EXECUTION VERSION
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XXXXXX XXXXXXX ABS CAPITAL I INC.,
as Depositor,
FAIRBANKS CAPITAL CORP.,
as Servicer,
CDC MORTGAGE CAPITAL INC.,
as Unaffiliated Seller,
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee,
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2002
CDC MORTGAGE CAPITAL TRUST 2002-HE3
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2002-HE3
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................5
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..........................................40
Section 2.01 Conveyance of Mortgage Loans...............................................................40
Section 2.02 Acceptance by the Trustee of the Mortgage Loans............................................44
Section 2.03 Representations, Warranties and Covenants of the Unaffiliated Seller and the
Servicer...................................................................................45
Section 2.04 The Depositor and the Mortgage Loans.......................................................48
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Non-Qualified
Mortgages..................................................................................49
Section 2.06 Execution and Delivery of Certificates.....................................................49
Section 2.07 REMIC Matters..............................................................................49
Section 2.08 Representations and Warranties of the Depositor............................................49
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................................51
Section 3.01 Servicer to Service Mortgage Loans.........................................................51
Section 3.02 Subservicing Agreements Between the Servicer and Subservicers..............................52
Section 3.03 Successor Subservicers.....................................................................53
Section 3.04 Liability of the Servicer..................................................................54
Section 3.05 No Contractual Relationship Between Subservicers and the Trustee...........................54
Section 3.06 Assumption or Termination of Subservicing Agreements by Trustee............................54
Section 3.07 Collection of Certain Mortgage Loan Payments; Establishment of Certain Accounts............55
Section 3.08 Subservicing Accounts......................................................................57
Section 3.09 Collection of Taxes, Assessments and Similar Items; Escrow Accounts........................58
Section 3.10 Collection Account.........................................................................59
Section 3.11 Withdrawals from the Collection Account....................................................60
Section 3.12 Investment of Funds in the Account.........................................................61
Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.............62
Section 3.14 Enforcement of Due-On-Sale Clauses Assumption Agreements...................................64
Section 3.15 Realization Upon Defaulted Mortgage Loans..................................................65
Section 3.16 Release of Mortgage Files..................................................................66
Section 3.17 Title, Conservation and Disposition of REO Property........................................67
Section 3.18 Notification of Adjustments................................................................69
Section 3.19 Access to Certain Documentation and Information Regarding the Mortgage Loans...............69
Section 3.20 Documents, Records and Funds in Possession of the Servicer to be Held for the
Trustee....................................................................................69
Section 3.21 Servicing Compensation.....................................................................70
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Section 3.22 Annual Statement as to Compliance..........................................................70
Section 3.23 Annual Independent Public Accountants' Servicing Statement; Financial Statements...........71
Section 3.24 Trustee to Act as Servicer.................................................................71
Section 3.25 Compensating Interest......................................................................72
Section 3.26 Credit Reporting; Xxxxx-Xxxxx-Xxxxxx Act...................................................72
Section 3.27 Advance Facilities.........................................................................72
Section 3.28 Servicer Performance Evaluations...........................................................74
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER............................................................75
Section 4.01 Advances...................................................................................75
Section 4.02 Priorities of Distribution.................................................................76
Section 4.03 Monthly Statements to Certificateholders...................................................80
Section 4.04 Certain Matters Relating to the Determination of LIBOR.....................................84
Section 4.05 The Class A Insurance Policy...............................................................84
Section 4.06 Effect of Payments by the Class A Certificate Insurer; Subrogation.........................86
ARTICLE V THE CERTIFICATES.......................................................................................86
Section 5.01 The Certificates...........................................................................86
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates................87
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..........................................91
Section 5.04 Persons Deemed Owners......................................................................92
Section 5.05 Access to List of Certificateholders' Names and Addresses..................................92
Section 5.06 Maintenance of Office or Agency............................................................92
Section 5.07 Rights of the Class A Certificate Insurer to Exercise Rights of Class A
Certificateholders.........................................................................93
Section 5.08 Trustee To Act Solely with Consent of the Class A Certificate Insurer......................93
Section 5.09 Mortgage Loans, Trust Fund and Accounts Held for Benefit of the Class A
Certificate Insurer........................................................................94
Section 5.10 Class A Certificate Insurer Default........................................................94
ARTICLE VI THE DEPOSITOR AND THE SERVICER........................................................................95
Section 6.01 Respective Liabilities of the Depositor and the Servicer...................................95
Section 6.02 Merger or Consolidation of the Depositor or the Servicer...................................95
Section 6.03 Limitation on Liability of the Depositor, the Servicer and Others..........................95
Section 6.04 Limitation on Resignation of the Servicer..................................................96
Section 6.05 Additional Indemnification by the Servicer; Third Party Claims.............................97
ARTICLE VII DEFAULT..............................................................................................97
Section 7.01 Events of Default..........................................................................97
Section 7.02 Trustee to Act; Appointment of Successor...................................................99
Section 7.03 Notification to Certificateholders........................................................100
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ARTICLE VIII CONCERNING THE TRUSTEE.............................................................................100
Section 8.01 Duties of the Trustee.....................................................................100
Section 8.02 Certain Matters Affecting the Trustee.....................................................101
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.....................................102
Section 8.04 Trustee May Own Certificates..............................................................103
Section 8.05 Trustee's Fees and Expenses...............................................................103
Section 8.06 Eligibility Requirements for the Trustee..................................................103
Section 8.07 Resignation and Removal of the Trustee....................................................104
Section 8.08 Successor Trustee.........................................................................104
Section 8.09 Merger or Consolidation of the Trustee....................................................105
Section 8.10 Appointment of Co-Trustee or Separate Trustee.............................................105
Section 8.11 Tax Matters...............................................................................106
Section 8.12 Periodic Filings..........................................................................109
Section 8.13 Tax Classification of Certain Accounts....................................................109
ARTICLE IX TERMINATION..........................................................................................111
Section 9.01 Termination upon Liquidation or Purchase of the Mortgage Loans............................111
Section 9.02 Final Distribution on the Certificates....................................................112
Section 9.03 Additional Termination Requirements.......................................................113
ARTICLE X MISCELLANEOUS PROVISIONS..............................................................................113
Section 10.01 Amendment.................................................................................113
Section 10.02 Recordation of Agreement; Counterparts....................................................115
Section 10.03 Governing Law.............................................................................116
Section 10.04 Intention of Parties......................................................................116
Section 10.05 Notices...................................................................................116
Section 10.06 Severability of Provisions................................................................117
Section 10.07 Assignment................................................................................117
Section 10.08 Limitation on Rights of Certificateholders................................................118
Section 10.09 Inspection and Audit Rights...............................................................118
Section 10.10 Certificates Nonassessable and Fully Paid.................................................119
Section 10.11 The Class A Certificate Insurer Default...................................................119
Section 10.12 Third Party Beneficiary...................................................................119
Section 10.13 Waiver of Jury Trial......................................................................119
SCHEDULES
Schedule I Mortgage Loan Schedule
Schedule II Representations and Warranties of the Servicer
Schedule IIA Further Representations and Warranties of the Servicer
Schedule III Representations and Warranties as to the Unaffiliated Seller
EXHIBITS
Exhibit A Form of Class A, Class M-1, Class M-2, Class B-1 and Class B-2 Certificate
Exhibit B [Reserved]
Exhibit C Form of Class P Certificate
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Exhibit D Form of Class R Certificate
Exhibit E Form of Class X Certificate
Exhibit F Form of Initial Certification of Trustee
Exhibit G Form of Final Certification of Trustee
Exhibit H Form of Transfer Affidavit
Exhibit I Form of Transferor Certificate
Exhibit J Form of Rule 144A Letter
Exhibit K Form of Request for Release
Exhibit L Form of Subsequent Transfer Agreement
Exhibit M Depositor Certification
Exhibit N Trustee/Servicer Certification
Exhibit O Performance Standards
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THIS POOLING AND SERVICING AGREEMENT, dated as of November 1,
2002, among XXXXXX XXXXXXX ABS CAPITAL I INC., a Delaware corporation, as
depositor (the "DEPOSITOR"), FAIRBANKS CAPITAL CORP., a Utah corporation, as
servicer (the "SERVICER"), CDC MORTGAGE CAPITAL INC., a New York corporation, as
unaffiliated seller (the "UNAFFILIATED SELLER") and DEUTSCHE BANK NATIONAL TRUST
COMPANY (f/k/a Bankers Trust Company of California, N.A.), a national banking
association, as trustee (the "TRUSTEE"),
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
PRELIMINARY STATEMENT
The Trustee shall elect that two segregated asset pools within
the Trust Fund be treated for federal income tax purposes as comprising two
REMICs (each a "REMIC" or, in the alternative, the Lower Tier REMIC and the
Upper Tier REMIC, respectively). Each Certificate, other than the Class P and
Class R Certificates, represents ownership of a regular interest in the Upper
Tier REMIC for purposes of the REMIC Provisions. The Class R Certificate
represents ownership of the sole class of residual interest in each of the Lower
Tier REMIC and the Upper Tier REMIC for purposes of the REMIC Provisions. Class
UT-R and Class LT-R comprise the Class R Certificate. The Startup Day for each
REMIC described herein is the Closing Date. The latest possible maturity date
for each regular interest is the date referenced for such regular interest in
this preliminary statement.
The Upper Tier REMIC shall hold as assets the several classes
of uncertificated Lower Tier Regular Interests, set out below. Each such Lower
Tier Regular Interest is hereby designated as a regular interest in the Lower
Tier REMIC. Class LT-A, Class LT-M-1, Class LT-M-2, Class LT-B-1 and Class
LT-B-2 are hereby designated the LT Accretion Directed Classes. The Class P
Certificate represents beneficial ownership of the Prepayment Charges, which
portion of the Trust Fund shall be treated as a grantor trust.
The Lower Tier REMIC shall hold as assets all of the assets
included in the Trust Fund other than Prepayment Charges and the Excess Reserve
Fund Account.
LOWER TIER CLASS LOWER TIER INITIAL LOWER TIER CORRESPONDING LATEST POSSIBLE MATURITY
DESIGNATION INTEREST RATE PRINCIPAL AMOUNT CLASS DATE
---------------------- ---------------- ---------------------- ------------- ------------------------
Class LT-A (1) 1/2 of the Class A March 25, 2033
Corresponding Class
initial principal
balance
Class LT-M-1 (1) 1/2 of the Class M-1 March 25, 2033
Corresponding Class
initial principal
balance
Class LT-M-2 (1) 1/2 of the Class M-2 March 25, 2033
Corresponding Class
initial principal
balance
Class LT-B-1 (1) 1/2 of the Class X-0 Xxxxx 00, 0000
Xxxxxxxxxxxxx Class
initial principal
balance
Class LT-B-2 (1) 1/2 of the Class X-0 Xxxxx 00, 0000
Xxxxxxxxxxxxx Class
initial principal
balance
Class LT-Accrual (1) 1/2 of the Pool Stated March 25, 2033
Principal Balance plus
1/2 of the Subordinated
Amount
Class LT-IO (2) (3) February 25, 2003
Class LT-R (4) (4)
(1) The interest rate with respect to any Distribution Date for these
interests is (i) during the Pre-Funding Period, an interest rate equal to
zero, and (ii) thereafter, a per annum variable rate equal to the weighted
average of the Adjusted Net Mortgage Rates then in effect on the beginning
of the related Due Period on the Mortgage Loans.
(2) The interest rate with respect to any Distribution Date for the Class
LT-IO is (i) during the Pre-Funding Period, 100% of the interest paid on
the Mortgage Loans, and (ii) thereafter, 0.00%.
(3) The Class LT-IO will have a notional principal balance equal to (i) during
the Pre-Funding Period, the Pool Stated Principal Balance, and (ii)
thereafter, zero.
(4) The Class LT-R is the sole class of residual interest in the Lower Tier
REMIC. The Class LT-R does not have a principal amount or an interest
rate.
On each Distribution Date, 50% of the increase in the
Subordinated Amount will be payable as a reduction of the principal balances of
the LT Accretion Directed Classes and will be accrued and added to the principal
balance of the LT-Accrual Class. On each Distribution Date, each LT Accretion
Directed Class will be reduced by an amount equal to 50% of any increase in the
Subordinated Amount that is attributable to a reduction in the principal balance
of its Corresponding Class. On each Distribution Date, the increase in the
principal balance of the LT-Accrual Class may not exceed interest accruals for
such Distribution Date for the LT-Accrual Class. If, with respect to any
Distribution Date, 50% of the increase in the Subordinated Amount exceeds
accrued interest on the LT-Accrual Class, the excess (accumulated with all such
excess
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for all prior Distribution Dates) will be added to any increase in the
Subordinated Amount for purposes of calculating accrued interest on the
LT-Accrual Class payable as principal on the LT Accretion Directed Classes on
the next Distribution Date.
All principal payments (scheduled and prepaid) on the Mortgage
Loans shall be allocated 50% to the LT-Accrual Class and 50% to the LT Accretion
Directed Classes, until paid in full. To this end, principal payments shall be
allocated among such LT Accretion Directed Classes in an amount equal to 50% of
the principal amounts allocated to their respective Corresponding Classes.
Notwithstanding the foregoing, principal payments allocated to the Class X
Certificates that result in the reduction of the Subordinated Amount shall be
allocated to the LT-Accrual Class until paid in full. Realized losses shall be
applied so that after all distributions have been made on each Distribution Date
(i) the principal balance of each LT Accretion Directed Class is equal to 50% of
the principal balance of its Corresponding Class, and (ii) the LT-Accrual Class
is equal to 50% of the Pool Stated Principal Balance plus 50% of the
Subordinated Amount.
The Upper Tier REMIC shall issue the following classes of
interests, and each Upper Tier Interest, other than the Class UT-R Interest, is
hereby designated as a regular interest in the Upper Tier REMIC.
UPPER TIER CLASS UPPER TIER INITIAL UPPER TIER LATEST POSSIBLE MATURITY
DESIGNATION INTEREST RATE PRINCIPAL AMOUNT CORRESPONDING CLASS DATE
--------------------- --------------- -------------------- --------------------- -------------------------
Class A (1) $537,817,000 Class A(8) March 25, 2033
Class M-1 (2) $ 39,594,000 Class M-1(8) March 25, 2033
Class M-2 (3) $ 36,294,000 Class M-2(8) March 25, 2033
Class B-1 (4) $ 26,066,000 Class B-1(8) March 25, 2033
Class B-2 (5) $ 10,229,000 Class B-2(8) March 25, 2033
Class X (6) (6) Class X March 25, 2033
Class UT-R (7) Class R
(1) The Class A will bear interest during each Interest Accrual Period at a
per annum rate equal to (a) on or prior to the Optional Termination Date,
the lesser of (i) LIBOR plus 0.490% and (ii) the WAC Cap and (b) after the
Optional Termination Date, the lesser of (i) LIBOR plus 0.980% and (ii)
the WAC Cap.
(2) The Class M-1 will bear interest during each Interest Accrual Period at a
per annum rate equal to (a) on or prior to the Optional Termination Date,
the lesser of (i) LIBOR plus 1.100% and (ii) the WAC Cap and (b) after the
Optional Termination Date, the lesser of (i) LIBOR plus 1.650%, and (ii)
the WAC Cap.
(3) The Class M-2 will bear interest during each Interest Accrual Period at a
per annum rate equal to (a) on or prior to the Optional Termination Date,
the lesser of (i) LIBOR plus 2.250% and (ii) the WAC Cap and (b) after the
Optional Termination Date, the lesser of (i) LIBOR plus 3.375%, and (ii)
the WAC Cap.
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(4) The Class B-1 will bear interest during each Interest Accrual Period at a
per annum rate equal to (a) on or prior to the Optional Termination Date,
the lesser of (i) LIBOR plus 3.400% and (ii) the WAC Cap and (b) after the
Optional Termination Date, the lesser of (i) LIBOR plus 5.100%, and (ii)
the WAC Cap.
(5) The Class B-2 will bear interest during each Interest Accrual Period at a
per annum rate equal to (a) on or prior to the Optional Termination Date,
the lesser of (i) LIBOR plus 4.000% and (ii) the WAC Cap and (b) after the
Optional Termination Date, the lesser of (i) LIBOR plus 6.000%, and (ii)
the WAC Cap.
(6) The Class X has an initial principal balance of $9,898,377, but it will
not accrue interest on such balance but will accrue interest on a notional
principal balance. As of any Distribution Date, the Class X shall have a
notional principal balance equal to the Pool Stated Principal Balance as
of the first day of the related Interest Accrual Period. With respect to
any Interest Accrual Period, the Class X shall bear interest at a rate
equal to the excess, if any, of the WAC Cap over the product of (i) 2 and
(ii) the weighted average Pass-Through Rate of the Lower Tier Regular
Interests, where each LT Accretion Directed Class is subject to a cap and
a floor equal to the Pass-Through Rate on its Corresponding Class, and the
LT-Accrual Class is subject to a cap of zero. With respect to any
Distribution Date, interest that so accrues on the notional principal
balance of the Class X shall be deferred in an amount equal to any
increase in the Subordinated Amount on such Distribution Date. Such
deferred interest shall not itself bear interest.
(7) The Class UT-R is the sole class of residual interest in the Upper Tier
REMIC. The Class UT-R does not have an interest rate.
(8) Each of these Certificates will represent not only the ownership of the
Corresponding Class of Upper Tier Regular Interest but also the right to
receive payments from the Excess Reserve Fund Account in respect of any
Basis Risk CarryForward Amounts. For federal income tax purposes, the
Trustee will treat a Certificateholder's right to receive payments from
the Excess Reserve Fund Account as payments made pursuant to a notional
principal contract written by the Class X Certificateholder.
The minimum denomination for each Class of Certificates, other
than the Class P, Class R and the Class X Certificates, will be $25,000 and
integral multiples of $1 thereof. The Class P, Class R and the Class X
Certificates will each represent a 100% Percentage Interest in such class.
Set forth below are designations of Classes of Certificates to
the categories used herein:
Book-Entry Certificates.................... All Classes of Certificates other than the Physical Certificates.
Subordinated Certificates.................. Class M-1, Class M-2, Class B-1 and Class B-2 Certificates.
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Delay Certificates......................... None.
ERISA-Restricted Certificates.............. Class R Certificates, Class P Certificate and Class X
Certificate; any certificate with a rating below the lowest
applicable permitted rating under the Underwriters' Exemption.
Floating Rate Certificates................. Class A and Subordinated Certificates.
LIBOR Certificates......................... Class A and Subordinated Certificates.
Non-Delay Certificates..................... Class A, Class X and Subordinated Certificates.
Offered Certificates....................... All Classes of Certificates other than the Private Certificates.
Physical Certificates...................... Class P, Class X and Class R Certificates.
Private Certificates....................... Class P, Class X and Class R Certificates.
Rating Agencies............................ Moody's, Fitch, Inc. and Standard & Poor's.
Regular Certificates....................... All Classes of Certificates other than the Class P and Class R
Certificates.
Residual Certificates...................... Class R Certificates.
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 Mortgage Loan with respect to
which any portion of a Scheduled Payment is, as of the last day of the prior Due
Period, two months or more past due (without giving effect to any grace period),
each Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for
which the Mortgagor has filed for bankruptcy.
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage
Loan, those mortgage servicing practices set forth in Section 3.01 of this
Agreement.
ACCOUNT: Any of the Capitalized Interest Account, the
Collection Account, the Distribution Account, any Escrow Account, the Excess
Reserve Fund Account, the Class A Insurance Payment Account or the Pre-Funding
Account. Each Account shall be an Eligible Account.
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ACCRUED CERTIFICATE INTEREST DISTRIBUTION AMOUNT: With respect
to any Distribution Date for each Class of Certificates (other than the Class X
Certificate), the amount of interest accrued during the related Interest Accrual
Period at the applicable Pass-Through Rate on the related Class Certificate
Balance immediately prior to such Distribution Date, as reduced by such Class's
share of Net Prepayment Interest Shortfalls and Relief Act Interest Shortfalls
for the related Due Period allocated to such Class pursuant to Section 4.02.
ADDITION NOTICE: A written notice from the Unaffiliated Seller
to the Trustee, the Rating Agencies and the Class A Certificate Insurer that the
Unaffiliated Seller desires to make a Subsequent Transfer.
ADJUSTABLE RATE MORTGAGE LOAN: A Mortgage Loan bearing
interest at an adjustable rate.
ADJUSTED MORTGAGE RATE: As to each Mortgage 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 Mortgage Loan and at
any time, the per annum rate equal to the Mortgage Rate less the Expense Fee
Rate.
ADJUSTMENT DATE: As to any Mortgage Loan, the first Due Date
on which the related Mortgage Rate adjusts as set forth in the related Mortgage
Note and each Due Date thereafter on which the Mortgage Rate adjusts as set
forth in the related Mortgage Note.
ADVANCES: Collectively, the P&I Advances and Servicing
Advances.
ADVANCE FACILITY: As defined in Section 3.27.
ADVANCE FACILITY TRUSTEE: As defined in Section 3.27.
ADVANCE REIMBURSEMENT AMOUNT: As defined in Section 3.27.
ADVANCING PERSON: As defined in Section 3.27.
AFFILIATE: With respect to any Person, any other Person
controlling, controlled by or under common control with such first Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
AGREEMENT: This Pooling and Servicing Agreement and all
amendments or supplements hereto.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to the Certificates on
any Distribution Date, the aggregate amount held in the Collection Account at
the close of business on the related Determination Date on account of (i)
Principal Prepayments and Liquidation Proceeds on the Mortgage Loans received
after the end of the related Prepayment Period and (ii) all Scheduled Payments
on the Mortgage Loans due after the end of the related Due Period.
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APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution
Date, the amount, if any, by which the aggregate Class Certificate Balance of
the Regular Certificates after distributions of principal on such Distribution
Date exceeds the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date.
APPRAISED VALUE: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
ASSIGNMENT AND RECOGNITION AGREEMENT: The BNC Assignment
Agreement, the IFC Assignment Agreement, the Novelle Assignment Agreement, the
Chapel Mortgage Assignment Agreement, the People's Choice Assignment Agreement,
the SIB Mortgage Assignment Agreement, the Fremont Assignment Agreement or the
First NLC Assignment Agreement, as applicable.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice
of transfer or equivalent instrument in recordable form (other than the
assignee's name and recording information not yet returned from the recording
office), reflecting the sale of the Mortgage to the Trustee.
AVERAGE NET PROCEEDS: As defined in Exhibit M hereto.
BALLOON LOAN: Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.
BASIC PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Excess Subordinated Amount, if any, for such
Distribution Date.
BASIS RISK CARRYFORWARD AMOUNT: With respect to each Class of
Regular Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of Regular Certificates is
based upon the WAC Cap, the excess of (i) the amount of interest such Class of
Certificates would otherwise be entitled to receive on such Distribution Date
had such rate been calculated as the sum of LIBOR and the applicable
Pass-Through Margin on such Class of Certificates for such Distribution Date,
over (ii) the amount of interest payable on such Class of Certificates
calculated at the WAC Cap for such Distribution Date and (B) the Basis Risk
CarryForward Amount for such Class of Certificates for all previous Distribution
Dates not previously paid, together with interest thereon at a rate equal to the
sum of LIBOR and the applicable Pass-Through Margin for such Class of
Certificates for such Distribution Date.
BASIS RISK PAYMENT: For any Distribution Date, an amount equal
to any Basis Risk CarryForward Amount, PROVIDED, HOWEVER, that with respect to
any Distribution Date, the payment cannot exceed the amounts otherwise
distributable on the Class X Certificates plus any Interest Rate Cap Payment
with respect to such Distribution Date.
BEST'S: Best's Key Rating Guide, as the same shall be amended
from time to time.
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BNC: BNC Mortgage, Inc., a Delaware corporation.
BNC ASSIGNMENT AGREEMENT: The Assignment and Recognition
Agreement, dated as of November 27, 2002, by and among the Unaffiliated Seller,
the Depositor and BNC, and each other Assignment and Recognition Agreement by
and among the Unaffiliated Seller, the Depositor and BNC in connection with any
Subsequent Transfer of BNC Mortgage Loans.
BNC MORTGAGE LOAN: A Mortgage Loan which was acquired from BNC
by the Unaffiliated Seller pursuant to the BNC Purchase Agreement, and which has
been acquired by the Trust Fund.
BNC PURCHASE AGREEMENT: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of February 26, 2002, as amended to
date, by and between the Unaffiliated Seller and BNC.
BOOK-ENTRY CERTIFICATES: As specified in the Preliminary
Statement.
BUSINESS DAY: Any day other than (i) Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions, in (a) the State
of New York, Utah, New Jersey and Florida, (b) the state in which the Servicer's
servicing operations are located, or (c) the State in which the Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.
CAP AGREEMENT: The interest rate cap agreement dated November
26, 2002 with the Cap Provider, as "Party A" thereunder, and the Unaffiliated
Seller, as "Party B" thereunder, or any replacement thereof.
CAP PROVIDER: Xxxxxx Xxxxxxx Capital Services Inc., a Delaware
corporation, and any successor thereto.
CAPITALIZED INTEREST ACCOUNT: The separate Eligible Account
created and maintained by the Trustee pursuant to Section 3.07(e) in the name of
the Trustee for the benefit of the Offered Certificateholders and designated
"Deutsche Bank National Trust Company, in trust for registered holders of CDC
Mortgage Capital Trust 2002-HE3, Mortgage Pass-Through Certificates, Series
2002-HE3".
CAPITALIZED INTEREST REQUIREMENT: With respect to the
Distribution Dates occurring in December 2002, January 2003 and February 2003,
the excess, if any, of (x) the Accrued Certificate Interest Distribution Amounts
for all classes of the Offered Certificates for such Distribution Date over (y)
all scheduled installments of interest (net of the related Expense Fees) due on
the Mortgage Loans in the related Due Period. In no event will the Capitalized
Interest Requirement be less than zero.
CERTIFICATE: Any one of the Certificates executed by the
Trustee in substantially the forms attached hereto as exhibits.
CERTIFICATE BALANCE: With respect to any Class of
Certificates, other than the Class R Certificate, at any date, the maximum
dollar amount of principal to which the Holder
8
thereof is then entitled hereunder, such amount being equal to the Denomination
thereof minus all distributions of principal previously made with respect
thereto and in the case of any Subordinated Certificates, reduced by any Applied
Realized Loss Amounts applicable to such Class of Subordinated Certificates. The
Class R Certificate has no Certificate Balance.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate.
CERTIFICATE REGISTER: The register maintained pursuant to
Section 5.02.
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.
CERTIFICATION: As defined in Section 8.12(b).
CHAPEL MORTGAGE: Chapel Mortgage Corporation, a New Jersey
corporation.
CHAPEL MORTGAGE ASSIGNMENT AGREEMENT: The Assignment and
Recognition Agreement, dated as of November 27, 2002, by and among the
Unaffiliated Seller, the Depositor and Chapel Mortgage, and each other
Assignment and Recognition Agreement by and among the Unaffiliated Seller, the
Depositor and Chapel Mortgage in connection with any Subsequent Transfer of
Chapel Mortgage Mortgage Loans.
CHAPEL MORTGAGE MORTGAGE LOAN: A Mortgage Loan which was
acquired from Chapel Mortgage by the Unaffiliated Seller pursuant to the Chapel
Mortgage Purchase Agreement, and which has been acquired by the Trust Fund.
CHAPEL MORTGAGE PURCHASE AGREEMENT: The Mortgage Loan Purchase
and Warranties Agreement, dated as of June 4, 2002, as amended to date, by and
between the Unaffiliated Seller and Chapel Mortgage.
CLASS: All Certificates bearing the same class designation as
set forth in the Preliminary Statement.
CLASS A CERTIFICATE INSURER: Financial Security Assurance
Inc., a monoline stock insurance company organized and created under the laws of
the State of New York, and any successors thereto.
9
CLASS A CERTIFICATE INSURER DEFAULT: The existence and
continuance of any of the following:
(a) the Class A Certificate Insurer shall have failed to make
a required payment when due under the Class A Insurance Policy;
(b) the Class A Certificate Insurer shall have (i) filed a
petition or commenced any case or proceeding under any provision or
chapter of the United States Bankruptcy Code, the New York State
Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization,
(ii) made a general assignment for the benefit of its creditors or
(iii) had an order for relief entered against it under the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization that is final and
nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have
entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, trustee, agent, or receiver for the Certificate
Insurer or for all or any material portion of its property or (ii)
authorizing the taking of possession by a custodian, trustee, agent, or
receiver of the Certificate Insurer or of all or any material portion
of its property.
CLASS A CERTIFICATES: All Certificates bearing the class
designation of "Class A Certificates".
CLASS A DEFICIENCY: With respect to any Distribution Date and
the Class A Certificates, an amount equal to the excess of the sum of:
(i) the excess of (x) the Accrued Certificate Interest
Distribution Amount for the Class A Certificates on such Distribution
Date, over (y) the Interest Amount Available, less the Premium Amount
and the Trustee Fee, in each case for such Distribution Date; plus
(ii) the Class A Principal Parity Amount, if any, for such
Distribution Date.
CLASS A INSURANCE PAYMENT ACCOUNT: The separate Eligible
Account created and maintained by the Trustee pursuant to Section 4.05(c) in the
name of the Trustee for the benefit of the Class A Certificateholders and the
Class A Certificate Insurer, and designated "Deutsche Bank National Trust
Company, in trust for Financial Security Assurance Inc. and the registered
holders of CDC Mortgage Capital Trust 2002-HE3, Mortgage Pass-Through
Certificates, Series 2002-HE3."
CLASS A INSURANCE POLICY: The Financial Guaranty Insurance
Policy No. 51369-N, and all endorsements thereto dated the Closing Date, issued
by the Class A Certificate Insurer for the benefit of the Class A
Certificateholders.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the excess of (i) the aggregate Class Certificate Balance of
the Class A Certificates immediately
10
prior to such Distribution Date over (ii) the lesser of (A) the product of
63.00% of the Current Maximum Amount and (B) the Current Maximum Amount minus
$3,299,492.
CLASS A PRINCIPAL PARITY AMOUNT: With respect to any
Distribution Date, the excess, if any, of (i) the aggregate Class Certificate
Balance of the Class A Certificates on that Distribution Date, after taking into
account any reduction therein on such Distribution Date from sources other than
the Class A Insurance Policy over (ii) the Current Maximum Amount on such
Distribution Date.
CLASS B-1 CERTIFICATES: All Certificates bearing the class
designation of "Class B-1 Certificates".
CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balance of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account distribution of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class Certificate Balance of the Class M-2
Certificates (after taking into account distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), and (D) the Class Certificate
Balance of the Class B-1 Certificates immediately prior to such Distribution
Date over (ii) the lesser of (A) 93.90% of the Current Maximum Amount and (B)
the Current Maximum Amount minus approximately $3,299,492.
CLASS B-2 CERTIFICATES: All Certificates bearing the class
designation of "Class B-2 Certificates".
CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balance of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account distribution of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class Certificate Balance of the Class M-2
Certificates (after taking into account distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date), (D) the Class Certificate
Balance of the Class B-1 Certificates (after taking into account distribution of
the Class B-1 Principal Distribution Amount on such Distribution Date), and (E)
the Class Certificate Balance of the Class B-2 Certificates immediately prior to
such Distribution Date over (ii) the lesser of (A) 97.00% of the Current Maximum
Amount and (B) the Current Maximum Amount minus approximately $3,299,492.
CLASS CERTIFICATE BALANCE: With respect to any Class and as to
any date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
CLASS M-1 CERTIFICATES: All Certificates bearing the class
designation of "Class M-1 Certificates".
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A
11
Certificates (after taking into account distribution of the Class A Principal
Distribution Amount on such Distribution Date), and (B) the Class Certificate
Balance of the Class M-1 Certificates immediately prior to such Distribution
Date over (ii) the lesser of (A) 75.00% of the Current Maximum Amount and (B)
the Current Maximum Amount MINUS approximately $3,299,492.
CLASS M-2 CERTIFICATES: All Certificates bearing the class
designation of "Class M-2 Certificates".
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account distribution of the Class A Principal Distribution Amount on
such Distribution Date), and (C) the Class Certificate Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 86.00% of the Current Maximum Amount and (B) the Current Maximum Amount
MINUS approximately $3,299,492.
CLASS P CERTIFICATES: All Certificates bearing the class
designation of "Class P Certificates".
CLASS R CERTIFICATES: All Certificates bearing the class
designation of "Class R Certificates".
CLASS X CERTIFICATES: All Certificates bearing the designation
of "Class X Certificates".
CLASS X DISTRIBUTABLE AMOUNT: On any Distribution Date, the
sum of (i) the amount of interest that has accrued on the Class X Regular
Interest and not applied as an Extra Principal Distribution Amount on such
Distribution Date, plus any such accrued interest remaining undistributed from
prior Distribution Dates, and (ii) any portion of the principal balance of the
Class X Regular Interest which is distributable as a Subordination Reduction
Amount, less any amounts paid as a Basis Risk Payment.
CLOSING DATE: November 27, 2002.
CODE: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
COLLECTION ACCOUNT: As defined in Section 3.10(a).
COMPENSATING INTEREST: For any Distribution Date, the lesser
of (a) the Prepayment Interest Shortfall, if any, for the Distribution Date, and
(b) one-half of the amount of the Servicing Fee payable to the Servicer for such
Distribution Date.
CONDEMNATION PROCEEDS: All awards of settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation.
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CONSENT PROCEDURES: As defined in Section 3.27.
CORPORATE TRUST OFFICE: The designated office of the Trustee
in the State of California at which at any particular time its corporate trust
business with respect to this Agreement is administered, which office at the
date of the execution of this Agreement is located at 0000 Xxxx Xx. Xxxxxx
Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000, Attn: Trust Administration-DC02M3, facsimile
no. (000) 000-0000 and which is the address to which notices to and
correspondence with the Trustee should be directed.
CORRESPONDING CLASS: The class of interests in any REMIC
created under this Agreement that correspond to the Class of interests in
another such REMIC or to a Class of Certificates in the manner set out below:
LOWER TIER UPPER TIER CORRESPONDING
CLASS DESIGNATION INTEREST CERTIFICATE
---------------------------- --------------------------- -------------------
Class LT-A Class A Class A
Class LT-M-1 Class M-1 Class M-1
Class LT-M-2 Class M-2 Class M-2
Class LT-B-1 Class B-1 Class B-1
Class LT-B-2 Class B-2 Class B-2
CUMULATIVE LOSS PERCENTAGE: With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Applied Realized Loss Amounts incurred from the Cut-off Date
to the last day of the preceding calendar month less any amounts received with
respect to Applied Realized Loss Amounts on the related Mortgage Loans
subsequent to the Final Recovery Determination being made with respect to such
Mortgage Loans and the denominator of which is the Scheduled Principal Balance
of the Mortgage Loans as of the Cut-off Date.
CURRENT MAXIMUM AMOUNT: With respect to any Distribution Date,
the sum of (i) the aggregate of the Stated Principal Balances of the Mortgage
Loans in the Trust at such time, and (ii) with respect to each Distribution Date
on or prior to February 25, 2003, the Pre-Funding Amount immediately prior to
the Distribution Date, net of investment earnings on deposit therein.
CUSTODIAL FILE: With respect to each Mortgage Loan, the file
retained by the Trustee consisting of items (i) - (viii) of Section 2.01(c).
CUT-OFF DATE: With respect to the Initial Mortgage Loans,
November 1, 2002, and with respect to each Subsequent Mortgage Loan, the related
Subsequent Cut-off Date.
CUT-OFF DATE POOL PRINCIPAL BALANCE: The aggregate Stated
Principal Balances of all Mortgage Loans as of the Cut-off Date.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the
Stated Principal Balance thereof as of the close of business on the Cut-off
Date.
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DATA TAPE INFORMATION: The information provided by the
Unaffiliated Seller as of November 1, 2002 to the Depositor setting forth the
following information with respect to each Mortgage Loan: (1) the Mortgagor's
name; (2) as to each Mortgage Loan, the Scheduled Principal Balance as of the
Cut-off Date; (3) the Mortgage Rate Cap; (4) the Index; (5) a code indicating
whether the Mortgaged Property is owner-occupied; (6) the type of Mortgaged
Property; (7) the first date on which the Monthly Payment was due on the
Mortgage Loan and, if such date is not consistent with the Due Date currently in
effect, such Due Date; (8) the "paid through date" based on payments received
from the related Mortgagor; (9) the original principal amount of the Mortgage
Loan; (10) with respect to Adjustable Rate Mortgage Loans, the Maximum Mortgage
Rate; (11) the type of Mortgage Loan (I.E., fixed or adjustable); (12) a code
indicating the purpose of the loan (I.E., purchase, rate and term refinance,
equity take-out refinance); (13) a code indicating the documentation style
(I.E., full, asset verification, income verification and no documentation); (14)
the credit risk score (FICO score); (15) the loan credit grade classification
(as described in the Underwriting Guidelines); (16) with respect to each
Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate; (17) the Mortgage Rate
at origination; (18) with respect to each Adjustable Rate Mortgage Loan, the
first Adjustment Date immediately following the Cut-off Date; (19) the Value of
the Mortgaged Property; (20) a code indicating the type of Prepayment Charges
applicable to such Mortgage Loan, if any; and (21) with respect to each
Adjustable Rate Mortgage Loan, the Periodic Mortgage Rate Cap. With respect to
the Mortgage Loans in the aggregate, the Data Tape Information shall set forth
the following information, as of the Cut-off Date: (1) the number of Mortgage
Loans; (2) the current aggregate outstanding principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
DEFINITIVE CERTIFICATES: Any Certificate evidenced by a
Physical Certificate and any Certificate issued in lieu of a Book-Entry
Certificate pursuant to Section 5.02(e).
DELAY CERTIFICATES: As specified in the Preliminary Statement.
DELETED MORTGAGE LOAN: A Mortgage Loan that is repurchased by
the Unaffiliated Seller or the related Originator, as applicable, or replaced
with a Substitute Mortgage Loan in accordance with the terms hereof and the
related Mortgage Loan Purchase Agreement.
14
DELINQUENCY TRIGGER EVENT: With respect to a Distribution Date
after the Stepdown Date, the event that is in effect if the quotient (expressed
as a percentage) of (x) the three month rolling daily average of the Stated
Principal Balance of 60+ Day Delinquent Loans as of the last day of the related
Due Period, over (y) the Pool Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period exceeds 37.00% of the prior period's
Senior Enhancement Percentage.
DELINQUENT: A mortgage loan is "Delinquent" if any monthly
payment due on a due date is not made by the close of business on the next
scheduled due date for that mortgage loan (including all Mortgage Loans in
foreclosure, Mortgage Loans in respect of REO Properties and Mortgage Loans for
which the related Mortgagor has declared bankruptcy). A mortgage loan is "30
days Delinquent" if the monthly payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the month
in which that monthly payment was due or, if there was no corresponding date
(E.G., as when a 30-day month follows a 31-day month in which the payment was
due on the 31st day of that month), then on the last day of that immediately
preceding month; and similarly for "60 days Delinquent" and "90 days
Delinquent," etc.
DELIVERY DATE: With respect to the Initial Mortgage Loans, the
Closing Date; with respect to any Subsequent Mortgage Loans, the related
Subsequent Transfer Date therefor.
DENOMINATION: With respect to each Certificate, the amount set
forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or the Percentage Interest appearing on the face thereof.
DEPOSITOR: Xxxxxx Xxxxxxx ABS Capital I Inc., a Delaware
corporation, or its successor in interest.
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: With respect to each Remittance Date, the
Business Day immediately preceding such Remittance Date.
DISTRIBUTION ACCOUNT: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.07(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "Deutsche Bank
National Trust Company, in trust for registered holders of CDC Mortgage Capital
Trust 2002-HE3, Mortgage Pass-Through Certificates, Series 2002-HE3".
15
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 in December 2002.
DOCUMENT EXCEPTION REPORT: The report attached to Exhibit G
hereto.
DUE DATE: The day of the month on which the Scheduled Payment
is due on a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to each Distribution Date, the period
commencing on the second day of the calendar month preceding the month in which
such Distribution Date occurs and ending on the first day of the calendar month
in which such Distribution Date occurs.
ELIGIBLE ACCOUNT: Either (i) a demand account maintained with
an Eligible Institution or (ii) a trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity or (iii) any other account acceptable to each Rating Agency.
Eligible Accounts may bear interest, and may include, if otherwise qualified
under this definition, accounts maintained with the Trustee.
ELIGIBLE INSTITUTION: A federal or state chartered depository
institution or trust company, which (x) with respect to any Eligible Account,
the amounts on deposit in which will be held for 30 days or less, the commercial
paper, short term debt obligations, or other short-term deposits of which are
rated at least A-1 by Fitch, A-1 by Standard & Poor's and "P-1" by Xxxxx'x (or a
comparable rating if another Rating Agency is specified by the Depositor by
written notice to the Servicer and the Trustee) or (y) with respect to any
Eligible Account, the amounts on deposit in which will be held for more than 30
days, the long-term unsecured debt obligations of which are rated at least AA-
by Fitch, AA- by Standard & Poor's and Aa3 by Moody's (or a comparable rating if
another Rating Agency is specified by the Depositor by written notice to the
Servicer and the Trustee).
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 of
Prohibited Transaction Exemption 97-34, 62 Fed. Reg. 39021 (1997), as amended
(or any successor thereto), or any substantially similar administrative
exemption granted by the U.S. Department of Labor.
ERISA-RESTRICTED CERTIFICATE: As specified in the Preliminary
Statement.
ESCROW ACCOUNT: The Eligible Account or Accounts established
and maintained pursuant to Section 3.09(b).
ESCROW PAYMENTS: As defined in Section 3.09(b) of this
Agreement.
EVENT OF DEFAULT: As defined in Section 7.01.
EXCESS RESERVE FUND ACCOUNT: The separate Eligible Account
created and maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c)
in the name of the Trustee for
16
the benefit of the Offered Certificateholders and designated "Deutsche Bank
National Trust Company, in trust for registered holders of CDC Mortgage Capital
Trust 2002-HE3, Mortgage Pass-Through Certificates, Series 2002-HE3".
EXCESS SUBORDINATED AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the Subordinated Amount on such Distribution
Date over (b) the Specified Subordinated Amount for such Distribution Date.
EXPENSE FEES: As to each Mortgage Loan, the sum of the
Servicing Fee and the Trustee Fee.
EXPENSE FEE RATE: As to each Mortgage Loan, a per annum rate
equal to the sum of the Servicing Fee Rate and the Trustee Fee Rate.
EXTRA PRINCIPAL DISTRIBUTION AMOUNT: As of any Distribution
Date, the lesser of (x) the related Total Monthly Excess Spread for such
Distribution Date and (y) the Subordination Deficiency for such Distribution
Date.
FAIRBANKS: Fairbanks Capital Corp. or any successor thereto.
XXXXXX XXX: The Federal National Mortgage Association, or any
successor thereto.
XXXXXX MAE GUIDES: The Xxxxxx Xxx Xxxxxxx' Guide and the
Xxxxxx Mae Servicers' Guide and all amendments or additions thereto.
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.
FINAL CERTIFICATION: A certification submitted by the Trustee
in substantially the form of Exhibit G hereto.
FINAL RECOVERY DETERMINATION: With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by an Originator as contemplated by the Assignment and Recognition
Agreements), a determination made by the Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.
FINAL SCHEDULED DISTRIBUTION DATE: The Final Scheduled
Distribution Date for each Class of Certificates is the Distribution Date in
each of the following months:
17
FINAL SCHEDULED
DISTRIBUTION DATE
Class A Certificates ....................................... March 25, 2033
Class M-1 Certificates ..................................... March 25, 2033
Class M-2 Certificates ..................................... March 25, 2033
Class B-1 Certificates ..................................... March 25, 2033
Class B-2 Certificates ..................................... March 25, 2033
Class X Certificates ....................................... March 25, 2033
Class P Certificates ....................................... March 25, 2033
Class R Certificates ....................................... March 25, 2033
FIRST NLC: First NLC Financial Services, LLC, a Florida
limited liability company.
FIRST NLC ASSIGNMENT AGREEMENT: The Assignment and Recognition
Agreement, dated as of November 27, 2002, by and among the Unaffiliated Seller,
the Depositor and First NLC, and each other Assignment and Recognition Agreement
by and among the Unaffiliated Seller, the Depositor and First NLC in connection
with any Subsequent Transfer of First NLC Mortgage Loans.
FIRST NLC MORTGAGE LOAN: A Mortgage Loan which was acquired
from First NLC by the Unaffiliated Seller pursuant to the First NLC Purchase
Agreement, and which has been acquired by the Trust Fund.
FIRST NLC PURCHASE AGREEMENT: The Mortgage Loan Purchase and
Warranties Agreement, dated as of October 14, 2002, as amended to date, by and
between the Unaffiliated Seller and First NLC.
FITCH: Fitch, Inc. If Fitch is designated as a Rating Agency
in the Preliminary Statement, for purposes of Section 10.05(b) the address for
notices to Fitch shall be Fitch, Inc., Xxx Xxxxx Xx. Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Residential Mortgage Surveillance Group - Xxxxxx Xxxxxxx ABS
Capital I Inc. 2002-HE3, or such other address as Fitch may hereafter furnish to
the Depositor and the Servicer.
FIXED RATE MORTGAGE LOAN: A Mortgage Loan bearing interest at
a fixed rate.
FLOATING RATE CERTIFICATES: As specified in the Preliminary
Statement.
FLOOR AMOUNT: An amount equal to the product of (x) 0.50% and
(y) the Maximum Pool Principal Balance.
FREMONT: Fremont Investment and Loan, a California
corporation.
FREMONT ASSIGNMENT AGREEMENT: The Assignment and Recognition
Agreement, dated as of November 27, 2002, by and among the Unaffiliated Seller,
the Depositor and Fremont, and each other Assignment and Recognition Agreement
by and among the Unaffiliated
18
Seller, the Depositor and Fremont in connection with any Subsequent Transfer of
Fremont Mortgage Loans.
FREMONT MORTGAGE LOAN: A Mortgage Loan which was acquired from
Fremont by the Unaffiliated Seller pursuant to the Fremont Purchase Agreement,
and which has been acquired by the Trust Fund.
FREMONT PURCHASE AGREEMENT: The Mortgage Loan Purchase and
Warranties Agreement, dated as of July 24, 2002, as amended to date, by and
between the Unaffiliated Seller and Fremont.
GROSS MARGIN: With respect to each Adjustable Rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note to be
added to the applicable Index to determine the Mortgage Rate.
IFC: IMPAC Funding Corporation, a California corporation.
IFC ASSIGNMENT AGREEMENT: The Assignment and Recognition
Agreement, dated as of November 27, 2002, by and among the Unaffiliated Seller,
the Depositor and IFC, and each other Assignment and Recognition Agreement by
and among the Unaffiliated Seller, the Depositor and IFC in connection with any
Subsequent Transfer of IFC Mortgage Loans.
IFC MORTGAGE LOAN: A Mortgage Loan which was acquired from IFC
by the Unaffiliated Seller pursuant to the IFC Purchase Agreement, and which has
been acquired by the Trust Fund.
IFC PURCHASE AGREEMENT: The Mortgage Loan Purchase and
Warranties Agreement, dated as of July 10, 2001 by and between the Unaffiliated
Seller and IFC.
I&I PAYMENTS: Payments due and owing under the Insurance and
Indemnity Agreement.
INDEX: As to each Adjustable Rate Mortgage Loan, the index
from time to time in effect for the adjustment of the Mortgage Rate set forth as
such on the related Mortgage Note.
INITIAL CUT-OFF DATE: November 1, 2002.
INITIAL MORTGAGE LOANS: The Mortgage Loans delivered by the
Depositor on the Startup Date.
INITIAL PRE-FUNDED AMOUNT: The amount of $110,092,857.
INSURANCE AND INDEMNITY AGREEMENT: The Insurance and Indemnity
Agreement dated as of November 1, 2002 among the Class A Certificate Insurer,
the Servicer and the Unaffiliated Seller, as such agreement may be amended or
supplemented in accordance with the provisions thereof.
19
INSURED PAYMENT: With respect to any Distribution Date, the
Class A Deficiency for that Distribution Date.
INSURANCE POLICY: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect, including any replacement policy or policies for any
Insurance Policies.
INSURANCE PROCEEDS: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
INTEREST ACCRUAL PERIOD: With respect to any Distribution
Date, the period beginning with the immediately preceding Distribution Date (or
in the case of the first Distribution Date, the period from and including the
Closing Date to but excluding such first Distribution Date) and ending on the
day prior to the current Distribution Date (on an actual/360 day count basis).
INTEREST AMOUNT AVAILABLE: With respect to any Distribution
Date, the sum of (i) the Interest Remittance Amount received by the Trustee from
the Servicer on the related Remittance Date and (ii) the Capitalized Interest
Requirement, if any, deposited to the Distribution Account on such Distribution
Date.
INTEREST RATE ADJUSTMENT DATE: With respect to each Adjustable
Rate Mortgage Loan, the date, specified in the related Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Rate is adjusted.
INTEREST RATE CAP PAYMENT: Beginning on the first Distribution
Date and continuing through the 26 Distribution Dates thereafter, the amount, if
any, equal to the product of (a) the number of basis points by which LIBOR
exceeds 7.25% (up to a maximum excess of 130 basis points) and (b) the amount
set forth on the notional balance and multiplier schedule attached to the Cap
Agreement as applicable to that Distribution Date, based on an "actual/360"
accrual.
INTEREST REMITTANCE AMOUNT: With respect to any Remittance
Date, the sum, without duplication, of:
(i) all scheduled installments of interest due on the Mortgage
Loans during the related Due Period and received or advanced by the
Servicer on or prior to the related Remittance Date;
(ii) Compensating Interest paid by the Servicer on such
Remittance Date;
(iii) the interest component of all Substitution Adjustment
Amounts and Repurchase Prices;
(iv) the interest component of all Condemnation Proceeds,
Insurance Proceeds and Liquidation Proceeds received by the Servicer
during the related Due Period (in each case, net (but not to be reduced
below zero) of unreimbursed expenses incurred in connection with a
liquidation or foreclosure and unreimbursed Advances, if any); and
20
(v) the interest component of the proceeds of any termination
of the Trust Fund.
REDUCED by the Servicing Fee for the related Due Period, together with amounts
in reimbursement for Advances previously made with respect to the Mortgage Loans
and other amounts as to which the Servicer is entitled to be reimbursed pursuant
to the Agreement.
INVESTMENT ACCOUNT: As defined in Section 3.12(a).
JPMORGAN CREDIT AGREEMENT: As defined in Section 3.27.
LATE COLLECTIONS: With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.
LATE PAYMENT RATE: Has the meaning ascribed thereto in the
Insurance and Indemnity Agreement.
LIBOR: With respect to any Interest Accrual Period for the
LIBOR Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; PROVIDED that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, 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 such quotations are provided, the rate for that date 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 date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
LIBOR CERTIFICATES: As specified in the Preliminary Statement.
LIBOR DETERMINATION DATE: With respect to any Interest Accrual
Period (other than the initial Interest Accrual Period) for the LIBOR
Certificates, the second London Business Day preceding the commencement of such
Interest Accrual Period.
LIQUIDATED MORTGAGE LOAN: With respect to any Distribution
Date, a defaulted Mortgage Loan (including any REO Property) which was
liquidated in the calendar month preceding the month of such Distribution Date
and as to which the Servicer has certified (in accordance with this Agreement)
that it has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan including the final disposition of an REO
Property.
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LIQUIDATION EVENT: With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from coverage under this Agreement by reason of its being
purchased, sold or replaced pursuant to or as contemplated by this Agreement.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from coverage under this Agreement by reason of its being
purchased pursuant to this Agreement.
LIQUIDATION PROCEEDS: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through trustee's sale,
foreclosure sale or otherwise.
LOAN-TO-VALUE RATIO or LTV: With respect to any Mortgage Loan,
the ratio (expressed as a percentage) of the original outstanding principal
amount of the Mortgage Loan as of the Cut-off Date (unless otherwise indicated),
to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination, and (b) if the Mortgage Loan was made to finance the acquisition of
the related Mortgaged Property, the purchase price of the Mortgaged Property.
LONDON BUSINESS DAY: Any day on which dealings in deposits of
United States dollars are transacted in the London interbank market.
LOSS TRIGGER EVENT: With respect to any Distribution Date, the
event that is in effect if the aggregate amount of Realized Losses incurred
since the related Cut-off Date through the last day of the related Prepayment
Period divided by the Maximum Pool Principal Balance exceeds the applicable
percentage as follows with respect to such Distribution Date: (a) 3.10% for the
Distribution Dates occurring from December 2004 to November 2005; (b) 4.10% for
the Distribution Dates occurring from December 2005 to November 2006; (c) 4.75%
for Distribution Dates occurring from December 2006 to November 2007; and (d)
5.35% for Distribution Dates occurring in December 2007 and thereafter.
LOWER TIER REGULAR INTEREST: As described in the Preliminary
Statement.
LOWER TIER REMIC: As described in the Preliminary Statement
MAXIMUM MORTGAGE RATE: With respect to each Adjustable Rate
Mortgage Loan, a rate that (i) is set forth on the Data Tape Information and in
the related Mortgage Note and (ii) is the maximum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the
lifetime of such Mortgage Loan.
MAXIMUM POOL PRINCIPAL BALANCE: The aggregate Stated Principal
Balances of all Initial Mortgage Loans as of the Initial Cut-off Date plus the
Initial Pre-Funded Amount.
MINIMUM MORTGAGE RATE: With respect to each Adjustable Rate
Mortgage Loan, a rate that (i) is set forth on the Data Tape Information and in
the related Mortgage Note and (ii) is the minimum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the
lifetime of such Mortgage Loan.
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MONTHLY STATEMENT: The statement delivered to the
Certificateholders pursuant to Section 4.03.
MOODY'S: Xxxxx'x Investors Service, Inc. If Xxxxx'x is
designated as a Rating Agency in the Preliminary Statement, 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 Pass-Through Group, or such other address as Moody's may
hereafter furnish to the Depositor and the Servicer.
MORTGAGE: The mortgage, deed of trust or other instrument
identified on the Mortgage Loan Schedule as securing a Mortgage Note.
MORTGAGE FILE: The items pertaining to a particular Mortgage
Loan contained in either the Servicing File or Custodial File.
MORTGAGE LOAN PURCHASE AGREEMENT: The BNC Purchase Agreement,
the IFC Purchase Agreement, the Novelle Purchase Agreement, the People's Choice
Purchase Agreement, the Chapel Mortgage Purchase Agreement, the SIB Mortgage
Purchase Agreement, the Fremont Purchase Agreement or the First NLC Purchase
Agreement, as applicable.
MORTGAGE LOANS: An individual Mortgage Loan which is the
subject of this Agreement, each Mortgage Loan originally sold and subject to
this Agreement being identified on the Mortgage Loan Schedule, which Mortgage
Loan includes, without limitation, the Mortgage File, the Scheduled Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan, excluding
replaced or repurchased Mortgage Loans. As applicable, "Mortgage Loan" shall be
deemed to refer to REO Property.
MORTGAGE LOAN SCHEDULE: A schedule of Mortgage Loans annexed
hereto as Schedule I, such schedule setting forth the following information with
respect to each Mortgage Loan: (1) the Originator's Mortgage Loan number; (2)
the city, state and zip code of the Mortgaged Property; (3) a code indicating
whether the Mortgaged Property is a single family residence, two-family
residence, three-family residence, four-family residence, PUD or condominium;
(4) the current Mortgage Interest Rate; (5) the current net Mortgage Rate; (6)
the current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value Ratio; (12) the next Interest Rate Adjustment Date; (13) the
lifetime Mortgage Interest Rate Cap; (14) whether the Mortgage Loan is
convertible or not; (15) a code indicating the mortgage guaranty insurance
company; (16) the Servicing Fee; (17) the identity of the related Originator of
such Mortgage Loan; (18) the Mortgagor's name; (19) the "paid-through" date
(based on payments received from the related Mortgagor) as of the Cut-off Date;
and (20) the Servicing Transfer Date.
MORTGAGE NOTE: The note or other evidence of the indebtedness
of a Mortgagor under a Mortgage Loan.
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MORTGAGE RATE: The annual rate of interest borne on a Mortgage
Note, which shall be adjusted from time to time with respect to Adjustable Rate
Mortgage Loans.
MORTGAGE RATE CAPS: With respect to an Adjustable Rate
Mortgage Loan, the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and
the Minimum Mortgage Rate for such Mortgage Loan.
MORTGAGED PROPERTY: The real property (or leasehold estate, if
applicable) identified on the Mortgage Loan Schedule as securing repayment of
the debt evidenced by a Mortgage Note.
MORTGAGOR: The obligor(s) on a Mortgage Note.
NET MONTHLY EXCESS CASH FLOW: For any Distribution Date the
amount remaining for distribution pursuant to subsection 4.02(a)(iii) (before
giving effect to distributions pursuant to such subsection).
NET PREPAYMENT INTEREST SHORTFALL: For any Distribution Date,
the amount by which the sum of the Prepayment Interest Shortfalls exceeds the
sum of the Compensating Interest payments made on such Distribution Date.
NIM CLOSING DATE: On or about November 27, 2002.
NIMS TRUST: CDC Mortgage Capital Inc. NIM Trust 2002-HE3N, a
Delaware business trust.
NON-DELAY CERTIFICATES: As specified in the Preliminary
Statement.
NONRECOVERABLE ADVANCE: Any Servicing Advances previously made
or proposed to be made in respect of a Mortgage Loan or REO Property, which, in
the good faith business judgment of the Servicer, will not or, in the case of a
proposed Servicing Advance, would not, be ultimately recoverable from related
late payments, Insurance Proceeds, Liquidation Proceeds or otherwise on such
Mortgage Loan or REO Property. The determination by the Servicer that it has
made a Nonrecoverable Advance or that any proposed Servicing Advances, if made,
would constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Trustee.
NONRECOVERABLE P&I ADVANCE: Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer, will not or, in the case of a
proposed P&I Advance, would not be ultimately recoverable from related late
payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
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.
NOVELLE: Novelle Financial Services, Inc., a California
corporation.
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NOVELLE ASSIGNMENT AGREEMENT: The Assignment and Recognition
Agreement, dated as of November 27, 2002, by and among the Unaffiliated Seller,
the Depositor and Novelle, and each other Assignment and Recognition Agreement
by and among the Unaffiliated Seller, the Depositor and Novelle in connection
with any Subsequent Transfer of Novelle Mortgage Loans.
NOVELLE MORTGAGE LOAN: A Mortgage Loan which was acquired from
Novelle by the Unaffiliated Seller pursuant to the Novelle Purchase Agreement,
and which has been acquired by the Trust Fund.
NOVELLE PURCHASE AGREEMENT: The Mortgage Loan Purchase and
Warranties Agreement, dated as of September 27, 2002 by and between the
Unaffiliated Seller and Novelle.
OFFERED CERTIFICATES: As specified in the Preliminary
Statement.
OFFICER'S CERTIFICATE: A certificate signed by an officer of
the Servicer with responsibility for the servicing of the Mortgage Loans and
listed on a list delivered to the Trustee pursuant to this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be
in-house counsel for the Servicer or the Subservicer, reasonably acceptable to
the Trustee and to the Class A Certificate Insurer, PROVIDED that any Opinion of
Counsel relating to (a) qualification of the Mortgage Loans in a REMIC or (b)
compliance with the REMIC Provisions, must be (unless otherwise stated in such
Opinion of Counsel) an opinion of counsel who (i) is in fact independent of the
Servicer of the Mortgage Loans, (ii) does not have any material direct or
indirect financial interest in the Servicer of the Mortgage Loans or in an
affiliate of either and (iii) is not connected with the Servicer of the Mortgage
Loans as an officer, employee, director or person performing similar functions.
OPTIONAL TERMINATION DATE: means:
(i) For so long as the Class X Certificates are 100% owned,
either directly or indirectly, by the Unaffiliated Seller or any
Affiliate thereof, then the Servicer may cause the Optional Termination
Date to occur on any Distribution Date when the aggregate Stated
Principal Balance of the Mortgage Loans is 10.00% or less of the
Maximum Pool Principal Balance; and
(ii) If the Class X Certificates are not 100% owned, either
directly or indirectly, by the Unaffiliated Seller or any Affiliate
thereof, then the Holders of a majority in Class Certificate Balance of
the Class X Certificates may cause the Optional Termination Date to
occur on any Distribution Date when the aggregate Stated Principal
Balance of the Mortgage Loans is 10.00% or less of the Maximum Pool
Principal Balance, and, if such Class X Certificateholders do not do
so, then the Servicer shall also have such right.
ORIGINATOR: The party that originated or acquired a Mortgage
Loan and, more specifically, (i) with respect to any BNC Mortgage Loan, BNC,
(ii) with respect to any IFC Mortgage Loan, IFC, (iii) with respect to any
Novelle Mortgage Loan, Novelle, (iv) with respect
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to any People's Choice Mortgage Loan, People's Choice, (v) with respect to any
Chapel Mortgage Loan, Chapel Mortgage, (vi) with respect to any SIB Mortgage
Loan, SIB Mortgage, (vii) with respect to any Fremont Mortgage Loan, Fremont and
(viii) with respect to any First NLC Mortgage Loan, First NLC.
OTS: Office of Thrift Supervision, and any successor thereto.
OUTSTANDING: With respect to the Certificates as of any date
of determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) 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 MORTGAGE LOAN: As of any Due Date, a Mortgage 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 Mortgage Loan prior to such Due Date.
OWNERSHIP INTEREST: As to any Residual 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.
P&I ADVANCE: As to any Mortgage Loan or REO Property, any
advance made by the Servicer in respect of any Remittance Date with respect to
any Mortgage Loan representing the aggregate of all payments of principal and
interest on such Mortgage Loan, net of the related Servicing Fee, that were due,
and that were delinquent or unpaid on the related Determination Date, plus
certain amounts representing assumed payments not covered by any current net
income on the Mortgaged Properties acquired by foreclosure or deed in lieu of
foreclosure as determined pursuant to Section 4.01.
PASS-THROUGH MARGIN: With respect to each Class of Regular
Certificates, on or prior to the Optional Termination Date the following
percentages: Class A Certificates, 0.490%, Class M-1 Certificates, 1.100%, Class
M-2 Certificates, 2.250%, Class B-1 Certificates, 3.400% and Class B-2
Certificates, 4.000%. Commencing on the first Distribution Date after the
Optional Termination Date, the Pass-Through Margins shall increase to: Class A
Certificates, 0.980%, Class M-1 Certificates, 1.650%, Class M-2 Certificates,
3.375%, Class B-1 Certificates, 5.100% and Class B-2 Certificates, 6.000%.
PASS-THROUGH RATE: For each Class of Certificates and each
Lower Tier Regular Interest, the per annum rate set forth or calculated in the
manner described in the Preliminary Statement.
PEOPLE'S CHOICE: People's Choice Home Loan, Inc., a Wyoming
corporation.
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PEOPLE'S CHOICE ASSIGNMENT AGREEMENT: The Assignment and
Recognition Agreement, dated as of November 27, 2002, as amended to date, by and
among the Unaffiliated Seller, the Depositor and People's Choice, and each other
Assignment and Recognition Agreement by and among the Unaffiliated Seller, the
Depositor and People's Choice in connection with any Subsequent Transfer of
People's Choice Mortgage Loans.
PEOPLE'S CHOICE MORTGAGE LOAN: A Mortgage Loan which was
acquired from People's Choice by the Unaffiliated Seller pursuant to the
People's Choice Purchase Agreement, and which has been acquired by the Trust
Fund.
PEOPLE'S CHOICE PURCHASE AGREEMENT: The Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of April 16, 2002, by
and between the Unaffiliated Seller and People's Choice.
PERCENTAGE INTEREST: As to any Certificate, the percentage
interest evidenced thereby in distributions required to be made on the related
Class, 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.
PERFORMANCE STANDARDS: The servicing performance standards set
forth on Exhibit O hereto.
PERIODIC MORTGAGE RATE CAP: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each Mortgage Interest Rate adjustment as
set forth in the related Mortgage Note.
PERMITTED INVESTMENTS: Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Servicer, the Trustee or any of their
respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, PROVIDED such obligations are
backed by the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
or bankers' acceptances (which shall each have an original maturity of
not more than 90 days and, in the case of bankers' acceptances, shall
in no event have an original maturity of more than 365 days or a
remaining maturity of more than 30 days) denominated in United States
dollars and issued by, any Eligible Institution;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Eligible Institution
(acting as principal);
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the United
States of America or any state thereof and that are rated by each
Rating Agency that rates such securities in its highest long-term
unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
27
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand
or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by each Rating Agency that rates
such securities in its highest short-term unsecured debt rating
available at the time of such investment;
(vi) units of money market funds, including money market funds
advised by the Depositor or an Affiliate thereof, that have been rated
"Aaa" by Moody's, "AAA" by Fitch and "AAA" by Standard & Poor's; and
(vii) if previously confirmed in writing to the Trustee and to
the Class A Certificate Insurer, any other demand, money market or time
deposit, or any other obligation, security or investment, as may be
acceptable to the Rating Agencies as a permitted investment of funds
backing "Aaa" or "AAA" rated securities;
PROVIDED, HOWEVER, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
PERMITTED TRANSFEREE: Any person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) 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)(1) of
the Code) with respect to any Residual Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) a
Person that is not a U.S. Person, (vi) an "electing large partnership" within
the meaning of section 775 of the Code and (vii) any other Person so designated
by the Depositor based upon an Opinion of Counsel that the Transfer of an
Ownership Interest in a Residual Certificate to such Person may cause the REMIC
hereunder to fail to qualify as a REMIC 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, association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
PHYSICAL CERTIFICATES: As specified in the Preliminary
Statement.
28
POOL STATED PRINCIPAL BALANCE: As to any Distribution Date,
the aggregate of the Stated Principal Balances of the Mortgage Loans for such
Distribution Date which were Outstanding Mortgage Loans as of the last day of
the related Due Period.
PREFERENCE AMOUNT: Any amounts distributed in respect of the
Class A Certificates which are recovered from any Holder of a Class A
Certificate as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code or other similar law in accordance with a final,
nonappealable order of a court having competent jurisdiction and which have not
theretofore been repaid to such Holder.
PREFERENCE CLAIM: As defined in Section 4.05(f) hereof.
PRE-FUNDING ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(f) in the name of the Trustee
for the benefit of the Certificateholders, and designated "Deutsche Bank
National Trust Company, in trust for registered holders of CDC Mortgage Capital
Trust 2002-HE3, Mortgage Pass-Through Certificates, Series 2002-HE3".
PRE-FUNDING AMOUNT: With respect to any date, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING EARNINGS: The actual investment earnings realized
on amounts deposited in the Pre-Funding Account.
PRE-FUNDING PERIOD: The period commencing on the Startup Date
and ending on the earliest to occur of (i) the date on which the amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings) is
less than $100,000, (ii) the date on which any Event of Default occurs and (iii)
February 24, 2003.
PREMIUM AMOUNT: The product of the Premium Rate and the
Certificate Balance of the Class A Certificates immediately prior to such
Distribution Date.
PREMIUM RATE: The rate at which the "Premium" is determined as
described in the letter dated November 27, 2002 between the Unaffiliated Seller
and the Class A Certificate Insurer (a copy of which shall be provided by the
Unaffiliated Seller to the Trustee).
PREPAYMENT CHARGE: Any prepayment premium, penalty or charge
collected by the Servicer with respect to a Mortgage Loan from a Mortgagor in
connection with any voluntary Principal Prepayment in full pursuant to the terms
of the related Mortgage Note.
PREPAYMENT INTEREST SHORTFALL: With respect to any Remittance
Date, the sum of, for each Mortgage Loan that was during the related Due
Period the subject of a Principal Prepayment in Full, an amount equal to the
product of (a) the Mortgage Rate net of the Servicing Fee Rate for such Mortgage
Loan, (b) the amount of the Principal Prepayment for such Mortgage Loan, (c)
1/360 and (d) the number of days commencing on the date on which such Principal
Prepayment was applied and ending on the last day of the calendar month
preceding such Due Period.
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PREPAYMENT PERIOD: With respect to any Distribution Date, the
period from the 15th day of the calendar month preceding the month in which such
Distribution Date occurs (or, in the case of the first Distribution Date, from
the Cut-off Date) through the 14th day of the month in which such Distribution
Date occurs.
PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, the
sum of (i) the Basic Principal Distribution Amount for such Distribution Date
and (ii) the Extra Principal Distribution Amount for such Distribution Date.
PRINCIPAL PREPAYMENT: Any full or partial payment or other
recovery of principal on a Mortgage Loan (including upon liquidation of a
Mortgage Loan) which is received in advance of its scheduled Due Date, excluding
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by
a Mortgagor of the entire principal balance of a Mortgage Loan.
PRINCIPAL REMITTANCE AMOUNT: With respect to any Remittance
Date, the sum, without duplication, of:
(i) all scheduled installments of principal due on the
Mortgage Loans during the related Due Period and received or advanced
by the Servicer on or prior to the related Remittance Date;
(ii) the principal component of all Condemnation Proceeds,
Insurance Proceeds and Liquidation Proceeds during the related Due
Period (in each case, net of remaining (I.E., not deducted from the
Interest Remittance Amount) unreimbursed expenses incurred in
connection with a liquidation or foreclosure and unreimbursed Advances,
if any);
(iii) all partial or full prepayments on the Mortgage Loans
received during the related Prepayment Period;
(iv) the principal component of all Substitution Adjustment
Amounts and Repurchase Prices; and
(v) the principal component of the proceeds of any termination
of the Trust Fund.
reduced by remaining amounts (I.E., not deducted from the Interest Remittance
Amount) in reimbursement for Advances previously made with respect to the
Mortgage Loans and other amounts as to which the Servicer is entitled to be
reimbursed pursuant to this Agreement.
PRIVATE CERTIFICATES: As specified in the Preliminary
Statement.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement, dated
November 25, 2002, relating to the Offered Certificates.
30
PTCE 95-60: As defined in Section 5.02(b).
PUD: Planned Unit Development.
QUALIFIED INSURER: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as a
FNMA- or FHLMC-approved mortgage insurer or having a claims paying ability
rating of at least "AA" or equivalent rating by a nationally recognized
statistical rating organization. Any replacement insurer with respect to a
Mortgage Loan must have at least as high a claims paying ability rating as the
insurer it replaces had on the Closing Date.
RATING AGENCY: Each of the Rating Agencies specified in the
Preliminary Statement. If such organization or a successor 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 or rating category of a Rating Agency shall mean such
rating category without giving effect to any modifiers. For purposes of Section
10.05(b), the addresses for notices to each Rating Agency shall be the address
specified therefor in the definition corresponding to the name of such Rating
Agency, or such other address as either such Rating Agency may hereafter furnish
to the Depositor and the Servicer.
RECORD DATE: With respect to any Distribution Date, the close
of business on the Business Day immediately preceding such Distribution Date;
PROVIDED, HOWEVER, that for any Certificate issued in Definitive Form, the
Record Date shall be the close of business on the last Business Day of the month
immediately preceding such applicable Distribution Date.
REALIZED LOSS: The excess of the outstanding principal balance
of a defaulted Mortgage Loan over the net Liquidation Proceeds with respect
thereto that are allocable to principal.
REFERENCE BANK: As defined in Section 4.04.
REGULAR CERTIFICATES: As specified in the Preliminary
Statement.
REIMBURSEMENT AMOUNT: As of any Distribution Date, the sum of
(a)(i) all Insured Payments previously received by the Trustee and all
Preference Amounts previously paid by the Class A Certificate Insurer and in
each case not previously repaid to the Class A Certificate Insurer pursuant to
Sections 6.05(a)(ii) hereof plus (ii) interest accrued on each such Insured
Payment and Preference Amounts not previously repaid calculated at the Late
Payment Rate from the date the Trustee received the related Insured Payment or
Preference Amounts were paid by the Class A Certificate Insurer and (b)(i) any
amounts then due and owing to the Class A Certificate Insurer under the
Insurance and Indemnity Agreement (excluding the Premium Amount due on such
Distribution Date), as certified to the Trustee by the Class A Certificate
Insurer plus (ii) interest on such amounts at the rate specified in the
Insurance and Indemnity
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Agreement. The Class A Certificate Insurer shall notify the Trustee and the
Unaffiliated Seller of the amount of any Reimbursement Amount.
RELIEF ACT INTEREST SHORTFALL: With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended Due Period as a
result of the application of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, and similar state laws.
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to REMICs, which appear at sections 860A through 860G of Subchapter M
of Chapter 1 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.
REMIC TRUST: The segregated pool of assets consisting of the
Trust Fund, exclusive of Prepayment Charges and the Excess Reserve Fund Account.
REMITTANCE DATE: The 18th day (or if such 18th day is not a
Business Day, the first Business Day immediately preceding) of any month.
REO DISPOSITION: The final sale by the Servicer of any REO
Property.
REO IMPUTED INTEREST: As to any REO Property, for any period,
an amount equivalent to interest (at the Mortgage Rate net of the Servicing Fee
Rate that would have been applicable to the related Mortgage Loan had it been
outstanding) on the unpaid principal balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is reduced pursuant to Section 3.17 by
any income from the REO Property treated as a recovery of principal).
REO PROPERTY: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
REPRESENTATIVE: Xxxxxx Xxxxxxx & Co. Incorporated, as
representative on behalf of itself and Banc of America Securities LLC.
REPURCHASE PRICE: With respect to any Mortgage Loan, an amount
equal to the sum of (i) the unpaid principal balance of such Mortgage Loan as of
the date of repurchase and (ii) (x) if such Mortgage Loan is being repurchased
by the Unaffiliated Seller, the sum of (A) interest on such unpaid principal
balance of such Mortgage Loan at the Mortgage Rate from the last date through
which interest has been paid and distributed to the Trustee to the last day of
the month in which such repurchase occurs, (B) all unreimbursed Servicing
Advances and (C) all expenses reasonably incurred by the Servicer, the Trustee,
the Class A Certificate Insurer or the Unaffiliated Seller, as the case may be,
in respect of a breach or defect, including, without limitation, expenses
arising out of any such party's enforcement of the Originator's repurchase
obligation, to the extent not included in (B), or (y) if such Mortgage Loan is
being repurchased by the related Originator, all other amounts payable by such
Originator in accordance with the terms of the related Mortgage Loan Purchase
Agreement.
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REQUEST FOR RELEASE: The Request for Release submitted by the
Servicer to the Trustee, substantially in the form of Exhibit K.
RESIDUAL CERTIFICATES: As specified in the Preliminary
Statement.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any Vice President, any Assistant Vice President, any Assistant Secretary, any
Assistant Treasurer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers who
at such time shall be officers to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject and who shall have 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 Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan which, unless otherwise specified herein, shall give effect to any related
Debt Service Reduction and any Deficient Valuation that affects the amount of
the monthly payment due on such Mortgage Loan.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any reduction in the principal balance of such Mortgage Loan incurred with
respect thereto as a result of a Deficient Valuation occurring before such Due
Date, but only to the extent such reduction in principal balance represents a
reduction in the portion of principal of such Mortgage Loan not yet due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) as of the date of such Deficient Valuation; and (c) as of any Due Date
subsequent to the occurrence of a Liquidation Event with respect to such
Mortgage Loan, zero.
SEC: As defined in Section 8.12(a).
SECURITIES ACT: The Securities Act of 1933, as amended.
SENIOR ENHANCEMENT PERCENTAGE: With respect to any
Distribution Date, the percentage obtained by dividing (x) the sum of (i) the
aggregate Class Certificate Balance of the Subordinated Certificates and (ii)
the Subordinated Amount (in each case after taking into
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account the distributions of the Principal Distribution Amount for such
Distribution Date) by (y) the Current Maximum Amount for that Distribution Date.
SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: As of any date of
determination, 37.00%.
SERVICER: Fairbanks Capital Corp., a Utah corporation, and its
successors and assigns, in its capacity as servicer hereunder.
SERVICER EVALUATION TERMINATION: Any termination of the
Servicer pursuant to the provisions of Section 3.28.
SERVICER PERFORMANCE EVALUATION: The evaluation described in
Section 3.28.
SERVICER TRIGGER: With respect to any Distribution Date, the
Servicer Trigger will be in effect with respect to the Servicer if either of the
following tests are failed:
(a) the Cumulative Loss Percentage exceeds (i) in months 1
through 24, 2.50%, (ii) in months 25 through 36, 4.00%, (iii) in months
37 through 48, 5.25% and (iv) in month 49 and thereafter, 6.70%; or
(b) the quotient (expressed as a percentage) of (x) the Stated
Principal Balance of Mortgage Loans 60 days Delinquent or more as of
the end of the related Due Period (including Mortgage Loans in
bankruptcy, foreclosure or represented by an REO Property) over (y) the
aggregate Stated Principal Balance of the Mortgage Loans as of the end
of the related Due Period, exceeds 20%.
SERVICING ADVANCES: The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by the Servicer in the performance of
its servicing obligations in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures and litigation, in
respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
(iv) the performance of its obligations under Section 3.01, Section 3.09,
Section 3.13 and Section 3.15 hereof, (v) locating any documents missing from
the Mortgage Files, and (vi) obtaining broker price opinions. The Servicer shall
not be required to make any Nonrecoverable Advances.
SERVICING FEE: With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. Such
fee shall be payable monthly, and shall be pro rated for any portion of a month
during which the Mortgage Loan is serviced by the Servicer under this Agreement.
The Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds and proceeds
received with respect to REO Properties, to the
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extent permitted by Section 3.11) of such Monthly Payment collected by the
Servicer, or as otherwise provided under Section 3.11.
SERVICING FEE RATE: With respect to each Mortgage Loan, 0.50%
per annum.
SERVICING FILE: With respect to each Mortgage Loan, the file
retained by the Servicer consisting of originals or copies of all documents in
the Mortgage File which are not delivered to the Trustee in the Custodial File
and copies of each of the other Mortgage Loan documents required to be delivered
by the related Originator pursuant to the terms of the related Mortgage Loan
Purchase Agreement.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage 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.
SERVICING TRANSFER DATE: With respect to each Mortgage Loan,
the date on which Fairbanks commenced servicing such Mortgage Loan, as set forth
on the Mortgage Loan Schedule.
SIB MORTGAGE: SIB Mortgage Corp., a New Jersey corporation.
SIB MORTGAGE ASSIGNMENT AGREEMENT: The Assignment and
Recognition Agreement, dated as of November 27, 2002, by and among the
Unaffiliated Seller, the Depositor and SIB Mortgage, and each other Assignment
and Recognition Agreement by and among the Unaffiliated Seller, the Depositor
and SIB Mortgage in connection with any Subsequent Transfer of SIB Mortgage
Mortgage Loans.
SIB MORTGAGE MORTGAGE LOAN: A Mortgage Loan which was acquired
from SIB Mortgage by the Unaffiliated Seller pursuant to the SIB Mortgage
Purchase Agreement, and which has been acquired by the Trust Fund.
SIB MORTGAGE PURCHASE AGREEMENT: The Mortgage Loan Purchase
and Warranties Agreement, dated as of July 11, 2002, as amended to date, by and
between the Unaffiliated Seller and SIB Mortgage.
SIMILAR LAW: As defined in Section 5.02(b).
SPECIFIED SUBORDINATED AMOUNT: With respect to any
Distribution Date prior to the Stepdown Date, an amount equal to 1.50% of the
Maximum Pool Principal Balance; and with respect to any Distribution Date on and
after the Stepdown Date, an amount equal to 3.00% of the Current Maximum Amount
for that Distribution Date subject to a minimum amount equal to 0.50% of the
Maximum Pool Principal Balance; PROVIDED, HOWEVER, that if, on any Distribution
Date, a Delinquency Trigger Event has occurred, the Specified Subordinated
Amount shall not be reduced to the applicable percentage of the Current Maximum
Amount, but instead remain the same as the prior period's Specified Subordinated
Amount until the distribution date on which a Delinquency Trigger Event is no
longer occurring; provided, further, that if, on any Distribution Date, a Loss
Trigger Event exists, the Specified Subordinated Amount shall equal 1.90% of the
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Maximum Pool Principal Balance until the Distribution Date on which a Loss
Trigger Event no longer exists. When the Class Certificate Balance of each Class
of LIBOR Certificates has been reduced to zero, the Specified Subordinated
Amount shall thereafter equal zero.
STANDARD & POOR'S: Standard & Poor's Ratings Services, a
division of the XxXxxx-Xxxx Companies, Inc. If Standard & Poor's is designated
as a Rating Agency in the Preliminary Statement, for purposes of Section
10.05(b) the address for notices to Standard & Poor's shall be Xxxxxxxx &
Xxxx'x, 00 Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage
Surveillance Group - Xxxxxx Xxxxxxx ABS Capital I Inc. 2002-HE3, or such other
address as Standard & Poor's may hereafter furnish to the Depositor and the
Servicer.
STARTUP DAY: For each REMIC created hereunder, the Closing
Date.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan, (i) the
principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal due on or before such date, to the extent actually
received, minus (ii) all amounts previously distributed to the Trustee with
respect to the related Mortgage Loan representing payments or recoveries of
principal, including Advances in respect of scheduled payments of principal. For
purposes of any Distribution Date, the Stated Principal Balance of any Mortgage
Loan will give effect to any scheduled payments of principal received or
advanced prior to the related Remittance Date and any unscheduled principal
payments and other unscheduled principal collections received during the related
Prepayment Period.
STEPDOWN DATE: The later to occur of (i) the earlier to occur
of (a) the Distribution Date in December 2005 and (b) the Distribution Date on
which the aggregate Class Certificate Balances of the Class A Certificates are
reduced to zero and (ii) the first Distribution Date on which the Senior
Enhancement Percentage (calculated for this purpose only after taking into
account scheduled and unscheduled payments of principal on the Mortgage Loans on
the last day of the related Due Period but prior to any applications of
Principal Distribution Amount to the Offered Certificates on the applicable
Distribution Date) is greater than or equal to the Senior Specified Enhancement
Percentage.
SUBORDINATED AMOUNT: As of any Distribution Date, the excess,
if any, of (a) the Current Maximum Amount for that Distribution Date on such
Distribution Date over (b) the aggregate of the Class Certificate Balances of
the Class A and Subordinated Certificates as of such Distribution Date (after
giving effect to the payment of the Principal Remittance Amount on such
Certificates on such Distribution Date).
SUBORDINATED CERTIFICATES: As specified in the Preliminary
Statement.
SUBORDINATION DEFICIENCY: With respect to any Distribution
Date, the excess, if any, of (a) the Specified Subordinated Amount applicable to
such Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date.
SUBORDINATION REDUCTION AMOUNT: With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess Subordinated
Amount and (b) the Total Monthly Excess Spread.
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SUBSERVICER: As defined in Section 3.02(a).
SUBSERVICING ACCOUNT: As defined in Section 3.08.
SUBSERVICING AGREEMENT: As defined in Section 3.02 hereof.
SUBSEQUENT CUT-OFF DATE: As to any Subsequent Mortgage Loans,
the date specified in the Addition Notice delivered in connection therewith,
which date shall be the close of business on the first day of the month in which
such Subsequent Mortgage Loans will be conveyed to the Trust Fund.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans hereafter
transferred and assigned to the Trust Fund pursuant to Section 2.01(d), each of
which shall have been purchased by the Unaffiliated Seller under a Mortgage Loan
Purchase Agreement.
SUBSEQUENT TRANSFER: The transfer and assignment by the
Depositor to the Trust of the Subsequent Mortgage Loans pursuant to the terms
hereof.
SUBSEQUENT TRANSFER AGREEMENT: A subsequent transfer agreement
in substantially the form of Exhibit L.
SUBSEQUENT TRANSFER DATE: The Business Day on which a
Subsequent Transfer occurs.
SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted by the
Unaffiliated Seller or an Originator for a Deleted Mortgage Loan in accordance
with the terms of this Agreement or the related Mortgage Loan Purchase
Agreement, which must, on the date of such substitution, as confirmed in a
Request for Release, substantially in the form of Exhibit K, (i) have a Stated
Principal Balance, after deduction of the principal portion of the Scheduled
Payment due in the month of substitution, not in excess of, and not more than
10% less than, the Stated Principal Balance of the Deleted Mortgage Loan; (ii)
be accruing interest at a rate no lower than and not more than 1% per annum
higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value Ratio
no higher than that of the Deleted Mortgage Loan; (iv) have a remaining term to
maturity no greater than (and not more than one year less than that of) the
Deleted Mortgage Loan; and (v) comply with each representation and warranty set
forth in Sections 3.01(f) and (h) of the Unaffiliated Seller's Agreement and
each representation and warranty set forth in the applicable Mortgage Loan
Purchase Agreement.
SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such
term pursuant to Section 2.03.
TAX SERVICE CONTRACT: As defined in Section 3.09(a).
TELERATE PAGE 3750: The display page currently so designated
on the Bridge Telerate Service (or such other page as may replace that page on
that service for displaying comparable rates or prices).
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TOTAL MONTHLY EXCESS SPREAD: As to any Distribution Date, an
amount equal to the excess if any, of (i) the interest collected (prior to the
Remittance Date) or advanced on the Mortgage Loans for Due Dates during the
related Due Period (net of Expense Fees, Premium Amount and Reimbursement
Amounts, if any) over (ii) the sum of the interest payable to the Classes of
Floating Rate Certificates on such Distribution Date.
TRANSFER: Any direct or indirect transfer or sale of any
Ownership Interest in a Residual Certificate.
TRANSFER AFFIDAVIT: As defined in section 5.02(b).
TRANSFEROR CERTIFICATE: As defined in Section 5.02(b).
TRIGGER EVENT: The occurrence of either a Delinquency Trigger
Event or a Loss Trigger Event.
TRUST FUND: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal received on
or with respect thereto after the related Cut-off Date, other than such amounts
which were due on the Mortgage Loans on or before the related Cut-off Date; (ii)
each Account, and all amounts deposited therein pursuant to the applicable
provisions of this Agreement; (iii) property that secured a Mortgage Loan and
has been acquired by foreclosure, deed-in-lieu of foreclosure or otherwise; (iv)
all rights of the Depositor against the Unaffiliated Seller under the
Unaffiliated Seller's Agreement; (v) all rights of the Depositor against each
Originator under the related Assignment and Recognition Agreement and the
related Mortgage Loan Purchase Agreement; (vi) the Class A Insurance Policy;
(vii) the Cap Agreement, solely for the benefit of the Class A
Certificateholders; and (viii) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing.
TRUSTEE: Deutsche Bank National Trust Company and its
successors and, if a successor trustee is appointed hereunder, such successor.
TRUSTEE FEE: As to any Distribution Date, an amount equal to
the sum of (a) the product of one-twelfth of the Trustee Fee Rate times the sum
of (i) the aggregate Stated Principal Balances of the Mortgage Loans at the end
of the prior Due Period, and (ii) the amount on deposit in the Pre-Funding
Account at the end of such prior Due Period and (b) any reasonable compensation
and expenses of a separate trustee or co-trustee to be paid pursuant to Section
8.10(d).
TRUSTEE FEE RATE: With respect to each Mortgage Loan, 0.0045%
per annum.
UNAFFILIATED SELLER'S AGREEMENT: The Unaffiliated Seller's
Agreement, dated as of the date hereof, among the Unaffiliated Seller and the
Depositor relating to the sale of the Mortgage Loans from the Unaffiliated
Seller to the Depositor.
UNPAID INTEREST AMOUNTS: As of any Distribution Date and any
Class of Certificates, the sum of (a) the excess of (i) the sum of the Accrued
Certificate Interest Distribution Amount for such Distribution Date and any
portion of such Accrued Certificate Interest Distribution Amount from prior
Distribution Dates remaining unpaid over (ii) the
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amount in respect of interest on such Class of Certificates actually distributed
on the preceding Distribution Date and (b) 30 days' interest on such excess at
the applicable Pass-Through Rate (to the extent permitted by applicable law).
UNPAID REALIZED LOSS AMOUNT: With respect to any Class of
Subordinated Certificates and as to any Distribution Date, is the excess of (i)
Applied Realized Loss Amounts with respect to such Class over (ii) the sum of
all distributions in reduction of such Applied Realized Loss Amounts on all
previous Distribution Dates. Any amounts distributed to a Class of Subordinated
Certificates in respect of any Unpaid Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such Class.
UPPER TIER REGULAR INTEREST: As described in the Preliminary
Statement.
UPPER TIER REMIC: As described in the Preliminary Statement.
U.S. PERSON: Shall mean (i) a citizen or resident of the
United States; (ii) a corporation (or entity treated as a corporation for tax
purposes) created or organized in the United States or under the laws of the
United States or of any state thereof, including, for this purpose, the District
of Columbia; (iii) a partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the United States
or of any state thereof, including, for this purpose, the District of Columbia
(unless provided otherwise by future Treasury regulations); (iv) an estate whose
income is includible in gross income for United States income tax purposes
regardless of its source; or (v) 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 U.S. Persons have authority to control all substantial decisions of
the trust. Notwithstanding the last clause of the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to continue
to be U.S. Persons.
VOTING RIGHTS: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X
Certificates, if any (such Voting Rights to be allocated among the holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class P
Certificates, if any, and (c) the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.
WAC CAP: With respect to the Mortgage Loans as of any
Distribution Date, the product of (i) the weighted average of the Adjusted Net
Mortgage Rates then in effect on the beginning of the related Due Period on the
Mortgage Loans, minus the Premium Rate, and (ii) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days in the
Interest Accrual Period related to such Distribution Date.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF MORTGAGE LOANS.
(a) The Depositor, concurrently with the execution and
delivery hereof, hereby sells, transfers, 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, other than any Subsequent Mortgage Loans, which will be so sold,
transferred, assigned, set-over and conveyed on the related Subsequent Transfer
Date.
(b) In connection with the transfer and assignment of each
Mortgage Loan, the Unaffiliated Seller has delivered or caused to be delivered
to the Trustee for the benefit of the Certificateholders the following documents
or instruments with respect to each Mortgage Loan so assigned (to the extent
such documents or instruments are required to be delivered by the related
Originator under each Mortgage Loan Purchase Agreement):
(i) the original Mortgage Note bearing all intervening
endorsements evidencing a complete chain of assignment from the
originator to the related Originator, endorsed "Pay to the order of
_________, without recourse" and signed in the name of the related
Originator by an authorized officer. To the extent that there is no
room on the face of the Mortgage Notes for endorsements, the
endorsement may be contained on an allonge, if state law so allows and
the Trustee is so advised by the related Originator that state law so
allows. If the Mortgage Loan was acquired by an Originator in a merger,
the endorsement must be by "[related Originator], successor by merger
to [name of predecessor]". If the Mortgage Loan was acquired or
originated by the related Originator while doing business under another
name, the endorsement must be by "[related Originator], formerly known
as [previous name]";
(ii) the original of any guarantee executed in connection with
the Mortgage Note;
(iii) the original Mortgage with evidence of recording
thereon. If in connection with any Mortgage Loan, the original Mortgage
with evidence of recording thereon can not be delivered on or prior to
the related Delivery Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation
or because such Mortgage has been lost or because such public recording
office retains the original recorded Mortgage, then the related
Originator, as required by the terms of the related Mortgage Loan
Purchase Agreement, will be required to deliver to the Trustee a
photocopy of such Mortgage and (i) the original recorded Mortgage or a
copy of such Mortgage certified by such public recording office to be a
true and complete copy of the original recorded Mortgage promptly upon
receipt thereof by the related Originator (but in any event within 360
days from the related Delivery Date); or (ii) in the case of a Mortgage
where a public recording office retains the original recorded Mortgage
or in the case where a Mortgage is lost after recordation in a public
recording office, a copy of such Mortgage certified by such public
recording
40
office to be a true and complete copy of the original recorded
Mortgage;
(iv) the originals of all assumption, modification,
consolidation or extension agreements, if any, with evidence of
recording thereon;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed in blank, in form and substance acceptable for recording;
(vi) the originals of all intervening assignments of mortgage,
evidencing a complete chain of assignment from the originator to the
related Originator, with evidence of recording thereon or if any such
intervening assignment has not been returned from the applicable
recording office or has been lost or if such public recording office
retains the original recorded assignments of mortgage;
(vii) the original or duplicate lender's title policy and all
riders thereto or, if such original is unavailable, either an original
title binder or an original or copy of the title commitment, and if
copies then certified to be true and complete by the title company; and
(viii) the security agreement, chattel mortgage or equivalent
document executed in connection with the Mortgage, if any.
From time to time, the Servicer shall forward to the Trustee additional
original documents, additional documents evidencing an assumption, modification,
consolidation or extension of a Mortgage Loan approved by the Servicer, in
accordance with the terms of this Agreement. All such mortgage documents held by
the Trustee as to each Mortgage Loan shall constitute the "CUSTODIAL FILE".
On or prior to the related Delivery Date, the Unaffiliated Seller shall
deliver, or cause the related Originator to deliver, to the Trustee Assignments
of Mortgages, in blank, for each Mortgage Loan. If an Assignment of Mortgage is
required to be recorded pursuant to the terms hereof, the Trustee shall promptly
forward such Assignments of Mortgage to the Servicer for recording. No later
than thirty (30) Business Days following the date of receipt by the Servicer of
the recording information for a Mortgage, the Servicer shall promptly submit or
cause to be submitted for recording, at the expense of the Unaffiliated Seller
(the Unaffiliated Seller to seek reimbursement from the related Originator under
the applicable Mortgage Loan Purchase Agreement) in the appropriate public
office for real property records, each Assignment of Mortgage referred to in
Section 2.01(b)(v). Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignment of Mortgage shall not be required to be completed and submitted for
recording with respect to any Mortgage Loan (other than any Mortgage Loan where
the Mortgaged Property is located in any state where recordation is required by
any Rating Agency to obtain the initial ratings on the Certificates, which
states as of the date hereof, are Florida and Maryland) until the earliest to
occur of (i) direction by Class A Certificate Insurer or (ii) upon a
determination by the Servicer that recordation is necessary for the enforcement
of rights under, or satisfaction or assignment of, the related Mortgage, at
which time, the Servicer shall record any such
41
Assignment of Mortgage in accordance with the terms hereof. If any Assignment of
Mortgage is required to be recorded pursuant to the terms hereof, the Mortgage
shall be assigned from the related Originator, to "Deutsche Bank National Trust
Company, as trustee under the Pooling and Servicing Agreement dated as of
November 1, 2002, Xxxxxx Xxxxxxx ABS Capital I Inc. Trust 2002-HE3." In the
event that any such assignment is lost or returned unrecorded because of a
defect therein, the Unaffiliated Seller shall cause the related Originator to
promptly prepare a substitute assignment to cure such defect and thereafter
cause each such assignment to be duly recorded. In the event the Unaffiliated
Seller does not pay or otherwise reimburse the Servicer for any of the foregoing
costs of recording any such Assignment of Mortgage, the Servicer shall be
entitled to be reimbursed from the Trust Fund from amounts on deposit in the
Collection Account. In the event the related Originator fails to reimburse the
Unaffiliated Seller for the recording costs described above, upon receipt of
written direction from the Unaffiliated Seller, the Trustee shall assign its
rights under the applicable Mortgage Loan Purchase Agreement solely with respect
to payment of such expenses to the Unaffiliated Seller.
On or prior to the Closing Date, the Unaffiliated Seller shall
deliver to the Trustee a copy of the Data Tape Information in electronic,
machine readable medium in a form mutually acceptable to the Trustee. Within ten
days of the Closing Date, the Unaffiliated Seller shall deliver a copy of the
complete Mortgage Loan Schedule to the Trustee.
In the event that such original or copy of any document
submitted for recordation to the appropriate public recording office is not so
delivered to the Trustee within 90 days following the related Delivery Date, and
in the event that the Originator does not cure such failure within 30 days of
discovery or receipt of written notification of such failure from the Depositor,
the Trustee or the Class A Certificate Insurer, the Trustee shall notify the
related Originator to repurchase the Mortgage Loan pursuant to the related
Mortgage Loan Purchase Agreement, upon the request of the Depositor, the Trustee
or the Class A Certificate Insurer, at the Repurchase Price and in the manner
specified in Section 2.03. The foregoing repurchase provision shall not apply in
the event that the related Originator cannot deliver such original or copy of
any document submitted for recordation to the appropriate public recording
office within the specified period due to a delay caused by the recording office
in the applicable jurisdiction; PROVIDED that the related Originator shall
instead be required to deliver a recording receipt of such recording office or,
if such recording receipt is not available, an officer's certificate of a
servicing officer of the Originator confirming that such document has been
accepted for recording.
(c) Purchase and Sale of Subsequent Mortgage Loans.
(i) Subject to the satisfaction of the conditions set forth in
paragraph (ii) below, and upon the Trustee's receipt of a Subsequent
Transfer Agreement executed by all other parties thereto, in
consideration of the Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign,
set over and convey to the Trustee without recourse but subject to
terms and provisions of this Agreement, all of the right, title and
interest of the Depositor in and to the Subsequent Mortgage Loans,
including the outstanding
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principal of and interest due on such Subsequent Mortgage Loans,
and all other related assets included or to be included in the Trust
Fund with respect thereto.
The amount released from the Pre-Funding Account with respect
to a transfer of Subsequent Mortgage Loans shall be one-hundred percent
(100%) of the aggregate Stated Principal Balances as of the related
Subsequent Cut-off Date of the Subsequent Mortgage Loans so
transferred.
(ii) The Subsequent Mortgage Loans and the other property and
rights related thereto described in paragraph (a) above shall be
transferred by the Depositor to the Trust Fund only upon the
satisfaction of each of the following conditions on or prior to the
related Subsequent Transfer Date:
(a) the Unaffiliated Seller shall have provided the
Depositor, the Trustee, the Rating Agencies and the Class A
Certificate Insurer with a timely Addition Notice, which shall
include a Mortgage Loan Schedule, listing the Subsequent
Mortgage Loans and shall have provided any other information
reasonably requested by any of the foregoing with respect to
the Subsequent Mortgage Loans;
(b) the Servicer shall have deposited in the Collection
Account all collections of (x) principal in respect of the
Subsequent Mortgage Loans received and due after the related
Subsequent Cut-off Date and (y) interest due on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date;
(c) as of each Subsequent Transfer Date, the
Unaffiliated Seller was not insolvent nor will be made
insolvent by such transfer nor is the Unaffiliated Seller
aware of any pending insolvency;
(d) such addition will not result in a "prohibited
transaction" (as defined in the REMIC Provisions) for any
REMIC held by the Trust Fund, and will not cause any REMIC
held by the Trust Fund to cease to qualify as a REMIC, as
evidenced by an Opinion of Counsel with respect to such
matters (which may be a blanket opinion dated the Closing
Date);
(e) the Pre-Funding Period shall not have terminated;
(f) the Unaffiliated Seller shall have delivered to the
Trustee an executed Assignment and Recognition Agreement with
respect to each related Originator of Subsequent Mortgage
Loans to be added to the Trust Fund on such Subsequent
Transfer Date;
(g) the Unaffiliated Seller shall have delivered to the
Trustee an Officer's Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (ii),
and the Opinion of Counsel referenced in clause (d); and
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(h) the Unaffiliated Seller and the Depositor shall
have delivered to the Trustee an executed copy of a Subsequent
Transfer Agreement, substantially in the form of Exhibit L
hereto.
(iii) The obligation of the Trust Fund to purchase the
Subsequent Mortgage Loans on a Subsequent Transfer Date is subject to
the requirements that, following the purchase of such Subsequent
Mortgage Loans, and with respect to the entire mortgage loan pool:
(a) no more than 3.40% may be second liens;
(b) no more than 30.00% may be Fixed Rate Mortgage
Loans;
(c) the weighted average original term to maturity may
not exceed 360 months;
(d) the weighted average gross Mortgage Rate must not
be less than 8.45%, or more than 9.05%;
(e) the weighted average LTV must not exceed 83.00%,
and no more than 47.00% of the Mortgage Loans may have LTVs in
excess of 80%;
(f) no Mortgage Loan may have a Stated Principal
Balance in excess of $1,000,000 as of the related Cut-off
Date;
(g) at least 85.00% of the Mortgage Loans must have
prepayment penalties;
(h) the weighted average Gross Margin for the
Adjustable Rate Mortgage Loans must be at least 6.40%;
(i) the weighted average credit score (FICO score) must
be at least 605, and none of the Mortgage Loans may have
credit scores below 500; and
(j) no Mortgage Loan originated on or after October 1,
2002 will be secured by property located in the State of
Georgia.
Any of the above requirements may be waived or modified in any
respect with the consent of the Class A Certificate Insurer and the
Rating Agencies.
(iv) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Unaffiliated Seller shall satisfy the
document delivery requirements set forth in Section 2.01(b).
Section 2.02 ACCEPTANCE BY THE TRUSTEE OF THE MORTGAGE LOANS.
The Trustee shall acknowledge, on each Delivery Date, receipt
of the documents identified in the Initial Certification in the form annexed
hereto as Exhibit F, and declares that it holds and will hold such documents and
the other documents delivered to it pursuant to Section 2.01, and that it
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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
and the Class A Certificate Insurer. The Trustee acknowledges that it will
maintain possession of the related Mortgage Notes in the State of California,
unless otherwise permitted by the Rating Agencies and the Class A Certificate
Insurer.
In connection with each Delivery, the Trustee shall deliver
via facsimile (with original to follow the next Business Day) to the Depositor,
the Unaffiliated Seller and the Class A Certificate Insurer an Initial
Certification on or prior to the related Delivery Date, certifying receipt of
the related Mortgage Notes and Assignments of Mortgage for each related Mortgage
Loan. The Trustee shall not be responsible to verify the validity, sufficiency
or genuineness of any document in any Custodial File.
Within 120 days after the related Delivery Date, the Trustee
shall ascertain that all documents required to be reviewed by it are in its
possession, and shall deliver to the Depositor, the Unaffiliated Seller and the
Class A Certificate Insurer a Final Certification to the effect that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such certification
as an exception and not covered by such certification): (i) all documents
required to be delivered to it are in its possession; (ii) such documents have
been reviewed by it and appear regular on their face and relate to such Mortgage
Loan; (iii) based on its examination and only as to the foregoing documents, the
information set forth in items (1), (2) and (18) of the Mortgage Loan Schedule
and items (1), (9) and (17) of the Data Tape Information respecting such
Mortgage Loan is correct; and (iv) each Mortgage Note has been endorsed as
provided in Section 2.01 of this Agreement. The Trustee shall not be responsible
to verify the validity, sufficiency or genuineness of any document in any
Custodial File. Upon receipt of such Final Certification, if the Depositor, the
Unaffiliated Seller or the Class A Certificate Insurer determines that any
noncompliance identified by the Trustee is a breach of a representation or
warranty relating to such Mortgage Loan , such party shall give written notice
to the Trustee thereof.
The Trustee shall retain possession and custody of each
Custodial 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 Custodial File as come into the possession of the
Servicer from time to time.
Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
UNAFFILIATED SELLER AND THE SERVICER.
(a) The Servicer hereby makes the representations and warranties set
forth in Schedules II and IIA hereto to the Depositor, the Unaffiliated Seller,
the Class A Certificate Insurer and the Trustee, as of the Closing Date, and
with respect to Subsequent Mortgage Loans, as of the related Subsequent Transfer
Date.
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(b) CDC Mortgage Capital Inc., in its capacity as the Unaffiliated
Seller, hereby makes the representations and warranties set forth in Schedule
III hereto to the Depositor, the Trustee and the Class A Certificate Insurer, as
of the Closing Date.
(c) It is understood and agreed by the Servicer and the Unaffiliated
Seller that the representations and warranties set forth in Section 2.03 shall
survive the transfer of the Mortgage Loans to the Trust Fund, and shall inure to
the benefit of the Trust Fund notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination or
failure to examine any Mortgage File. Upon discovery by any of the Depositor,
the Unaffiliated Seller, the Class A Certificate Insurer, the Trustee or the
Servicer of a breach by the Unaffiliated Seller of any of the foregoing
representations or any of the representations and warranties made pursuant to
Sections 3.01(f) and (h) of the Unaffiliated Seller's Agreement or by any
Originator of the representations and warranties made pursuant to the related
Assignment and Recognition Agreement, the party discovering such breach shall
give prompt written notice to the others.
(d) Within 90 days of the earlier of either discovery by or notice to
the Unaffiliated Seller of any breach of a representation or warranty set forth
in Section 3.01(f) or (h) of the Unaffiliated Seller's Agreement that materially
and adversely affects the value of the Mortgage Loans or the interest of the
Trustee, the Class A Certificate Insurer or the Certificateholders therein, the
Unaffiliated Seller shall use its best efforts to cure such breach in all
material respects and, if such breach cannot be remedied, the Unaffiliated
Seller shall, (i) if such 90 day period expires prior to the second anniversary
of the related Delivery Date, remove such Mortgage Loan from the Trust Fund and
substitute in its place a Substitute Mortgage Loan, in the manner and subject to
the conditions set forth in this Section 2,03; or (ii) repurchase such Mortgage
Loan at the Repurchase Price; 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, if any, and a Request for
Release substantially in the form of Exhibit K, and the Mortgage File for any
such Substitute Mortgage Loan
With respect to any Substitute Mortgage Loan or Loans, the Unaffiliated
Seller shall deliver to the Trustee for the benefit of the Certificateholders
the Mortgage Note, the Mortgage, the related Assignment of the Mortgage, 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 Mortgage Loans in the Due Period of substitution shall not be part of
the Trust Fund and will be retained by the related Originator on the next
succeeding Distribution Date. For the Due Period of substitution, distributions
to Certificateholders will include the monthly payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the related Originator shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan.
For any month in which the Unaffiliated Seller substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (if any) by which the aggregate principal balance of
all such Substitute Mortgage Loans as of the date of substitution is less than
the aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the monthly
46
payments due in the Due Period of substitution). The Unaffiliated Seller shall
deposit the amount of such shortage (the "SUBSTITUTION ADJUSTMENT AMOUNT") plus,
an amount equal to the aggregate of any unreimbursed Advances and accrued and
unpaid Servicing Fees with respect to such Deleted Mortgage Loans into the
Collection Account on or before the Remittance Date for the Distribution Date in
the month succeeding the calendar month during which the related Mortgage Loan
became required to be purchased or replaced hereunder.
Within 90 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth on Schedule IIA
hereto that materially and adversely affects the value of the Mortgage Loans or
the interest of the Trustee, the Class A Certificate Insurer or the
Certificateholders therein, the Servicer shall use its best efforts to promptly
cure such breach in all material respects and, if such defect or breach cannot
be remedied, the Servicer shall, at the Depositor's option, purchase such
Mortgage Loan at the Repurchase Price.
Upon discovery that any document does not comply with the requirements
set forth in clauses (i) through (iv) of the Trustee's review of the Custodial
Files pursuant to Section 2.02 or receipt of written notice of a breach of a
representation and warranty or written notice that a Mortgage Loan does not
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, the Trustee shall in turn promptly notify the applicable Originator
(with a copy to the Servicer, the Class A Certificate Insurer and the
Unaffiliated Seller) in writing of such non compliance or breach and request
that the related Originator cure such non compliance or breach within the time
period set forth in the applicable Mortgage Loan Purchase Agreement (but in any
event, within 60 days from the date the related Originator is notified of such
non compliance or breach) and if the related Originator does not cure such non
compliance or breach in all material respects during such period, the Trustee
shall notify such Originator to repurchase such Mortgage Loan from the Trust
Fund at the Repurchase Price, and such repurchase must occur no later than the
90th day following the Trustee's original notice of such noncompliance or breach
if such noncompliance or breach is a failure of the Mortgage Loan to constitute
a "qualified mortgage" within the meaning of Section 860G(a)(3) of the Code.
(e) Upon delivery of the Final Certification with respect to each
Mortgage Loan, the Trustee will notify the related Originator within 5 Business
Days of such delivery of any missing documents from the Custodial File and if
the related Originator does not deliver such missing documents within 60 days
from the date the related Originator is notified of such noncompliance or
breach, the Trustee shall notify such Originator to repurchase such Mortgage
Loan from the Trust Fund at the Repurchase Price.
(f) Based solely on information received with respect to any Substitute
Mortgage Loan from the Unaffiliated Seller or the related Originator, as
applicable, the Servicer shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan and the substitution of the Substitute
Mortgage Loan or Loans and the Servicer shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Substitute Mortgage Loan or
Loans shall be subject to the terms of this Agreement in all respects, and the
Unaffiliated Seller shall be deemed to have made with respect to such Substitute
Mortgage Loan or Loans, as of the date of substitution, the representations and
warranties made pursuant to Sections 3.01(f) and (h) of the Unaffiliated
Seller's Agreement with respect to such Mortgage
47
Loan. Upon any such substitution and the deposit to the Collection 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 relating to such Deleted Mortgage Loan to the Unaffiliated Seller or the
related Originator, as applicable, and shall execute and deliver at the
Unaffiliated Seller's or related Originator's direction, as applicable, such
instruments of transfer or assignment prepared by such party, in each case
without recourse, as shall be necessary to vest title in the Unaffiliated Seller
or the related Originator, or its designee, as applicable, the Trustee's
interest in any Deleted Mortgage Loan substituted for pursuant to this Section
2.03.
(g) In the event that the Unaffiliated Seller or the related
Originator, as applicable, shall have repurchased a Mortgage Loan, the
Repurchase Price therefor shall be deposited in the Collection Account pursuant
to Section 3.10 on or before the Remittance Date for the Distribution Date in
the month following the month during which the Unaffiliated Seller or the
related Originator, as applicable, became obligated hereunder to repurchase or
replace such Mortgage Loan and upon such deposit of the Repurchase 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 K hereto, the Trustee shall release
the related Custodial File to such Person as directed by the Servicer, and the
Trustee shall execute and deliver at such Person's direction such instruments of
transfer or assignment prepared by such Person, 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 Person to cure,
repurchase or replace any Mortgage Loan as to which a breach has occurred and is
continuing shall constitute the sole remedy against such Persons respecting such
breach available to Certificateholders, the Depositor, the Unaffiliated Seller,
the Class A Certificate Insurer or the Trustee on their behalf. In the event
such required repurchase or replacement does not occur, the Trustee shall take
such actions as directed upon written direction from the Depositor or the Class
A Certificate Insurer and the provision of reasonable indemnity satisfactory to
the Trustee in accordance with Sections 6.03 and 8.02.
(h) If the Unaffiliated Seller is required to repurchase or replace a
Mortgage Loan pursuant to the terms hereof, upon receipt by the Trustee of
written direction from the Unaffiliated Seller and either the related Repurchase
Price or Substitute Mortgage Loan, as applicable, the Trustee shall assign to
the Unaffiliated Seller its rights under the related Mortgage Loan Purchase
Agreement solely with respect to such Mortgage Loan by an assignment in form and
substance mutually satisfactory to the Unaffiliated Seller and the Trustee.
(i) The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Custodial Files to the Trustee.
Section 2.04 THE DEPOSITOR AND THE MORTGAGE LOANS.
The Depositor hereby represents and warrants to the Trustee and to the
Class A Certificate Insurer with respect to each Mortgage Loan as of the date
hereof or such other date set forth herein that as of the related Delivery Date,
and following the transfer of the Mortgage Loans to it by the Unaffiliated
Seller, the Depositor had good title to the Mortgage Loans and the Mortgage
Notes were subject to no offsets, defenses or counterclaims.
48
The Depositor hereby assigns, transfers and conveys to the Trustee all
of its rights with respect to the Initial Mortgage Loans and shall, on each
subsequent Transfer Date, convey all of its right, title and interest with
respect to the related subsequent Mortgage Loans.
Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS AND NON-QUALIFIED MORTGAGES.
Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 30 days after the
related Delivery Date unless the Unaffiliated Seller delivers, or causes the
related Originator to deliver, as applicable, to the Trustee an Opinion of
Counsel, at the expense of the Unaffiliated Seller or the related Originator, as
applicable, 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 Date, as defined in Sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding.
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, 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 Holders of the
Certificates, and for the benefit of the Class A Certificate Insurer.
Section 2.07 REMIC MATTERS.
The Preliminary Statement sets forth the designations 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 "latest possible
maturity date" is March 25, 2033, which is the sixth Distribution Date following
the latest Mortgage Loan maturity date.
Section 2.08 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Servicer and to the Class A Certificate Insurer and the that as of the date
of this Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the
49
due authorization, execution and delivery hereof by the other parties hereto,
constitutes or will constitute the legal, valid and binding agreement of the
Depositor, enforceable against the Depositor in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that may materially and adversely affect its performance
hereunder; and
(h) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had, or, with respect to the subsequent Mortgage
Loans, will have, good title to, and was, or will be, the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred, or shall transfer, all right, title and interest in each Mortgage
Loan to the Trustee. The transfer of the Mortgage Note and the Mortgage as and
in the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Trustee, for the benefit of the Certificateholders and for the
benefit of the Class A Certificate Insurer, all right, title, and interest of
the Depositor thereto as note holder and mortgagee or (ii) to grant to the
Trustee, for the benefit of the Certificateholders and for the benefit of the
Class A Certificate Insurer, the security interest referred to in Section 10.04
hereof.
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It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.08 shall survive delivery of the
respective Custodial Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 SERVICER TO SERVICE MORTGAGE LOANS.
(a) For and on behalf of the Certificateholders and for the benefit of
the Class A Certificate Insurer, the Servicer shall service and administer the
Mortgage Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the Servicer
or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) the Servicer's or any Subservicer's right to receive compensation
for its services hereunder or with respect to any particular transaction.
To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone or through Subservicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver
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
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer
51
under any standard hazard insurance policy. Subject to Section 3.15, the Trustee
shall execute, at the written request of the Servicer, and furnish to the
Servicer and any Subservicer such documents as are necessary or appropriate to
enable the Servicer or any Subservicer to carry out their servicing and
administrative duties hereunder, and the Trustee hereby grants to the Servicer,
and this Agreement shall constitute, a power of attorney to carry out such
duties including a power of attorney to take title to Mortgaged Properties after
foreclosure on behalf of the Trustee. The Trustee shall execute a separate power
of attorney in favor of the Servicer for the purposes described herein to the
extent necessary or desirable to enable the Servicer to perform its duties
hereunder. The Trustee shall not be liable for the actions of the Servicer or
any Subservicers under such powers of attorney.
(b) Subject to Section 3.09(b) hereof, in accordance with the standards
of the preceding paragraph, the Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in Section 3.11.
Any cost incurred by the Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.
(c) Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan or (ii) permit any modification, waiver or amendment of any term
of any Mortgage Loan that would both (A) effect an exchange or reissuance of
such Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions, or (iii) except as provided in Section 3.07(a), waive any
Prepayment Charges.
(d) The Servicer may delegate its responsibilities under this
Agreement; PROVIDED, HOWEVER, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.
Section 3.02 SUBSERVICING AGREEMENTS BETWEEN THE SERVICER AND
SUBSERVICERS.
(a) Subject to the consent of the Class A Certificate Insurer (so long
as no Class A Certificate Insurer Default has occurred and is continuing), which
consent shall not be unreasonably withheld, the Servicer may enter into
Subservicing Agreements with Subservicers, for the servicing and administration
of the Mortgage Loans.
Unless otherwise approved by the Class A Certificate Insurer (so long
as no Class A Certificate Insurer Default has occurred and is continuing), each
Subservicer shall be (i)
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authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Subservicing Agreement, (ii) an institution approved as
a mortgage loan originator by the Federal Housing Administration or an
institution that has deposit accounts insured by the FDIC and (iii) a Xxxxxxx
Mac or Xxxxxx Mae approved mortgage servicer. Each Subservicing Agreement must
impose on the Subservicer requirements conforming to the provisions set forth in
Section 3.08 and provide for servicing of the Mortgage Loans consistent with the
terms of this Agreement. The Servicer will examine each Subservicing Agreement
and will be familiar with the terms thereof. The terms of any Subservicing
Agreement will not be inconsistent with any of the provisions of this Agreement.
The Servicer and the Subservicers may enter into and make amendments to the
Subservicing Agreements or enter into different forms of Subservicing
Agreements; PROVIDED, HOWEVER, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the Trustee,
without the consent of the Trustee. Any variation without the consent of the
Trustee from the provisions set forth in Section 3.08 relating to insurance or
priority requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee, the Unaffiliated Seller, the Class A Certificate Insurer and the
Depositor copies of all Subservicing Agreements, and any amendments or
modifications thereof, promptly upon the Servicer's execution and delivery of
such instruments.
(b) As part of its servicing activities hereunder, the Servicer (except
as otherwise provided in the last sentence of this paragraph), for the benefit
of the Trustee, shall enforce the obligations of each Subservicer under the
related Subservicing Agreement, including, without limitation, any obligation to
make advances in respect of delinquent payments as required by a Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
Section 3.03 SUCCESSOR SUBSERVICERS.
The Servicer shall be entitled to terminate any Subservicing Agreement
and the rights and obligations of any Subservicer pursuant to any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement. In the event of termination of any Subservicer, all servicing
obligations of such Subservicer shall be assumed simultaneously by the Servicer
without any act or deed on the part of such Subservicer or the Servicer, and the
Servicer either shall service directly the related Mortgage Loans or shall enter
into a Subservicing Agreement with a successor Subservicer which qualifies under
Section 3.02.
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Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor or the Trustee without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default).
Section 3.04 LIABILITY OF THE SERVICER.
Notwithstanding 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 primarily liable to the Trustee for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Servicer by such Subservicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Section 3.05 NO CONTRACTUAL RELATIONSHIP BETWEEN SUBSERVICERS AND THE
TRUSTEE.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trustee (or any successor Servicer) shall not be deemed
a party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section 3.06.
The Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.
Section 3.06 ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY
TRUSTEE.
In the event the Servicer at any time shall for any reason no longer be
the Servicer (including by reason of the occurrence of a Event of Default), the
Trustee or its designee shall thereupon assume all of the rights and obligations
of the Servicer under each Subservicing Agreement that the Servicer may have
entered into, with copies thereof provided to the Trustee prior to the Trustee
assuming such rights and obligations, unless the Trustee elects to terminate any
Subservicing Agreement in accordance with its terms as provided in Section 3.03.
Upon such assumption, the Trustee, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Depositor, the
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Trustee, their designees or any successor Servicer shall be deemed to have
assumed any liability or obligation of the Servicer that arose before it ceased
to be the Servicer.
The Servicer at its expense shall, upon request of the Trustee, deliver
to the assuming party all documents and records relating to each Subservicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by or on behalf of it, and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
Section 3.07 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS;
ESTABLISHMENT OF CERTAIN ACCOUNTS.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any applicable insurance policies, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Consistent with the foregoing, the
Servicer may (i) waive any late payment charge or, if applicable, any penalty
interest, or (ii) extend the due dates for the Scheduled Payments due on a
Mortgage Note for a period of not greater than 180 days; PROVIDED that any
extension pursuant to clause (ii) above shall not affect the amortization
schedule of any Mortgage Loan for purposes of any computation hereunder, except
as provided below. In the event of any such arrangement pursuant to clause (ii)
above, the Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangements, subject to Section 4.01(d) pursuant to which the Servicer shall
not be required to make any such advances that are Nonrecoverable P&I Advances.
Notwithstanding the foregoing, the Servicer may not waive, in whole or in part,
a Prepayment Charge, except under the following circumstances: (i) such waiver
relates to a default or a reasonably foreseeable default and would, in the
reasonable judgment of the Servicer, maximize recovery of total proceeds taking
into account the value of such Prepayment Charge and the related Mortgage Loan,
and doing so is standard and customary in servicing mortgage loans similar to
the Mortgage Loans (including any waiver of a Prepayment Charge in connection
with a refinancing of a Mortgage Loan that is related to a default or a
reasonably foreseeable default), and in no event will the Servicer waive a
Prepayment Charge in connection with a refinancing of a Mortgage Loan that is
not related to a default or a reasonably foreseeable default, (ii) such
Prepayment Charge is not permitted to be collected by applicable law or (iii)
the Servicer has not been provided with documentation sufficient to establish
the existence of such Prepayment Charge at the time of such waiver. If a
Prepayment Charge is waived other than as permitted by the prior sentence, then
the Servicer is required to pay the amount of such waived Prepayment Charge, for
the benefit of the Holders of the Class P Certificates, by depositing such
amount into the Collection Account together with and at the time that the amount
prepaid on the related Mortgage Loan is required to be deposited into the
Collection Account.
(b) (i) (i) The Trustee shall establish and maintain the Excess Reserve
Fund Account, on behalf of the Class X Certificateholders, to secure their
limited
55
recourse obligation to pay to the Floating Rate Certificateholders Basis
Risk CarryForward Amounts.
(ii) On each Distribution Date, the Trustee shall deposit the amount of
any Basis Risk Payment and any Interest Rate Cap Payment made solely for
the benefit of the Class A Certificateholders for such date into the
Excess Reserve Fund Account.
(c) (i) On each Distribution Date on which there exists a Basis
Risk CarryForward Amount on any Class of Certificates, the Trustee shall
(1) withdraw from the Distribution Account and deposit in the Excess
Reserve Fund Account, as set forth in Section 4.02(a)(iii)(f), the lesser
of (a) the sum of (x) the Class X Distributable Amount (without regard to
the reduction in the definition thereof with respect to the Basis Risk
CarryForward Amount) (to the extent remaining after the distributions
specified in Sections 4.02(a)(iii)(a)-(e)) and (y) the Interest Rate Cap
Payment, if any, with respect to such Distribution Date, and (b) the Basis
Risk CarryForward Amount and (2) withdraw from the Excess Reserve Fund
Account amounts necessary to pay to such Class or Classes of Certificates
the Basis Risk CarryForward Amount. Such payments shall be allocated to
those Classes on a PRO RATA basis based upon the amount of Basis Risk
CarryForward Amount owed to each such Class and shall be paid in the
priority set forth in Section 4.02(a)(iii)(g) hereof.
(ii) The Trustee shall account for the Excess Reserve Fund Account as
an outside reserve fund within the meaning of Treasury regulation
1.860G-2(h) and not as an asset of any REMIC created pursuant to this
Agreement. The beneficial owner of the Excess Reserve Fund Account is the
Class X Certificateholder. For all federal tax purposes, amounts
transferred by the Upper Tier REMIC to the Excess Reserve Fund Account
shall be treated as distributions by the Trustee to the Class X
Certificateholder.
(iii) Any Basis Risk CarryForward Amounts paid by the Trustee to the
Floating Rate Certificateholders shall be accounted for by the Trustee as
amounts paid first to the Holders of the Class X Certificate and then to
the respective Class or Classes of Floating Rate Certificates. In
addition, the Trustee shall account for the Floating Rate
Certificateholders' rights to receive payments of Basis Risk CarryForward
Amounts as rights in a limited recourse interest rate cap contract written
by the Class X Certificateholders in favor of the Floating Rate
Certificateholders.
(iv) Notwithstanding any provision contained in this Agreement, the
Trustee shall not be required to make any payments from the Excess Reserve
Fund Account except as expressly set forth in this Section 3.07(c).
(d) The Trustee shall establish and maintain the Distribution Account
on behalf of the Certificateholders. 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 3.11;
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(ii) any amount deposited by the Servicer pursuant to Section 3.10 in
connection with any losses on Permitted Investments; and
(iii) 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 in writing to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering notice 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 in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 4.02. In no event shall
the Trustee incur liability for withdrawals from the Distribution Account at the
direction of the Servicer.
(e) The Trustee shall establish and maintain the Capitalized Interest
Account, on behalf of the Certificateholders. On the Closing Date, the Trustee
shall deposit $604,785 to the Capitalized Interest Account from the proceeds of
the sale of the Offered Certificates. Withdrawals from the Capitalized Interest
Account shall be made in accordance with Sections 4.02(c) and (d) hereof. The
Trustee shall account for the Capitalized Interest Account as an outside reserve
fund within the meaning of Treasury Regulation 1.860G-2(h) and not as an asset
of any REMIC created pursuant to this Agreement. The beneficial owner of the
Capitalized Interest Account shall be the Unaffiliated Seller.
(f) The Trustee shall establish and maintain the Pre-Funding Account,
on behalf of the Certificateholders. On the Closing Date, the Trustee shall
deposit the Initial Pre-Funded Amount to the Pre-Funding Account from the
proceeds of the sale of the Offered Certificates. Withdrawals from the
Pre-Funding Account shall be made in accordance with Sections 4.02(e) and (f)
hereof.
(g) The Trustee may invest the funds in the Accounts if directed in
writing by the Servicer, with respect to the Collection Account and the
Distribution Account or by the Unaffiliated Seller, with respect to the
Pre-Funding Account and the Capitalized Interest Account in each case, in
Permitted Investments, which directions shall be in accordance with Section
3.12. Amounts on deposit in the Excess Reserve Fund Account shall not be
invested.
(h) The Servicer shall give prior written notice to the Trustee, each
Rating Agency and the Depositor of any proposed change of the location of the
Collection Account.
Section 3.08 SUBSERVICING ACCOUNTS.
In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Subservicer will be required to
establish and maintain one or more accounts (collectively, the "SUBSERVICING
ACCOUNT"). The Subservicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Servicer. The Subservicer shall deposit in the
clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day
57
after the Subservicer's receipt thereof, all proceeds of Mortgage Loans
received by the Subservicer less its servicing compensation to the extent
permitted by the Subservicing Agreement, and shall thereafter deposit such
amounts in the Subservicing Account, in no event more than two Business
Days after the deposit of such funds into the clearing account. The
Subservicer shall thereafter deposit such proceeds in the Collection
Account or remit such proceeds to the Servicer for deposit in the
Collection Account not later than two Business Days after the deposit of
such amounts in the Subservicing Account. For purposes of this Agreement,
the Servicer shall be deemed to have received payments on the Mortgage
Loans when the Subservicer receives such payments.
Section 3.09 COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS; ESCROW
ACCOUNTS.
(a) The Servicer shall ensure that each of the Mortgage Loans shall be
covered by a paid-in-full, life-of-the-loan tax service contract with a
nationally recognized provider acceptable to the Servicer (each, a "TAX SERVICE
CONTRACT"). Each Tax Service Contract shall be assigned to the Trustee, or its
designee, at the Servicer's expense in the event that the Servicer is terminated
as Servicer of the related Mortgage Loan.
(b) To the extent that the services described in this paragraph (b) are
not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) hereof, the Servicer undertakes to perform such functions. The
Servicer shall establish and maintain, or cause to be established and
maintained, one or more accounts (the "ESCROW ACCOUNTS"), which shall be
Eligible Accounts. The Servicer shall deposit in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer's receipt thereof, all collections from the Mortgagors (or related
advances from Subservicers) for the payment of taxes, assessments, hazard
insurance premiums and comparable items for the account of the Mortgagors
("ESCROW PAYMENTS") collected on account of the Mortgage Loans and shall
thereafter deposit such Escrow Payments in the Escrow Accounts, in no event more
than two Business Days after the deposit of such funds in the clearing account,
for the purpose of effecting the payment of any such items as required under the
terms of this Agreement. Withdrawals of amounts from an Escrow Account may be
made only to (i) effect payment of taxes, assessments, hazard insurance
premiums, and comparable items; (ii) reimburse the Servicer (or a Subservicer to
the extent provided in the related Subservicing Agreement) out of related
collections for any advances made pursuant to Section 3.01 (with respect to
taxes and assessments) and Section 3.13 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay interest, if required and as described below, to Mortgagors on balances in
the Escrow Account; (v) clear and terminate the Escrow Account at the
termination of the Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement or (vi) recover amounts deposited in error.
As part of its servicing duties, the Servicer or Subservicers shall pay to the
Mortgagors interest on funds in Escrow Accounts, to the extent required by law
and, to the extent that interest earned on funds in the Escrow Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. To the extent that a Mortgage does not provide for
Escrow Payments, the Servicer shall determine whether any such payments are made
by the Mortgagor in a manner and at a time that avoids the loss of the Mortgaged
Property due to
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a tax sale or the foreclosure of a tax lien. The Servicer assumes full
responsibility for the payment of all such bills within such time and shall
effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments; PROVIDED,
HOWEVER, that such advances are deemed to be Servicing Advances.
Section 3.10 COLLECTION ACCOUNT.
(a) On behalf of the Trustee, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more Eligible
Accounts (such account or accounts, the "COLLECTION ACCOUNT"), held in trust for
the benefit of the Trustee. On behalf of the Trustee, the Servicer shall deposit
or cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, and shall thereafter deposit in the Collection Account, in no
event more than two Business Days after the deposit of such funds into the
clearing account, as and when received or as otherwise required hereunder, the
following payments and collections received or made by it subsequent to the
related Cut-off Date (other than in respect of principal or interest on the
related Mortgage Loans due on or before the related Cut-off Date, and except for
$159,227.93 in interest, which is being retained by the Unaffiliated Seller), or
payments (other than Principal Prepayments) received by it on or prior to the
related Cut-off Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds to the extent such Insurance Proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the related Mortgagor in accordance with the express
requirements of law or in accordance with prudent and customary servicing
practices and Liquidation Proceeds;
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect
to funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant to
the second paragraph of Section 3.13(a) in respect of any blanket policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with this Agreement; and
(vii) all Prepayment Charges collected by the Servicer.
The foregoing requirements for deposit in the Collection Accounts shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing,
59
payments in the nature of late payment charges, NSF fees, reconveyance fees,
assumption fees and other similar fees and charges need not be deposited by the
Servicer in the Collection Account and shall, upon collection, belong to the
Servicer as additional compensation for its servicing activities. In the event
the Servicer shall deposit in the Collection Account any amount not required to
be deposited therein, it may at any time withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding.
(b) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Servicer shall give notice to the Trustee and the Depositor of the location of
the Collection Account maintained by it when established and prior to any change
thereof.
Section 3.11 WITHDRAWALS FROM THE COLLECTION ACCOUNT.
(a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in
Section 4.01:
(i) On or prior to the Remittance Date, to remit to the Trustee the
Interest Remittance Amount and the Principal Remittance Amount in respect
of the related Distribution Date together with all amounts representing
Prepayment Charges from the Mortgage Loans received during the related
Prepayment Period;
(ii) to reimburse the Servicer for P&I Advances, but only to the extent
of amounts received which represent Late Collections (net of the related
Servicing Fees) of Monthly Payments on Mortgage Loans with respect to
which such P&I Advances were made in accordance with the provisions of
Section 4.01;
(iii) to pay the Servicer or any Subservicer (a) any unpaid Servicing
Fees or (b) any unreimbursed Servicing Advances with respect to each
Mortgage Loan, but only to the extent of any Late Collections, Liquidation
Proceeds, Insurance Proceeds or other amounts as may be collected by the
Servicer from a Mortgagor, or otherwise received with respect to such
Mortgage Loan (or the related REO Property);
(iv) to pay to the Servicer as servicing compensation (in addition to
the Servicing Fee) on the Remittance Date any interest or investment
income earned on funds deposited in the Collection Account;
(v) to pay to the Unaffiliated Seller or the related Originator, as
applicable, with respect to each Mortgage Loan that has previously been
purchased or replaced by the Unaffiliated Seller or such Originator, as
applicable, pursuant to this Agreement, all amounts received thereon
subsequent to the date of purchase or substitution, as the case may be;
(vi) to reimburse the Servicer for any P&I Advance or Servicing Advance
previously made which the Servicer has determined to be a Nonrecoverable
P&I Advance or Nonrecoverable Servicing Advance in accordance with the
provisions of Section 4.01;
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(vii) to pay, or to reimburse the Servicer for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to Section
3.15;
(viii) to reimburse the Servicer, the Depositor or the Trustee for
expenses incurred by or reimbursable to the Servicer, the Depositor or the
Trustee, as the case may be, pursuant to Section 6.03;
(ix) to reimburse the Servicer, the Unaffiliated Seller, the Depositor,
the Class A Certificate Insurer or the Trustee, as the case may be, for
expenses reasonably incurred in respect of the breach or defect giving
rise to the purchase obligation under Section 2.03 of this Agreement that
were included in the Repurchase Price of the Mortgage Loan, including any
expenses arising out of the enforcement of the purchase obligation to the
extent not otherwise paid pursuant to the terms hereof;
(x) to withdraw any amounts deposited in the Collection Account in
error; and
(xi) to clear and terminate the Collection Account upon termination of
this Agreement.
(b) The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii) and (ix)
above. The Servicer shall provide written notification to the Trustee, on or
prior to the next succeeding Remittance Date, upon making any withdrawals from
the Collection Account pursuant to subclause (a)(vii) above.
Section 3.12 INVESTMENT OF FUNDS IN THE ACCOUNT.
(a) The Servicer may direct the investment of funds in the Collection
Account and may direct the Trustee to invest funds in the Distribution Account,
and the Unaffiliated Seller may direct the Trustee to invest the funds in the
Pre-Funding Account and the Capitalized Interest Account (each of such Accounts,
for purposes of this Section 3.12, an "INVESTMENT ACCOUNT"), in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand no later than the Business Day immediately preceding
the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement. All such investment directions shall be in writing
and if the Trustee does not receive such written instructions no investment
shall be made. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trustee. The Trustee shall be entitled to sole
possession (except with respect to investment direction of funds held in the
related Account and any income and gain realized thereon) over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee. In the event amounts on deposit in an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Trustee may:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may
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otherwise mature hereunder in an amount equal to
the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be
withdrawn on such date; and
(y) demand payment of all amounts due thereunder that
such Permitted Investment would not constitute a
Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) (i) All income and gain realized from the
investment of funds deposited in the Collection Account and
the Distribution Account held by or on behalf of the Servicer,
shall be for the benefit of the Servicer and shall be subject
to its withdrawal in the manner set forth in Section 3.11 in
the case of income in the Collection Account, and on each
Distribution Date, the Trustee shall withdraw from the
Distribution Account, and remit to the Servicer all amounts in
respect of such income and gain in the Distribution Account.
Whether in regard to the Collection Account or the
Distribution Account, the Servicer shall deposit in the
Collection Account or the Distribution Account, as applicable,
the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in such accounts
immediately upon realization of such loss.
(ii) All income and gain realized from the investment
of funds deposited in the Pre-Funding Account and the
Capitalized Interest Account held by or on behalf of the
Unaffiliated Seller shall be retained in such Investment
Account, subject to withdrawal as provided in Section 4.02.
Whether in regard to the Pre-Funding Account or the
Capitalized Interest Account, the Unaffiliated Seller shall
deposit in the Pre-Funding Account or the Capitalized Interest
Account, as applicable, the amount of any loss of principal
incurred in respect of any such Permitted Investment made with
funds in such accounts immediately upon realization of such
loss.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee shall take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate proceedings. The Trustee shall not be liable for the
amount of any loss incurred in respect of any investment or lack of investment
of funds held in any Investment Account or the Distribution Account if made in
accordance with this Section 3.12.
Section 3.13 MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND
OMISSIONS AND FIDELITY COVERAGE.
(a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Mortgage Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related
62
hazard insurance policy. The Servicer shall also cause to be maintained fire
insurance with extended coverage on each REO Property in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the improvements
which are a part of such property and (ii) the outstanding principal balance of
the related Mortgage Loan at the time it became an REO Property, plus accrued
interest at the Mortgage Rate and related Servicing Advances. The Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the property subject to the related
Mortgage or amounts to be released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.11. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to the Trustee, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is
at any time in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards and flood insurance
has been made available, the Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's (or such other rating that is comparable to such rating) insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in the first two sentences
of this Section 3.13, it being understood and agreed that such policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy complying with the first two sentences of this Section 3.13,
and there shall have been one or more losses which would have been covered by
such policy, deposit to the Collection Account from its own funds the amount not
otherwise payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee claims under any such blanket policy in a timely fashion in accordance
with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Xxxxxx Xxx or Xxxxxxx Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer
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has obtained a waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The
Servicer shall also maintain a fidelity bond in the form and amount that would
meet the requirements of Xxxxxx Mae or Xxxxxxx Mac, unless the Servicer has
obtained a waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The
Servicer shall provide the Trustee with copies of any such insurance policies
and fidelity bond. The Servicer shall be deemed to have complied with this
provision if an Affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such errors
and omissions policy and fidelity bond shall by its terms not be cancelable
without thirty days' prior written notice to the Trustee. The Servicer shall
also cause each Subservicer to maintain a policy of insurance covering errors
and omissions and a fidelity bond which would meet such requirements.
Section 3.14 ENFORCEMENT OF DUE-ON-SALE CLAUSES ASSUMPTION
AGREEMENTS.
The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; PROVIDED, HOWEVER,
that the Servicer shall not be required to take such action if, in its sole
business judgment, the Servicer believes it is not in the best interests of the
Trust Fund and shall not exercise any such rights if prohibited by law from
doing so. If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause or if any of the other conditions set forth
in the proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, PROVIDED that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer, has a credit risk rating at
least equal to that of the original Mortgagor. In connection with any
assumption, modification or substitution, the Servicer shall apply such
underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Servicer shall not take or enter
into any assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Servicer in respect of an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including, but not limited to, the related Mortgage Rate and the
amount of the Scheduled Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
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Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.14, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
Section 3.15 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
The Servicer shall use its best efforts, consistent with
customary servicing practices as described in Section 3.01, to foreclose upon or
otherwise comparably convert (which may include an acquisition of REO Property)
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.07, and which are not
released from this Agreement pursuant to any other provision hereof. The
Servicer shall use reasonable efforts to realize upon such defaulted Mortgage
Loans in such manner as will maximize the receipt of principal and interest by
the Trustee, taking into account, among other things, the timing of foreclosure
proceedings. The foregoing is subject to the provisions that, in any case in
which Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to the Trustee, after reimbursement to itself for such expenses,
and (ii) that such expenses will be recoverable by the Servicer through
Insurance Proceeds or Liquidation Proceeds from the related Mortgaged Property,
as contemplated in Section 3.11. 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 related property, as
contemplated in Section 3.11.
The proceeds of any liquidation or REO Disposition, as well as
any recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Servicer or any Subservicer
for any related unreimbursed Servicing Advances, pursuant to Section 3.11 or
3.17; second, to reimburse the Servicer for any related xxxxxxxxxxxx X&X
Advances, pursuant to Section 3.11; third, to accrued and unpaid interest on the
Mortgage Loan or REO Imputed Interest, at the Mortgage Rate, to the date of the
liquidation or REO Disposition, or to the Due Date prior to the Remittance Date
on which such amounts are to be distributed if not in connection with a
liquidation or REO Disposition; and fourth, as a recovery of principal of the
Mortgage Loan. If the amount of the recovery so allocated to interest is less
than a full recovery thereof, that amount will be allocated as follows: first,
to unpaid Servicing Fees; and second, as interest at the Mortgage Rate (net of
the Servicing Fee Rate). The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Servicer or any Subservicer pursuant
to Section 3.11 or 3.17. The portions of the recovery so allocated to interest
at the Mortgage Rate (net of the Servicing Fee Rate) and to principal of the
Mortgage Loan shall be applied as follows: first, to reimburse the Servicer or
any Subservicer for any related unreimbursed Servicing Advances in accordance
with Section 3.11 or 3.17, and second,
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to the Trustee in accordance with the provisions of Section 4.02, subject to the
last paragraph of Section 3.17 with respect to certain excess recoveries from an
REO Disposition.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the presence of, hazardous or toxic substances or wastes on the related
Mortgaged Property, or if the Trustee otherwise requests, the Servicer shall
cause an environmental inspection or review of such Mortgaged Property to be
conducted by a qualified inspector. Upon completion of the inspection, the
Servicer shall promptly provide the Trustee with a written report of the
environmental inspection.
After reviewing the environmental inspection report, the
Servicer shall determine how to proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Servicer determines to proceed with foreclosure or acceptance of a
deed in lieu of foreclosure, the Servicer shall be reimbursed for all reasonable
costs associated with such foreclosure or acceptance of a deed in lieu of
foreclosure and any related environmental clean-up costs, as applicable, from
the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Servicer, the Servicer shall be entitled to
be reimbursed from amounts in the Collection Account pursuant to Section 3.11
hereof. In the event the Servicer determines not to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
from general collections for all Servicing Advances made with respect to the
related Mortgaged Property from the Collection Account pursuant to Section 3.11
hereof.
Section 3.16 RELEASE OF MORTGAGE FILES.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Servicer will, within five (5)
Business Days of the payment in full, notify the Trustee by a certification
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 3.10 have been or
will be so deposited) of a Servicing Officer and shall request delivery to it of
the Custodial File. Upon receipt of such certification and request, the Trustee
shall promptly release the related Custodial File to the Servicer within five
(5) Business Days. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon
request of the Servicer and delivery to the Trustee, of a Request for Release,
release the related Custodial File to the Servicer, and the Trustee shall, at
the direction of the Servicer, execute such documents as shall be necessary to
the prosecution of any such proceedings and the Servicer shall retain the
Mortgage File in trust for the benefit of the Trustee. Such Request for Release
shall obligate the Servicer to return each and every document previously
requested from the Custodial File to the Trustee when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation
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Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Servicer
has delivered to the Trustee a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation that are required to be deposited into the Collection
Account have been so deposited, or that such Mortgage Loan has become an REO
Property, a copy of the Request for Release of Documents shall be released by
the Trustee to the Servicer or its designee.
Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity, or shall exercise and deliver to the Servicer a power of attorney
sufficient to authorize the Servicer to execute such documents on its behalf.
Each such certification shall include a request that such pleadings or documents
be executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.17 TITLE, CONSERVATION AND DISPOSITION OF REO
PROPERTY.
(a) This Section shall apply only to REO Properties acquired
for the account of the Trustee and shall not apply to any REO Property relating
to a Mortgage Loan which was purchased or repurchased from the Trustee pursuant
to any provision hereof. In the event that title to any such REO Property is
acquired, the deed or certificate of sale shall be issued to the Servicer, or to
its nominee, on behalf of the Trustee.
(b) The Servicer shall manage, conserve, protect and operate
each REO Property for the Trustee solely for the purpose of its prompt
disposition and sale. The Servicer, either itself or through an agent selected
by the Servicer, shall manage, conserve, protect and operate the REO Property in
the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same for a period not
greater than one year, except as otherwise provided below) on such terms and
conditions as the Servicer deems to be in the best interest of the Trustee. The
Servicer shall notify the Trustee from time to time as to the status of each REO
Property.
(c) The Servicer shall use its best efforts to dispose of the
REO Property as soon as possible (subject to the Trustee's right to veto any
proposed sale of REO Property) and
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shall sell such REO Property in any event within one year after title has been
taken to such REO Property, unless the Servicer determines, and gives an
appropriate notice to the Trustee to such effect, that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than one year is permitted under the foregoing sentence and is necessary to sell
any REO Property, the Servicer shall report monthly to the Trustee as to the
progress being made in selling such REO Property. Notwithstanding its veto
rights, the Trustee has no obligation with respect to REO dispositions.
(d) [Reserved].
(e) The Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall deposit such funds in the
Collection Account.
(f) The Servicer shall deposit net of reimbursement to the
Servicer for any related outstanding Servicing Advances and unpaid Servicing
Fees provided in Section 3.11 hereof, or cause to be deposited, on a daily basis
in the Collection Account all revenues received with respect to the related REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property.
(g) The Servicer, upon an REO Disposition, shall be entitled
to reimbursement for any related unreimbursed Servicing Advances as well as any
unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.11.
(h) Any net proceeds which are in excess of the applicable
Stated Principal Balance plus all unpaid REO Imputed Interest thereon through
the date of the REO Disposition shall be retained by the Servicer as additional
servicing compensation.
(i) The Servicer shall use its reasonable best efforts to
sell, or cause the Subservicer to sell, any REO Property as soon as possible,
but in no event later than the conclusion of the third calendar year beginning
after the year of its acquisition by the REMIC unless (i) the Servicer applies
for an extension of such period from the Internal Revenue Service pursuant to
the REMIC Provisions and Code Section 856(e)(3), in which event such REO
Property shall be sold within the applicable extension period, or (ii) the
Servicer obtains for the Trustee an Opinion of Counsel, addressed to the
Depositor, the Trustee and the Servicer, to the effect that the holding by the
REMIC of such REO Property subsequent to such period will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code or cause the REMIC to fail to qualify as a REMIC under the REMIC
Provisions or comparable provisions of relevant state laws at any time. The
Servicer shall manage, conserve, protect and operate each REO Property for the
Trustee solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) or result in the receipt by
the REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) of the Code or any "net income from foreclosure property"
which is subject to taxation under Section 860G(a)(1) of the Code. 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
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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 Trustee on behalf of the Certificateholders,
rent the same, or any part thereof, as the Servicer deems to be in the best
interest of the Trustee on behalf of the Certificateholders for the period prior
to the sale of such REO Property; PROVIDED, HOWEVER, that any rent received or
accrued with respect to such REO Property qualifies as "rents from real
property" as defined in Section 856(d) of the Code.
Section 3.18 NOTIFICATION OF ADJUSTMENTS.
With respect to each Adjustable Rate Mortgage Loan, the
Servicer shall adjust the Mortgage Rate on the related Interest Rate Adjustment
Date and shall adjust the Scheduled Payment on the related mortgage payment
adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. The Servicer shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Rate and Scheduled Payment adjustments. The Servicer shall promptly, upon
written request therefor, deliver to the Trustee such notifications and any
additional applicable data regarding such adjustments and the methods used to
calculate and implement such adjustments. Upon the discovery by the Servicer or
the receipt of notice from the Trustee that the Servicer has failed to adjust a
Mortgage Rate or Scheduled Payment in accordance with the terms of the related
Mortgage Note, the Servicer shall deposit in the Collection Account from its own
funds the amount of any interest loss caused as such interest loss occurs.
Section 3.19 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS.
The Servicer shall provide, or cause the Subservicer to
provide, to the Depositor, the Unaffiliated Seller, the Class A Certificate
Insurer, the Trustee, the OTS or the FDIC and the examiners and supervisory
agents thereof access to the documentation regarding the Mortgage Loans in its
possession. Such access shall be afforded without charge, but only upon
reasonable and prior written request and during normal business hours at the
offices of the Servicer or any Subservicer. Nothing in this Section shall
derogate from the obligation of any such party to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of any such party to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
Section 3.20 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE
SERVICER TO BE HELD FOR THE TRUSTEE.
The Servicer shall account fully to the Trustee for any funds
received by the Servicer or which otherwise are collected by the Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan. All
Mortgage Files and funds collected or held by, or under the control of, the
Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Collection 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
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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 any 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 Mortgage 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 3.21 SERVICING COMPENSATION.
(a) As compensation for its activities hereunder, the Servicer
shall, with respect to each Mortgage Loan, be entitled to retain from deposits
to the Collection Account and from Liquidation Proceeds, Insurance Proceeds and
REO Proceeds related to such Mortgage Loan, the Servicing Fee with respect to
each Mortgage Loan (less any portion of such amounts retained by any
Subservicer). In addition, the Servicer shall be entitled to recover unpaid
Servicing Fees out of related late collections to the extent permitted in
Section 3.11. The right to receive the Servicing Fee may not be transferred in
whole or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement; PROVIDED, HOWEVER, that
the Servicer may pay from the Servicing Fee any amounts due to a Subservicer
pursuant to a Subservicing Agreement entered into under Section 3.02.
(b) Additional servicing compensation in the form of
assumption or modification fees, late payment charges, NSF fees, reconveyance
fees and other similar fees and charges (other than Prepayment Charges) shall be
retained by the Servicer only to the extent such fees or charges are received by
the Servicer. The Servicer shall also be entitled pursuant to Section
3.11(a)(iv) to withdraw from the Collection Account and the Distribution
Account, as additional servicing compensation, interest or other income earned
on deposits therein.
(c) The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of premiums for any blanket policy insuring against hazard losses
pursuant to Section 3.13, servicing compensation of the Subservicer to the
extent not retained by it and the fees and expenses of independent accountants
and any agents appointed by the Servicer), and shall not be entitled to
reimbursement therefor except as specifically provided in Section 3.11.
Section 3.22 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver or cause to be delivered to the
Depositor, the Rating Agencies, the Unaffiliated Seller, the Class A Certificate
Insurer, and the Trustee on or before March 1 of each calendar year, commencing
in 2003, an Officers' Certificate stating, as to each signatory thereof, that
(i) a review of the activities of the Servicer during the preceding calendar
year and of performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of 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 officers and the
nature and status thereof.
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Section 3.23 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
STATEMENT; FINANCIAL STATEMENTS.
Not later than March 1st of each calendar year commencing in
2003, the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Depositor, the
Unaffiliated Seller, the Class A Certificate Insurer, the Rating Agencies and
the Trustee a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Servicer which includes an
assertion that the Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
Subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Subservicers.
Section 3.24 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
3.10 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 Mortgage Loans
hereunder, including but not limited to repurchases or substitutions pursuant to
Section 2.03, (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.
Every subservicing agreement entered into by the Servicer
shall contain a provision giving the successor Servicer the option to terminate
such agreement in the event a successor Servicer is appointed.
If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the Servicer under any subservicing agreement in accordance with the terms
thereof; PROVIDED that the Trustee (or any other successor Servicer) shall not
incur any liability or have any obligations in its capacity as successor
Servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession.
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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 (if any) and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
Section 3.25 COMPENSATING INTEREST.
The Servicer shall remit to the Trustee on each Remittance
Date an amount from its own funds equal to the lesser of (a) the Prepayment
Interest Shortfall, if any, for such Remittance Date, and (b) the amount of
one-half of the Servicing Fee payable to the Servicer for such Remittance Date.
Section 3.26 CREDIT REPORTING; XXXXX-XXXXX-XXXXXX ACT.
(a) The Servicer agrees to accurately and fully report its
borrower credit files with respect to the Mortgage Loans to all three credit
repositories in a timely manner.
(b) The Servicer shall comply with Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 and all applicable regulations promulgated
thereunder, relating to the Mortgage Loans and the related borrowers and shall
provide all required notices thereunder.
Section 3.27 ADVANCE FACILITIES.
With the prior written consent of the Class A Certificate
Insurer, the Servicer is hereby authorized to enter into a financing or other
facility (an "ADVANCE FACILITY") under which (l) the Servicer sells, assigns or
pledges to another Person (an "ADVANCING PERSON") the Servicer's rights under
this Agreement to be reimbursed for any Advances and/or (2) an Advancing Person
agrees to fund some or all P&I Advances or Servicing Advances required to be
made by the Servicer pursuant to this Agreement; PROVIDED, HOWEVER, that the
Class A Certificate Insurer hereby consents to XX Xxxxxx Xxxxx Bank, pursuant to
that certain 8/02 Fairbanks Capital Corp. Senior Secured Credit Agreement dated
as of August 1, 2002 by and among Fairbanks, as borrower, JPMorgan Chase Bank,
as administrative agent, collateral agent and a lender and the other lenders
party thereto (the "JPMORGAN CREDIT AGREEMENT"); PROVIDED, FURTHER, that such
consent is conditioned upon receipt by the Class A Certificate Insurer of a
letter from JPMorgan Chase Bank and the Servicer to the Class A Certificate
Insurer within eight Business Days of the Closing Date, in form and substance
satisfactory to the Class A Certificate Insurer, and thereafter the Class A
Certificate Insurer shall have seven Business Days following receipt of such
letter to confirm or withdraw such consent (collectively, the "CONSENT
PROCEDURES"). Except as provided in the preceding sentence, no consent of any
party is required before the Servicer may enter into an Advance Facility.
Notwithstanding the existence of any Advance Facility under which an Advancing
Person agrees to fund P&I Advances and/or Servicing Advances on the Servicer's
behalf, the Servicer shall remain obligated pursuant to this Agreement to make
P&I Advances and Servicing Advances pursuant to and as required by this
Agreement, and shall not be relieved of such obligations by virtue of such
Advance Facility.
Reimbursement amounts ("ADVANCE REIMBURSEMENT AMOUNTS") shall
consist solely of amounts in respect of P&I Advances and/or Servicing Advances
made with respect to
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the Mortgage Loans for which the Servicer would be permitted to reimburse itself
in accordance with this Agreement, assuming the Servicer had made the related
P&I Advance(s) and/or Servicing Advance(s).
The Servicer shall maintain and provide to any successor
Servicer a detailed accounting on a loan-by-loan basis as to amounts advanced
by, pledged or assigned to, and reimbursed to any Advancing Person. The
successor Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.
An Advancing Person who purchases or receives an assignment or
pledge of the rights to be reimbursed for P&I Advances and/or Servicing
Advances, and/or whose obligations hereunder are limited to the funding of P&I
Advances and/or Servicing Advances shall not be required to meet the criteria
for qualification of a subservicer set forth in this Agreement.
The documentation establishing any Advance Facility shall
require that Advance Reimbursement Amounts distributed with respect to each
Mortgage Loan be allocated to outstanding xxxxxxxxxxxx X&X Advances or Servicing
Advances (as the case may be) made with respect to that Mortgage Loan on a
"first-in, first out" (FIFO) basis. Such documentation shall also require the
Servicer to provide to the related Advancing Person or its designee loan-by-loan
information with respect to each Advance Reimbursement Amount distributed to
such Advancing Person or to a trustee or custodian (an "ADVANCE FACILITY
TRUSTEE") on each Distribution Date, to enable the Advancing Person or Advance
Facility Trustee to make the FIFO allocation of each Advance Reimbursement
Amount with respect to each Mortgage Loan. The Servicer shall remain entitled to
be reimbursed pursuant to the Advance Facility by the Advancing Person or
Advance Facility Trustee for all P&I Advances and Servicing Advances funded by
the Servicer to the extent the related rights to be reimbursed therefor have not
been sold, assigned or pledged to an Advancing Person.
Any amendment to this Section 3.27 or to any other provision
of this Agreement that may be necessary or appropriate to effect the terms of an
Advance Facility as described generally in this Section 3.27, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the Trustee, the Depositor, the Unaffiliated Seller and the Servicer
without the consent of any Certificateholder, but with the consent of the Class
A Certificate Insurer, notwithstanding anything to the contrary in this
Agreement. Prior to entering into an Advance Facility, the Servicer shall notify
the lender under such facility in writing that: (a) the Advances financed by
and/or pledged to the lender are obligations owed to the Servicer on a
non-recourse basis payable only from the cash flows and proceeds received under
this Agreement for reimbursement of such Advances only to the extent provided
herein, and the Trustee is not otherwise obligated or liable to repay any
Advances financed by the lender; (b) the Servicer will be responsible for
remitting to the lender the applicable amounts collected by it as reimbursement
for Advances funded by the lender, subject to the restrictions and priorities
created in this Agreement; (c) the Trustee shall not have any responsibility to
track or monitor the administration of the financing arrangement between the
Servicer and the lender; (d) if the Servicer is replaced by a successor
servicer, the lender shall continue to be entitled to receive reimbursements as
provided in clause (a) above but shall have no further right to make advances
with respect to the transaction subject to this Agreement; and (e) (i) the
pledge, if any, of
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Servicer's rights to the lender under the facility conveys no rights (such as a
right to fees after the removal of the Servicer or the right to become a
substitute servicer) under this Agreement, or against the Trust Fund, any
investor in or guarantor of securities issued hereunder, or any person other
than the Servicer, (ii) the Servicer is only pledging assets and rights that it
owns and any purported pledge of any assets or rights that are not property of
the Servicer shall be of force and effect and will not be deemed to create any
additional rights or assets of either the lender or the Servicer and (iii) the
lender shall take such steps as are reasonably necessary to confirm to a
successor servicer that it has no rights in any collateral due or payable on or
after the date of servicing transfer other than the Servicer's rights to
reimbursement of Advances (to be repaid pursuant to the terms of this Agreement)
for Advances made prior to such servicing transfer.
Section 3.28. SERVICER PERFORMANCE EVALUATIONS.
Within 60 days after the reporting by the Trustee in its
monthly statement pursuant to Section 4.03 of a Cumulative Loss Percentage or
the percentage of Mortgage Loans 60 days Delinquent or more which, in either
case, would cause a Servicer Trigger to be in effect, the Depositor shall select
and notify the Trustee of such selection for engagement by the Trust Fund, at
the expense of the Servicer, a nationally recognized independent auditor,
approved in writing by the Class A Certificate Insurer and the Rating Agencies
unless such Rating Agencies specifically waive such approval rights (PROVIDED,
HOWEVER, that if the Trustee does not receive the written approval of any Rating
Agency within 20 days of the selection of an independent auditor, such Rating
Agency will be deemed to have approved of such auditor), to evaluate the
performance of the Servicer. Such engagement shall require the auditor to select
a statistical sample of Delinquent Mortgage Loans (comprising a percentage
(determined by the independent auditor in its sole discretion, which percentage
shall not exceed 50%) of all Delinquent Mortgage Loans by unpaid principal
balance as of the date the Servicer Trigger occurred) and to examine the
Servicer's servicing practices with respect to such Mortgage Loans (including,
without limitation, examining payment histories, documentation relating to the
Servicer's contacts with the related Mortgagors and documents contained in the
related Servicing File) for the period of 24 months prior to such examination
or, with respect to an examination taking place within 24 months of the Closing
Date, the period beginning on the Closing Date and ending on the date of such
examination. Such engagement shall also require the auditor to compare such
servicing practices of the Servicer with respect to the selected Mortgage Loans
to the Performance Standards set forth on Exhibit O hereto and to evaluate the
Servicer's compliance with the Performance Standards. The evaluation process
described above in this Section 3.28 is referred to herein as a "SERVICER
PERFORMANCE EVALUATION" and is subject in all respects to the approval of the
Class A Certificate Insurer and the Rating Agencies. In the engagement, the
auditor shall be required to deliver the results of its Servicer Performance
Evaluation to the Trustee, the Depositor, the Class A Certificate Insurer and
the Rating Agencies and the Trustee shall report such Servicer Performance
Evaluation results to Certificateholders by forwarding a copy of such results
upon written request therefor.
After receipt by the Class A Certificate Insurer and the
Certificateholders of the results of the Servicer Performance Evaluation (or in
any case, notwithstanding the lack of receipt of such results, within 60 days of
the occurrence of the Servicer Trigger), if either the Holders of the
Certificates entitled to 51% or more of the Voting Rights or (regardless of the
results of such Servicer Performance Evaluation) the Class A Certificate Insurer
requests in
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writing to the Trustee to terminate Fairbanks as Servicer under this Agreement,
Fairbanks shall be removed as Servicer pursuant to Section 7.01. If such a
written request is made to the Trustee, Fairbanks will be deemed to have
"failed" the Servicer Performance Evaluation and an Event of Default under
Section 7.01(i) shall be deemed to have occurred.
At their option, the Class A Certificate Insurer and each
Rating Agency shall have the right to review all of the information provided to
the independent auditor in connection with a Servicer Performance Evaluation so
as to allow the Class A Certificate Insurer or such Rating Agency to evaluate
the Servicer's compliance with the Performance Standards.
The Servicer shall cooperate with all reasonable requests of
the Trustee, the independent auditor, the Class A Certificate Insurer and the
Rating Agencies in connection with a Servicer Performance Evaluation, including,
without limitation, making available to the auditor payment histories,
documentation relating to the Servicer's contacts with the related Mortgagors
and documents contained in the Servicing File. The Servicer shall pay all costs
and expenses of the independent auditor, the Class A Certificate Insurer, the
Trustee or any Rating Agency (including the costs of the Class A Certificate
Insurer or any Rating Agency review pursuant to the foregoing paragraph)
associated with a Servicer Performance Evaluation.
Notwithstanding anything to the contrary set forth herein,
this Section 3.28 shall only be applicable for so long as Fairbanks is acting as
Servicer hereunder.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
Section 4.01 ADVANCES.
(a) The amount of P&I Advances to be made by the Servicer for
any Remittance Date shall equal, subject to Section 4.01(c), the sum of (i) with
respect to the Mortgage Loans, the aggregate amount of Scheduled Payments (with
each interest portion thereof net of the related Servicing Fee), due during the
Due Period immediately preceding such Remittance Date in respect of such
Mortgage Loans, which Scheduled Payments were not received as of the close of
business on the last Business Day of the immediately preceding Due Period, plus
(ii) with respect to each REO Property, which REO Property was acquired during
or prior to the related Prepayment Period and as to which such REO Property an
REO Disposition did not occur during the related Prepayment Period, an amount
equal to the excess, if any, of the Scheduled Payments (with each interest
portion thereof net of the related Servicing Fee) that would have been due on
the related Due Date in respect of the related Mortgage Loans, over the net
income from such REO Property transferred to the Collection Account for
distribution on such Remittance Date.
(b) On the Remittance Date, the Servicer shall remit in
immediately available funds to the Trustee an amount equal to the aggregate
amount of P&I Advances, if any, to be made in respect of the Mortgage Loans and
REO Properties for the related Remittance Date either (i) from its own funds,
(ii) from the Collection Account, to the extent of funds held therein
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for future distribution (in which case, it will cause to be made an appropriate
entry in the records of Collection Account that Amounts Held For Future
Distribution have been, as permitted by this Section 4.01, used by the Servicer
in discharge of any such P&I Advance) or (iii) in the form of any combination of
(i) and (ii) aggregating the total amount of P&I Advances to be made by the
Servicer with respect to the Mortgage Loans and REO Properties. Any Amounts Held
For Future Distribution and so used shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before any future Remittance Date to the extent required.
(c) The obligation of the Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from coverage under this Agreement, except as otherwise provided
in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Advance. The determination by the
Servicer that it has made a Nonrecoverable P&I Advance or a Nonrecoverable
Advance or that any proposed P&I Advance or Servicing Advance, if made, would
constitute a Nonrecoverable P&I Advance or a Nonrecoverable Advance,
respectively, shall be evidenced by an Officers' Certificate of the Servicer
delivered to the Trustee.
(e) Except as otherwise provided herein, the Servicer shall be
entitled to reimbursement pursuant to Section 3.11 hereof for Servicing Advances
from recoveries from the related Mortgagor or from all Liquidation Proceeds and
other payments or recoveries (including Insurance Proceeds and Condemnation
Proceeds) with respect to the related Mortgage Loan.
Section 4.02 PRIORITIES OF DISTRIBUTION.
(a) On each Distribution Date, the Trustee will make the
disbursements and transfers from amounts then on deposit in the Distribution
Account in the following order of priority:
(i) (x) from the Interest Amount Available, to the Class A
Certificate Insurer, the Premium Amount and to the Trustee the Trustee
Fee, in each case for such Distribution Date; to the holders of each
Class of Certificates, in the following order of priority:
(y) from the remaining Interest Amount Available, plus
in the case of clause (a) below, the related portion of any Insured
Payment,
(a) to the Class A Certificates, the Accrued
Certificate Interest Distribution Amount for such Class and
any Unpaid Interest Amounts for such Class for such
Distribution Date, as described in Section 4.02(a);
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(b) to the Class A Certificate Insurer, the amount of
any Reimbursement Amount then owing to it on account of a
prior drawing relating to interest on the Class A
Certificates;
(c) to the Class M-1 Certificates, the Accrued
Certificate Interest Distribution Amount for such Class on
such Distribution Date;
(d) to the Class M-2 Certificates, the Accrued
Certificate Interest Distribution Amount for such Class on
such Distribution Date;
(e) to the Class B-1 Certificates, the Accrued
Certificate Interest Distribution Amount for such Class on
such Distribution Date;
(f) to the Class B-2 Certificates, the Accrued
Certificate Interest Distribution Amount for such Class on
such Distribution Date;
(ii) (A) on each Distribution Date (1) before the Stepdown
Date or (2) with respect to which a Trigger Event is in effect, to the
holders of the related Class or Classes of Offered Certificates then
entitled to distributions of principal as set forth below, from the
amounts remaining on deposit in the Distribution Account after making
distributions pursuant to clause (i) above, an amount equal to the
Principal Distribution Amount in the following order of priority:
(a) to the Class A Certificates, until the Class
Certificate Balance thereof is reduced to zero;
(b) to the Class A Certificate Insurer, the amount of
any Reimbursement Amount then owing to it on account of a
prior drawing relating to principal on the Class A
Certificates; and
(c) sequentially to the Class M-1, Class M-2, Class B-1
and Class B-2 Certificates, in that order, until the
respective Class Certificate Balances are reduced to zero;
(B) on each Distribution Date (1) on and after the Stepdown
Date and (2) as long as a Trigger Event is not in effect, to the
holders of the related Class or Classes of Offered Certificates then
entitled to distribution of principal, from amounts remaining on
deposit in the Distribution Account after making distributions pursuant
to clause (i) above, an amount equal to, in the aggregate, the
Principal Distribution Amount in the following amounts and order of
priority:
(a) the lesser of (x) the Principal Distribution Amount
and (y) the Class A Principal Distribution Amount to the Class
A Certificates, until the Class Certificate Balance thereof is
reduced to zero;
(b) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(B)(a) above and (y)
the amount of any Reimbursement Amount then owing to
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the Class A Certificate Insurer on account of a prior drawing
relating to principal on the Class A Certificates;
(c) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(B)(a) above and to
the Class A Certificate Insurer in clause (ii)(B)(b) above and
(y) the Class M-1 Principal Distribution Amount to the Class
M-1 Certificateholders, until the Class Certificate Balance
thereof has been reduced to zero;
(d) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(B)(a) above and to
the Class A Certificate Insurer in clause (ii)(B)(b) above and
to the Class M-1 Certificates in clause (ii)(B)(c) above and
(y) the Class M-2 Principal Distribution Amount to the Class
M-2 Certificateholders, until the Class Certificate Balance
thereof has been reduced to zero;
(e) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(B)(a) above, to the
Class A Certificate Insurer in clause (ii)(B)(b) above, to the
Class M-1 Certificates in clause (ii)(B)(c) above and to the
Class M-2 Certificates in clause (ii)(B)(d) above and (y) the
Class B-1 Principal Distribution Amount to the Class B-1
Certificateholders, until the Class Certificate Balance
thereof has been reduced to zero;
(f) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(B)(a) above, to the
Class A Certificate Insurer in clause (ii)(B)(b) above, to the
Class M-1 Certificates in clause (ii)(B)(c) above, to the
Class M-2 Certificates in clause (ii)(B)(d) above and to the
Class B-1 Certificates in clause (ii)(B)(e) above and (y) the
Class B-2 Principal Distribution Amount to the Class B-2
Certificateholders, until the Class Certificate Balance
thereof has been reduced to zero;
(iii) any amount remaining in the Distribution Account after
the distributions in clauses (i) and (ii) above, plus as specifically
indicated below, from amounts on deposit in the Excess Reserve Fund
Account, shall be distributed in the following order of priority:
(a) to the Class A Certificate Insurer, to the extent
of any remaining Reimbursement Amount then owing to it;
(b) to the holders of the Class M-1 Certificates, any
Unpaid Interest Amounts for such Class;
(c) to the holders of the Class M-1 Certificates, any
Unpaid Realized Loss Amount for such Class;
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(d) to the holders of the Class M-2 Certificates, any
Unpaid Interest Amounts for such Class;
(e) to the holders of the Class M-2 Certificates, any
Unpaid Realized Loss Amount for such Class;
(f) to the holders of the Class B-1 Certificates, any
Unpaid Interest Amounts for such Class;
(g) to the holders of the Class B-1 Certificates, any
Unpaid Realized Loss Amount for such Class;
(h) to the holders of the Class B-2 Certificates, any
Unpaid Interest Amounts for such Class;
(i) to the holders of the Class B-2 Certificates, any
Unpaid Realized Loss Amount for such Class;
(j) to the Excess Reserve Fund Account, the amount of
any Basis Risk Payment for such Distribution Date;
(k) from amounts on deposit in the Excess Reserve Fund
Account, not including any Interest Rate Cap Payment included
in that account, an amount equal to any Basis Risk
CarryForward Amount with respect to any Floating Rate
Certificate for such Distribution Date to the Floating Rate
Certificates in the same order and priority in which Accrued
Certificate Interest Distribution Amount is allocated among
those Classes of Certificates;
(l) from any Interest Rate Cap Payment on deposit in
the Excess Reserve Fund Account with respect to that
distribution date, an amount equal to any unpaid remaining
Basis Risk CarryForward Amount with respect to the Class A
Certificates for that Distribution Date (after giving effect
to distributions pursuant to clause (k) above) to the Class A
Certificates; and
(m) to the holders of the Class P Certificates, the
outstanding principal balance thereof, if any, and to the
holders of the Class X Certificates, the remainder of the
Class X Distributable Amount not distributed pursuant to
Sections 4.02(a)(iii)(a)-(k) (to the extent stated in clause
(i) of the definition of Class X Distributable Amount, as
interest, and to the extent stated in clause (ii) of the
definition of Class X Distributable Amount, as principal); and
(iv) to the holders of the Class R Certificates, any remaining
amount.
(b) On each Distribution Date, all amounts representing
Prepayment Charges from the Mortgage Loans received during the related
Prepayment Period will be distributed to the holders of the Class P
Certificates.
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(c) On the December 2002, January 2003 and February 2003
Distribution Dates, the Trustee shall transfer from the Capitalized Interest
Account to the Distribution Account the Capitalized Interest Requirement, if
any, for such Distribution Date.
(d) On the Distribution Date following either the final
Subsequent Transfer Date or February 24, 2003 whichever date is earlier, any
amounts remaining in the Capitalized Interest Account and all Pre-Funding
Earnings in the Pre-Funding Account, after taking into account the transfers in
respect of the Distribution Date described in clause (c) above, shall be paid by
the Trustee to the Unaffiliated Seller.
(e) On each Subsequent Transfer Date, the Unaffiliated Seller
shall instruct in writing the Trustee to withdraw from the Pre-Funding Account
an amount equal to 100% of the aggregate Stated Principal Balances as of the
related Subsequent Cut-off Date of the Subsequent Mortgage Loans sold to the
Trust Fund on such Subsequent Transfer Date and pay such amount to or upon the
order of the Unaffiliated Seller upon satisfaction of the conditions set forth
in Section 2.01(c) hereof with respect to such transfer. The Trustee may
conclusively rely on such written instructions from the Unaffiliated Seller.
(f) If the Pre-Funding Amount (exclusive of Pre-Funding
Earnings) has been reduced to $100,000 or less by the close of business on
January 1, 2003 then, on the January 25, 2003 Distribution Date, after giving
effect to any reductions in the Pre-Funding Amount on such date, the Trustee
shall withdraw from the Pre-Funding Account on such date and deposit in the
Distribution Account the amount on deposit in the Pre-Funding Account other than
any Pre-Funding Earnings; if the Pre-Funding Amount has not been reduced to zero
by the close of business on February 24, 2003, the Trustee shall withdraw from
the Pre-Funding Account the amount on deposit therein, other than the
Pre-Funding Earnings, and deposit such amount on the February 25, 2003
Distribution Date into the Distribution Account. Each amount so deposited to the
Distribution Account pursuant to the preceding sentence shall be distributed to
the Holders of the Offered Certificates, PRO RATA, based on their relative Class
Certificate Balances immediately prior to the related Distribution Date, as a
separate payment of principal, on the related Distribution Date.
(g) On any Distribution Date, any Relief Act Shortfalls and
Net Prepayment Interest Shortfalls for such Distribution Date will be allocated
as a reduction in the following order:
(1) First, to the amount of interest payable to the Class X
Certificates; and
(2) Second, PRO RATA, as a reduction of the Accrued
Certificate Interest Distribution Amount for the Class A, Class M-1,
Class M-2, Class B-1 and Class B-2 Certificates, based on the amount of
interest to which such classes would otherwise be entitled.
Section 4.03 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
(a) Not later than each Distribution Date, the Trustee shall
make available to each Certificateholder, the Servicer, the Depositor, the
Unaffiliated Seller, the Class A
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Certificate Insurer and each Rating Agency a statement setting forth with
respect to the related distribution:
(i) the amount thereof allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and
Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any Unpaid
Interest Amounts included in such distribution and any remaining Unpaid
Interest Amounts after giving effect to such distribution, any Basis
Risk CarryForward Amount for such Distribution Date and the amount of
all Basis Risk CarryForward Amount covered by withdrawals from the
Excess Reserve Fund Account on such Distribution Date;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable
to such Holders if there were sufficient funds available therefor, the
amount of the shortfall and the allocation thereof as between principal
and interest, including any Basis Risk CarryForward Amount not covered
by amounts in the Excess Reserve Fund Account;
(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 Stated Principal Balance for the following
Distribution Date;
(vi) the amount of the Servicing Fees paid to or retained by
the Servicer or Subservicer (with respect to the Subservicers, in the
aggregate) with respect to such Distribution Date;
(vii) the Pass-Through Rate for each such Class of
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 reported by
the servicer as outstanding as of the close of business on such
Distribution Date;
(ix) the number and aggregate Scheduled Principal Balances of
Mortgage Loans (1) as to which the Scheduled Payment is delinquent 31
to 60 days, 61 to 90 days and 91 or more days, (2) that have become REO
Property, (3) that are in foreclosure and (4) that are in bankruptcy,
in each case as of the close of business on the last Business Day of
the immediately preceding month;
(x) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and
Stated Principal Balance of such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date and
the date of acquisition thereof;
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(xi) the total number and principal balance of any REO
Properties (and market value, if available) as of the close of business
on the Determination Date preceding such Distribution Date;
(xii) whether a Trigger Event has occurred and is continuing
(including the calculation of thereof and the aggregate outstanding
balance of all 60+ Day Delinquent Loans);
(xiii) the amount on deposit in the Excess Reserve Fund
Account (after giving effect to distributions on such Distribution
Date);
(xiv) the aggregate amount of Applied Realized Loss Amounts
incurred during the preceding calendar month and aggregate Applied
Realized Loss Amounts through such Distribution Date;
(xv) the amount of any Net Monthly Excess Cash Flow on such
Distribution Date and the allocation thereof to the Certificateholders
with respect to Applied Realized Losses and Unpaid Interest Amounts;
(xvi) the Subordinated Amount and Required Subordinated
Amount;
(xvii) the Interest Remittance Amount, the Principal
Remittance Amount and the Prepayment Charges remitted by Servicer with
respect to that Distribution Date;
(xviii) the Pre-Funded Amount as of the end of the prior Due
Period;
(xix) the amount of any principal prepayment on the
Certificates resulting from the application of unused Pre-Funding
Account moneys;
(xx) the Class A Deficiency Amount and the Insured Payment for
such Distribution Date;
(xxi) the Reimbursement Amount immediately prior to such
Distribution Date, and the amount of any payments to the Class A
Certificate Insurer on account thereof on such Distribution Date; and
(xxii) the Interest Rate Cap Payment, if any, for such
Distribution Date.
(b) The Trustee's responsibility for providing the above
statement is limited to the availability, timeliness and accuracy of the
information derived from the Servicer or, in the case of the Reimbursement
Amount, from the Class A Certificate Insurer. The Trustee will provide the above
statement via the Trustee's internet website, except that the Trustee shall
deliver a hard copy of such statement to the Class A Certificate Insurer on each
Distribution Date. The Trustee's website will initially be located at
XXXX://XXX.XXXXXXXXXXXXXX.XX.XXX and assistance in using the website can be
obtained by calling the Trustee's investor relations desk at 0-000-000-0000. A
paper copy of the statement will also be made available upon request.
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(c) Within a reasonable period of time after the end of each
calendar year, 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) and (a)(vii) 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.
(d) Not later than the Determination Date, the Servicer shall
furnish to the Trustee a monthly remittance advice statement containing such
information as shall be reasonably requested by the Trustee to provide the
reports required by Section 4.03(a) as to the accompanying remittance and the
period ending on the close of business on the last Business Day of the
immediately preceding month.
The Servicer shall furnish to the Trustee an individual loan
accounting report, as of the last Business Day of each month, to document
Mortgage Loan payment activity on an individual Mortgage Loan basis. With
respect to each month, the corresponding individual loan accounting report (in
electronic format) shall be received by the Trustee no later than the related
Determination Date, which report shall contain the following:
(i) with respect to each Scheduled Payment, the amount of such
remittance allocable to principal (including a separate breakdown of
any Principal Prepayment, including the date of such prepayment, and
any prepayment penalties or premiums, along with a detailed report of
interest on principal prepayment amounts remitted in accordance with
Section 3.25);
(ii) with respect to each Scheduled Payment, the amount of
such remittance allocable to interest and assumption fees;
(iii) the amount of servicing compensation received by the
Servicer during the prior distribution period;
(iv) the individual and aggregate Stated Principal Balance of
the Mortgage Loans;
(v) the individual and aggregate Scheduled Principal Balances
of the Mortgage Loans;
(vi) the aggregate of any expenses reimbursed to the Servicer
during the prior distribution period pursuant to Section 3.05; and
(vii) the number and aggregate Scheduled Principal Balances of
Mortgage Loans (a) as to which the Scheduled Payment is delinquent (1)
31 to 60 days, (2) 61 to 90 days and (3) 91 days or more; (b) as to
which foreclosure has commenced; (c) as to which REO Property has been
acquired and (d) that are in bankruptcy.
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Section 4.04 CERTAIN MATTERS RELATING TO THE DETERMINATION OF
LIBOR.
Until all of the LIBOR Certificates are paid in full, the
Trustee will at all times retain at least four Reference Banks for the purpose
of determining LIBOR with respect to each Interest Determination Date. The
Servicer initially shall designate the Reference Banks. Each "REFERENCE BANK"
shall be a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, shall not control, be controlled by, or be
under common control with, the Trustee and shall have an established place of
business in London. If any such Reference Bank should be unwilling or unable to
act as such or if the Servicer should terminate its appointment as Reference
Bank, the Servicer shall promptly appoint or cause to be appointed another
Reference Bank. The Trustee shall have no liability or responsibility to any
Person for (i) the selection of any Reference Bank for purposes of determining
LIBOR or (ii) any inability to retain at least four Reference Banks which is
caused by circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for
each Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement. The Trustee shall not have any liability or
responsibility to any Person for its inability, following a good-faith
reasonable effort, to obtain quotations from the Reference Banks or to determine
the arithmetic mean referred to in the definition of LIBOR, all as provided for
in this Section 4.04 and the definition of LIBOR. The establishment of LIBOR and
each Pass-Through Rate for the LIBOR Certificates by the Trustee shall (in the
absence of manifest error) be final, conclusive and binding upon each Holder of
a Certificate and the Trustee.
Section 4.05 THE CLASS A INSURANCE POLICY.
(a) Within two (2) days following each Remittance Date, the
Trustee shall determine with respect to the immediately following Distribution
Date, the amount to be on deposit in the Distribution Account on such
Distribution Date as a result of the (i) Servicer's remittance of the Interest
Remittance Amount and the Principal Remittance Amount on the related Remittance
Date, and (ii) any transfers to the Distribution Account made from the
Capitalized Interest Account and/or the Pre-Funding Account relating to such
Distribution Date pursuant to Section 4.02 hereof, excluding the amount of any
Insured Payment.
(b) If on any Distribution Date there is a Class A Deficiency,
the Trustee shall complete a Notice in the form of Exhibit A to the Class A
Insurance Policy and submit such notice to the Class A Certificate Insurer no
later than 12:00 noon New York City time on the second Business Day preceding
such Distribution Date as a claim for an Insured Payment in an amount equal to
such Class A Deficiency.
(c) The Trustee shall establish a separate Eligible Account
for the benefit of Holders of the Class A Certificates and the Class A
Certificate Insurer referred to herein as the "Class A Insurance Payment
Account" over which the Trustee shall have exclusive control and sole right of
withdrawal. The Trustee shall deposit upon receipt any amount paid under the
Class
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A Insurance Policy in the Insurance Payment Account and distribute such amount
only for purposes of payment to the Class A Certificateholders of the Class A
Insured Amount and such amount may not be applied to satisfy any costs, expenses
or liabilities of the Servicer, the Trustee or the Trust Fund. Amounts paid
under the Class A Insurance Policy, to the extent needed to pay the Class A
Insured Amount shall be transferred to the Distribution Account on the related
Distribution Date and disbursed by the Class A Trustee to the Class A
Certificateholders in accordance with Section 4.02. It shall not be necessary
for such payments to be made by checks or wire transfers separate from the
checks or wire transfers used to pay other distributions to the Class A
Certificateholders with other funds available to make such payment. However, the
amount of any payment of principal or of interest on the Class A Certificates to
be paid from funds transferred from the Class A Insurance Payment Account shall
be noted as provided in paragraph (d) below in the Certificate Register and in
the statement to be furnished to Holders of the Class A Certificates pursuant to
Section 4.03(a). Funds held in the Class A Insurance Payment Account shall not
be invested. Any funds remaining in the Class A Insurance Payment Account on the
first Business Day following a Distribution Date shall be returned to the Class
A Certificate Insurer pursuant to the written instructions of the Class A
Certificate Insurer by the end of such Business Day.
(d) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Class A Certificate
from moneys received under the Class A Insurance Policy. The Class A Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
(e) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Insured Payment has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Class A Certificate Insurer, shall comply
with the provisions of the Class A Insurance Policy to obtain payment by the
Class A Certificate Insurer of such voided Insured Payment, and shall, at the
time it provides notice to the Class A Certificate Insurer, notify, by mail to
the Class A Certificateholders of the affected Certificates that, in the event
any Class A Certificateholder's Insured Payment is so recovered, such Class A
Certificateholder will be entitled to payment pursuant to the Class A Insurance
Policy, a copy of which shall be made available through the Trustee, the Class A
Certificate Insurer or the Class A Certificate Insurer's fiscal agent, if any,
and the Trustee shall furnish to the Class A Certificate Insurer or its fiscal
agent, if any, its records evidencing the payments which have been made by the
Trustee and subsequently recovered from the Class A Certificateholders, and
dates on which such payments were made.
(f) The Trustee shall promptly notify the Class A Certificate
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "PREFERENCE CLAIM") of any distribution made with respect to
the Class A Certificates. Each Class A Certificateholder, by its purchase of
Class A Certificates, the Servicer and the Trustee agree that, the Class A
Certificate Insurer (so long as no Class A Certificate Insurer Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such
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Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedes or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Class A Certificate Insurer shall be
subrogated to, and each Class A Certificateholder, the Trustee hereby delegates
and assigns to the Class A Certificate Insurer, to the fullest extent permitted
by law, the rights the Trustee and each Class A Certificateholder in the conduct
of any such Preference Claim, including, without limitation, all rights of any
party to any adversary proceeding or action with respect to any court order
issued in connection with any such Preference Claim.
(g) The Trustee shall, upon retirement of the Class A
Certificates, furnish to the Class A Certificate Insurer a notice of such
retirement, and, upon retirement of the Class A Certificates and the expiration
of the term of the Class A Insurance Policy, surrender the Class A Insurance
Policy to the Class A Certificate Insurer for cancellation.
Section 4.06 EFFECT OF PAYMENTS BY THE CLASS A CERTIFICATE
INSURER; SUBROGATION.
Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on the Class A Certificates which is
made with moneys received pursuant to the terms of the Class A Insurance Policy
shall not be considered payment of the Class A Certificates from the Trust Fund.
The Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Class A Certificate agrees, that without the need for any
further action on the part of the Class A Certificate Insurer, the Depositor,
the Servicer, the Trustee or the Certificate Registrar (a) to the extent the
Class A Certificate Insurer makes payments, directly or indirectly, on account
of principal of or interest on the Class A Certificates to the Holders of such
Class A Certificates, the Class A Certificate Insurer will be fully subrogated
to, and each Class A Certificateholder, the Servicer and the Trustee hereby
delegate and assign to the Class A Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Class A Certificateholders in respect of securities law violations arising
from the offer and sale of the Class A Certificates, and (b) the Class A
Certificate Insurer shall be paid such amounts from the sources and in the
manner provided herein for the payment of such amounts and as provided in the
Insurance and Indemnity Agreement. The Trustee and the Servicer shall cooperate
in all respects with any reasonable request by the Class A Certificate Insurer
for action to preserve or enforce the Class A Certificate Insurer's rights or
interests under this Agreement without limiting the rights or affecting the
interests of the Holders as otherwise set forth herein.
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 registered form, 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.
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The Depositor hereby directs the Trustee to register the Class
X and the Class P Certificates initially to "CDC Mortgage Capital Inc." and then
on the Closing Date as follows: "Deutsche Bank National Trust Company, as
Indenture Trustee on behalf of the Noteholders of the CDC Mortgage Capital Inc.
NIM Trust 2002-HE3N", and to deliver such Class X and Class P Certificates on
the NIM Closing Date to Deutsche Bank National Trust Company, as trustee of the
NIM Trust.
Subject to Section 9.02 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 (x) by
wire transfer in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if such Holder has
so notified the Trustee at least five Business Days prior to the related Record
Date or (y) 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
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 any
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, 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 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
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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 form satisfactory to the Trustee 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 cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private 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. Except
with respect to the transfer of the Class X and Class P Certificates to the NIMs
Trust on the Closing Date, 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, the Certificateholder
desiring to effect such transfer shall certify to the Trustee in writing the
facts surrounding the transfer in substantially the form set forth in Exhibit I
(the "TRANSFEROR CERTIFICATE") and either (i) there shall be delivered to the
Trustee a letter in substantially the form of Exhibit J (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 without registration under
the Securities Act. The Depositor shall provide to any Holder of a Private
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage 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 Mortgage 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 Private Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
the Depositor 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.
Except with respect to the transfer of the Class X and Class P
Certificates to the NIMs Trust on the Closing Date, no transfer of an
ERISA-Restricted Certificate shall be made unless the Trustee shall have
received either (i) a representation letter from the transferee in substantially
the form of Exhibit J), to the effect that such transferee is not an employee
benefit plan or arrangement subject to Section 406 of ERISA, a plan subject to
Section 4975 of the Code or a plan subject to any Federal, state or local law
("SIMILAR LAW") materially similar to the foregoing provisions of ERISA or 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 (ii) if
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the ERISA-Restricted Certificate is a Class X Certificate that has been the
subject of an ERISA-Qualifying Underwriting, and the purchaser is an insurance
company, a representation that the purchaser is an insurance company that 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.
For purposes of the preceding sentence, with respect to an ERISA-Restricted
Certificate that is not a Private Certificate, in the event the representation
letter referred to in the preceding sentence is not furnished, such
representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. In the event that such representation is
violated, such attempted transfer or acquisition shall be void and of no effect.
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 Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual 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 Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual 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
H.
(iii) Each Person holding or acquiring any Ownership Interest
in a Residual 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 Residual 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 Residual Certificate, (C) not to Transfer its Ownership Interest in a
Residual Certificate or to cause the Transfer of an Ownership Interest
in a Residual Certificate to any other Person if it has actual
knowledge that such Person (i) is not a Permitted Transferee or that
such Transfer Affidavit is false, (ii) if such transfer is for the
purpose of impeding the assessment or collection of tax, (iii) if it
has actual knowledge or reason to know that the proposed transferee
would be unwilling or unable to pay taxes attributed to the Residual
Certificate
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or (iv) if it has actual knowledge or reason to know that the proposed
transferee will not honor the restrictions on subsequent transfers of
the Residual Certificate set forth in this section 5.02(c) and in the
Transfer Affidavit, (D) to conduct a reasonable investigation of the
financial condition of the proposed transferee and transfer its
Ownership Interest in the Residual Certificate only if, as a result of
such investigation, it concludes that the proposed transferee has
historically paid its debts as they came due and will continue to pay
its debts as they come due in the future, and (E) not to cause income
from its Ownership Interest in a Residual Certificate to be
attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Person or
another U.S. taxpayer.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual 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 Residual 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 Residual
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Residual Certificate that is in fact
not permitted by Section 5.02(b) and this Section 5.02(c) 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 the Rule
144A Letter. The Trustee shall be entitled but not obligated to recover
from any Holder of a Residual 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 Residual 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
Residual Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual 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 Unaffiliated Seller or the Servicer, to the effect that the elimination of
such restrictions will not cause the transfer to be disregarded under Treasury
Regulation 1.860E-1(c), cause the Trust Fund hereunder to fail to qualify as a
REMIC 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 Residual
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 Residual
Certificate is not transferred, directly or indirectly, to a Person that is not
a
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Permitted Transferee and (b) to provide for a means to compel the Transfer of a
Residual 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 Certificate 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 participating firms as
representatives of the Certificate 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 Certificate 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 Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or 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 or the
Depositor is unable to locate a qualified successor, (y) the Depositor at its
option 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, Certificate Owners representing at least 51% of the Certificate Balance
of the Book-Entry Certificates together advise the Trustee and the Depository
through the Depository Participants in writing that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability of
definitive, fully-registered Certificates (the "DEFINITIVE Certificates") to
Certificate 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 Servicer, 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
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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.
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
Depositor, the Servicer, the Class A Certificate Insurer and the Trustee such
security or indemnity as may be required by them to hold 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, the Depositor, the Class A
Certificate Insurer and any agent of the Servicer, the Depositor, the Class A
Certificate Insurer 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, the Depositor, the Class A
Certificate Insurer nor any agent of the Servicer, the Depositor, the Class A
Certificate Insurer 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
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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 the offices of its agent for such purposes located
at c/o DTC Transfer Agent Services, 00 Xxxxx Xxxxxx, Xxxxxxxx Xxxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or agency.
Section 5.07 RIGHTS OF THE CLASS A CERTIFICATE INSURER TO
EXERCISE RIGHTS OF CLASS A CERTIFICATEHOLDERS.
By accepting its Class A Certificate, each Class A
Certificateholder agrees that unless a Class A Certificate Insurer Default
exists, the Class A Certificate Insurer shall be deemed to be the Class A
Certificateholders for all purposes (other than with respect to the receipt of
payment on the Class A Certificates) and shall have the right to exercise all
rights of the Class A Certificateholders under this Agreement and under the
Class A Certificates without any further consent of the Class A
Certificateholders, including, without limitation:
(a) the right to require the Unaffiliated Seller to repurchase
Mortgage Loans pursuant to Section 2.03 hereof to the extent set forth in such
Section;
(b) the right to give notices of breach or to terminate the
rights and obligations of the Servicer as servicer pursuant to Section 7.01
hereof;
(c) the right to direct the actions of the Trustee during the
continuance of a Servicer default pursuant to Sections 3.24, 7.01 and 7.02
hereof;
(d) the right to institute proceedings against the Servicer
pursuant to Section 7.01 hereof;
(e) the right to direct the Trustee to investigate certain
matters pursuant to Sections 8.01 and 8.02 hereof;
(f) the right to remove the Trustee pursuant to Section 8.07
hereof; and
(g) any rights or remedies expressly given the Class A
Certificateholders.
In addition, each Certificateholder agrees that, subject to
Section 10.11, unless a Class A Certificate Insurer Default exists, the rights
specifically enumerated above may only be exercised by the Certificateholders
with the prior written consent of the Class A Certificate Insurer.
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Section 5.08 TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CLASS A
CERTIFICATE INSURER.
Unless a Class A Certificate Insurer Default exists, the
Trustee shall not, without the Class A Certificate Insurer's consent or unless
directed by the Class A Certificate Insurer:
(a) terminate the rights and obligations of the Servicer as
Servicer pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.01 hereof;
or
(c) undertake any litigation.
The Class A Certificate Insurer may, in writing and in its
sole discretion renounce all or any of its rights under this Agreement or any
requirement for the Class A Certificate Insurer's consent for any period of
time.
Section 5.09 MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR
BENEFIT OF THE CLASS A CERTIFICATE INSURER.
(a) The Trustee shall hold the Trust Fund and the Custodial
Files for the benefit of the Certificateholders and the Class A Certificate
Insurer and all references in this Agreement and in the Certificates to the
benefit of Holders of the Certificates shall be deemed to include the Class A
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Class A Certificate Insurer for action to preserve
or enforce the Class A Certificate Insurer's rights or interests under this
Agreement and the Class A Certificates unless, as stated in an Opinion of
Counsel addressed to the Trustee and the Class A Certificate Insurer, such
action is adverse to the interests of the Class A Certificateholders or
diminishes the rights of the Class A Certificateholders or imposes additional
burdens or restrictions on the Class A Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Certificateholders and for the
benefit of the Class A Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Class A Certificate Insurer.
Section 5.10 CLASS A CERTIFICATE INSURER DEFAULT.
Notwithstanding anything elsewhere in this Agreement or in the
Certificates to the contrary, if a Class A Certificate Insurer Default exists,
or if and to the extent the Class A Certificate Insurer has delivered its
written renunciation of all of its rights under this Agreement, all provisions
of this Agreement which (a) permit the Class A Certificate Insurer to exercise
rights of the Class A Certificateholders, (b) restrict the ability of the
Certificateholders, the Servicer or the Trustee to act without the consent or
approval of the Class A Certificate Insurer, (c) provide that a particular act
or thing must be acceptable to the Class A Certificate Insurer, (d) permit the
Class A Certificate Insurer to direct (or otherwise to require) the actions of
the Trustee, the Servicer or the Certificateholders, (e) provide that any action
or omission taken with the consent, approval or authorization of the Class A
Certificate Insurer shall be authorized
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hereunder or shall not subject the party taking or omitting to take such action
to any liability hereunder or (f) which have a similar effect, shall be of no
further force and effect and the Trustee shall administer the Trust Fund and
perform its obligations hereunder solely for the benefit of the Holders of the
Certificates. Nothing in the foregoing sentence, nor any action taken pursuant
thereto or in compliance therewith, shall be deemed to have released the Class A
Certificate Insurer from any obligation or liability it may have to any party or
to the Class A Certificateholders hereunder, under any other agreement,
instrument or document (including, without limitation, the Class A Insurance
Policy) or under applicable law.
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
its existence, rights and franchises as a corporation or federal savings bank,
as the case may be, under the laws of the United States or under the laws of one
of the states thereof and will each obtain and preserve its qualification 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 Mortgage 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, Xxxxxx Mae or FHLMC.
Section 6.03 LIMITATION ON LIABILITY OF THE DEPOSITOR, THE
SERVICER AND OTHERS.
Neither the Depositor, the Servicer, the Trustee nor any of
their respective directors, officers, employees or agents 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 Servicer, the Trustee or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Servicer, the Trustee or any such Person from any liability which would
otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence (or with respect to the Servicer or the Trustee, negligence) in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder.
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The Depositor and any director, officer, employee or agent of the Depositor 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 Servicer, the Trustee and any director, officer, employee or agent of the
Depositor, the Servicer or the Trustee 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 (including, as to the Trustee, the undertaking of actions as
directed by the Unaffiliated Seller or the Class A Certificate Insurer pursuant
to Section 2.03), other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or gross negligence (or with respect to the
Servicer or the Trustee, negligence) in the performance of their respective
duties hereunder or by reason of reckless disregard of their respective
obligations and duties hereunder. The Depositor shall not 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 the Depositor
may in its discretion undertake any such action (or direct the Trustee to
undertake any such actions pursuant to Section 2.03 hereof for the benefit of
the Certificateholders) that it may deem necessary or desirable in respect of
this Agreement and the 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 shall be
entitled to be reimbursed therefor out of the Collection Account.
Neither the Servicer nor any of the officers, employees or
agents of the Servicer shall be under any liability to the Trustee or the
Depositor for any action taken or for refraining from the taking of any action
in good faith pursuant to this Agreement; PROVIDED, HOWEVER, that this provision
shall not protect the Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in compliance with the terms of this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Servicer and any officer, employee or agent of 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 Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expenses or liability; PROVIDED, HOWEVER, that the Servicer may undertake any
such action which it may deem necessary or desirable in respect to this
Agreement and the rights and duties of the parties hereto. 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 Servicer
shall be entitled to be reimbursed therefor out of the Collection Account. In
the event the Servicer agrees, at the request of the Depositor, to act on behalf
of the Depositor in any litigation relating to the origination of a Mortgage
Loan, the Depositor shall pay all expenses associated with the defense and
management of such claim (without reimbursement from the Trust Fund).
Section 6.04 LIMITATION ON RESIGNATION OF THE SERVICER.
The Servicer shall not assign this Agreement or resign from
the obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Depositor and the
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Trustee or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Depositor and the Trustee which Opinion of Counsel shall be in form and
substance acceptable to the Depositor and the Trustee. No such resignation shall
become effective until a successor shall have assumed the Servicer's
responsibilities and obligations hereunder.
Section 6.05 ADDITIONAL INDEMNIFICATION BY THE SERVICER; THIRD
PARTY CLAIMS.
The Servicer shall indemnify the Depositor, the Unaffiliated
Seller and the Trustee and hold them harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses that
any of them may sustain in any way related to any breach by the Servicer, of any
of its representations and warranties referred to in Section 2.03(a) or the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer immediately shall
notify the Depositor, the Unaffiliated Seller and the Trustee if a claim is made
by a third party with respect to any such breach or failure by the Servicer
under this Agreement, assume (with the prior written consent of the Depositor,
the Unaffiliated Seller and the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or the Depositor, the Unaffiliated Seller or the Trustee in respect
of such claim; PROVIDED, that if it is determined that the Servicer is not
obligated to indemnify such parties in accordance with this Section 6.05, each
such party (or the Trust Fund, if applicable) shall promptly reimburse the
Servicer in connection with each of the foregoing payments made to such party by
the Servicer.
ARTICLE VII
DEFAULT
Section 7.01 EVENTS OF DEFAULT.
"EVENT OF DEFAULT", wherever used herein, means any one of the
following events:
(a) any failure by the Servicer to remit to the Trustee any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of one Business Day after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Depositor, by the Class A Certificate Insurer or by the
Trustee or to the Trustee by Certificateholders evidencing percentage interests
of at least 25% in the Certificates; or
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement which continues unremedied for
a period of forty-five days (except that such number of days shall be fifteen in
the case of a failure to pay any premium for any insurance policy required to be
maintained under this Agreement) after the earlier of (i) the date on which
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written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Depositor, by the Class A Certificate Insurer,
or by the Trustee, or to the Trustee by Certificateholders of Certificates
evidencing percentage interests of at least 25% in the Certificates and (ii)
actual knowledge of such failure by a Servicing Officer of the Servicer; or
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(d) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(e) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) if Fairbanks is no longer acting as Servicer, any failure
by the Servicer of the Servicer Trigger; or
(g) any failure of the Servicer to make any P&I Advance on any
Remittance Date required to be made from its own funds pursuant to Section 4.01
which continues unremedied for one Business Day immediately following the
Remittance Date; or
(h) a breach of any representation and warranty of the
Servicer referred to in Section 2.03(a), which materially and adversely affects
the interests of the Certificateholders and which continues unremedied for a
period of thirty days after the date upon which written notice of such breach is
given to the Servicer by the Trustee, by the Class A Certificate Insurer, or by
the Depositor, or to the Trustee by Certificateholders entitled to at least 25%
of the Voting Rights in the Certificates or;
(i) for so long as Fairbanks is acting as Servicer, the
occurrence of a Servicer Evaluation Termination.
If (i) an Event of Default described in clauses (a) through
(h) of this Section 7.01 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, or
at the direction of the Class A Certificate Insurer, or of Holders holding at
least 51% of the Voting Rights, the Trustee shall, or (ii) if an Event of
Default described in clause (i) of this Section 7.01 shall occur, then the
Trustee shall, by notice in writing to the Servicer (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 Mortgage Loans and the proceeds thereof, other than
its rights as a Certificateholder hereunder; PROVIDED, HOWEVER, that the Trustee
shall not be required to give written notice to the Servicer of the occurrence
of an Event of Default
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described in clauses (b) through (i) of this Section 7.01 unless and until a
Responsible Officer of the Trustee has actual knowledge of the occurrence of
such an Event of Default. On and after the receipt by the Servicer of such
written notice, all authority and power of the Servicer hereunder, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee. The Trustee shall make any P&I Advance which the Servicer failed to
make subject to Section 4.01, whether or not the obligations of the Servicer
have been terminated pursuant to this Section. 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 Mortgage 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 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 Collection Account, or thereafter be received
with respect to the Mortgage Loans.
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 Mortgage 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 Section 3.11, and any other amounts payable
to such Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder in accordance with Section 3.11 and in
the time period specified in Section 3.11.
Section 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of
termination pursuant to Section 3.24 or Section 7.01, the Trustee shall, unless
the Class A Certificate Insurer shall have named an alternative successor
Servicer and given written notice thereof to the Trustee of at least 30 days
prior to the effective date of the transfer of servicing to such successor,
subject to and to the extent provided in Section 3.05, 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 P&I Advances or Servicing Advances pursuant to Section 4.01. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans that the Servicer would have been entitled to charge to the
Collection Account or Distribution Account if the Servicer had continued to act
hereunder including, if the Servicer was receiving the Servicing Fee, the
Servicing Fee and the income on investments or gain related to the Collection
Account and Distribution Account.
Notwithstanding the foregoing, if the Trustee has become the
successor to the Servicer in accordance with Section 7.01, the Trustee may, if
it shall be unwilling to so act, or shall, if it is prohibited by applicable law
from making P&I Advances and Servicing Advances pursuant to Section 4.01 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
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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 Xxxxxx Xxx and FHLMC approved seller/servicer in good
standing, which has a net worth of at least $30,000,000, which is willing to
service the Mortgage Loans and which executes and delivers to the Depositor and
the Trustee an agreement accepting such delegation and assignment, containing 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 incurred prior to termination of the Servicer under
Section 7.01), with like effect as if originally named as a party to this
Agreement; PROVIDED that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation will
not be qualified or reduced, as a result of such assignment and delegation.
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 3.05, act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; PROVIDED, HOWEVER, that no such compensation shall be in
excess of the Servicing Fee Rate and amounts paid to the Servicer from
investments. 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 and shall, during the term of its
service as servicer, maintain in force the policy or policies that the Servicer
is required to maintain pursuant to Section 6.05.
Section 7.03 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of or appointment of a successor to
the Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the Class A Certificate Insurer, the Unaffiliated Seller 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, the Class
A Certificate Insurer, the Unaffiliated Seller and each Rating Agency notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 DUTIES OF THE TRUSTEE.
The Trustee, before the occurrence of an Event of Default 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 has occurred and remains uncured, 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. The Trustee shall not be responsible for
the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order, or other instrument.
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.
Unless an Event of Default known to the Trustee has occurred and is
continuing,
(a) 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 the duties and obligations 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;
(b) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it is finally proven that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) 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 the
direction of the Class A Certificate Insurer, or of Holders of Certificates
evidencing not less than 25% of the Voting Rights of 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.
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Section 8.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no responsibility to
ascertain or confirm the genuineness of any signature of any such party or
parties;
(b) the Trustee 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;
(c) 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;
(d) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing so to do by the Class A Certificate
Insurer, or by Holders of Certificates evidencing not less than 25% of the
Voting Rights allocated to each Class of Certificates;
(e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;
(f) 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;
(g) 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);
(h) the Trustee shall not be deemed to have knowledge of an Event of
Default until a Responsible Officer of the Trustee shall have received written
notice thereof; and
(i) 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 hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee
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reasonable security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred therein or thereby.
Section 8.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates shall be taken
as the statements of the Depositor 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 Mortgage Loan or
related document other than with respect to the Trustee's execution and
countersignature of the Certificates. The Trustee shall not be accountable for
the use or application by the Depositor or the Servicer of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer.
The Trustee shall have no responsibility for filing or recording any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the successor
Servicer).
The Trustee executes the Certificates not in its individual capacity
but solely as Trustee of the Trust Fund created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal undertaking or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.
Section 8.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
Section 8.05 TRUSTEE'S FEES AND EXPENSES.
(a) As compensation for its activities under this Agreement, the
Trustee may withdraw from the Distribution Account on each Distribution Date the
Trustee Fee for the Distribution Date. The Trustee and any director, officer,
employee, or agent of the Trustee shall be indemnified by the Servicer against
any loss, liability, or expense (including reasonable attorney's fees) resulting
from any failure by the Servicer to perform its obligations under this
Agreement. This indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee under this Agreement.
The Trustee shall not be entitled to payment or reimbursement from the
Unaffiliated Seller for any routine ongoing expenses incurred by the Trustee in
the ordinary course of its duties as Trustee, Registrar, or paying agent under
this Agreement or for any other expenses, including indemnification payments,
except as set forth herein.
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Section 8.06 ELIGIBILITY REQUIREMENTS FOR THE 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 either 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) as
evidenced in writing by each Rating Agency. 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 this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07. 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 Depositor, the Unaffiliated Seller or the Servicer other than
the Trustee in its role as successor to the Servicer.
Section 8.07 RESIGNATION AND REMOVAL OF THE 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, the
Servicer, the Class A Certificate Insurer, the Unaffiliated Seller, 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 Section 8.06 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
appoint a successor trustee reasonably acceptable to the Class A Certificate
Insurer by written instrument, in triplicate, one copy of which shall be
delivered to the Trustee, one copy to the Servicer and one copy to the successor
trustee.
The Class A Certificate Insurer or 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
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duly authorized, one complete set of which 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. The successor trustee shall notify
each Rating Agency of any removal of the Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.
Section 8.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 8.07 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 Class A Certificate Insurer, 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 its acceptance, the successor trustee is
eligible under Section 8.06 and its appointment does 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. 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 THE 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
Section 8.06 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 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
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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 appropriate. 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:
(a) 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;
(b) No trustee hereunder shall be held personally liable because 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;
(c) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(d) The Trustee, and not the Servicer, shall be liable for the
payment of reasonable compensation and expenses to any such separate trustee or
co-trustee from the Trustee Fee payable to the Trustee on each Distribution
Date.
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 and indemnity to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Depositor.
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Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11 TAX MATTERS.
As set forth in the Preliminary Statement, the assets within the Trust
Fund for which any REMIC election is to be made shall constitute, and the
conduct of matters relating to such assets shall be consistent with the
treatment of such assets as, a REMIC. To this end, the Trustee covenants and
agrees to act as agent (and the Trustee is hereby appointed to act as agent) on
behalf of any REMIC created hereunder, and that in such capacity it shall:
(a) prepare and file in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by
the Internal Revenue Service) and prepare and file with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to any REMIC described in the
Preliminary Statement containing such information and at the times and in the
manner as may be required by the Code or state or local tax laws, regulations,
or rules, and furnish 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 to the Internal
Revenue Service on Form 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 an election that each of the Lower Tier REMIC and the Upper
Tier REMIC 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 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 the calculation of any original issue
discount using the Prepayment Assumption (as defined in the Prospectus
Supplement);
(e) provide information necessary for the computation of tax imposed
on the transfer of a Residual 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);
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(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 status as a REMIC 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 REMIC
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 any REMIC created hereunder
before 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) cause federal, state or local income tax or information returns
to 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 the income, expenses, assets, and liabilities thereof on a calendar
year basis and on the accrual method of accounting 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 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 any REMIC created
hereunder, and otherwise act on behalf of the REMIC in relation to any tax
matter or controversy involving it.
The Trustee shall treat the rights of the Class P Certificateholders
to Prepayment Charges as the beneficial ownership of interests in a grantor
trust, and not as an obligation of any REMIC created hereunder, for federal
income tax purposes.
To enable the Trustee to perform its duties under this Agreement, the
Depositor shall provide to the Trustee within ten 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 the price, yield, prepayment assumption, and projected
cash flows of the Certificates and the Mortgage Loans. Moreover, the Depositor
shall provide information to the Trustee concerning the value to each Class of
Certificates of the right to receive Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account. Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor any additional information or
data that the Trustee may, from time to time, reasonably request to enable the
Trustee to perform its duties under this Agreement. The Depositor hereby
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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 such REMIC as defined in Section 860G(c) of
the Code, on any contribution to the REMIC after the Startup Day pursuant to
Section 860G(d) of the Code, or any other tax is imposed, including any minimum
tax imposed on the REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, if not paid as otherwise provided for herein, the tax
shall be paid by (i) the Trustee if such tax arises out of or results from
negligence of the Trustee in the performance of any of its obligations under
this Agreement, (ii) the Servicer if such tax arises out of or results from a
breach by the Servicer of any of its obligations under this Agreement, (iii) the
Unaffiliated Seller shall pay if such tax arises out of or results from the
Unaffiliated Seller's obligation to repurchase a Mortgage Loan pursuant to
Section 2.03, or (iv) in all other cases, or if the Trustee, the Servicer or the
Unaffiliated Seller fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid with amounts otherwise to be distributed
to the Certificateholders, as provided in Section 4.02(a).
Section 8.12 PERIODIC FILINGS.
(a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Securities Exchange Act of 1934, as amended. The Trustee shall prepare
on behalf of the Trust any Forms 8-K and 10-K customary for similar securities
as required by the Exchange Act and the Rules and Regulations of the Securities
and Exchange Commission (the "SEC") thereunder, and the Trustee shall file (via
the SEC's Electronic Data Gathering and Retrieval System) such Forms with the
SEC on behalf of the Depositor. The Depositor hereby grants to the Trustee a
limited power of attorney to execute and file each such Form 8-K but only to the
extent no accompanying certification is required to be filed on behalf of the
Depositor. Such power of attorney shall continue until either the earlier of (i)
receipt by the Trustee from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust. The Depositor shall execute
the Form 10-Ks. The Trustee shall have no liability with respect to any failure
to properly prepare or file such periodic reports resulting from or relating to
the Trustee's inability or failure to obtain any information not resulting from
its own negligence or willful misconduct.
(b) Each Form 8-K shall be filed by the Trustee with the SEC within
15 days after each Distribution Date, including a Form 8-K with a copy of the
statement to the Certificateholders for such Distribution Date as an exhibit
thereto. Prior to March 30th of each year (or such earlier date as may be
required by the Exchange Act and the Rules and Regulations of the SEC), the
Trustee shall file a Form 10-K, in substance. as required by applicable law or
the SEC's staff interpretations. Such Form 10-K shall include as exhibits the
Servicer's annual statement of compliance described under Section 3.22 (upon
which the Trustee may rely) and the accountant's report described under Section
3.23, in each case to the extent they have been timely delivered to the Trustee.
If they are not so timely delivered, the Trustee shall file an amended Form 10-K
including such documents as exhibits reasonably promptly after they are
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delivered to the Trustee. The Form 10-K shall also include a certification in
the form attached hereto as Exhibit M (the "CERTIFICATION"), which shall be
signed by the senior officer of the Depositor in charge of securitization. The
Trustee shall prepare and deliver each Form 10-K to the Depositor for execution
no later than March 20th (or if such day is not a Business Day, the immediately
preceding Business Day) of each year. The Depositor shall return the executed
Form 10-K to the Trustee for filing no later than March 25th (or if such day is
not a Business Day, the immediately preceding Business Day) of each year.
(c) Notwithstanding that the Certification is to be signed by an
officer of the Depositor, a Responsible Officer of the Trustee shall sign a
certification, in the form attached hereto as Exhibit N for the benefit of the
Depositor and its officers, directors and Affiliates in respect of items 1
through 3 thereof of the Certification (PROVIDED, HOWEVER, that the Trustee
shall not undertake an analysis of the accountant's report attached as an
exhibit to the Form 10-K), and a Servicing Officer of the Servicer who is
responsible for the servicing and administration of the Mortgage Loans shall
sign a certification in the form attached hereto as Exhibit N for the benefit of
the Depositor, the Trustee and their respective officers, directors and
Affiliates in respect of items 4 and 5 of the Certification. Each such
certification shall be delivered to the Depositor and the Trustee (as
applicable), no later than March 10th of each year (or if such day is not a
Business Day, the immediately preceding Business Day) and the Depositor shall
deliver the Certification to be filed to the Trustee no later than March 20th of
each year (or if such day is not a Business Day, the immediately preceding
Business Day). In the event that prior to the filing date of the Form 10-K in
March of each year, the Trustee or the Servicer has actual knowledge of
information material to the Certification, that party shall promptly notify the
Depositor and each of the other parties signing the certifications. In addition,
(i) the Trustee shall indemnify and hold harmless the Depositor and its
officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon any
breach of the Trustee's obligations under this Section 8.12(c) or the Trustee's
negligence, bad faith or willful misconduct in connection therewith and (ii) the
Servicer shall indemnify and hold harmless the Depositor, the Trustee and their
respective officers, directors and Affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon any breach of the Servicer's obligations under this Section 8.12(c) or the
Servicer's negligence, bad faith or willful misconduct in connection therewith.
If the indemnification provided for herein is unavailable or insufficient to
hold harmless the indemnified party, then (i) the Trustee agrees in connection
with a breach of the Trustee's obligations under this Section 8.12(c) or the
Trustee's negligence, bad faith or willful misconduct in connection therewith
that it shall contribute to the amount paid or payable by the Depositor as a
result of the losses, claims, damages or liabilities of the Depositor in such
proportion as is appropriate to reflect the relative fault of the Depositor on
the one hand and the Trustee on the other and (ii) the Servicer agrees that it
shall contribute to the amount paid or payable by the Depositor and/or the
Trustee as a result of the losses, claims, damages or liabilities of the
Depositor and/or the Trustee in such proportion as is appropriate to reflect the
relative fault of the Depositor or the Trustee, as the case may be, on the one
hand and the Servicer on the other in connection with a breach of the Servicer's
obligations under this Section 8.12(c) or the Servicer's negligence, bad faith
or willful misconduct in connection therewith.
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(d) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor and the Unaffiliated Seller a
copy of any such executed report, statement or information.
(e) Prior to January 30 of the first year in which the Trustee is
able to do so under applicable law, the Trustee shall, in accordance with
applicable law, file a Form 15D Suspension Notification with respect to the
Trust Fund in a timely manner.
Section 8.13 TAX CLASSIFICATION OF CERTAIN ACCOUNTS.
For federal income tax purposes, the Trustee shall treat the Excess
Reserve Fund Account as an outside reserve fund, within the meaning of Treasury
Regulation ss. 1.860G-2(h), that is beneficially owned by the holder of the
Class X Certificate. The Trustee shall treat the rights that each Class of
Certificates has to receive payments of Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account as rights to receive payments under an interest rate
cap contract written by the Class X Certificateholder in favor of each Class.
Accordingly, each Class of Certificates (excluding the Class X, Class P and
Class R Certificates) will comprise two components - an Upper Tier Regular
Interest and an interest in a notional principal contract. The Trustee shall
allocate the issue price for a Class of Certificates between such two components
for purposes of determining the issue price of the Upper Tier Regular Interest
component based on information received from the Depositor.
Section 8.14 CAP AGREEMENT. The Trustee is hereby authorized and
directed to execute and deliver the Cap Agreement and to acknowledge the
provisions thereof.
ARTICLE IX
TERMINATION
Section 9.01 TERMINATION UPON LIQUIDATION OR PURCHASE OF THE MORTGAGE
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, on or after the
applicable Optional Termination Date, by the Servicer or the Class X
Certificateholders of all Mortgage Loans (and REO Properties) at the price equal
to the sum of (i) 100% of the Stated Principal Balance of each Mortgage Loan
(other than in respect of REO Property) plus one month's accrued interest
thereon at the applicable Adjusted Mortgage Rate and (ii) the lesser of (x) the
appraised value of any REO Property as determined by the higher of two
appraisals completed by two independent appraisers selected by the Servicer at
the expense of the Servicer and (y) the Stated Principal Balance of each
Mortgage Loan related to any REO Property, in each case plus accrued and unpaid
interest thereon at the applicable Adjusted Net Mortgage Rate and (b) the later
of (i) the maturity or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan remaining in the Trust Fund 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 expiration of 21 years from the
death of the survivor of the
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descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to
the Court of St. James's, living on the date hereof.
No such purchase will be permitted without the consent of the Class A
Certificate Insurer, unless no draw on the Class A Insurance Policy would be
made or unreimbursed on the final Distribution Date.
Section 9.02 FINAL DISTRIBUTION ON THE CERTIFICATES.
If on any Determination Date, the Servicer determines that there are
no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the Collection Account, the Servicer shall direct the
Trustee promptly to send a Notice of Final Distribution each Certificateholder.
If the Servicer or the Class X Certificateholder elects to terminate the Trust
Fund pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
the Notice of Final Distribution is to be mailed to the affected
Certificateholders such electing party shall notify the Depositor and the
Trustee of the date the Servicer or the Class X Certificateholder intends to
terminate the Trust Fund and of the applicable repurchase price of the Mortgage
Loans and REO Properties.
A Notice of Final Distribution, 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 of Final Distribution 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 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 Trustee will give such Notice
of Final Distribution to each Rating Agency at the time such Notice of Final
Distribution is given to Certificateholders.
In the event such Notice of Final Distribution is given, the Servicer
shall cause all funds in the Collection 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 Custodial Files for the
Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders of each Class, in each case on
the final Distribution Date and in the order set forth in Section 4.02, in
proportion to their respective Percentage Interests, with respect to
Certificateholders of the same Class, an amount equal to (i) as to each Class of
Regular Certificates (except the Class X Certificate), the Certificate Balance
thereof plus for each such Class and the Class X Certificate accrued interest
thereon in the case of an interest-bearing Certificate and (ii) as to the
Residual Certificates, the amount, if any, which remains on deposit
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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. 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.
In the event the Servicer or the Class X Certificateholder, as
applicable, exercises its purchase option with respect to the Mortgage Loans 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 or the Class X
Certificateholder, as applicable, 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 either REMIC as defined in Section 860F of
the Code, or (ii) cause either the Lower Tier REMIC or the Upper Tier REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding:
(a) The Trustee shall sell all of the assets of the Trust Fund to the
Servicer or the Class X Certificateholder, as applicable, and, within 90 days of
such sale, shall distribute to the Certificateholders the proceeds of such sale
in complete liquidation of each of the Lower Tier REMIC and the Upper Tier
REMIC.
(b) The Trustee shall attach a statement to the final federal income
tax return for each of the Lower Tier REMIC and the Upper Tier REMIC stating
that pursuant to Treasury Regulation ss. 1.860F-1, the first day of the 90-day
liquidation period for each such REMIC was the date on which the Trustee sold
the assets of the Trust Fund to the Servicer or the Class X Certificateholder,
as applicable.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 AMENDMENT.
This Agreement may be amended from time to time (x) by the Depositor,
the Servicer and the Trustee, with the prior written consent of the Class A
Certificate Insurer, (y) with the consent of the Unaffiliated Seller unless the
Trustee receives an Opinion of Counsel (which Opinion of Counsel shall not be an
expense of the Trustee or the Trust Fund) stating that
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the amendment will not adversely affect the Unaffiliated Seller, but (z) without
the consent of any of the Certificateholders (i) to cure any ambiguity or
mistake, (ii) to correct any defective provision herein or to supplement any
provision herein which may be inconsistent with any other provision herein,
(iii) to add to the duties of the Depositor or the Servicer, (iv) to add any
other provisions with respect to matters or questions arising hereunder or (v)
to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; PROVIDED, that any action pursuant to clauses (iv)
or (v) above shall not, as evidenced by an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee or the Trust Fund), adversely
affect in any material respect the interests of any Certificateholder; and
PROVIDED, FURTHER, that the amendment shall not be deemed to adversely affect in
any material respect the interests of the Certificateholders if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Certificates; it being understood and
agreed that any such letter in and of itself will not represent a determination
as to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating.
In addition, this Agreement may also be amended from time to time (x)
by the Trustee, the Depositor and the Servicer, with the prior written consent
of the Class A Certificate Insurer, and (y) with the consent of the Unaffiliated
Seller unless the Trustee receives an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee or the Trust Fund) stating that
the amendment will not adversely affect the Unaffiliated Seller, but (z) without
the consent of the Certificateholders, 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 Lower Tier REMIC and the Upper Tier REMIC under the Code,
(ii) avoid or minimize the risk of the imposition of any tax on the Lower Tier
REMIC or the Upper Tier REMIC pursuant to the Code that would be a claim at any
time prior to the final redemption of the Certificates or (iii) comply with any
other requirements of the Code; PROVIDED, that the Trustee has been provided an
Opinion of Counsel, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the Trust
Fund, to the effect that such action is necessary or helpful to, as applicable,
(i) maintain such qualification, (ii) avoid or minimize the risk of the
imposition of such a tax or (iii) comply with any such requirements of the Code.
This Agreement may also be amended from time to time (x) by the
Depositor, the Servicer and the Trustee, with the prior written consent of the
Class A Certificate Insurer, (y) with the consent of the Unaffiliated Seller
unless the Trustee receives an Opinion of Counsel (which Opinion of Counsel
shall not be an expense of the Trustee or the Trust Fund) stating that the
amendment will not adversely affect the Unaffiliated Seller, and (z), except as
set forth in Section 3.27, with the consent of the Holders of Certificates
evidencing Percentage Interests aggregating not less than 66-2/3% of each Class
of Certificates (based on the aggregate outstanding principal balance of such
class at such time) 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 (i) 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, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the
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consent of the Holders of Certificates of such Class evidencing, as to such
Class, Percentage Interests aggregating not less than 66-2/3%, or (iii) 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
imposition of any tax on any REMIC or the Certificateholders or cause any REMIC
to fail to qualify as a REMIC at any time that any Certificates are outstanding.
Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee or the Servicer, any Certificate beneficially owned by the
Depositor, the Unaffiliated Seller or any of their respective Affiliates shall
be deemed not to be outstanding (and shall not be considered when determining
the percentage of Certificateholders consenting or when calculating the total
number of Certificates entitled to consent) for purposes of determining if the
requisite consents of Certificateholders under this Section 10.01 have been
obtained.
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.
It shall not be necessary for the consent of Certificateholders under
this Section 10.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
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
receipt of an Opinion of Counsel to the effect that such recordation materially
and beneficially affects the interests of the Certificateholders.
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For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 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 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 (i)
of the Mortgage Loans by the Depositor and (ii) of the Trust Fund by the
Depositor to the Trustee each be, and be construed as, an absolute sale thereof.
It is, further, not the intention of the parties that such conveyances be deemed
a pledge thereof. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Depositor, as the case
may be, or if for any other reason this Agreement is held or deemed to create a
security interest in either such assets, then (i) this Agreement shall be deemed
to be a security agreement within the meaning of the Uniform Commercial Code of
the State of New York and (ii) the conveyances provided for in this Agreement
shall be deemed to be an assignment and a grant by the Depositor to the Trustee,
for the benefit of the Certificateholders, of a security interest in all of the
assets transferred, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders and of the
Class A Certificate Insurer shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Trust Fund, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of the
Agreement. The Depositor shall arrange for filing any Uniform Commercial Code
continuation statements in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholders.
Section 10.05 NOTICES.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency 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;
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4. The repurchase or substitution of Mortgage Loans pursuant to
Section 2.03; and
5. The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
1. Each report to Certificateholders described in Section 4.03; and
2. Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor or the Representative, Xxxxxx Xxxxxxx ABS Capital I Inc. or Xxxxxx
Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxxx Xxxxx, Esq., (b) in the case of the Servicer, Fairbanks Capital Corp.,
0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention: General Counsel,
or such other address as may be hereafter furnished to the parties hereto in
writing, (c) in the case of the Trustee to the Corporate Trust Office, Deutsche
Bank National Trust Company, 0000 Xxxx Xx. Xxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx
00000-0000, Attention: Trust Administration DC02M3, or such other address as the
Trustee may hereafter furnish to the parties hereto, (d) in the case of the
Unaffiliated Seller, CDC Mortgage Capital, Inc., 0 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention General Counsel, or such other address as the
Unaffiliated Seller may hereafter furnish to the parties hereto, (e) in the case
of each 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 any
Originator, the address specified therefor in the applicable Mortgage Loan
Purchase Agreement. Notices to Certificateholders shall be deemed given when
mailed, first class postage prepaid, to their respective addresses appearing in
the Certificate Register.
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, the Class A Certificate
Insurer and Depositor; PROVIDED, HOWEVER, that, subject to Section 3.27, the
Servicer may pledge or sell its interest in any reimbursements for P&I Advances
or Servicing Advances hereunder. Notwithstanding anything to the contrary
herein, the Servicer, with the prior written consent of the Class A Certificate
Insurer, may pledge or assign as collateral all of its rights, title and
interest (but none of its obligations) under this
117
Agreement to a lender financing the purchase of the servicing rights with
respect to the Mortgage Loans; PROVIDED, that such assignment shall not impair
any rights or claims that the Unaffiliated Seller, the Depositor or the Trustee
may have against the Servicer; PROVIDED, FURTHER, that the Class A Certificate
Insurer hereby consents to the Servicer's financing pursuant to the JPMorgan
Credit Agreement, subject to the Consent Procedures.
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, and the Class A Certificate Insurer, 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 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
any representative of the Depositor, the Unaffiliated Seller, the Class A
Certificate Insurer or the
118
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
Mortgage Loans, to make copies and extracts therefrom, to cause such books to be
audited by independent certified public accountants selected by the party
conducting the inspection and to discuss its affairs, finances and accounts
relating to the Mortgage 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 of the Servicer incident to the exercise by
the Depositor, the Unaffiliated Seller, the Class A Certificate Insurer or the
Trustee of any right under this Section 10.09 shall be borne by the Servicer.
Section 10.10 CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Depositor that 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 CLASS A CERTIFICATE INSURER DEFAULT.
Any right conferred to the Class A Certificate Insurer shall be
suspended during any period in which a Class A Certificate Insurer Default
exists. At such time as the Class A Certificates are no longer outstanding
hereunder, and no amounts owed to the Class A Certificate Insurer hereunder
remain unpaid, the Class A Certificate Insurer's rights hereunder shall
terminate.
Section 10.12 THIRD PARTY BENEFICIARY.
The parties agree that the Class A Certificate Insurer is intended and
shall have all rights of a third-party beneficiary of this Agreement.
Section 10.13 WAIVER OF JURY TRIAL.
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVES (TO
THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
* * * * * * *
119
IN WITNESS WHEREOF, the Depositor, the Trustee, the Unaffiliated
Seller 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.
XXXXXX XXXXXXX ABS CAPITAL I INC.,
as Depositor
By:
--------------------------------------
Name:
Title:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
solely as Trustee and not in its
individual capacity
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
FAIRBANKS CAPITAL CORP.,
as Servicer
By:
--------------------------------------
Name:
Title:
CDC MORTGAGE CAPITAL INC.,
as Unaffiliated Seller
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
SCHEDULE I
Mortgage Loan Schedule
[See Exhibit A to the Unaffiliated Seller's Agreement, Tab 2]
I-1
SCHEDULE II
CDC MORTGAGE CAPITAL TRUST 2002-HE3
Mortgage Pass-Through Certificates,
Series 2002-HE3
REPRESENTATIONS AND WARRANTIES OF THE SERVICER
(1) The Servicer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah and is duly authorized and
qualified to transact any and all business contemplated by this Pooling and
Servicing Agreement to be conducted by the 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 enforce each Mortgage Loan and to service the Mortgage Loans in accordance
with the terms of this Pooling and Servicing Agreement;
(2) The Servicer has the full power and authority to service each Mortgage
Loan, and to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Pooling and Servicing Agreement and has duly
authorized by all necessary action on the part of the Servicer the execution,
delivery and performance of this Pooling and Servicing Agreement; and this
Pooling and Servicing Agreement, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except to the extent 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 the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought;
(3) The execution and delivery of this Pooling and Servicing Agreement by
the Servicer, the servicing of the Mortgage Loans by the Servicer hereunder, the
consummation by the Servicer of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof are in
the ordinary course of business of the Servicer and will not (A) result in a
breach of any term or provision of the organizational documents of the Servicer
or (B) conflict with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material agreement or
instrument to which the Servicer is a party or by which it may be bound, or any
statute, order or regulation applicable to the Servicer of any court, regulatory
body, administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Servicer's knowledge, would in the
future materially and adversely affect, (x) the ability of the
II-1
Servicer to perform its obligations under this Pooling and Servicing Agreement
or (y) the business, operations, financial condition, properties or assets of
the Servicer taken as a whole;
(4) The Servicer is an approved seller/servicer for Xxxxxx Xxx or Xxxxxxx
Mac in good standing and is a HUD approved mortgagee pursuant to Section 203 and
Section 211 of the National Housing Act;
(5) No litigation is pending against the Servicer that is reasonably
likely to materially and adversely affect the execution, delivery or
enforceability of this Pooling and Servicing Agreement or the ability of the
Servicer to service the Mortgage Loans or to perform any of its other
obligations hereunder in accordance with the terms hereof;
(6) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this Pooling
and Servicing Agreement or the consummation by the Servicer of the transactions
contemplated by this Pooling and Servicing Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior to
the Closing Date; and
(7) The Servicer represents that its computer and other systems used in
servicing the Mortgage Loans operate in a manner such that the Servicer can
service the Mortgage Loans in accordance with the terms of this Pooling and
Servicing Agreement.
II-2
SCHEDULE IIA
Further Representations and Warranties of the Servicer
(1) MORTGAGE LOAN SCHEDULE. With respect to each Mortgage Loan, as of
the applicable Cut-off Date, each of (1) the last Due Date on which a payment
was actually applied to the outstanding principal balance of each Mortgage Loan;
(2) the Stated Principal Balance of each Mortgage Loan, after deduction of
payments of principal due and collected on or before the applicable Cut-off
Date; and (3) the Servicing Transfer Date for each Mortgage Loan is true and
correct;
(2) PAYMENTS CURRENT. Unless otherwise indicated on the related
Mortgage Loan Schedule, with respect to each Mortgage Loan, no Scheduled Payment
is 30 days or more Delinquent nor has any Payment been 30 days or more
Delinquent at any time from and after the Servicing Transfer Date;
(3) ORIGINAL TERMS UNMODIFIED. With respect to each Mortgage Loan,
the terms of the Mortgage Note and Mortgage have not been impaired, waived,
altered or modified by the Servicer (or to its knowledge by any other Person) in
any respect from and after the Servicing Transfer Date;
(4) NO SATISFACTION OF MORTGAGE. With respect to each Mortgage Loan,
since the related Servicing Transfer Date, the Mortgage has not been satisfied,
cancelled, subordinated or rescinded by the Servicer (or to its knowledge by any
other Person), in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage by the Servicer (or to its knowledge by
any other Person), in whole or in part, nor has any instrument been executed by
the Servicer (or to its knowledge by any other Person) that would effect any
such release, cancellation, subordination or rescission. From and after the
Servicing Transfer Date, the Servicer has not waived the performance by the
Mortgagor of any action, if the Mortgagor's failure to perform such action would
cause the Mortgage Loan to be in default, nor has the Servicer waived any
default resulting from any action or inaction by the Mortgagor;
(5) NO DEFAULTS. With respect to each Mortgage Loan, other than
payments due but not yet 30 days Delinquent, to the Servicer's knowledge, there
is no default, breach, violation or event which would permit acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event which would permit
acceleration;
(6) MORTGAGED PROPERTY UNDAMAGED; NO CONDEMNATION PROCEEDINGS. With
respect to each Mortgage Loan, to the Servicer's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of the
Mortgaged Property. To the Servicer's knowledge, the related Mortgaged Property
is undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the related
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each related Mortgaged Property is in good repair;
IIA-1
(7) ESCROW PAYMENTS/INTEREST RATE ADJUSTMENTS. With respect to each
Mortgage Loan, since the Servicing Transfer Date, the servicing and collection
practices used by the Servicer with respect to such Mortgage Loan have been in
all respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, if any, all such deposits and payments
received by the Servicer are in the possession of, or under the control of, the
Servicer and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law and
the provisions of the related Mortgage Note and Mortgage. From and after the
Servicing Transfer Date, all Mortgage Rate adjustments (if any) have been made
in strict compliance with state and federal law and the terms of the related
Mortgage Note;
(8) OTHER INSURANCE POLICIES. With respect to each Mortgage Loan,
from and after the Servicing Transfer Date, no action, inaction or event has
occurred and, to the Servicer's knowledge, no state of facts exists or has
existed that has resulted or will result in the exclusion from, denial of, or
defense to coverage under any insurance policy related to such Mortgage Loan,
irrespective of the cause of such failure of coverage;
(9) NO VIOLATION OF ENVIRONMENTAL LAWS. With respect to each Mortgage
Loan, to the Servicer's knowledge, there is no pending action or proceeding
directly involving the related Mortgaged Property in which compliance with any
environmental law, rule or regulation is an issue; to the Servicer's knowledge,
there is no violation of any environmental law, rule or regulation with respect
to the related Mortgaged Property; and
(10) SOLDIERS' AND SAILORS' CIVIL RELIEF ACT. With respect to each
Mortgage Loan, no Mortgagor has notified the Servicer, and the Servicer has no
knowledge, of any relief requested or allowed to the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act of 1940 or any similar state or local
law.
IIA-2
SCHEDULE III
(a) DUE ORGANIZATION AND AUTHORITY. The Unaffiliated Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of New York and has all licenses necessary to carry on its business
as now being conducted and is licensed, qualified and in good standing in
each state wherein it owns or leases any material properties or where a
Mortgaged Property is located, if the laws of such state require licensing
or qualification in order to conduct business of the type conducted by the
Unaffiliated Seller, and in any event the Unaffiliated Seller is in
compliance with the laws of any such state to the extent necessary; the
Unaffiliated Seller has the full corporate power, authority and legal right
to execute and deliver this Agreement and to perform its obligations
hereunder; the execution, delivery and performance of this Agreement by the
Unaffiliated Seller and the consummation of the transactions contemplated
hereby have been duly and validly authorized; this Agreement and all
agreements contemplated hereby have been duly executed and delivered and
constitute the valid, legal, binding and enforceable obligations of the
Unaffiliated Seller, regardless of whether such enforcement is sought in a
proceeding in equity or at law; and all requisite corporate action has been
taken by the Unaffiliated Seller to make this Agreement and all agreements
contemplated hereby valid and binding upon the Unaffiliated Seller in
accordance with their terms;
(b) NO CONFLICTS. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment
of or compliance with the terms and conditions of this Agreement, will
conflict with or result in a breach of any of the terms, conditions or
provisions of the Unaffiliated Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which the Unaffiliated Seller
is now a party or by which it is bound, or constitute a default or result
in an acceleration under any of the foregoing, except such unfulfillment,
non-compliance or default or acceleration does not in the aggregate have a
material adverse effect on the operation, business, condition (business or
otherwise) of the Unaffiliated Seller or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Unaffiliated
Seller or its property is subject, except such violation does not in the
aggregate have a material adverse effect on the operation, business,
condition (business or otherwise) of the Unaffiliated Seller or result in
the creation or imposition of any lien, charge or encumbrance that would
have an adverse effect upon any of its properties pursuant to the terms of
any mortgage, contract, deed of trust or other instrument;
(c) NO LITIGATION PENDING. There is no action, suit, proceeding or
investigation pending nor, to the Unaffiliated Seller's knowledge,
threatened against the Unaffiliated Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in
the aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Unaffiliated
Seller, or in any material impairment of the right or ability of the
Unaffiliated Seller to carry on its business substantially as now
conducted, or which would draw into question the validity of this Agreement
or of any action taken or to be taken in connection with the obligations of
the Unaffiliated Seller contemplated herein, or
III-1
which would be likely to impair materially the ability of the Unaffiliated
Seller to perform under the terms of this Agreement;
(d) NO CONSENT REQUIRED. No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or governmental agency
or body including HUD, the FHA or the VA is required for the execution,
delivery and performance by the Unaffiliated Seller of or compliance by the
Unaffiliated Seller with this Agreement or the consummation of the
transactions contemplated by this Agreement, or if required, such approval
has been obtained prior to the Closing Date;
III-2
EXHIBIT A
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 REPRESENTS 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") AND CERTAIN OTHER ASSETS.
Certificate No. : [A-1/M-1-1/M-2-1/B-1-1/B-2-1]
Cut-off Date : November 1, 2002
First Distribution Date : December 26, 2002
Initial Certificate Balance of this
Certificate ("DENOMINATION") : A $537,817,000
M-1 $39,594,000
M-2 $36,294,000
B-1 $26,066,000
B-2 $10,229,000
Initial Certificate Balances of all
Certificates of this Class : A $537,817,000
M-1 $39,594,000
M-2 $36,294,000
B-1 $26,066,000
B-2 $10,229,000
A-1
CUSIP : A 00000XXX0
M-1 00000XXX0
M-2 00000XXX0
B-1 00000XXX0
B-2 00000XXX0
A-2
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
[Class A][Class M-1] [Class M-2][Class B-1][Class B-2]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
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 Unaffiliated Seller, any Originator, the Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "AGREEMENT") among XXXXXX XXXXXXX ABS CAPITAL
I INC., as depositor (the "DEPOSITOR"), Fairbanks Capital Corp., as servicer
(the "Servicer"), CDC Mortgage Capital Inc., as unaffiliated seller (the
"UNAFFILIATED SELLER") and Deutsche Bank National Trust Company, 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.
* * *
A-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
By:
----------------------------------
Countersigned:
By:
--------------------------------------------------
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
A-4
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
This Certificate is one of a duly authorized issue of Certificates
designated as CDC Mortgage Capital Trust 2002-HE3 Mortgage Pass-Through
Certificates, Series 2002-HE3 (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 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. The Record Date applicable to each Distribution Date
is the Business Date immediately preceding such Distribution Date, PROVIDED,
HOWEVER, that for any Definitive Certificates, the Record Date shall be the last
Business Day of the month next preceding the month of such Distribution Date.
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 offices designated by the Trustee for such
purposes, 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 parties thereto, and Financial Security Assurance Inc., as Class A
Certificate Insurer, with the consent of the Holders of Certificates affected by
such amendment evidencing the requisite Percentage Interest, as provided in the
A-5
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 offices designated by the Trustee for such
purposes, 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 Unaffiliated Seller, the Class A
Certificate Insurer and the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and no such party shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans, as of the last day of the related Due Period, is
less than or equal to 10% of the Maximum Pool Principal Balance, the Servicer
and/or the Class X Certificateholders will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of 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.
A-6
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
A-7
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.
A-8
EXHIBIT B
[Reserved]
B-1
EXHIBIT C
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
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 TITLE I
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OF A PLAN SUBJECT
TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO APPLICABLE FEDERAL, STATE OR
LOCAL LAW ("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF
ERISA OR THE CODE, OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF
SUCH A PLAN, OR A REPRESENTATION 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 TITLE I OF ERISA, SECTION 4975 OF THE
CODE OR SIMILAR LAW WITHOUT THE REPRESENTATION LETTER OR THE OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2002
First Distribution Date : December 26, 2002
Percentage Interest of this Certificate
("DENOMINATION") : 100%
Principal Balance : $[100.26]
CUSIP : N/A
C-1
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
Class P
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable monthly
as set forth herein. This Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Unaffiliated Seller,
the Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage 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 of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "AGREEMENT") among XXXXXX XXXXXXX ABS CAPITAL
I INC., as depositor (the "DEPOSITOR"), Fairbanks Capital Corp., as servicer
(the "SERVICER"), CDC Mortgage Capital Inc., as unaffiliated seller (the
"UNAFFILIATED SELLER") and Deutsche Bank National Trust Company, 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.
This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purpose, or the office or agency
maintained by the Trustee.
No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 ACT"), and any applicable state securities laws
or is made in accordance with the 1933 Act and such laws. In the event of any
such transfer, the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached to the Pooling and Servicing
Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall be an expense of the transferor.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in
C-2
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,
Section 4975 of the Code or Similar Law, or a person acting on behalf of or
investing plan assets of any such plan, which representation letter shall not be
an expense of the Trustee.
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.
* * *
C-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
By:
----------------------------------
Countersigned:
By:
--------------------------------------------------
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
C-4
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
This Certificate is one of a duly authorized issue of Certificates
designated as CDC Mortgage Capital Trust 2002-HE3 Mortgage Pass-Through
Certificates, Series 2002-HE3 (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. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
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 offices designated by the Trustee for such
purposes 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 parties thereto, and Financial Security Assurance Inc., as Class A
Certificate Insurer 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
C-5
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 offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee 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 Unaffiliated Seller, the Class A
Certificate Insurer and the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and no such party shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans, as of the last day of the related Due Period, is
less than or equal to 10% of the Maximum Pool Principal Balance, the Servicer
and/or the Class X Certificateholders will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of 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-6
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
C-7
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-8
EXHIBIT D
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, 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.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS (i)
TO A PERMITTED TRANSFEREE AND THE TRANSFER IS MADE IN COMPLIANCE WITH SECTION
5.02(c) OF THE AGREEMENT, AND (ii) 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 A PLAN SUBJECT TO
MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A
PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED, OR ANY ATTEMPT IS MADE
TO TRANSFER TO A PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA, A PLAN
SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A
PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE ASSETS OF
ANY SUCH PLAN OR ARRANGEMENT, SUCH ATTEMPTED TRANSFER OR ACQUISITION SHALL BE
VOID AND OF NO EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2002
First Distribution Date : December 26, 2002
Percentage Interest of this
Certificate ("DENOMINATION") : 100%
CUSIP : N/A
D-1
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
Class R
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate is distributable monthly
as set forth herein. This Class R Certificate has no Certificate Balance and is
not entitled to distributions in respect of principal or interest. This
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Unaffiliated Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CDC Mortgage Capital Inc. is the registered owner
of the Percentage Interest specified above of any monthly distributions due to
the Class R Certificates pursuant to a Pooling and Servicing Agreement dated as
of the Cut-off Date specified above (the "AGREEMENT") among XXXXXX XXXXXXX ABS
CAPITAL I INC., as depositor (the "DEPOSITOR"), Fairbanks Capital Corp., as
servicer (the "SERVICER"), CDC Mortgage Capital Inc., as unaffiliated seller
(the "UNAFFILIATED SELLER") and Deutsche Bank National Trust Company, 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 offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in California.
No transfer of a Class R Certificate shall be made unless the Trustee
shall have received 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 or
arrangement subject to Section 406 of ERISA, a plan or arrangement subject to
Section 4975 of the Code or a plan subject to Similar Law, or 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, which representation letter shall not be an
expense of the Trustee, the Servicer or the Trust Fund. In the event that such
representation is violated, or any attempt is made to transfer to a plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code or a plan subject to Similar Law, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement,
such attempted transfer or acquisition shall be void and of no effect.
Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this
D-2
Class R Certificate are expressly subject to the following provisions: (i) each
Person holding or acquiring any Ownership Interest in this 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 this Class R Certificate may be registered on the Closing
Date or thereafter transferred, and the Trustee shall not register the Transfer
of this Certificate unless, in addition to the certificates required to be
delivered to the Trustee under Section 5.02(b) of the Agreement, the Trustee
shall have been furnished with a Transfer Affidavit of the initial owner or the
proposed transferee in the form attached as Exhibit H to the Agreement, (iii)
each Person holding or acquiring any Ownership Interest in this 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 this 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
this Class R Certificate and (C) not to Transfer the Ownership Interest in this
Class R Certificate or to cause the Transfer of the Ownership Interest in this
Class R Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee and (iv) any attempted or purported
Transfer of the Ownership Interest in this Class R Certificate in violation of
the provisions herein shall be absolutely null and void and shall 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.
D-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but solely as Trustee
By:
---------------------------------------------------
Countersigned:
By:
--------------------------------------------------
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
D-4
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
This Certificate is one of a duly authorized issue of
Certificates designated as CDC Mortgage Capital Trust 2002-HE3 Mortgage
Pass-Through Certificates, Series 2002-HE3 (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 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. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
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 offices designated by the
Trustee for such purposes 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 parties thereto, and Financial Security Assurance
Inc., as Class A Certificate Insurer 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
D-5
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 offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in California,
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 Unaffiliated Seller, the
Class A Certificate Insurer and the Trustee and any agent of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and no such party shall be affected by any notice to
the contrary.
On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is less than or equal to 10% of the Maximum Pool Principal Balance, the
Servicer and/or the Class X Certificateholder will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of 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.
D-6
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
D-7
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.
D-8
EXHIBIT E
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS 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
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS PROVIDED IN THE POOLING AND SERVICING AGREEMENT, NEITHER THIS
CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE
DELIVERS TO THE TRUSTEE 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 A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO
MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A
PLAN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA, A
PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A
PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR USING THE ASSETS OF ANY SUCH PLAN IN
VIOLATION OF THE TRANSFER RESTRICTIONS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT SHALL BE VOID AND OF NO EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2002
First Distribution Date : December 26, 2002
Percentage Interest of this
Certificate ("DENOMINATION") : 100%
CUSIP : N/A
E-1
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
Class X
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Unaffiliated Seller or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage 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 of the
denominations of all Certificates of the Class to which this Certificate
belongs) in certain monthly distributions pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "AGREEMENT") among
XXXXXX XXXXXXX ABS CAPITAL I INC., as depositor (the "DEPOSITOR"), Fairbanks
Capital Corp., as servicer (the "SERVICER"), CDC Mortgage Capital Inc., as
unaffiliated seller (the "UNAFFILIATED SELLER") and Deutsche Bank National Trust
Company, 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.
This Certificate does not have a Certificate Balance or
Pass-Through Rate and will be entitled to distributions only to the extent set
forth in the Agreement. In addition, any distribution of the proceeds of any
remaining assets of the Trust will be made only upon presentment and surrender
of this Certificate at the offices designated by the Trustee for such purposes
or the office or agency maintained by the Trustee.
No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 ACT"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Pooling and
Servicing Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall be an expense of the transferor.
No transfer of a Certificate of this Class shall be made
unless the Trustee shall have received either (i) a representation letter from
the transferee of such Certificate, acceptable
E-2
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 or any materially similar provisions of applicable
Federal, state or local law ("SIMILAR LAW") or a person acting on behalf of or
investing plan assets of any such plan, which representation letter shall not be
an expense of the Trustee, or (ii) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, and the purchaser is an insurance company, a
representation that 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 (iii) in the
case of a 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 plan
subject to Similar Law, 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 and the Servicer,
which Opinion of Counsel shall not be an expense of the Trustee, the Servicer or
the Trust Fund, addressed to the Trustee, to the effect that the purchase or
holding of such 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 expressly undertaken in this
Agreement or to any liability.
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.
* * *
E-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but solely as Trustee
By:
------------------------------------------------------
Countersigned:
By:
--------------------------------------------------
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
E-4
XXXXXX XXXXXXX ABS CAPITAL I INC.
CDC Mortgage Capital Trust 2002-HE3
Mortgage Pass-Through Certificates, Series 2002-HE3
This Certificate is one of a duly authorized issue of
Certificates designated as CDC Mortgage Capital Trust 2002-HE3 Mortgage
Pass-Through Certificates, Series 2002-HE3 (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. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
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 offices designated by the
Trustee for such purposes 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 parties thereto, and Financial Security Assurance
Inc., as Class A Certificate Insurer 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
E-5
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 offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee 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 Unaffiliated Seller, the
Class A Certificate Insurer and the Trustee and any agent of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and no such party shall be affected by any notice to
the contrary.
On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is less than or equal to 10% of the Maximum Principal Balance, the
Servicer and/or the Class X Certificateholders will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of 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.
E-6
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
E-7
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.
E-8
EXHIBIT F
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Servicer]
[Originator]
---------------------
---------------------
Re: Pooling and Servicing Agreement dated as of November 1, 2002
among Xxxxxx Xxxxxxx ABS Capital I Inc., as Depositor,
Fairbanks Capital Corp., as Servicer, CDC Mortgage Capital
Inc., as Unaffiliated Seller and Deutsche Bank National Trust
Company, as Trustee, CDC Mortgage Capital Trust Series
2002-HE3
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), for each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
listed in the attached schedule), it has received:
(i) the original Mortgage Note, endorsed as provided in the
following form: "Pay to the order of ________, without recourse"; and
(ii) a duly executed assignment of the Mortgage.
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related to
such Mortgage 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 Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, perfection, priority, effectiveness or suitability
of any such Mortgage Loan. Notwithstanding anything herein to the contrary, the
Trustee has made no determination and makes no representations 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 sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
the assignment relates.
F-1
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
F-2
EXHIBIT G
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Servicer]
[Originator]
---------------------
---------------------
Re: Pooling and Servicing Agreement dated as of November
1, 2002 among Xxxxxx Xxxxxxx ABS Capital I Inc., as
Depositor, Fairbanks Capital Corp., as Servicer, CDC
Mortgage Capital Inc., as Unaffiliated Seller and
Deutsche Bank National Trust Company, as Trustee, CDC
Mortgage Capital Trust Series 2002-HE3
Gentlemen:
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 Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attached Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided
in Section 2.01 of the Pooling and Servicing Agreement, with all
intervening endorsements showing a complete chain of endorsement from
the originator to the last endorsee.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form
provided in Section 2.01 of the Pooling and Servicing Agreement; or, if
the Unaffiliated Seller has certified or the Trustee otherwise knows
that the related Mortgage has not been returned from the applicable
recording office, a copy of the assignment of the Mortgage (excluding
information to be provided by the recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from
the originator to the last endorsee.
(v) The original or duplicate lender's title policy and all
riders thereto or, if such original is unavailable, any one of an
original title binder, either an original title
G-1
binder or an original or copy of the title commitment, and if copies
then certified to be true and complete by the title company.
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 Mortgage Loan, and (b) the information set forth in items (1), (2) and
(18) of the Mortgage Loan Schedule and items (1), (9) and (17) of the Data Tape
Information accurately reflects information set forth in the Custodial File.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review of the Custodial
File 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 Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, perfection, priority, effectiveness or
suitability of any such Mortgage Loan. Notwithstanding anything herein to the
contrary, the Trustee has made no determination and makes no representations 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 sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
G-2
EXHIBIT H
TRANSFER AFFIDAVIT
XXXXXX XXXXXXX ABS CAPITAL I INC. Trust 2002-HE3,
Mortgage Pass-Through Certificates,
Series 2002-HE3
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 Xxxxxx
Xxxxxxx ABS Capital I Inc., as depositor (the "DEPOSITOR"), Fairbanks Capital
Corp., as servicer, CDC Mortgage Capital Inc., as unaffiliated seller (the
"UNAFFILIATED SELLER") and Deutsche Bank National Trust Company, 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
for the benefit of the Depositor and the Trustee.
2. The Transferee is not, as of the date hereof, and will not
be, as of the date of the Transfer, a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986. The
Transferee will endeavor to remain other than a disqualified organization for so
long as it retains its Ownership Interest in the Certificate.
3. The Transferee has historically paid its debts as they came
due and will continue to pay its debts as they come due in the future.
4. The Transferee has no present knowledge or expectation that
it will be unable to pay any United States taxes owed by it or become insolvent
or subject to a bankruptcy proceeding for so long as the Certificate remains
outstanding.
5. The Transferee has been advised of, and understands that as
the holder of a noneconomic residual interest it may incur tax liabilities in
excess of any cash flows generated by the interest. The Transferee intends to
pay such taxes associated with holding the Certificate as they become due.
6. The Transferee will not cause income from the Certificate
to be attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.
H-1
(1)7. [A. Formula Test] The Transferee agrees that the present
value of the anticipated tax liabilities associated with holding the Certificate
does not exceed the sum of the present value of any consideration given to the
Transferee to acquire the Certificate, the present value of the expected future
distributions on the Certificate, and the present value of the anticipated tax
savings associated with holding the interest as the REMIC generates losses. The
Transferee agrees that it complied with U.S. Treasury Regulations Section
1.860E-1(c)(8) in making such representation.
The Transferee agrees that it is not a foreign permanent
establishment or fixed base(within the meaning of an applicable income tax
treaty) of the Transferor or another U.S. taxpayer.
[B. Asset Test] The Transferee, at the time of the transfer,
and at the close of the Transferee's two fiscal years preceding the year of the
transfer, had gross assets for financial reporting purposes in excess of $100
million and net assets in excess of $10 million (excluding any obligation of a
person related to the Transferee within the meaning of U.S. Treasury Regulations
Section 1.860E-1(c)(6)(ii) or any other asset if a principle purpose for holding
or acquiring the other asset was to permit the Transferee to satisfy the above
stated minimum asset requirements).
The Transferee is an "eligible corporation," as defined in
U.S. Treasury Regulations Section 1.860E-1(c)(6)(i). The Transferee agrees, in
connection with any subsequent transfer of its Ownership Interest in the
Certificate, to transfer its Ownership Interest only to another "eligible
corporation," as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i),
and to honor the restrictions on subsequent transfers of the Certificate by
transferring its Ownership Interest only in a transaction that satisfies the
requirements of U.S. Treasury Regulations Section 1.860E-1(c)(4)(i), (ii) (iii)
and U.S. Treasury Regulations Section 1.860E-1(c)(5).
The Transferee determined the consideration paid to it to
acquire the Certificate in good faith and based on reasonable market assumptions
(including, but not limited to, borrowing and investment rates, prepayment and
loss assumptions, expense and reinvestment assumptions, tax rates and other
factors specific to the Transferee).
8. The Transferee is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includable 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.
9. The Transferee's taxpayer identification number is
____________.
-------------------
(1) Insert either section 7A or 7B.
H-2
10. The Transferee is not an employee benefit plan that is
subject to ERISA or a plan that is subject to Section 4975 of the Code, and the
Transferee is not acting on behalf of or investing plan assets of such a plan.
11. The Transferee has reviewed the provisions of Section
5.02(c) of the Agreement 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.
12. The Transferee consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Certificate will only be owned,
directly or indirectly, by a Transferee that is not a disqualified organization.
13. The Transferee will not transfer its interest in the
Certificate for the purpose of impeding the assessment or collection of any tax.
14. The Transferee will not transfer such Certificate unless
(i) it has received from any subsequent transferee an affidavit in substantially
the same form as this affidavit containing the same representations set forth
herein, and (ii) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false. The Transferee will deliver such
affidavit to the Trustee upon receipt.
* * *
H-3
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__
H-4
EXHIBIT I
FORM OF TRANSFEROR CERTIFICATE
__________, 20__
Xxxxxx Xxxxxxx ABS Capital I Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx
Deutsche Bank National Trust Company,
as Trustee,
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: CDC Mortgage Capital Trust, Series 2002-HE3, Mortgage
Pass-Through Certificates, Series 2002-HE3, 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 Residual Certificate, we have no
knowledge the Transferee is not a Permitted Transferee.
Very truly yours,
-------------------------------------------
Print Name of Transferor
By:
----------------------------------------
Authorized Officer
I-1
EXHIBIT J
FORM OF RULE 144A LETTER
____________, 20__
Xxxxxx Xxxxxxx ABS Capital I Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx
Deutsche Bank National Trust Company,
as Trustee,
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: CDC Mortgage Capital Trust 2002, Series 2002-HE3,
Mortgage Pass-Through Certificates, Series 2002-HE3,
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) 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 using the assets of any such plan or arrangement to effect such acquisition
or, with respect to a Class X Certificate that has been the subject of an
ERISA-Qualifying Underwriting, the purchaser is an insurance company that is
purchasing this certificate 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,
(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
J-1
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 Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
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, (f) to the extent that the Certificate transferred is a Class X
Certificate, we are a bankruptcy-remote entity and (g) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We 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
Securities Act.
J-2
ANNEX 1 TO EXHIBIT J
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 $_________ 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.
J-3
------- 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.
------- 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.
J-4
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 Transferor
By:
----------------------------------------
Name:
Title:
Date:
--------------------------------------
J-5
ANNEX 2 TO EXHIBIT J
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,
J-6
(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 Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
Print Name of Transferor
By:
--------------------------------------------
Name:
Title:
IF AN ADVISER:
----------------------------------------------
Print Name of Buyer
Date:
-----------------------------------------
J-7
EXHIBIT K
REQUEST FOR RELEASE
(for Trustee)
To: [Address]
Re:
In connection with the administration of the Mortgage Loans held by
you as the Trustee on behalf of the Certificateholders, we request the release,
and acknowledge receipt, of the (Custodial File/[specify documents]) for the
Mortgage Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
SEND CUSTODIAL FILE TO:
REASON FOR REQUESTING DOCUMENTS (CHECK ONE)
____ 1. Mortgage Loan Paid in Full. (The Company hereby certifies
that all amounts received in connection therewith have been
credited to the Collection Account as provided in the Pooling and
Servicing Agreement.)
____ 2. Mortgage Loan Repurchase Pursuant to Subsection 2.03 of the
Pooling and Servicing Agreement. (The Company hereby certifies
that the repurchase price has been credited to the Collection
Account as provided in the Pooling and Servicing Agreement.)
____ 3. Mortgage Loan Liquidated By _________________. (The Company
hereby certifies that all proceeds of foreclosure, insurance,
condemnation or other liquidation have been finally received and
credited to the Collection Account pursuant to the Pooling and
Servicing Agreement.)
____ 4. Mortgage Loan in Foreclosure.
____ 5. Other (explain).
If box 1, 2 or 3 above is checked, and if all or part of the Custodial
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
K-1
If box 4 or 5 above is checked, upon our return of all of the above
documents to you as the Trustee, please acknowledge your receipt by signing in
the space indicated below, and returning this form.
FAIRBANKS CAPITAL CORP.
By:
---------------------------------
Name:
Title:
Date:
K-2
EXHIBIT L
FORM OF SUBSEQUENT TRANSFER AGREEMENT
CDC MORTGAGE CAPITAL TRUST 2002-HE3
Pursuant to separate Mortgage Loan Purchase Agreements, BNC Mortgage,
Inc. ("BNC"), IMPAC Funding Corporation ("IFC"), People's Choice Home Loan, Inc.
("PEOPLE'S CHOICE"), Chapel Mortgage Corporation ("CHAPEL MORTGAGE"), SIB
Mortgage Corp. ("SIB MORTGAGE"), Fremont Investment and Loan ("FREMONT") and
First NLC Financial Services, LLC ("FIRST NLC" and together with BNC, IFC,
Superior, NC Capital, SIB Mortgage and Fremont, the "ORIGINATORS") have agreed
to sell to CDC Mortgage Capital Inc. (the "UNAFFILIATED SELLER") certain
mortgage loans (each, a "MORTGAGE LOAN"). These Mortgage Loans may in turn be
sold by the Unaffiliated Seller to XXXXXX XXXXXXX ABS CAPITAL I INC. (the
"DEPOSITOR") and then sold by the Depositor to the CDC Mortgage Capital Trust
0000-XX0 (xxx "XXXXX XXXX"). The Trust Fund was established pursuant to a
Pooling and Servicing Agreement, dated as of November 1, 2002 (the "POOLING AND
SERVICING AGREEMENT") among the Unaffiliated Seller, the Depositor, Fairbanks
Capital Corp., as Servicer (the "SERVICER") and Deutsche Bank National Trust
Company, as trustee (the "TRUSTEE"). The Pooling and Servicing Agreement permits
a pre-funding feature, allowing for the acquisition by the Trust Fund of
Subsequent Mortgage Loans during the Pre-Funding Period. Representations and
warranties with respect to the Mortgage Loans have been made by the Originators
pursuant to separate Assignment and Recognition Agreements.
Capitalized terms used herein and not defined herein have their
respective meanings as set forth in the Pooling and Servicing Agreement.
CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
The Unaffiliated Seller does hereby irrevocably sell, transfer,
assign, set over and otherwise convey to the Depositor, without recourse (except
as otherwise explicitly provided for herein) all of its right, title and
interest in and to the Subsequent Mortgage Loans, exclusive of the obligations
of the Unaffiliated Seller or any other Person with respect to the Subsequent
Mortgage Loans but including specifically, without limitation, the Mortgages,
the Custodial Files and all other documents, materials and properties
appurtenant thereto and the Mortgage Notes, including all interest and principal
collected by the Unaffiliated Seller on or with respect to the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date, together with all of
its right, title and interest in and to the proceeds received after such
Subsequent Cut-off Date of any related insurance policies on behalf of the
Depositor.
The Depositor does hereby irrevocably sell, transfer, assign, set over
and otherwise convey to the Trust Fund, without recourse (except as otherwise
explicitly provided for herein) all of its right, title and interest in and to
the Subsequent Mortgage Loans, exclusive of the obligations of the Depositor or
any other Person with respect to the Subsequent Mortgage Loans but including
specifically, without limitation, the Mortgages, the Custodial Files and all
other documents, materials and properties appurtenant thereto and the Mortgage
Notes, including all interest and principal collected by the Depositor on or
with respect to the Subsequent
L-1
Mortgage Loans after the related Subsequent Cut-off Date, together with all of
its right, title and interest in and to the proceeds received after such
Subsequent Cut-off Date of any related insurance policies on behalf of the Trust
Fund.
The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans specified in this Subsequent Transfer Agreement and the Pooling
and Servicing Agreement shall be borne by the Unaffiliated Seller.
The Unaffiliated Seller hereby affirms the representation and warranty
set forth in Sections 3.01(f) and (h) of the Unaffiliated Seller's Agreement
with respect to the Subsequent Mortgage Loans as of the date hereof. The
Unaffiliated Seller hereby delivers notice and confirms that each of the
conditions set forth in Section 2.01(c) of the Pooling and Servicing Agreement
are satisfied as of the date hereof.
The Servicer hereby affirms the representations and warranties set
forth in Schedule IIA to the Pooling and Servicing Agreement with respect to the
Subsequent Mortgage Loans as of the date hereof.
Additional terms of the sale are attached hereto as Attachment A.
To the extent permitted by applicable law, this Subsequent Transfer
Agreement, or a memorandum thereof if permitted under applicable law, is subject
to recordation in all appropriate public offices for real property records in
all 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 the Unaffiliated Seller's expense, but only when accompanied by an
opinion of counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary for
the administration or servicing of the Mortgage Loans.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to the principles of conflicts of laws.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein; PROVIDED, that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
[Remainder of Page Intentionally Left Blank]
L-2
CDC MORTGAGE CAPITAL INC.,
as Unaffiliated Seller
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
XXXXXX XXXXXXX ABS CAPITAL I INC.,
as Depositor
By:
-------------------------------------
Name:
Title:
FAIRBANKS CAPITAL CORP.,
as Servicer
By:
-------------------------------------
Name:
Title:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
L-3
EXHIBIT M
FORM CERTIFICATION TO BE
PROVIDED TO DEPOSITOR
Re: CDC Mortgage Capital Trust 2002-HE3
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2002-HE3
I, [identify the certifying individual], certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on
Form 8-K containing distribution or servicing reports filed in respect
of periods included in the year covered by this annual report, of
Xxxxxx Xxxxxxx ABS Capital I Inc. (the "DEPOSITOR") relating to the
above-referenced trust and series of certificates;
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made,
not misleading as of the last day of the period covered by this annual
report;
3. Based on my knowledge, the servicing information required to be
provided to the trustee by the servicer under the pooling and
servicing agreement is included in these reports;
4. I am responsible for reviewing the activities performed by the
servicer under the pooling and servicing agreement and based upon the
review required under the pooling and servicing agreement, and except
as disclosed in the report, the servicer has fulfilled its obligations
under the pooling and servicing agreement; and
5. I have disclosed to the servicer's certified public accountants all
significant deficiencies relating to the servicer's compliance with
the minimum servicing standards in accordance with a review conducted
in compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar standard as set forth in the pooling and servicing
agreement.
Date: _________________________
__________________________________
[Signature]
[Title]
M-1
EXHIBIT N
Annual Certifications
Re: CDC Mortgage Capital Trust 2002-HE3
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2002-HE3
I, [identify the certifying individual], certify to Xxxxxx Xxxxxxx ABS Capital I
Inc. and the Trustee, if applicable, (the "Depositor"), and its officers,
directors and affiliates, and with the knowledge and intent that they will rely
upon this certification, that:
1. [To be certified by the Trustee] [I have reviewed the annual report on
Form 10-K for the fiscal year], and all reports on Form 8-K containing
distribution date reports filed in respect of periods included in the
year covered by that annual report, of the Depositor relating to the
above-referenced trust;]
2. [To be certified by the Trustee] [Based on my knowledge, the
information in these distribution date reports, taken as a whole, does
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as
of the last day of the period covered by that annual report;]
3. [To be certified by the Trustee] [Based on my knowledge, the
distribution information required to be provided to the trustee by the
servicer under the pooling and servicing agreement is included in
these distribution date reports;]
4. [To be certified by the Servicer] [I am responsible for reviewing the
activities performed by the servicer under the pooling and servicing
agreement and based upon the review required under the pooling and
servicing agreement, and except as disclosed in the report, the
servicer has fulfilled its obligations under the pooling and servicing
agreement; and]
5. [To be certified by the Servicer] [I have disclosed to the servicer's
certified public accountants all significant deficiencies relating to
the servicer's compliance with the minimum servicing standards in
accordance with a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or similar standard as
set forth in the pooling and servicing agreement.]
Date: ____________________________
__________________________________
[Signature]
[Title]
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EXHIBIT O
These performance standards apply to all first lien Mortgage Loans and
REO Properties subject to this Agreement. Only Mortgage Loans initiated for
foreclosure and REO Properties managed by the Servicer will be included in the
calculation of these performance standards.
The Servicer's performance shall be measured by the benchmarks for
specified performance measurement areas described in the following table (the
"Performance Benchmarks"). Any failure of any component of such standards will
be given a sixty (60) day cure period. After giving effect to the applicable
grace periods, the Servicer shall be deemed to have failed to meet the
performance standards upon: (x) the occurrence of the same five (5) Performance
Benchmarks for three (3) consecutive months, (y) the occurrence of the same
three (3) Performance Benchmarks for six (6) consecutive months, or (z) the
occurrence of the same one (1) Performance Benchmark for nine (9) consecutive
months.
PERFORMANCE BENCHMARKS
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BENCHMARK STANDARD
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I. Right Party Contacts (First 15 days of delinquency) 22.5%
The Servicer will achieve an average daily Right Party Contact Rate for
the month against all accounts in their first 15 days of delinquency.
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2. Right Party Contacts (After the 15th day of delinquency but not in foreclosure) 18.75%
The Servicer will achieve an average daily Right Party Contact Rate for
the month against all accounts past the first 15 days of delinquency
but prior to foreclosure.
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3. Promise to Pay 22.5%
The Servicer will achieve an average daily Promise to Pay on a minimum
percentage of all loans 1 - 89 days delinquent.
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4. Roll Rate (I to 29 days of delinquency - MBA method) 52.5%
The Servicer shall achieve a Roll Rate from previous month-end to
current month-end.
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5. Roll Rate (30 to 59 days of delinquency - MBA method) 45%
The Servicer shall achieve a Roll Rate from previous month-end to
current month-end.
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6. Roll Rate (60 to 89 days of delinquency - MBA method) 30%
The Servicer shall achieve a Roll Rate from previous month-end to
current month-end.
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BENCHMARK STANDARD
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7. Abandonment Rate The Servicer will operate its customer service area to 13.3%
achieve no more than a maximum Abandonment Rate on customer
calls.
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8. REO Sales 11.25%
The Servicer will sell a minimum percentage of the REO Sellable
Portfolio on a monthly basis and will obtain a Total Sales Price to
Total Reconciled Market Value of at least 95%, measured on a rolling
three month average.
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9. The Servicer will obtain a minimum Pre-Foreclosure Resolution Rate on a rolling 45%
three month average.
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10. Servicer will meet a minimum Foreclosure Timeline Percentage on a rolling three 120%
month average basis.
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DEFINITIONS FOR PERFORMANCE STANDARDS
ABANDONMENT RATE: The percentage of total incoming calls to the
customer service area which are not directed to the automated telephone response
system in which the customer terminates the call prior to connection with a
customer service representative.
FORECLOSURE TIMELINE: For any Mortgage Loan in foreclosure, the number
of days to foreclosure from the date of the foreclosure initiation; provided,
that such calculation shall not include any unavoidable delays resulting from
circumstances such as bankruptcy, missing documents, workouts authorized by the
Seller, contested actions, service of process delays, sheriff sale scheduling
delays, court delays in entering judgment or scheduling hearings, and other
circumstances agreed to by the Seller as long as the Servicer (i) has documented
such delay in its system and (ii) has, upon request by the Seller, provided a
report of such conditions, detailing corrective actions taken, the date of such
actions and the expected resolution date, and demonstrating diligent time
management to resolve such issues.
FORECLOSURE TIMELINE PERCENTAGE: For all Mortgage Loans with a
completed foreclosure sale during the preceding month, the average, for each
such Mortgage Loan, of (i) the Foreclosure Timeline for such Mortgage Loan,
divided by (ii) the applicable Xxxxxxx Mac standard in the relevant state at
such time.
PRE-FORECLOSURE RESOLUTION: ANY OF THE FOLLOWING:
o Reinstatement - means any defaulted Mortgage Loan for which the
related Mortgagor brings the Mortgage Loan back to a status no
more than sixty (60) days delinquent through a lump sum payment
or otherwise consistent with the terms of the Agreement.
o Full payoff - means any defaulted Mortgage Loan which is paid in
full as defined in the Agreement.
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o Cash for keys - means a defaulted Mortgage Loan for which the
related Mortgagor surrenders the property in exchange for a cash
sum to enable foreclosure on a property with imperfect title.
o Shortfall payoff- means a defaulted Mortgage Loan for which a
final payment in an amount less than the indebtedness owed under
the applicable Mortgage Note is made consistent with the terms of
the Agreement, and such payment is received by the Servicer in
full satisfaction of such indebtedness.
o Deed-in-Lieu of Foreclosure - means a defaulted Mortgage Loan for
which title to the related Mortgaged Property is taken by the
Servicer through deed in lieu of foreclosure and the resulting
REO Property is to be liquidated consistent with the terms of the
Agreement.
o Modification/Deferral (subject to REMIC restrictions) - means a
defaulted Mortgage Loan which is modified in a manner consistent
with the Agreement and for which the related Mortgagor has made
three (3) consecutive payments consistent with the terms of such
Mortgage Loan as so modified.
o Forbearance Plan - means a defaulted Mortgage Loan for which the
related Mortgagor has made payments in accordance with a
forbearance plan entered into by such Mortgagor.
o Take-out at Foreclosure Sale - means the Mortgaged Property
related to a defaulted Mortgage Loan that is purchased at a
foreclosure sale by a party other than the Servicer in a manner
consistent with the Agreement.
PRE-FORECLOSURE RESOLUTION RATE: [For any month, the percentage
equivalent of a fraction (i) the numerator of which equals the number of
Mortgage Loans that were at least ninety (90) days past due at the beginning of
such month, with respect to which a Pre-Foreclosure Resolution was achieved
during such month, divided by (ii) the number of such resolved Mortgage Loans
plus the number of Mortgage Loans relating to Mortgaged Properties that become
REO Properties during such month.]
PROMISE TO PAY: An agreement with an obligor to make at least one full
payment within thirty (30) days.
RECONCILED MARKET VALUE: The targeted sales price of an REO Property.
Reconciled Market Value is established following an analysis by the Servicer's
in-house appraisers of competing marketing plans and other market conditions.
This analysis will include a review of the interior Broker Price Opinions (BPOs)
received from the listing agent and an outside third party real-estate agent.
This set value never changes throughout the servicing of the REO asset and will
be reflected in all reporting.
REO SELLABLE PORTFOLIO: The entire REO Property portfolio, less any
REO Property in eviction, redemption under contract or other situations in which
the Servicer cannot pass marketable title. The Servicer must have at least
twenty five (25) REO Properties listed with
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an average list age of at least ninety (90) days in order for the related
Performance Benchmark to be measured.
RIGHT PARTY CONTACT RATE: A person-to-person contact with an obligor
(a signer of the Mortgage Note), or, where applicable, the obligor's legal
guardian or attorney-in-fact with respect to the loan, or other third party as
appointed by the Mortgagor.
ROLL RATE: Calculated as a three month rolling average percentage of
loans, based on unpaid principal balance, that remain in the same bucket or
improve their delinquency status (including loans that pay off or are otherwise
liquidated) from previous month-end to current month-end.
TOTAL RECONCILED MARKET VALUE: For any month, the sum of all the
Reconciled Market Values on all REO Property closings during such month.
TOTAL SALES PRICE: For any month, the sum of the sales price of all
REO Property closings in such month, less any Seller's closing concessions in
which the sales price was inflated to reflect the concession amount.
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