ability to perform or meet any of its obligations under the
Agreement.
S-IIX-1
(4) No litigation is pending or, to the best of Servicer's knowledge,
threatened, against Servicer that would materially and adversely affect
the execution, delivery or enforceability of the Agreement or the
ability of Servicer to service the Loans or to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Servicer of, or compliance by Servicer with, the
Agreement or the consummation of the transactions contemplated thereby,
or if any such consent, approval, authorization or order is required,
Servicer has obtained the same.
S-IIX-2
SCHEDULE IIIA
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Loan Representations and Warranties of Equity One-Delaware
----------------------------------------------------------
Equity One-Delaware ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIIA to the Depositor and the Trustee as
of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller and the Mortgages, Mortgage Notes
and Mortgaged Properties related thereto. Capitalized terms used but not
otherwise defined in this Schedule IIIA shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) The information set forth on Schedule I to the Agreement with respect
to the Loans is true and correct in all material respects as of the
Closing Date.
(2) As of the Cut-off Date, no Loan was 30 or more days contractually past
due (assuming 30 day months).
(3) None of the Loans are Second Lien Loans.
(4) No Loan had a Combined Loan-to-Value Ratio at origination in excess of
100%. For purposes of determining the date of origination on which each
Loan's Combined Loan-to-Value Ratio is measured, no Loan has been
significantly modified within the meaning of Treasury Regulation
1.860G-2(b) as of the Closing Date.
(5) Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage.
(6) Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Second Lien
Loan, which shall be subject to prior liens approved by Seller),
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to the Agreement.
(7) To the best of Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property.
(8) There is no valid right of rescission, offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
S-IIIA-1
(9) To the best of Seller's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of such
Mortgage, except those which are insured against by the title insurance
policy referred to in item (13) below.
(10) To the best of the Seller's knowledge, each Mortgaged Property is free
of material damage and in good repair.
(11) Each Loan at origination complied in all material respects with
applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and all applicable
predatory and abusive lending laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(12) As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that
a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(13) For each Loan, other than Second Lien Loans with initial principal
balances of $50,000 or less, a lender's policy of title insurance
together with a condominium endorsement and extended coverage
endorsement, if applicable, in an amount at least equal to the Cut-off
Date Stated Principal Balance of each such Loan or a commitment
(binder) to issue the same was effective on the date of the origination
of each Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, which policy insures the Seller and successor owners of
indebtedness secured by the related insured Mortgage, as to the
applicable priority lien of the Mortgage subject to the exceptions set
forth in item (4) above; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(14) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on or
being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and such Mortgaged
Property is lawfully occupied under applicable law.
(16) Each Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note
and such
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Mortgage had legal capacity to execute such Mortgage Note and such
Mortgage and each such Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(17) The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making, or closing or recording such Loans were paid.
(18) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including, (a) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (b) otherwise by judicial
foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of the
forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) The origination, underwriting and collection practices used by the
Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(22) There is no pledged account or other security other than any Escrow
Account and real estate securing the Mortgagor's obligations.
(23) No Loan has a shared appreciation feature, or other contingent interest
feature.
(24) Each Loan contains a customary "due on sale" clause.
(25) To the best of Seller's knowledge: at the Cut-off Date, the
improvements on each Mortgaged Property were covered by a valid and
existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage and coverage for such
other hazards as are customary in the area where such Mortgaged
Property is located in an amount at least equal to the lesser of (a)
the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage
creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances
of such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. For all Mortgages creating a
first lien on the related Mortgaged Property, all such individual
insurance policies and all flood policies referred to in item (25)
below contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
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(26) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration was required at closing with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (a) the original outstanding
principal balance of the related Loan, (b) the minimum amount required
to compensate for damage or loss on a maximum insurable value basis or
(c) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of Seller's knowledge, there is no proceeding occurring,
pending or threatened for the total or partial condemnation of any
Mortgaged Property.
(28) There is no material monetary default existing under any Mortgage or
the related Mortgage Note and, to the best of the Seller's knowledge,
there is no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration.
(29) Each Mortgaged Property is improved by a one- to eight-family, or other
multi-family, residential dwelling including condominium units, which,
to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under
state law.
(30) Each Loan is being serviced by the Servicer.
(31) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the
related loan schedule. The consolidated principal amount does not
exceed the original principal amount of such Loan. No Mortgage Note
permits or obligates the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(32) To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid, except for items which have been assessed, but are not yet
due and payable. Except for (a) payments in the nature of escrow
payments, and (b) interest accruing from the date of any Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever is
later, to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(33) Each Loan was underwritten in all material respects in accordance with
the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
(34) An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the
approval or disapproval of such Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(35) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar
arrangement.
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(36) The Loans were selected from among the outstanding residential and
multi-family mortgage loans in Seller's portfolio at the Closing Date
as to which the representations and warranties made as to such Loans
set forth in this Schedule IIIA can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders.
(37) Each Loan has a Due Date in the month of the first Distribution Date.
(38) Approximately (a) 5.9637% of the Group I Loans and (b) none of the
Group II Loans (by principal balance) are Balloon Loans.
(39) No Loan is subject to negative amortization or deferred interest
payments.
(40) No Mortgagor has requested relief under the Relief Act.
(41) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which
would be either "consumer credit contracts" or "purchase money loans"
as such terms are defined in 16 C.F.R. ss.433.1.
(42) No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(43) Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3)
of the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
(44) The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
(45) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Seller have been
capitalized under any Mortgage or related Mortgage Note.
(46) All Loans calculate interest utilizing the actuarial method.
(47) None of the Loans are subject to the Home Ownership & Equity Protection
Act of 1994.
(48) As of the Cut-off Date, the Mortgage Rate relating to each Loan that is
an adjustable rate mortgage loan has been adjusted in accordance with
the terms of the related Mortgage Note.
(49) Each Loan at the time it was made complied in all material respects
with applicable local, state, and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
(50) No Loan is classified and/or defined as (a) a "high cost home,"
"covered" (excluding home loans defined as "covered home loans"
pursuant to the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high risk
home," or "predatory" loan under any applicable federal, state or local
law (or is similarly classified and/or defined using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), or (b) a "High Cost Loan" or
"Covered Loan," as applicable (as such terms are defined in the then
current Standard & Poor's LEVELS(R) Glossary which is now Version 5.6
Revised, Appendix E).
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(51) No Loan originated on or after October 1, 2002, and before March 7,
2003, is secured by property located in the State of Georgia, and no
Loan originated on or after March 7, 2003, is a "high cost home loan"
as defined under the Georgia Fair Lending Act.
(52) No Loan secured by property located in the State of Kentucky is a
"high-cost home loan" as defined in Kentucky House Xxxx 207.
(53) No Loan secured by property located in the State of New York (a) had an
original principal balance of $300,000 or less and (b) had an
application date on or after April 1, 2003, the terms of which loan
equal or exceed either the APR or the points and fees threshold for
"high-cost home loans," as defined in Section 6-L of the New York State
Banking Law.
(54) No Loan secured by property located in the State of New Mexico is a
"high-cost home loan" as defined in the New Mexico Home Loan Protection
Act.
(55) No Loan secured by property located in the State of New Jersey is a
"high-cost home loan" as defined in the New Jersey Home Ownership
Security Act of 2002.
(56) No Loan secured by property located in the State of Illinois is in
violation of the provisions of the Illinois Interest Act.
(57) No Group II-A Loan originated on or after October 1, 2002 has a
prepayment penalty longer than three years after its origination and no
Group II-A Loan originated prior to October 1, 2002 has a prepayment
penalty longer than five years after its origination.
(58) The Servicer has fully furnished with respect to each Group II-A Loan
(and, on a going forward basis, will fully furnish), in accordance with
the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis (during the period in which the Servicer serviced the Group II-A
Loans).
(59) No proceeds from any Group II-A Loan were used to purchase
single-premium credit insurance policies.
(60) The original principal balance of each Group II-A Loan is within FHLMC
loan balance limits in effect as of the Cut-off Date for conforming
one- to four-family mortgage loans.
(61) With respect to any Group II-A Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the mortgage loan transaction.
(62) No Loan secured by property located in the Commonwealth of
Massachusetts is a "high cost home mortgage loan" as defined in the
Massachusetts Predatory Home Loan Practices Act.
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SCHEDULE IIIB
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Loan Representations and Warranties of Equity One-Minnesota
-----------------------------------------------------------
Equity One-Minnesota ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIIB to the Depositor and the Trustee as
of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller and the Mortgages, Mortgage Notes
and Mortgaged Properties related thereto. Capitalized terms used but not
otherwise defined in this Schedule IIIB shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) The information set forth on Schedule I to the Agreement with respect
to the Loans is true and correct in all material respects as of the
Closing Date.
(2) As of the Cut-off Date, no Loan was 30 or more days contractually past
due (assuming 30 day months).
(3) None of the Loans are Second Lien Loans.
(4) No Loan had a Combined Loan-to-Value Ratio at origination in excess of
100%. For purposes of determining the date of origination on which each
Loan's Combined Loan-to-Value Ratio is measured, no Loan has been
significantly modified within the meaning of Treasury Regulation
1.860G-2(b) as of the Closing Date.
(5) Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage.
(6) Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Second Lien
Loan, which shall be subject to prior liens approved by Seller),
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to the Agreement.
(7) To the best of Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property.
(8) There is no valid right of rescission, offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
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(9) To the best of Seller's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of such
Mortgage, except those which are insured against by the title insurance
policy referred to in item (13) below.
(10) To the best of the Seller's knowledge, each Mortgaged Property is free
of material damage and in good repair.
(11) Each Loan at origination complied in all material respects with
applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and all applicable
predatory and abusive lending laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(12) As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that
a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(13) For each Loan, other than Second Lien Loans with initial principal
balances of $50,000 or less, a lender's policy of title insurance
together with a condominium endorsement and extended coverage
endorsement, if applicable, in an amount at least equal to the Cut-off
Date Stated Principal Balance of each such Loan or a commitment
(binder) to issue the same was effective on the date of the origination
of each Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, which policy insures the Seller and successor owners of
indebtedness secured by the related insured Mortgage, as to the
applicable priority lien of the Mortgage subject to the exceptions set
forth in item (4) above; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(14) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on or
being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and such Mortgaged
Property is lawfully occupied under applicable law.
(16) Each Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note
and such Mortgage had legal capacity to execute such Mortgage Note and
such
S-IIIB-2
Mortgage and each such Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(17) The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making, or closing or recording such Loans were paid.
(18) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including, (a) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (b) otherwise by judicial
foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of the
forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) The origination, underwriting and collection practices used by the
Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(22) There is no pledged account or other security other than any Escrow
Account and real estate securing the Mortgagor's obligations.
(23) No Loan has a shared appreciation feature, or other contingent interest
feature.
(24) Each Loan contains a customary "due on sale" clause.
(25) To the best of Seller's knowledge: at the Cut-off Date, the
improvements on each Mortgaged Property were covered by a valid and
existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage and coverage for such
other hazards as are customary in the area where such Mortgaged
Property is located in an amount at least equal to the lesser of (a)
the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage
creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances
of such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. For all Mortgages creating a
first lien on the related Mortgaged Property, all such individual
insurance policies and all flood policies referred to in item (25)
below contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
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(26) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration was required at closing with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (a) the original outstanding
principal balance of the related Loan, (b) the minimum amount required
to compensate for damage or loss on a maximum insurable value basis or
(c) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of Seller's knowledge, there is no proceeding occurring,
pending or threatened for the total or partial condemnation of any
Mortgaged Property.
(28) There is no material monetary default existing under any Mortgage or
the related Mortgage Note and, to the best of the Seller's knowledge,
there is no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration.
(29) Each Mortgaged Property is improved by a one- to eight-family, or other
multi-family, residential dwelling including condominium units, which,
to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under
state law.
(30) Each Loan is being serviced by the Servicer.
(31) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the
related loan schedule. The consolidated principal amount does not
exceed the original principal amount of such Loan. No Mortgage Note
permits or obligates the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(32) To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid, except for items which have been assessed, but are not yet
due and payable. Except for (a) payments in the nature of escrow
payments, and (b) interest accruing from the date of any Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever is
later, to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(33) Each Loan was underwritten in all material respects in accordance with
the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
(34) An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the
approval or disapproval of such Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(35) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar
arrangement.
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(36) The Loans were selected from among the outstanding residential and
multi-family mortgage loans in Seller's portfolio at the Closing Date
as to which the representations and warranties made as to such Loans
set forth in this Schedule IIIB can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders.
(37) Each Loan has a Due Date in the month of the first Distribution Date.
(38) None of the Group I Loans and none of the Group II Loans are Balloon
Loans.
(39) No Loan is subject to negative amortization or deferred interest
payments.
(40) No Mortgagor has requested relief under the Relief Act.
(41) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which
would be either "consumer credit contracts" or "purchase money loans"
as such terms are defined in 16 C.F.R. ss.433.1.
(42) No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(43) Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3)
of the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
(44) The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
(45) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Seller have been
capitalized under any Mortgage or related Mortgage Note.
(46) All Loans calculate interest utilizing the actuarial method.
(47) None of the Loans are subject to the Home Ownership & Equity Protection
Act of 1994.
(48) As of the Cut-off Date, the Mortgage Rate relating to each Loan that is
an adjustable rate mortgage loan has been adjusted in accordance with
the terms of the related Mortgage Note.
(49) Each Loan at the time it was made complied in all material respects
with applicable local, state, and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
(50) No Loan is classified and/or defined as (a) a "high cost home,"
"covered" (excluding home loans defined as "covered home loans"
pursuant to the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high risk
home," or "predatory" loan under any applicable federal, state or local
law (or is similarly classified and/or defined using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), or (b) a "High Cost Loan" or
"Covered Loan," as applicable (as such terms are defined in the then
current Standard & Poor's LEVELS(R) Glossary which is now Version 5.6
Revised, Appendix E).
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(51) No Loan originated on or after October 1, 2002, and before March 7,
2003, is secured by property located in the State of Georgia, and no
Loan originated on or after March 7, 2003, is a "high cost home loan"
as defined under the Georgia Fair Lending Act.
(52) No Loan secured by property located in the State of Kentucky is a
"high-cost home loan" as defined in Kentucky House Xxxx 207.
(53) No Loan secured by property located in the State of New York (a) had an
original principal balance of $300,000 or less and (b) had an
application date on or after April 1, 2003, the terms of which loan
equal or exceed either the APR or the points and fees threshold for
"high-cost home loans," as defined in Section 6-L of the New York State
Banking Law.
(54) No Loan secured by property located in the State of New Mexico is a
"high-cost home loan" as defined in the New Mexico Home Loan Protection
Act.
(55) No Loan secured by property located in the State of New Jersey is a
"high-cost home loan" as defined in the New Jersey Home Ownership
Security Act of 2002.
(56) No Loan secured by property located in the State of Illinois is in
violation of the provisions of the Illinois Interest Act.
(57) No Group II-A Loan originated on or after October 1, 2002 has a
prepayment penalty longer than three years after its origination and no
Group II-A Loan originated prior to October 1, 2002 has a prepayment
penalty longer than five years after its origination.
(58) The Servicer has fully furnished with respect to each Group II-A Loan
(and, on a going forward basis, will fully furnish), in accordance with
the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis (during the period in which the Servicer serviced the Group II-A
Loans).
(59) No proceeds from any Group II-A Loan were used to purchase
single-premium credit insurance policies.
(60) The original principal balance of each Group II-A Loan is within FHLMC
loan balance limits in effect as of the Cut-off Date for conforming
one- to four-family mortgage loans.
(61) With respect to any Group II-A Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the mortgage loan transaction.
(62) No Loan secured by property located in the Commonwealth of
Massachusetts is a "high cost home mortgage loan" as defined in the
Massachusetts Predatory Home Loan Practices Act.
S-IIIB-6
SCHEDULE IIIC
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Loan Representations and Warranties of Equity One-New Hampshire
---------------------------------------------------------------
Equity One-New Hampshire ("SELLER") hereby makes the representations
and warranties set forth in this Schedule IIIC to the Depositor and the Trustee
as of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller and the Mortgages, Mortgage Notes
and Mortgaged Properties related thereto. Capitalized terms used but not
otherwise defined in this Schedule IIIC shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) The information set forth on Schedule I to the Agreement with respect
to the Loans is true and correct in all material respects as of the
Closing Date.
(2) As of the Cut-off Date, no Loan was 30 or more days contractually past
due (assuming 30 day months).
(3) None of the Loans are Second Lien Loans.
(4) No Loan had a Combined Loan-to-Value Ratio at origination in excess of
100%. For purposes of determining the date of origination on which each
Loan's Combined Loan-to-Value Ratio is measured, no Loan has been
significantly modified within the meaning of Treasury Regulation
1.860G-2(b) as of the Closing Date.
(5) Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage.
(6) Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Second Lien
Loan, which shall be subject to prior liens approved by Seller),
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to the Agreement.
(7) To the best of Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property.
(8) There is no valid right of rescission, offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
S-IIIC-1
(9) To the best of Seller's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of such
Mortgage, except those which are insured against by the title insurance
policy referred to in item (13) below.
(10) To the best of the Seller's knowledge, each Mortgaged Property is free
of material damage and in good repair.
(11) Each Loan at origination complied in all material respects with
applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and all applicable
predatory and abusive lending laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(12) As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that
a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(13) For each Loan, other than Second Lien Loans with initial principal
balances of $50,000 or less, a lender's policy of title insurance
together with a condominium endorsement and extended coverage
endorsement, if applicable, in an amount at least equal to the Cut-off
Date Stated Principal Balance of each such Loan or a commitment
(binder) to issue the same was effective on the date of the origination
of each Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, which policy insures the Seller and successor owners of
indebtedness secured by the related insured Mortgage, as to the
applicable priority lien of the Mortgage subject to the exceptions set
forth in item (4) above; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(14) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on or
being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and such Mortgaged
Property is lawfully occupied under applicable law.
(16) Each Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note
and such
S-IIIC-2
Mortgage had legal capacity to execute such Mortgage Note and such
Mortgage and each such Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(17) The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making, or closing or recording such Loans were paid.
(18) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including, (a) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (b) otherwise by judicial
foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of the
forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) The origination, underwriting and collection practices used by the
Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(22) There is no pledged account or other security other than any Escrow
Account and real estate securing the Mortgagor's obligations.
(23) No Loan has a shared appreciation feature, or other contingent interest
feature.
(24) Each Loan contains a customary "due on sale" clause.
(25) To the best of Seller's knowledge: at the Cut-off Date, the
improvements on each Mortgaged Property were covered by a valid and
existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage and coverage for such
other hazards as are customary in the area where such Mortgaged
Property is located in an amount at least equal to the lesser of (a)
the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage
creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances
of such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. For all Mortgages creating a
first lien on the related Mortgaged Property, all such individual
insurance policies and all flood policies referred to in item (25)
below contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
S-IIIC-3
(26) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration was required at closing with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (a) the original outstanding
principal balance of the related Loan, (b) the minimum amount required
to compensate for damage or loss on a maximum insurable value basis or
(c) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of Seller's knowledge, there is no proceeding occurring,
pending or threatened for the total or partial condemnation of any
Mortgaged Property.
(28) There is no material monetary default existing under any Mortgage or
the related Mortgage Note and, to the best of the Seller's knowledge,
there is no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration.
(29) Each Mortgaged Property is improved by a one- to eight-family, or other
multi-family, residential dwelling including condominium units, which,
to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under
state law.
(30) Each Loan is being serviced by the Servicer.
(31) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the
related loan schedule. The consolidated principal amount does not
exceed the original principal amount of such Loan. No Mortgage Note
permits or obligates the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(32) To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid, except for items which have been assessed, but are not yet
due and payable. Except for (a) payments in the nature of escrow
payments, and (b) interest accruing from the date of any Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever is
later, to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(33) Each Loan was underwritten in all material respects in accordance with
the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
(34) An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the
approval or disapproval of such Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(35) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar
arrangement.
S-IIIC-4
(36) The Loans were selected from among the outstanding residential and
multi-family mortgage loans in Seller's portfolio at the Closing Date
as to which the representations and warranties made as to such Loans
set forth in this Schedule IIIC can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders.
(37) Each Loan has a Due Date in the month of the first Distribution Date.
(38) Approximately (a) 43.8620% of the Group I Loans and (b) none of the
Group II Loans (by principal balance) are Balloon Loans.
(39) No Loan is subject to negative amortization or deferred interest
payments.
(40) No Mortgagor has requested relief under the Relief Act.
(41) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which
would be either "consumer credit contracts" or "purchase money loans"
as such terms are defined in 16 C.F.R. ss.433.1.
(42) No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(43) Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3)
of the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
(44) The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
(45) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Seller have been
capitalized under any Mortgage or related Mortgage Note.
(46) All Loans calculate interest utilizing the actuarial method.
(47) None of the Loans are subject to the Home Ownership & Equity Protection
Act of 1994.
(48) As of the Cut-off Date, the Mortgage Rate relating to each Loan that is
an adjustable rate mortgage loan has been adjusted in accordance with
the terms of the related Mortgage Note.
(49) Each Loan at the time it was made complied in all material respects
with applicable local, state, and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
(50) No Loan is classified and/or defined as (a) a "high cost home,"
"covered" (excluding home loans defined as "covered home loans"
pursuant to the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high risk
home," or "predatory" loan under any applicable federal, state or local
law (or is similarly classified and/or defined using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), or (b) a "High Cost Loan" or
"Covered Loan," as applicable (as such terms are defined in the then
current Standard & Poor's LEVELS(R) Glossary which is now Version 5.6
Revised, Appendix E).
S-IIIC-5
(51) No Loan originated on or after October 1, 2002, and before March 7,
2003, is secured by property located in the State of Georgia, and no
Loan originated on or after March 7, 2003, is a "high cost home loan"
as defined under the Georgia Fair Lending Act.
(52) No Loan secured by property located in the State of Kentucky is a
"high-cost home loan" as defined in Kentucky House Xxxx 207.
(53) No Loan secured by property located in the State of New York (a) had an
original principal balance of $300,000 or less and (b) had an
application date on or after April 1, 2003, the terms of which loan
equal or exceed either the APR or the points and fees threshold for
"high-cost home loans," as defined in Section 6-L of the New York State
Banking Law.
(54) No Loan secured by property located in the State of New Mexico is a
"high-cost home loan" as defined in the New Mexico Home Loan Protection
Act.
(55) No Loan secured by property located in the State of New Jersey is a
"high-cost home loan" as defined in the New Jersey Home Ownership
Security Act of 2002.
(56) No Loan secured by property located in the State of Illinois is in
violation of the provisions of the Illinois Interest Act.
(57) No Group II-A Loan originated on or after October 1, 2002 has a
prepayment penalty longer than three years after its origination and no
Group II-A Loan originated prior to October 1, 2002 has a prepayment
penalty longer than five years after its origination.
(58) The Servicer has fully furnished with respect to each Group II-A Loan
(and, on a going forward basis, will fully furnish), in accordance with
the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis (during the period in which the Servicer serviced the Group II-A
Loans).
(59) No proceeds from any Group II-A Loan were used to purchase
single-premium credit insurance policies.
(60) The original principal balance of each Group II-A Loan is within FHLMC
loan balance limits in effect as of the Cut-off Date for conforming
one- to four-family mortgage loans.
(61) With respect to any Group II-A Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the mortgage loan transaction.
(62) No Loan secured by property located in the Commonwealth of
Massachusetts is a "high cost home mortgage loan" as defined in the
Massachusetts Predatory Home Loan Practices Act.
S-IIIC-6
SCHEDULE IIID
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Loan Representations and Warranties of Equity One-Pennsylvania
--------------------------------------------------------------
Equity One-Pennsylvania ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIID to the Depositor and the Trustee as
of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller and the Mortgages, Mortgage Notes
and Mortgaged Properties related thereto. Capitalized terms used but not
otherwise defined in this Schedule IIID shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) The information set forth on Schedule I to the Agreement with respect
to the Loans is true and correct in all material respects as of the
Closing Date.
(2) As of the Cut-off Date, no Loan was contractually past due (assuming 30
day months) for 30 or more days.
(3) None of the Loans are Second Lien Loans.
(4) No Loan had a Combined Loan-to-Value Ratio at origination in excess of
100%. For purposes of determining the date of origination on which each
Loan's Combined Loan-to-Value Ratio is measured, no Loan has been
significantly modified within the meaning of Treasury Regulation
1.860G-2(b) as of the Closing Date.
(5) Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage.
(6) Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Second Lien
Loan, which shall be subject to prior liens approved by Seller),
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to the Agreement.
(7) To the best of Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property.
(8) There is no valid right of rescission, offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
S-IIID-1
(9) To the best of Seller's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of such
Mortgage, except those which are insured against by the title insurance
policy referred to in item (13) below.
(10) To the best of the Seller's knowledge, each Mortgaged Property is free
of material damage and in good repair.
(11) Each Loan at origination complied in all material respects with
applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and all applicable
predatory and abusive lending laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(12) As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that
a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(13) For each Loan, other than Second Lien Loans with initial principal
balances of $50,000 or less, a lender's policy of title insurance
together with a condominium endorsement and extended coverage
endorsement, if applicable, in an amount at least equal to the Cut-off
Date Stated Principal Balance of each such Loan or a commitment
(binder) to issue the same was effective on the date of the origination
of each Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, which policy insures the Seller and successor owners of
indebtedness secured by the related insured Mortgage, as to the
applicable priority lien of the Mortgage subject to the exceptions set
forth in item (4) above; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(14) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on or
being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and such Mortgaged
Property is lawfully occupied under applicable law.
(16) Each Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note
and such
S-IIID-2
Mortgage had legal capacity to execute such Mortgage Note and such
Mortgage and each such Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(17) The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making, or closing or recording such Loans were paid.
(18) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including, (a) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (b) otherwise by judicial
foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of the
forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) The origination, underwriting and collection practices used by the
Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(22) There is no pledged account or other security other than any Escrow
Account and real estate securing the Mortgagor's obligations.
(23) No Loan has a shared appreciation feature, or other contingent interest
feature.
(24) Each Loan contains a customary "due on sale" clause.
(25) To the best of Seller's knowledge: at the Cut-off Date, the
improvements on each Mortgaged Property were covered by a valid and
existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage and coverage for such
other hazards as are customary in the area where such Mortgaged
Property is located in an amount at least equal to the lesser of (a)
the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage
creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances
of such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. For all Mortgages creating a
first lien on the related Mortgaged Property, all such individual
insurance policies and all flood policies referred to in item (25)
below contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
S-IIID-3
(26) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration was required at closing with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (a) the original outstanding
principal balance of the related Loan, (b) the minimum amount required
to compensate for damage or loss on a maximum insurable value basis or
(c) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of Seller's knowledge, there is no proceeding occurring,
pending or threatened for the total or partial condemnation of any
Mortgaged Property.
(28) There is no material monetary default existing under any Mortgage or
the related Mortgage Note and, to the best of the Seller's knowledge,
there is no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration.
(29) Each Mortgaged Property is improved by a one- to eight-family, or other
multi-family, residential dwelling including condominium units, which,
to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under
state law.
(30) Each Loan is being serviced by the Servicer.
(31) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the
related loan schedule. The consolidated principal amount does not
exceed the original principal amount of such Loan. No Mortgage Note
permits or obligates the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(32) To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid, except for items which have been assessed, but are not yet
due and payable. Except for (a) payments in the nature of escrow
payments, and (b) interest accruing from the date of any Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever is
later, to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(33) Each Loan was underwritten in all material respects in accordance with
the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
(34) An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the
approval or disapproval of such Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(35) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar
arrangement.
S-IIID-4
(36) The Loans were selected from among the outstanding residential and
multi-family mortgage loans in Seller's portfolio at the Closing Date
as to which the representations and warranties made as to such Loans
set forth in this Schedule IIID can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders.
(37) Each Loan has a Due Date in the month of the first Distribution Date.
(38) None of the Group I Loans and none of the Group II Loans are Balloon
Loans.
(39) No Loan is subject to negative amortization or deferred interest
payments.
(40) No Mortgagor has requested relief under the Relief Act.
(41) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which
would be either "consumer credit contracts" or "purchase money loans"
as such terms are defined in 16 C.F.R. ss.433.1.
(42) No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(43) Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3)
of the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
(44) The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
(45) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Seller have been
capitalized under any Mortgage or related Mortgage Note.
(46) All Loans calculate interest utilizing the actuarial method.
(47) None of the Loans are subject to the Home Ownership & Equity Protection
Act of 1994.
(48) As of the Cut-off Date, the Mortgage Rate relating to each Loan that is
an adjustable rate mortgage loan has been adjusted in accordance with
the terms of the related Mortgage Note.
(49) Each Loan at the time it was made complied in all material respects
with applicable local, state, and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
(50) No Loan is classified and/or defined as (a) a "high cost home,"
"covered" (excluding home loans defined as "covered home loans"
pursuant to the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high risk
home," or "predatory" loan under any applicable federal, state or local
law (or is similarly classified and/or defined using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), or (b) a "High Cost Loan" or
"Covered Loan," as applicable (as such terms are defined in the then
current Standard & Poor's LEVELS(R) Glossary which is now Version 5.6
Revised, Appendix E).
S-IIID-5
(51) No Loan originated on or after October 1, 2002, and before March 7,
2003, is secured by property located in the State of Georgia, and no
Loan originated on or after March 7, 2003, is a "high cost home loan"
as defined under the Georgia Fair Lending Act.
(52) No Loan secured by property located in the State of Kentucky is a
"high-cost home loan" as defined in Kentucky House Xxxx 207.
(53) No Loan secured by property located in the State of New York (a) had an
original principal balance of $300,000 or less and (b) had an
application date on or after April 1, 2003, the terms of which loan
equal or exceed either the APR or the points and fees threshold for
"high-cost home loans," as defined in Section 6-L of the New York State
Banking Law.
(54) No Loan secured by property located in the State of New Mexico is a
"high-cost home loan" as defined in the New Mexico Home Loan Protection
Act.
(55) No Loan secured by property located in the State of New Jersey is a
"high-cost home loan" as defined in the New Jersey Home Ownership
Security Act of 2002.
(56) No Loan secured by property located in the State of Illinois is in
violation of the provisions of the Illinois Interest Act.
(57) No Group II-A Loan originated on or after October 1, 2002 has a
prepayment penalty longer than three years after its origination and no
Group II-A Loan originated prior to October 1, 2002 has a prepayment
penalty longer than five years after its origination.
(58) The Servicer has fully furnished with respect to each Group II-A Loan
(and, on a going forward basis, will fully furnish), in accordance with
the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis (during the period in which the Servicer serviced the Group II-A
Loans).
(59) No proceeds from any Group II-A Loan were used to purchase
single-premium credit insurance policies.
(60) The original principal balance of each Group II-A Loan is within FHLMC
loan balance limits in effect as of the Cut-off Date for conforming
one- to four-family mortgage loans.
(61) With respect to any Group II-A Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the mortgage loan transaction.
(62) No Loan secured by property located in the Commonwealth of
Massachusetts is a "high cost home mortgage loan" as defined in the
Massachusetts Predatory Home Loan Practices Act.
S-IIID-6
SCHEDULE IIIE
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Loan Representations and Warranties of Popular Financial
--------------------------------------------------------
Popular Financial ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIIE to the Depositor and the Trustee as
of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller and the Mortgages, Mortgage Notes
and Mortgaged Properties related thereto. Capitalized terms used but not
otherwise defined in this Schedule IIIE shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) The information set forth on Schedule I to the Agreement with respect
to the Loans is true and correct in all material respects as of the
Closing Date.
(2) As of the Cut-off Date, no Loan was 30 or more days contractually past
due (assuming 30 day months).
(3) None of the Loans are Second Lien Loans.
(4) No Loan had a Combined Loan-to-Value Ratio at origination in excess of
100%. For purposes of determining the date of origination on which each
Loan's Combined Loan-to-Value Ratio is measured, no Loan has been
significantly modified within the meaning of Treasury Regulation
1.860G-2(b) as of the Closing Date.
(5) Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage.
(6) Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Second Lien
Loan, which shall be subject to prior liens approved by Seller),
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to the Agreement.
(7) To the best of Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property.
(8) There is no valid right of rescission, offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
S-IIIE-1
(9) To the best of Seller's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of such
Mortgage, except those which are insured against by the title insurance
policy referred to in item (13) below.
(10) To the best of the Seller's knowledge, each Mortgaged Property is free
of material damage and in good repair.
(11) Each Loan at origination complied in all material respects with
applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and all applicable
predatory and abusive lending laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(12) As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that
a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(13) For each Loan, other than Second Lien Loans with initial principal
balances of $50,000 or less, a lender's policy of title insurance
together with a condominium endorsement and extended coverage
endorsement, if applicable, in an amount at least equal to the Cut-off
Date Stated Principal Balance of each such Loan or a commitment
(binder) to issue the same was effective on the date of the origination
of each Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, which policy insures the Seller and successor owners of
indebtedness secured by the related insured Mortgage, as to the
applicable priority lien of the Mortgage subject to the exceptions set
forth in item (4) above; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(14) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on or
being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and such Mortgaged
Property is lawfully occupied under applicable law.
(16) Each Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note
and such
S-IIIE-2
Mortgage had legal capacity to execute such Mortgage Note and
such Mortgage and each such Mortgage Note and Mortgage have been duly
and properly executed by such parties.
(17) The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making, or closing or recording such Loans were paid.
(18) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including, (a) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (b) otherwise by judicial
foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of the
forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) The origination, underwriting and collection practices used by the
Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(22) There is no pledged account or other security other than any Escrow
Account and real estate securing the Mortgagor's obligations.
(23) No Loan has a shared appreciation feature, or other contingent interest
feature.
(24) Each Loan contains a customary "due on sale" clause.
(25) To the best of Seller's knowledge: at the Cut-off Date, the
improvements on each Mortgaged Property were covered by a valid and
existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage and coverage for such
other hazards as are customary in the area where such Mortgaged
Property is located in an amount at least equal to the lesser of (a)
the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage
creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances
of such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. For all Mortgages creating a
first lien on the related Mortgaged Property, all such individual
insurance policies and all flood policies referred to in item (25)
below contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
S-IIIE-3
(26) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration was required at closing with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (a) the original outstanding
principal balance of the related Loan, (b) the minimum amount required
to compensate for damage or loss on a maximum insurable value basis or
(c) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of Seller's knowledge, there is no proceeding occurring,
pending or threatened for the total or partial condemnation of any
Mortgaged Property.
(28) There is no material monetary default existing under any Mortgage or
the related Mortgage Note and, to the best of the Seller's knowledge,
there is no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration.
(29) Each Mortgaged Property is improved by a one- to eight-family, or other
multi-family, residential dwelling including condominium units, which,
to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under
state law.
(30) Each Loan is being serviced by the Servicer.
(31) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the
related loan schedule. The consolidated principal amount does not
exceed the original principal amount of such Loan. No Mortgage Note
permits or obligates the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(32) To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid, except for items which have been assessed, but are not yet
due and payable. Except for (a) payments in the nature of escrow
payments, and (b) interest accruing from the date of any Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever is
later, to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(33) Each Loan was underwritten in all material respects in accordance with
the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
(34) An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the
approval or disapproval of such Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(35) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar
arrangement.
S-IIIE-4
(36) The Loans were selected from among the outstanding residential and
multi-family mortgage loans in Seller's portfolio at the Closing Date
as to which the representations and warranties made as to such Loans
set forth in this Schedule IIIE can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders.
(37) Each Loan has a Due Date in the month of the first Distribution Date.
(38) Approximately (a) 0.5980% of the Group I Loans and (b) none of the
Group II Loans (by principal balance) are Balloon Loans.
(39) No Loan is subject to negative amortization or deferred interest
payments.
(40) No Mortgagor has requested relief under the Relief Act.
(41) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which
would be either "consumer credit contracts" or "purchase money loans"
as such terms are defined in 16 C.F.R. ss.433.1.
(42) No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(43) Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3)
of the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
(44) The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
(45) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Seller have been
capitalized under any Mortgage or related Mortgage Note.
(46) All Loans calculate interest utilizing the actuarial method.
(47) None of the Loans are subject to the Home Ownership & Equity Protection
Act of 1994.
(48) As of the Cut-off Date, the Mortgage Rate relating to each Loan that is
an adjustable rate mortgage loan has been adjusted in accordance with
the terms of the related Mortgage Note.
(49) Each Loan at the time it was made complied in all material respects
with applicable local, state, and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
(50) No Loan is classified and/or defined as (a) a "high cost home,"
"covered" (excluding home loans defined as "covered home loans"
pursuant to the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high risk
home," or "predatory" loan under any applicable federal, state or local
law (or is similarly classified and/or defined using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), or (b) a "High Cost Loan" or
"Covered Loan," as applicable (as such terms are defined in the then
current Standard & Poor's LEVELS(R) Glossary which is now Version 5.6
Revised, Appendix E).
S-IIIE-5
(51) No Loan originated on or after October 1, 2002, and before March 7,
2003, is secured by property located in the State of Georgia, and no
Loan originated on or after March 7, 2003, is a "high cost home loan"
as defined under the Georgia Fair Lending Act.
(52) No Loan secured by property located in the State of Kentucky is a
"high-cost home loan" as defined in Kentucky House Xxxx 207.
(53) No Loan secured by property located in the State of New York (a) had an
original principal balance of $300,000 or less and (b) had an
application date on or after April 1, 2003, the terms of which loan
equal or exceed either the APR or the points and fees threshold for
"high-cost home loans," as defined in Section 6-L of the New York State
Banking Law.
(54) No Loan secured by property located in the State of New Mexico is a
"high-cost home loan" as defined in the New Mexico Home Loan Protection
Act.
(55) No Loan secured by property located in the State of New Jersey is a
"high-cost home loan" as defined in the New Jersey Home Ownership
Security Act of 2002.
(56) No Loan secured by property located in the State of Illinois is in
violation of the provisions of the Illinois Interest Act.
(57) No Group II-A Loan originated on or after October 1, 2002 has a
prepayment penalty longer than three years after its origination and no
Group II-A Loan originated prior to October 1, 2002 has a prepayment
penalty longer than five years after its origination.
(58) The Servicer has fully furnished with respect to each Group II-A Loan
(and, on a going forward basis, will fully furnish), in accordance with
the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis (during the period in which the Servicer serviced the Group II-A
Loans).
(59) No proceeds from any Group II-A Loan were used to purchase
single-premium credit insurance policies.
(60) The original principal balance of each Group II-A Loan is within FHLMC
loan balance limits in effect as of the Cut-off Date for conforming
one- to four-family mortgage loans.
(61) With respect to any Group II-A Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the mortgage loan transaction.
(62) No Loan secured by property located in the Commonwealth of
Massachusetts is a "high cost home mortgage loan" as defined in the
Massachusetts Predatory Home Loan Practices Act.
S-IIIE-6
SCHEDULE IIIF
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
Loan Representations and Warranties of Popular Funding
------------------------------------------------------
Popular Funding ("SELLER") hereby makes the representations and
warranties set forth in this Schedule IIIF to the Depositor and the Trustee as
of the Closing Date or, if so specified herein, as of the Cut-off Date with
respect to the Loans being conveyed by Seller and the Mortgages, Mortgage Notes
and Mortgaged Properties related thereto. Capitalized terms used but not
otherwise defined in this Schedule IIIF shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Popular ABS, Inc., as depositor, and JPMorgan Chase
Bank, N.A., as trustee. The term "Agreement" shall be used in this Schedule to
refer to the Pooling and Servicing Agreement.
(1) The information set forth on Schedule I to the Agreement with respect
to the Loans is true and correct in all material respects as of the
Closing Date.
(2) As of the Cut-off Date, no Loan was 30 or more days contractually past
due (assuming 30 day months).
(3) None of the Loans are Second Lien Loans.
(4) No Loan had a Combined Loan-to-Value Ratio at origination in excess of
100%. For purposes of determining the date of origination on which each
Loan's Combined Loan-to-Value Ratio is measured, no Loan has been
significantly modified within the meaning of Treasury Regulation
1.860G-2(b) as of the Closing Date.
(5) Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Loan, and (c) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage.
(6) Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan
free and clear of any pledge, lien (except in the case of a Second Lien
Loan, which shall be subject to prior liens approved by Seller),
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any
other party, to sell and assign the same pursuant to the Agreement.
(7) To the best of Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property.
(8) There is no valid right of rescission, offset, defense or counterclaim
to any Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
S-IIIF-1
(9) To the best of Seller's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any Mortgaged Property
which are or may be a lien prior to, or equal with, the lien of such
Mortgage, except those which are insured against by the title insurance
policy referred to in item (13) below.
(10) To the best of the Seller's knowledge, each Mortgaged Property is free
of material damage and in good repair.
(11) Each Loan at origination complied in all material respects with
applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and all applicable
predatory and abusive lending laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws.
(12) As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that
a Loan may have been modified by a written instrument which has been
recorded or submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy of which
has been or shall be delivered to the Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation, modification or
satisfaction with respect thereto.
(13) For each Loan, other than Second Lien Loans with initial principal
balances of $50,000 or less, a lender's policy of title insurance
together with a condominium endorsement and extended coverage
endorsement, if applicable, in an amount at least equal to the Cut-off
Date Stated Principal Balance of each such Loan or a commitment
(binder) to issue the same was effective on the date of the origination
of each Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the related Mortgaged Property is
located, which policy insures the Seller and successor owners of
indebtedness secured by the related insured Mortgage, as to the
applicable priority lien of the Mortgage subject to the exceptions set
forth in item (4) above; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy.
(14) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the appraised value of
each Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on or
being part of any Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of such Mortgaged Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse
effect on the value of such Mortgaged Property, and such Mortgaged
Property is lawfully occupied under applicable law.
(16) Each Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note
and such Mortgage had legal capacity to execute such Mortgage Note and
such
S-IIIF-2
Mortgage and each such Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(17) The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making, or closing or recording such Loans were paid.
(18) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including, (a) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (b) otherwise by judicial
foreclosure.
(19) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage is in substantially one of the
forms acceptable to FNMA or FHLMC, with such riders as have been
acceptable to FNMA or FHLMC, as the case may be.
(21) The origination, underwriting and collection practices used by the
Seller with respect to each Loan have been in all respects legal,
prudent and customary in the mortgage lending and servicing business.
(22) There is no pledged account or other security other than any Escrow
Account and real estate securing the Mortgagor's obligations.
(23) No Loan has a shared appreciation feature, or other contingent interest
feature.
(24) Each Loan contains a customary "due on sale" clause.
(25) To the best of Seller's knowledge: at the Cut-off Date, the
improvements on each Mortgaged Property were covered by a valid and
existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage and coverage for such
other hazards as are customary in the area where such Mortgaged
Property is located in an amount at least equal to the lesser of (a)
the maximum insurable value of the improvements on such Mortgaged
Property or (b) (i) in the case of a Loan secured by a Mortgage
creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances
of such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. For all Mortgages creating a
first lien on the related Mortgaged Property, all such individual
insurance policies and all flood policies referred to in item (25)
below contain a standard mortgagee clause naming the Seller or the
original mortgagee, and its successors in interest, as mortgagee, and
the Seller has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance including flood insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor.
S-IIIF-3
(26) If a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration was required at closing with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (a) the original outstanding
principal balance of the related Loan, (b) the minimum amount required
to compensate for damage or loss on a maximum insurable value basis or
(c) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of Seller's knowledge, there is no proceeding occurring,
pending or threatened for the total or partial condemnation of any
Mortgaged Property.
(28) There is no material monetary default existing under any Mortgage or
the related Mortgage Note and, to the best of the Seller's knowledge,
there is no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration under such Mortgage or
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration.
(29) Each Mortgaged Property is improved by a one- to eight-family, or other
multi-family, residential dwelling including condominium units, which,
to the best of Seller's knowledge, does not include cooperatives or
mobile homes and does not constitute other than real property under
state law.
(30) Each Loan is being serviced by the Servicer.
(31) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the
related loan schedule. The consolidated principal amount does not
exceed the original principal amount of such Loan. No Mortgage Note
permits or obligates the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(32) To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid, except for items which have been assessed, but are not yet
due and payable. Except for (a) payments in the nature of escrow
payments, and (b) interest accruing from the date of any Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever is
later, to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Servicer has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the related Mortgage.
(33) Each Loan was underwritten in all material respects in accordance with
the Seller's underwriting guidelines as set forth in the Prospectus
Supplement.
(34) An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the
approval or disapproval of such Loan; such appraisal is in a form
acceptable to FNMA and FHLMC.
(35) No Loan is a graduated payment mortgage loan or a growing equity
mortgage loan, and no Loan is subject to a buydown or similar
arrangement.
S-IIIF-4
(36) The Loans were selected from among the outstanding residential and
multi-family mortgage loans in Seller's portfolio at the Closing Date
as to which the representations and warranties made as to such Loans
set forth in this Schedule IIIF can be made. Such selection was not
made in a manner that would adversely affect the interests of
Certificateholders.
(37) Each Loan has a Due Date in the month of the first Distribution Date.
(38) Approximately (a) 2.0770% of the Group I Loans and (b) none of the
Group II Loans (by principal balance) are Balloon Loans.
(39) No Loan is subject to negative amortization or deferred interest
payments.
(40) No Mortgagor has requested relief under the Relief Act.
(41) None of the Loans are retail installment contracts for goods or
services or are home improvement loans for goods or services, which
would be either "consumer credit contracts" or "purchase money loans"
as such terms are defined in 16 C.F.R. ss.433.1.
(42) No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty
with respect to goods or services provided in connection with any Loan.
(43) Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3)
of the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
(44) The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Prospectus Supplement.
(45) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or
payments of other charges or payments due the Seller have been
capitalized under any Mortgage or related Mortgage Note.
(46) All Loans calculate interest utilizing the actuarial method.
(47) None of the Loans are subject to the Home Ownership & Equity Protection
Act of 1994.
(48) As of the Cut-off Date, the Mortgage Rate relating to each Loan that is
an adjustable rate mortgage loan has been adjusted in accordance with
the terms of the related Mortgage Note.
(49) Each Loan at the time it was made complied in all material respects
with applicable local, state, and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
(50) No Loan is classified and/or defined as (a) a "high cost home,"
"covered" (excluding home loans defined as "covered home loans"
pursuant to the New Jersey Home Ownership Security Act of 2002 that
were originated between November 26, 2003 and July 7, 2004), "high risk
home," or "predatory" loan under any applicable federal, state or local
law (or is similarly classified and/or defined using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), or (b) a "High Cost Loan" or
"Covered Loan," as applicable (as such terms are defined in the then
current Standard & Poor's LEVELS(R) Glossary which is now Version 5.6
Revised, Appendix E).
S-IIIF-5
(51) No Loan originated on or after October 1, 2002, and before March 7,
2003, is secured by property located in the State of Georgia, and no
Loan originated on or after March 7, 2003, is a "high cost home loan"
as defined under the Georgia Fair Lending Act.
(52) No Loan secured by property located in the State of Kentucky is a
"high-cost home loan" as defined in Kentucky House Xxxx 207.
(53) No Loan secured by property located in the State of New York (a) had an
original principal balance of $300,000 or less and (b) had an
application date on or after April 1, 2003, the terms of which loan
equal or exceed either the APR or the points and fees threshold for
"high-cost home loans," as defined in Section 6-L of the New York State
Banking Law.
(54) No Loan secured by property located in the State of New Mexico is a
"high-cost home loan" as defined in the New Mexico Home Loan Protection
Act.
(55) No Loan secured by property located in the State of New Jersey is a
"high-cost home loan" as defined in the New Jersey Home Ownership
Security Act of 2002.
(56) No Loan secured by property located in the State of Illinois is in
violation of the provisions of the Illinois Interest Act.
(57) No Group II-A Loan originated on or after October 1, 2002 has a
prepayment penalty longer than three years after its origination and no
Group II-A Loan originated prior to October 1, 2002 has a prepayment
penalty longer than five years after its origination.
(58) The Servicer has fully furnished with respect to each Group II-A Loan
(and, on a going forward basis, will fully furnish), in accordance with
the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly
basis (during the period in which the Servicer serviced the Group II-A
Loans).
(59) No proceeds from any Group II-A Loan were used to purchase
single-premium credit insurance policies.
(60) The original principal balance of each Group II-A Loan is within FHLMC
loan balance limits in effect as of the Cut-off Date for conforming
one- to four-family mortgage loans.
(61) With respect to any Group II-A Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the mortgage loan transaction.
(62) No Loan secured by property located in the Commonwealth of
Massachusetts is a "high cost home mortgage loan" as defined in the
Massachusetts Predatory Home Loan Practices Act.
S-IIIF-6
SCHEDULE IV
LIST OF FINANCING STATEMENTS:
PERFECTION OF GRANT OF SECURITY INTEREST
BY SELLERS TO DEPOSITOR
=================================================================== ================================================================
SELLER LOCATION
=================================================================== ================================================================
Equity One, Inc., a Delaware corporation Secretary of State of the State of Delaware
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Equity One, Incorporated Secretary of the Commonwealth of the Commonwealth of
Pennsylvania
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Equity One, Inc., a Minnesota corporation Secretary of State of Minnesota
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Equity One Consumer Loan Company, Inc. Secretary of State of New Hampshire
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Popular Financial Services, LLC Secretary of State of the State of Delaware
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Popular Financial Funding, LLC Secretary of State of the State of Delaware
=================================================================== ================================================================
S-IV-1
SCHEDULE V
LIST OF FINANCING STATEMENTS:
PERFECTION OF GRANT OF SECURITY INTEREST
BY DEPOSITOR TO TRUSTEE
=================================================================== ================================================================
DEPOSITOR LOCATION
=================================================================== ================================================================
Popular ABS, Inc. Secretary of State of the State of Delaware
=================================================================== ================================================================
S-V-1
SCHEDULE VI
LIST OF FINANCING STATEMENTS:
PERFECTION OF SALE
BY SELLERS TO DEPOSITOR
=================================================================== ================================================================
SELLER LOCATION
=================================================================== ================================================================
Equity One, Inc., a Delaware corporation Secretary of State of the State of Delaware
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Equity One, Incorporated Secretary of the Commonwealth of the Commonwealth of
Pennsylvania
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Equity One, Inc., a Minnesota corporation Secretary of State of Minnesota
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Equity One Consumer Loan Company, Inc. Secretary of State of New Hampshire
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Popular Financial Services, LLC Secretary of State of the State of Delaware
------------------------------------------------------------------- ----------------------------------------------------------------
------------------------------------------------------------------- ----------------------------------------------------------------
Popular Financial Funding, LLC Secretary of State of the State of Delaware
=================================================================== ================================================================
S-VI-1
SCHEDULE VII
LIST OF FINANCING STATEMENTS:
PERFECTION OF SALE
BY DEPOSITOR TO TRUSTEE
=================================================================== ================================================================
DEPOSITOR LOCATION
=================================================================== ================================================================
Popular ABS, Inc. Secretary of State of the State of Delaware
=================================================================== ================================================================
S-VII-1
EXHIBIT A-1
Form of Class AF-[] Certificate
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, AS AMENDED (THE "CODE").
Certificate No. :
Cut-off Date: : October 31, 2004
First Distribution Date: : December 27, 2004
Initial Certificate Balance
of this Certificate
("DENOMINATION") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
ISIN :
CUSIP :
Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5
Class AF-[]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage
loans divided into three groups, Group I, Group II-A and Group II-B
(collectively, the "LOANS"). The Loans in Group I are fixed rate
mortgage loans secured by first liens on one- to four-family dwellings
and other multifamily dwellings. The Loans in Group II-A are adjustable
rate mortgage loans secured by first liens on one- to four-family
dwellings. The Loans in Group II-B are adjustable rate mortgage loans
secured by first liens on one- to four-family dwellings and other
multifamily dwellings. The Class AF-[] Certificates primarily represent
an interest in the Loans in Group I.
Popular ABS, Inc., as Depositor
A-1-1
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Sellers, the Servicer or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Popular ABS, Inc. (the "DEPOSITOR"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "AGREEMENT") among the Depositor, Equity One, Inc., a
Delaware corporation, Popular Financial Funding, LLC, Equity One, Inc., a
Minnesota corporation, Equity One Consumer Loan Company, Inc., Equity One,
Incorporated and Popular Financial Services, LLC, as sellers (in such capacity,
collectively, the "SELLERS"), Equity One, Inc., a Delaware corporation, as
servicer (in such capacity, the "SERVICER"), and JPMorgan Chase Bank, N.A., as
trustee (the "TRUSTEE"). 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.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated ___________, 20__ JPMorgan Chase Bank, N.A.,
Countersigned: as Trustee
By: _______________________ By: _______________________
Authorized Signatory of
JPMorgan Chase Bank, N.A.,
as Trustee
X-0-0
XXXXXXX X-0
Form of Class AV-[] Certificate
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, AS AMENDED (THE "CODE").
[THIS CLASS AV-1B CERTIFICATE IS SUBORDINATE TO THE CLASS AV-1A CERTIFICATES TO
THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.]
Certificate No. :
Cut-off Date: : October 31, 2004
First Distribution Date: : December 27, 2004
Initial Class Certificate Balance
of this Certificate
("DENOMINATION") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
ISIN :
CUSIP :
Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5
Class AV-[]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage
loans divided into three groups, Group I, Group II-A and Group II-B
(collectively, the "LOANS"). The Loans in Group I are fixed rate
mortgage loans secured by first liens on one- to four-family dwellings
and other multifamily dwellings. The Loans in Group II-A are adjustable
rate mortgage loans secured by first liens on one- to four-family
dwellings. The Loans in Group II-B are adjustable rate mortgage loans
secured by first liens on one- to four-
A-2-1
family dwellings and other multifamily dwellings. [The [Class AV-1A]
[Class AV-1B] Certificates primarily represent an interest in the Group
II-A Loans] [The Class AV-2 Certificates primarily represent an
interest in the Group II-B Loans].
Popular ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Sellers, the Servicer or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Popular ABS, Inc. (the "DEPOSITOR"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "AGREEMENT") among the Depositor, Equity One, Inc., a
Delaware corporation, Popular Financial Funding, LLC, Equity One, Inc., a
Minnesota corporation, Equity One Consumer Loan Company, Inc., Equity One,
Incorporated and Popular Financial Services, LLC, as sellers (in such capacity,
collectively, the "SELLERS"), Equity One, Inc., a Delaware corporation, as
servicer (in such capacity, the "SERVICER"), and JPMorgan Chase Bank, N.A., as
trustee (the "TRUSTEE"). 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.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated ___________, 20__ JPMorgan Chase Bank, N.A.,
Countersigned: as Trustee
By: _______________________ By: _______________________
Authorized Signatory of
JPMorgan Chase Bank, N.A.,
as Trustee
X-0-0
XXXXXXX X-0
Form of Class M-[] Certificate
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, AS AMENDED (THE "CODE").
THIS CLASS M-[] CERTIFICATE IS SUBORDINATE TO THE [SENIOR CERTIFICATES] [SENIOR
CERTIFICATES AND THE CLASS M-1 CERTIFICATES] [SENIOR CERTIFICATES, THE CLASS M-1
CERTIFICATES AND THE CLASS M-2 CERTIFICATES] [SENIOR CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3 CERTIFICATES] OF THIS
SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
Certificate No. :
Cut-off Date: : October 31, 2004
First Distribution Date: : December 27, 2004
Initial Certificate Balance
of this Certificate
("DENOMINATION") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
ISIN :
CUSIP :
Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5
Class M-[]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage
loans divided into three groups, Group I, Group II-A and Group II-B
(collectively, the "LOANS"). The Loans in Group I are fixed rate
mortgage loans secured by first
A-3-1
liens on one- to four-family dwellings and other multifamily dwellings.
The Loans in Group II-A are adjustable rate mortgage loans secured by
first liens on one- to four-family dwellings. The Loans in Group II-B
are adjustable rate mortgage loans secured by first liens on one- to
four-family dwellings and other multifamily dwellings. The Class M-[]
Certificates primarily represent an interest in the Group I, Group II-A
and Group II-B Loans.
Popular ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Sellers, the Servicer or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Popular ABS, Inc. (the "DEPOSITOR"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "AGREEMENT") among the Depositor, Equity One, Inc., a
Delaware corporation, Popular Financial Funding, LLC, Equity One, Inc., a
Minnesota corporation, Equity One Consumer Loan Company, Inc., Equity One,
Incorporated and Popular Financial Services, LLC, as sellers (in such capacity,
collectively, the "SELLERS"), Equity One, Inc., a Delaware corporation, as
servicer (in such capacity, the "SERVICER"), and JPMorgan Chase Bank, N.A., as
trustee (the "TRUSTEE"). 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.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated ___________, 20__ JPMorgan Chase Bank, N.A.,
Countersigned: as Trustee
By: _______________________ By: _______________________
Authorized Signatory of
JPMorgan Chase Bank, N.A.,
as Trustee
X-0-0
XXXXXXX X-0
Form of Class B-[] Certificate
[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, AS AMENDED (THE "CODE").
THIS CLASS B-[] CERTIFICATE IS SUBORDINATE TO THE [SENIOR CERTIFICATES, THE
CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES
AND THE CLASS M-4 CERTIFICATES] [SENIOR CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE CLASS
M-4 CERTIFICATES AND THE CLASS B-1 CERTIFICATES] [SENIOR CERTIFICATES, THE CLASS
M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE
CLASS M-4 CERTIFICATES, CLASS B-1 CERTIFICATES AND THE CLASS B-2 CERTIFICATES]
OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
Certificate No. :
Cut-off Date: : October 31, 2004
First Distribution Date: : December 27, 2004
Initial Certificate Balance
of this Certificate
("DENOMINATION") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
ISIN :
CUSIP :
Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5
Class B-[]
A-4-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage
loans divided into three groups, Group I, Group II-A and Group II-B
(collectively, the "LOANS"). The Loans in Group I are fixed rate
mortgage loans secured by first liens on one- to four-family dwellings
and other multifamily dwellings. The Loans in Group II-A are adjustable
rate mortgage loans secured by first liens on one- to four-family
dwellings. The Loans in Group II-B are adjustable rate mortgage loans
secured by first liens on one- to four-family dwellings and other
multifamily dwellings. The Class B-[] Certificates primarily represent
an interest in the Group I, Group II-A and Group II-B Loans.
Popular ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Sellers, the Servicer or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Popular ABS, Inc. (the "DEPOSITOR"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "AGREEMENT") among the Depositor, Equity One, Inc., a
Delaware corporation, Popular Financial Funding, LLC, Equity One, Inc., a
Minnesota corporation, Equity One Consumer Loan Company, Inc., Equity One,
Incorporated and Popular Financial Services, LLC, as sellers (in such capacity,
collectively, the "SELLERS"), Equity One, Inc., a Delaware corporation, as
servicer (in such capacity, the "SERVICER"), and JPMorgan Chase Bank, N.A., as
trustee (the "TRUSTEE"). 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.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated ___________, 20__ JPMorgan Chase Bank, N.A.,
Countersigned: as Trustee
By: _______________________ By: _______________________
Authorized Signatory of
JPMorgan Chase Bank, N.A.,
as Trustee
X-0-0
XXXXXXX X-0
Form of Class R Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN THREE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF THE DUTIES OF THE
SERVICER UNDER SUCH AGREEMENT.]
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
B-1-1
Certificate No. :
Cut-off Date : October 31, 2004
Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5
evidencing a percentage interest in the distributions allocable to the
Class R Certificates with respect to a Trust Fund consisting primarily
of a pool of fixed and adjustable rate mortgage loans divided into
three groups, Group I, Group II-A and Group II-B (collectively, the
"LOANS"). The Loans in Group I are fixed rate mortgage loans secured by
first liens on one- to four-family dwellings and other multifamily
dwellings. The Loans in Group II-A are adjustable rate mortgage loans
secured by first liens on one- to four-family dwellings. The Loans in
Group II-B are adjustable rate mortgage loans secured by first liens on
one- to four-family dwellings and other multifamily dwellings.
Popular ABS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Sellers, the Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Loans are guaranteed or insured by any governmental agency
or instrumentality.
This certifies that __________________ is the registered owner of the
Percentage Interest (set forth on the face hereof) in certain monthly
distributions with respect to a Trust Fund consisting of the Loans deposited by
Popular ABS, Inc. (the "DEPOSITOR"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "AGREEMENT") among the Depositor, Equity One, Inc., a Delaware corporation,
Popular Financial Funding, LLC, Equity One, Inc., a Minnesota corporation,
Equity One Consumer Loan Company, Inc., Equity One, Incorporated and Popular
Financial Services, LLC, as sellers (in such capacity, collectively, the
"SELLERS"), Equity One, Inc., a Delaware corporation, as servicer (in such
capacity, the "SERVICER"), and JPMorgan Chase Bank, N.A., as trustee (the
"TRUSTEE"). 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.
Any distribution of the proceeds of any remaining assets of the Trust
Fund will be made only upon presentment and surrender of this Class R
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
Any proposed transfer of a Class R Certificate shall be subject to the
restrictions on transfer described in Section 5.02 of the Agreement.
No transfer of a Class R Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer or (ii) in the case of any such Class R
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactment), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the
B-1-2
Trustee and the Servicer to the effect that the purchase or holding of such
Class R Certificate will not result in the assets of the Trust Fund being deemed
to be "plan assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee or the Servicer to any
obligation in addition to those undertaken in the Agreement, which Opinion of
Counsel shall not be an expense of the Trustee or the Servicer. Notwithstanding
anything else to the contrary herein, any purported transfer of a Class R
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the opinion of counsel satisfactory to the Trustee as described
above shall be void and of no effect.
Each Holder of this Class R Certificate will be deemed to have agreed
to be bound by the restrictions of the Agreement, including but not limited to
the restrictions that (i) each person holding or acquiring any Ownership
Interest in this Class R Certificate must be a Permitted Transferee, (ii) no
Ownership Interest in this Class R Certificate may be transferred without
delivery to the Trustee of (a) a transfer affidavit of the proposed transferee
and (b) a transfer certificate of the transferor, each of such documents to be
in the form described in the Agreement, (iii) each person holding or acquiring
any Ownership Interest in this Class R Certificate must agree to require a
transfer affidavit and to deliver a transfer certificate to the Trustee as
required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Class R Certificate must agree not to transfer an
Ownership Interest in this Class R Certificate if it has actual knowledge that
the proposed transferee is not a Permitted Transferee and (v) any attempted or
purported transfer of any Ownership Interest in this Class R Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated ___________, 20__
JPMorgan Chase Bank, N.A.,
as Trustee
By: _______________________
Countersigned:
By: _______________________
Authorized Signatory of
JPMorgan Chase Bank, N.A.,
as Trustee
B-1-3
EXHIBIT B-2
Form of Class X Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (I) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR (II) IF THIS CERTIFICATE HAS BEEN THE SUBJECT OF
AN ERISA QUALIFYING UNDERWRITING, A REPRESENTATION THAT THE TRANSFEREE IS
PURCHASING SUCH CERTIFICATE WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY
GENERAL ACCOUNT", AS DEFINED IN PROHIBITED TRANSACTION CLASS EXEMPTION 95-60
("PTCE 95-60") AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE
COVERED UNDER SECTIONS I AND III OF PTCE 95-60, OR (III) AN OPINION OF COUNSEL
IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
B-2-1
Certificate No. : 1
Cut-off Date : October 31, 2004
Percentage Interest : __.__%
Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series 2004-5
evidencing a percentage interest in the distributions allocable to the
Class X Certificates with respect to a Trust Fund consisting primarily
of a pool of fixed and adjustable rate mortgage loans divided into
three groups, Group I, Group II-A and Group II-B (collectively, the
"LOANS"). The Loans in Group I are fixed rate mortgage loans secured by
first liens on one- to four-family dwellings and other multifamily
dwellings. The Loans in Group II-A are adjustable rate mortgage loans
secured by first liens on one- to four-family dwellings. The Loans in
Group II-B are adjustable rate mortgage loans secured by first liens on
one- to four-family dwellings and other multifamily dwellings.
Popular ABS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Sellers, the Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Loans are guaranteed or insured by any governmental agency
or instrumentality.
This certifies that Popular ABS, Inc. is the registered owner of the
Percentage Interest (set forth on the face hereof) in certain monthly
distributions with respect to a Trust Fund consisting of the Loans deposited by
Popular ABS, Inc. (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement") among the Depositor, Equity One, Inc., a Delaware corporation,
Popular Financial Funding, LLC, Equity One, Inc., a Minnesota corporation,
Equity One Consumer Loan Company, Inc., Equity One, Incorporated and Popular
Financial Services, LLC, as sellers (in such capacity, collectively, the
"SELLERS"), Equity One, Inc., a Delaware corporation, as servicer (in such
capacity, the "SERVICER"), and JPMorgan Chase Bank, N.A., as trustee (the
"TRUSTEE"). 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.
No transfer of a Class X Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, (ii) if the Class X Certificate has been the
subject of an ERISA Qualifying Underwriting and the transferee is an insurance
company, a representation that the transferee is an insurance company which is
purchasing such Certificate with funds contained in an "insurance company
general account", as defined in Prohibited Transaction Class Exemption 95-60
("PTCE 95-60") and that the purchase and holding of the Certificate is covered
under Sections I and III of PTCE 95-60 or (iii) in the case of any such Class X
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactment), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Servicer to
B-2-2
the effect that the purchase or holding of such Class X Certificate will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or the Servicer to any obligation in addition to those
undertaken in the Agreement, which Opinion of Counsel shall not be an expense of
the Trustee or the Servicer. Notwithstanding anything else to the contrary
herein, any purported transfer of a Class X Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Any distribution of the proceeds of any remaining assets of the Trust
Fund will be made only upon presentment and surrender of this Class X
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated ___________, 20__
JPMorgan Chase Bank, N.A.,
as Trustee
By: _______________________
Name:
Title:
Countersigned:
By: _______________________
Authorized Signatory of
JPMorgan Chase Bank, N.A.,
as Trustee
B-2-3
EXHIBIT C
Form of Reverse of Certificates
Popular ABS, Inc.
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Popular ABS, Inc. Mortgage Pass-Through Certificates, of the
Series specified on the face hereof (herein collectively called the
"CERTIFICATES"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
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 on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer and the Trustee with the consent of the Holders
of Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. 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 therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office or the office or agency maintained by the
Trustee
C-1
in New York, New York, accompanied by a 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 the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons 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 the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, 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 Servicer, the Sellers and the Trustee and any agent
of the Depositor or the Trustee may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Depositor, the Trustee, nor any such agent shall be affected by any notice to
the contrary.
On any Distribution Date on which the Pool Principal Balance is less
than 10% of the Cut-off Date Pool Principal Balance, the Servicer will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans and all
property acquired in respect of the Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon the later of the maturity or other liquidation (or any advance
with respect thereto) of the last Loan remaining in the Trust Fund or the
disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
C-2
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 Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee 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
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds 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.
C-3
EXHIBIT D
Form of Initial Certification Of Trustee
[date]
[Depositor]
[Servicer]
[Sellers]
---------------------
---------------------
Re: Pooling and Servicing Agreement among Popular ABS, Inc., as
Depositor, Equity One, Inc., a Delaware corporation, Popular
Financial Funding, LLC, Equity One, Inc., a Minnesota corporation,
Equity One Consumer Loan Company, Inc., Equity One, Incorporated
and Popular Financial Services, LLC, as Sellers, Equity One, Inc.,
a Delaware corporation, as Servicer, and JPMorgan Chase Bank,
N.A., as Trustee, Mortgage Pass-Through Certificates, Series
0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that, as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached Exception Report) it
has received the original Mortgage Note or an executed Affidavit of Lost Note in
the form attached hereto as Annex I, and confirms that, for all Mortgage Notes
received, the name on the Mortgage Note matches that on the Loan Schedule,
except as set forth on the Exception Report attached hereto.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
JPMorgan Chase Bank, N.A.,
as Trustee
By:________________________________________
Name:
Title:
D-1
ANNEX I
AFFIDAVIT OF LOST NOTE
COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF PHILADELPHIA :
The undersigned, being duly sworn, deposes and says that:
1. ______________, a ___________ corporation (the "Holder") is the
owner of a note dated ________________ of _______________, in the principal
amount of $ ______________ (the "Note").
2. The Holder has not pledged or disposed of the Note in any manner
whatsoever to any person nor given any person authority to transfer or pledge
the same.
3. The Holder does not know of the whereabouts of the Note and believes
the Note has been lost or destroyed.
4. The Holder makes this affidavit to JPMorgan Chase Bank, N.A.
("Trustee") in order to induce the Trustee to issue its initial certification
pursuant to Section 2.02 of the Pooling and Servicing Agreement dated as of
October 31, 2004 among the Trustee, the Holder and the other parties set forth
therein, without an exception therefrom.
5. The Holder and its successors and assigns shall at all time
indemnify and save harmless the Trustee against all loss or damage it might
suffer by reason of the issuance and delivery of a replacement note for the
Note, including all cost, charges, expenses and claims of every kind and nature.
6. If the Note shall be found the Holder shall promptly deliver the
same to the Trustee in order that it may be cancelled.
7. The undersigned is duly authorized to execute this Affidavit on
behalf of the Holder.
Date:______________________ [SELLER]
__________________________ By:_____________________________
Witness Name:
Title:
JPMorgan Chase Bank, N.A.,
as Trustee
By:_____________________________
Name:
Title:
D-2
EXHIBIT E
Form of Final Certification Of Trustee
[date]
[Depositor]
[Servicer]
[Seller]
---------------------
---------------------
Re: Pooling and Servicing Agreement among Popular ABS, Inc., as
Depositor, Equity One, Inc., a Delaware corporation, Popular
Financial Funding, LLC, Equity One, Inc., a Minnesota corporation,
Equity One Consumer Loan Company, Inc., Equity One, Incorporated
and Popular Financial Services, LLC, as Sellers, Equity One, Inc.,
a Delaware corporation, as Servicer, and JPMorgan Chase Bank,
N.A., as Trustee, Mortgage Pass-Through Certificates, Series
0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), the undersigned, as
Trustee, hereby certifies that as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached Exception Report),
except as set forth on the Exception Report attached hereto, it has received:
(i) the original Mortgage Note and confirms that the name on the
Mortgage Note matches that on the Loan Schedule;
(ii) the original recorded Mortgage (unless such Mortgage has not yet
been returned by the relevant recording office, as certified by the Depositor;
(iii) the original recorded assignment of the Mortgage in the form
provided in Section 2.01(c) of the Pooling and Servicing Agreement;
(iv) the original or duplicate original recorded assignment or
assignments of the Mortgage necessary to show a complete chain of assignment
from the originator to the Seller, unless the Depositor has certified that the
related assignment has not been returned from the applicable recording office;
and
(v) the original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by the
title company, unless the Depositor has certified that such title policy has not
yet been received from the applicable title insurance company.
E-1
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Loan, and (b) the information set forth in items (c), (d), (e) and (i) of the
definition of the "Loan Schedule" in Article I of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
JPMorgan Chase Bank, N.A.,
as Trustee
By:_____________________________
Name:
Title:
E-2
EXHIBIT F
Form of Transfer Affidavit
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
STATE OF )
) ss:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of ________, the proposed Transferee
of an Ownership Interest in a Class R Certificate (the "CERTIFICATE") issued
pursuant to the Pooling and Servicing Agreement, (the "AGREEMENT"), relating to
the above-referenced Series, by and among Popular ABS, Inc., as depositor (the
"DEPOSITOR"), Equity One, Inc., a Delaware corporation, Popular Financial
Funding, LLC, Equity One, Inc., a Minnesota corporation, Equity One Consumer
Loan Company, Inc., Equity One, Incorporated and Popular Financial Services,
LLC, as Sellers, Equity One, Inc., a Delaware corporation, as Servicer, and
JPMorgan Chase Bank, N.A., as Trustee. Capitalized terms used, but not defined
herein or in Exhibit 1 hereto, shall have the meanings ascribed to such terms in
the Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account. The Transferee has no
knowledge that any such affidavit is false.
3. The Transferee acknowledges that it understands that as the holder
of the residual interest, the Transferee may incur tax liabilities in excess of
any cash flows the residual interest generates and the Transferee intends to pay
any taxes associated with its holding the residual interest as those taxes
become due.
4. The Transferee represents that the conditions specified in either or
both of subparagraph (a) and (b) of this paragraph are satisfied:
(a) The requirements of this subparagraph (a) will be met if: the
present value of the anticipated tax liabilities associated with holding the
residual interest does not exceed the sum of: (i) the present value of any
consideration given to the Transferee to acquire the interest, (ii) the present
value of the expected future distributions on the interest, and (iii) the
present value of the anticipated tax savings associated with holding the
interest as the REMIC generates losses. For purposes of this subparagraph (a),
the Transferee is assumed to pay tax at a rate equal to the highest rate of tax
specified in section 11(b)(1) of the Code, and present values are computed using
a discount rate equal to the applicable federal rate prescribed by section
1274(d) of the Code, compounded semiannually, or such other rate that the
Transferee can demonstrate it borrows substantial funds at in the course of its
trade or business from unrelated third parties.
(b) The requirements of this subparagraph (b) will be met if: (i)
at the time of the transfer, and at the close of each of the Transferee's two
fiscal years preceding the year of transfer the Transferee's
F-1
gross assets for financial reporting purposes exceed $100 million and its net
assets for financial reporting purposes exceed $10 million, (ii) The Transferee
is an eligible corporation (within the meaning of section 860L(a)(2) of the
Code), (iii) The Transferee is not a foreign branch of an eligible corporation
or any other arrangement by which the Residual interest will at any time be
subject to net tax by a foreign country or possession of the United States, (iv)
The Transferee agrees, in executing this Certificate that any subsequent
transfer of the Residual interest will be to another eligible corporation in a
"qualifying transaction," and (v) the Transferee has not indicated to, nor
provided to the Transferor any grounds to believe that, the Transferee will not
pay the taxes associated with the residual interest. For purposes of applying
this subparagraph (b), the Transferee's gross assets and net assets do not
include any obligation of any person related to the Transferee within the
meaning of section 860L(g) of the Code, or any other asset if a principal
purpose for holding or acquiring the asset is to permit the Transferee to
satisfy the requirements of this subparagraph (b), and a "qualifying
transaction" is a transaction that satisfies the requirements of ss.4 of Rev.
Proc. 2001-12, 2001-3 I.R.B. 35.
5. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
6. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (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 and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
7. The Transferee has reviewed the provisions of Section 5.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
8. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit G to the Agreement (a "TRANSFEROR CERTIFICATE") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
F-2
9. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
10. The Transferee's taxpayer identification number is ________.
11. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
12. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed 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.
13. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan or arrangement that is subject to Section 4975 of the Code, and
the Transferee is not acting on behalf of such a plan or arrangement or using
the assets of any such plan or arrangement to effect the transfer.
14. The Transferee has provided financial statements or other financial
information requested by the transferor in connection with the transfer of the
Class R Certificates to permit the transferor to assess the financial capability
of the Transferee to pay any such taxes.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of _______, 20 __ .
------------------------------
PRINT NAME OF TRANSFEREE
By:___________________________
Name:_________________________
Title:________________________
[Corporate Seal]
ATTEST:
---------------------------------
[Assistant] Secretary
Personally appeared before me the above-named ________, known or proved
to me to be the same person who executed the foregoing instrument and to be the
________ of the Transferee, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this _____ day of ______, 20__.
-----------------------------------------
NOTARY PUBLIC
My Commission expires the ________ day of
_____, 20 __.
F-3
EXHIBIT 1
to EXHIBIT F
Certain Definitions
-------------------
"OWNERSHIP INTEREST": As to any Class R Certificate, any ownership
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.
"PERMITTED TRANSFEREE": Any person other than (a) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (b) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (c) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(l) of the Code) with respect to
any Class R Certificate, (d) rural electric and telephone cooperatives described
in section 1381(a)(2)(C) of the Code, (e) a Person that is not (i) a citizen or
resident of the United States, (ii) a corporation or partnership (or other
entity properly treated as a corporation or partnership for U.S. federal income
tax purposes) created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or (iv) a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States Persons have authority
to control all substantial decisions of the trust, unless such Person listed in
clause (i), (ii), (iii) or (iv) above has furnished the transferor and the
Trustee with a duly completed Internal Revenue Service Form W-8ECI and (f) any
other Person so designated by the Depositor based upon an Opinion of Counsel
that the Transfer of an Ownership Interest in a Class R Certificate to such
Person may cause any REMIC hereunder to fail to qualify as one or more REMICs at
any time that the Certificates are outstanding. The terms "United States,"
"State" and "International Organization" shall have the meanings set forth in
section 7701 of the Code or successor provisions. A corporation will not be
treated as an instrumentality of the United States or of any State or political
subdivision thereof for these purposes if all of its activities are subject to
tax and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such government unit.
"PERSON": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"TRANSFER": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"TRANSFEREE": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
F-4
EXHIBIT 2
to EXHIBIT F
Section 5.02(c) of the Agreement
--------------------------------
(c) 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
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) 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.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "TRANSFER AFFIDAVIT") of the initial
owner or the proposed transferee in the form attached hereto as
Exhibit F.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and (C)
not to Transfer its Ownership Interest in a Class R Certificate or to
cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported transferee shall become a
Holder of a Class R Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of 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 or
for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit, Transferor Certificate
and either the Rule 144A Letter or the Investment Letter. The Trustee
shall be entitled but not obligated to recover from any Holder of a
Class R Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it became other
than a Permitted Transferee, all payments made on such Class R
Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to
the last preceding Permitted Transferee of such Certificate.
F-5
(v) The Depositor shall use its best efforts to make available,
upon receipt of written request from the Trustee, all information
necessary to compute any tax imposed under Section 860E(e) of the Code
as a result of a Transfer of an Ownership Interest in a Class R
Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the Sellers
or the Servicer, to the effect that the elimination of such restrictions will
not cause the Trust Fund hereunder to fail to qualify as one or more REMICs at
any time that the Certificates are outstanding or result in the imposition of
any tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class R Certificate hereby
consents to any amendment of this Agreement which, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (A) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (B) to provide for a means to compel the Transfer of a Class R
Certificate which is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
F-6
EXHIBIT G
Form of Transferor Certificate
---------------------
Date
Popular ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
------------------
JPMorgan Chase Bank, N.A.
----------------------------
----------------------------
Attention:
------------------
------------------
Re: Popular ABS, Inc. Mortgage Pass-Through Certificates, Series
2004-5, Class ,
-----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "ACT"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
to the extent we are disposing of a Class R Certificate, we have no knowledge
the Transferee is not a Permitted Transferee.
Very truly yours,
---------------------------------
Print Name of Transferor
By:
------------------------------
Authorized Officer
G-1
EXHIBIT H
Form of Investment Letter (Non Rule 144A)
----------------------
Date
Popular ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
----------------------
JPMorgan Chase Bank, N.A.
-------------------------------
-------------------------------
Attention:
---------------------
---------------------
Re: Popular ABS, Inc. Mortgage Pass-Through Certificates,
Series 2004-5, Class
------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "ACT"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement, nor are we using the assets of any such plan or
arrangement to effect such acquisition, or (ii) we are an insurance company and
are purchasing Certificates, other than the Class R Certificates, that have been
the subject of an ERISA Qualifying Underwriting, we are purchasing the
Certificates with funds contained in an "insurance company general account", as
defined in Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and the
purchasing and holding of such Certificates are covered by Sections I and III of
PTCE 95-60, (e) we are acquiring the Certificates for investment for our own
account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to
H-1
an effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this Certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
-------------------------------
Print Name of Transferee
By:____________________________
Authorized Officer
H-2
EXHIBIT I
Form of Rule 144A Letter
------------------------
Date
Popular ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
----------------------------------
JPMorgan Chase Bank, N.A.
-------------------------------------------
-------------------------------------------
Attention:
---------------------------------
---------------------------------
Re: Popular ABS, Inc. Mortgage Pass-Through Certificates, Series
2004-5, Class ,
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "ACT"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement, nor are we using the assets of any such plan or
arrangement to effect such acquisition, or (ii) we are an insurance company and
are purchasing Certificates, other than the Class R Certificates, that have been
the subject of an ERISA Qualifying Underwriting, we are purchasing the
Certificates with funds contained in an "insurance company general account", as
defined in Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and the
purchasing and holding of such Certificates are covered by Sections I and III of
PTCE 95-60, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would render the
disposition of the Certificates a violation of Section 5 of the Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
and (f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Act and have completed either of the forms of certification to
that effect attached hereto as Annex 1 or Annex 2. We
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are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed 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 Act.
I-2
ANNEX 1 TO EXHIBIT I
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "BUYER") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("RULE 144A") because (i) the Buyer owned and/or
invested on a discretionary basis either at least $100,000,000 in securities or,
if Buyer is a dealer, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 in securities (except for the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A and (ii) the Buyer satisfies the
criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by 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, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ 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,
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.
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___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a) (22) of the Investment
Advisors Act of 1940.
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) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
-------------------------------------
Print Name of Buyer
By:__________________________________
Name:
Title:
Date:________________________________
I-4
ANNEX 2 TO EXHIBIT I
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "BUYER") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("RULE 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $____ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $____ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the
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Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
-------------------------------------
Print Name of Buyer or Adviser
By:
----------------------------------
Name:
Title:
IF AN ADVISER:
-------------------------------------
Print Name of Buyer
Date:
--------------------------------
I-6
EXHIBIT J
Form of Request for Release of Documents
Popular ABS, Inc.
Mortgage Pass-Through Certificates
Series 2004-5
To: Attn:
--------------------------------------- --------------------------------
--------------------------------
Re: Pooling and Servicing Agreement among Popular ABS, Inc., as
Depositor, Equity One, Inc., a Delaware corporation, Popular
Financial Funding, LLC, Equity One, Inc., a Minnesota
corporation, Equity One Consumer Loan Company, Inc., Equity
One, Incorporated and Popular Financial Services, LLC, as
Sellers, Equity One, Inc., a Delaware corporation, as
Servicer, and JPMorgan Chase Bank, N.A., as Trustee, Mortgage
Pass-Through Certificates, Series 2004-5
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as
Trustee for Popular ABS, Inc., we request the release of the Mortgage File for
the Loan(s) described below, for the reason indicated.
FT Account #: Pool #:
Mortgagor's Name, Address and Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
1. Loan paid in full (_______________________ hereby certifies
that all amounts have been received.)
2. Loan Liquidated (___________________________ hereby certifies
that all proceeds of foreclosure, insurance, or other
liquidation have been finally received.)
3. Loan in Foreclosure.
4. Other (explain):
The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Servicer shall be
deposited into the Certificate Account, and the Servicer shall keep the
Documents and any proceeds separate and distinct from all other property in the
Servicer's possession, custody or control.
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If item 1 or 2 above is checked, and if all or part of the Mortgage
File was previously released to us, please release to us our previous receipt on
file with you, as well as any additional documents in your possession relating
to the above-specified Loan. If item 3 or 4 is checked, upon return of all of
the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
_____________________________________
_____________________________________
_____________________________________
By:________________________________________
Name:______________________________________
Title:_____________________________________
Date:______________________________________
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By:________________________________________
Name:______________________________________
Title:_____________________________________
Date:______________________________________
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EXHIBIT K
Form of Reporting Document
SEE ATTACHED
K-1
EXHIBIT L
Yield Maintenance Agreement
SEE ATTACHED
L-1
EXHIBIT M
Form of Power of Attorney
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JPMorgan Chase Bank, N.A., a banking
association organized under the laws of the United States, having a place of
business at 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, X.X. 00000, as Trustee (and
in no personal or other representative capacity) under the Pooling and Servicing
Agreement, dated as of __________, 20__ (as amended, restated, supplemented or
otherwise modified from time to time, the "Agreement"; capitalized terms not
defined herein have the definitions assigned to such terms in the Agreement),
relating to the __________________, hereby appoints _______________, in its
capacity as a Servicer under the Agreement, as the Trustee's true and lawful
Special Attorney-in-Fact, in the Trustee's name, place and stead and for the
Trustee's benefit, but only in its capacity as Trustee aforesaid, to perform all
acts and execute all documents as may be customary, necessary and appropriate to
effectuate the following enumerated transactions in respect of any mortgage,
deed of trust, promissory note or real estate owned from time to time owned
(beneficially or in title, whether the Trustee is named therein as mortgagee or
beneficiary or has become mortgagee or beneficiary by virtue of endorsement,
assignment or other conveyance) or held by or registered to the Trustee
(directly or through custodians or nominees), or in respect of which the Trustee
has a security interest or other lien, all as provided under the applicable
Agreement and only to the extent the respective Trustee has an interest therein
under the Agreement, and in respect of which the Servicer is acting as servicer
pursuant to the Agreement (the "Mortgage Documents").
This appointment shall apply to the following enumerated transactions under the
Agreement only:
1. The modification or re-recording of any Mortgage Document for the purpose of
correcting it to conform to the original intent of the parties thereto or to
correct title errors discovered after title insurance was issued and where such
modification or re-recording does not adversely affect the lien under the
Mortgage Document as insured.
2. The subordination of the lien under a Mortgage Document to an easement in
favor of a public utility company or a state or federal agency or unit with
powers of eminent domain including, without limitation, the execution of partial
satisfactions/releases, partial reconveyances and the execution of requests to
trustees to accomplish same.
3. The conveyance of the properties subject to a Mortgage Document to the
applicable mortgage insurer, or the closing of the title to the property to be
acquired as real estate so owned, or conveyance of title to real estate so
owned.
4. The completion of loan assumption and modification agreements in respect of
Mortgage Documents.
5. The full or partial satisfaction/release of a Mortgage Document or full
conveyance upon payment and discharge of all sums secured thereby, including,
without limitation, cancellation of the related note.
6. The assignment of any Mortgage Document, in connection with the repurchase of
the mortgage loan secured and evidenced thereby.
M-1
7. The full assignment of a Mortgage Document upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof, including,
without limitation, the assignment of the related note.
8. With respect to a Mortgage Document, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial foreclosure
or termination, cancellation or rescission of any such foreclosure, including,
without limitation, any and all of the following acts:
a. the substitution of trustee(s) serving under a deed of trust,
in accordance with state law and the deed of trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or
notices of sale;
d. the cancellation/rescission of notices of default and/or
notices of sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and
performance of such other actions as may be necessary under
the terms of the Mortgage Document or state law to
expeditiously complete said transactions in paragraphs 8(a)
through 8(e), above.
9. Demand, xxx for, recover, collection and receive each and every sum of money,
debt, account and interest (which now is, or hereafter shall become due and
payable) belonging to or claimed by the Trustee under the Mortgage Documents,
and to use or take any lawful means for recovery thereof by legal process or
otherwise.
10. Endorse on behalf of the Trustee all checks, drafts and/or negotiable
instruments made payable to the Trustee in respect of the Mortgage Documents.
The Trustee gives the Special Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by this
Limited Power of Attorney, subject to the terms and conditions set forth in the
Agreement including the standard of care applicable to servicers in the
Agreement, and hereby does ratify and confirm what such Special Attorney-in-Fact
shall lawfully do or cause to be done by authority hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Trustee has caused its corporate name and seal to be
hereto signed and affixed and these presents to be acknowledged by its duly
elected and authorized officer this ___ day of ___ , 20__.
JPMorgan Chase Bank, N.A., as Trustee
-------------------------------------
By:
Name:
Title:
WITNESS: WITNESS:
------------------------------- -------------------------------------
Name: Name:
Title: Title:
XXXXX XX XXX XXXX
XX
XXXXXX XX XXX XXXX
Xx ______________, 20__, before me, the undersigned, a Notary Public in
and for said state, personally appeared __________________, personally known to
me to be the person whose name is subscribed to the within instrument and to be
a duly authorized and acting _______________ of JPMorgan Chase Bank, N.A., and
such person acknowledged to me that such person executed the within instrument
in such person's authorized capacity as a ___________________ of JPMorgan Chase
Bank, N.A., and that by such signature on the within instrument the entity upon
behalf of which such person acted executed the instrument.
WITNESS my hand and official seal.
----------------------------------
Notary Public
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