EXHIBIT 4.1
EXECUTION COPY
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FREMONT MORTGAGE SECURITIES CORPORATION,
as Depositor,
FREMONT INVESTMENT & LOAN,
as Originator and Servicer,
XXXXX FARGO BANK, N.A.,
as Master Servicer and Trust Administrator,
and
HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2004
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FREMONT HOME LOAN TRUST 2004-D
MORTGAGE-BACKED CERTIFICATES,
SERIES 2004-D
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions........................................................................................... 5
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.......................................................................... 55
Section 2.02. Acceptance by the Trustee or Trust Administrator of the Mortgage Loans................................ 59
Section 2.03. Representations, Warranties and Covenants of the Originator and the Servicer.......................... 60
Section 2.04. Delivery of Opinion of Counsel in Connection with Substitution; Non-Qualified Mortgages............... 63
Section 2.05. Execution and Delivery of Certificates................................................................ 63
Section 2.06. Representations and Warranties of the Depositor....................................................... 63
Section 2.07. Representations, Warranties and Covenants of the Servicer, the Originator and the Master Servicer..... 65
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Servicer to Service Mortgage Loans.................................................................... 70
Section 3.02. Subservicing Agreements between the Servicer and Subservicers......................................... 72
Section 3.03. Successor Subservicers................................................................................ 73
Section 3.04. Liability of the Servicer............................................................................. 73
Section 3.05. No Contractual Relationship between Subservicers and the Trustee, Master Servicer, Trust
Administrator or Certificateholder.................................................................... 74
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee or Trust Administrator................ 74
Section 3.07. Collection of Certain Mortgage Loan Payments.......................................................... 74
Section 3.08. Subservicing Accounts................................................................................. 76
Section 3.09. Collection of Taxes, Assessments and Similar Items; Escrow Accounts................................... 76
Section 3.10. Collection Account.................................................................................... 77
Section 3.11. Withdrawals from the Collection Account............................................................... 78
Section 3.12. Investment of Funds in the Collection Account and the Distribution Account............................ 80
Section 3.13. Maintenance of Hazard Insurance, Errors and Omissions and Fidelity Coverage........................... 81
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements............................................. 82
Section 3.15. Realization upon Defaulted Mortgage Loans............................................................. 83
Section 3.16. Release of Mortgage Files............................................................................. 85
Section 3.17. Title, Conservation and Disposition of REO Property................................................... 86
Section 3.18. Notification of Adjustments........................................................................... 88
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Section 3.19. Access to Certain Documentation and Information Regarding the Mortgage Loans.......................... 88
Section 3.20. Documents, Records and Funds in Possession of the Servicer to Be Held for the Trustee................. 88
Section 3.21. Servicing Compensation................................................................................ 89
Section 3.22. Annual Statement as to Compliance..................................................................... 89
Section 3.23. Annual Independent Public Accountants' Servicing Statement; Financial Statements...................... 90
Section 3.24. Master Servicer to Act as Servicer.................................................................... 90
Section 3.25. Compensating Interest................................................................................. 91
Section 3.26. Credit Reporting; Xxxxx-Xxxxx-Xxxxxx Act.............................................................. 91
Section 3.27. Net WAC Rate Carryover Reserve Account; Distribution Account.......................................... 91
Section 3.28. Optional Purchase of Delinquent Mortgage Loans........................................................ 93
Section 3.29. REMIC-Related Covenants............................................................................... 93
ARTICLE IIIA
ADMINISTRATION AND MASTER SERVICING OF THEMORTGAGE LOANS BY THE MASTER SERVICER
Section 3A.01 Master Servicer....................................................................................... 93
Section 3A.02 REMIC-Related Covenants............................................................................... 94
Section 3A.03 Monitoring of Servicer................................................................................ 95
Section 3A.04 Fidelity Bond......................................................................................... 96
Section 3A.05 Power to Act; Procedures.............................................................................. 96
Section 3A.06 Due-on-Sale Clauses; Assumption Agreements............................................................ 96
Section 3A.07 Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.................. 96
Section 3A.08 [RESERVED]............................................................................................ 97
Section 3A.09 Compensation for the Master Servicer.................................................................. 97
Section 3A.10 Annual Officer's Certificate as to Compliance......................................................... 97
Section 3A.11 Annual Independent Accountant's Servicing Report...................................................... 98
Section 3A.12 Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls........................ 99
ARTICLE IV
DISTRIBUTIONS AND ADVANCES BY THE SERVICER
Section 4.01. Advances.............................................................................................. 99
Section 4.02. Priorities of Distribution............................................................................ 100
Section 4.03. Monthly Statements to Certificateholders.............................................................. 111
Section 4.04. Certain Matters Relating to the Determination of LIBOR................................................ 114
Section 4.05. Allocation of Applied Realized Loss Amounts........................................................... 115
Section 4.06. Compliance with Withholding Requirements.............................................................. 115
Section 4.07. Commission Reporting.................................................................................. 115
Section 4.08. REMIC Distributions and Allocation of Losses.......................................................... 117
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates...................................................................................... 121
Section 5.02. Certificate Register; Registration of Transfer and Exchange of Certificates........................... 122
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates..................................................... 127
Section 5.04. Persons Deemed Owners................................................................................. 127
Section 5.05. Access to List of Certificateholders' Names and Addresses............................................. 127
Section 5.06. Maintenance of Office or Agency....................................................................... 127
ARTICLE VI
THE DEPOSITOR, THE ORIGINATOR, THE MASTER SERVICER AND THE SERVICER
Section 6.01. Respective Liabilities of the Depositor, the Originator, the Master Servicer and the Servicer......... 128
Section 6.02. Merger or Consolidation of the Depositor, the Originator, the Master Servicer or the Servicer......... 128
Section 6.03. Limitation on Liability of the Depositor, the Originator, the Master Servicer, the Trust
Administrator, the Servicer and Others................................................................ 128
Section 6.04. Limitation on Resignation of the Servicer............................................................. 129
Section 6.05. Additional Indemnification by the Servicer; Third Party Claims........................................ 130
Section 6.06. Rights of the Depositor, the Master Servicer, the Trust Administrator and the Trustee in Respect
of the Servicer....................................................................................... 130
Section 6.07. Limitation on Resignation of the Master Servicer...................................................... 131
Section 6.08. Assignment of Master Servicing........................................................................ 131
ARTICLE VII
DEFAULT
Section 7.01. Events of Default..................................................................................... 132
Section 7.02. Master Servicer to Act; Appointment of Successor...................................................... 137
Section 7.03. Notification to Certificateholders.................................................................... 139
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
Section 8.01. Duties of the Trustee................................................................................. 139
Section 8.02. Certain Matters Affecting the Trustee and the Trust Administrator..................................... 140
Section 8.03. Neither the Trustee Nor the Trust Administrator Liable for Certificates or Mortgage Loans............. 142
Section 8.04. Trustee and Trust Administrator May Own Certificates.................................................. 142
Section 8.05. Fees and Expenses of the Trustee and Trust Administrator.............................................. 143
Section 8.06. Eligibility Requirements for the Trustee and Trust Administrator...................................... 144
Section 8.07. Resignation and Removal of the Trustee or Trust Administrator......................................... 144
Section 8.08. Successor Trustee or Trust Administrator.............................................................. 145
Section 8.09. Merger or Consolidation of the Trustee or the Trust Administrator..................................... 146
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Section 8.10. Appointment of Co-Trustee or Separate Trustee......................................................... 146
Section 8.11. Representations and Warranties of the Trustee and Trust Administrator................................. 147
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation or Purchase of the Mortgage Loans........................................ 148
Section 9.02. Final Distribution on the Certificates................................................................ 149
Section 9.03. Additional Termination Requirements................................................................... 150
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment............................................................................................. 151
Section 10.02. Recordation of Agreement; Counterparts................................................................ 153
Section 10.03. Governing Law......................................................................................... 153
Section 10.04. Intention of Parties.................................................................................. 153
Section 10.05. Notices............................................................................................... 154
Section 10.06. Severability of Provisions............................................................................ 155
Section 10.07. Assignment; Sales; Advance Facilities................................................................. 155
Section 10.08. Limitation on Rights of Certificateholders............................................................ 156
Section 10.09. Inspection and Audit Rights........................................................................... 157
Section 10.10. Certificates Nonassessable and Fully Paid............................................................. 157
Section 10.11. Waiver of Jury Trial.................................................................................. 158
ARTICLE XI
REMIC PROVISIONS
Section 11.01. REMIC Administration.................................................................................. 158
Section 11.02. Prohibited Transactions and Activities................................................................ 161
Section 11.03. Indemnification....................................................................................... 162
SCHEDULES
Schedule I Mortgage Loan Schedule
Schedule II Reserved
Schedule III Reserved
Schedule IV Representations and Warranties of Fremont Investment & Loan as to
the Mortgage Loans
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EXHIBITS
Exhibit A Form of Class A and Class M Certificates
Exhibit B Form of Class P Certificate
Exhibit C Form of Class R Certificate
Exhibit D Form of Class C Certificate
Exhibit E Form of Initial Certification of Trust Administrator
Exhibit F Form of Document Certification and Exception Report of Trust
Administrator
Exhibit G Form of Residual Transfer Affidavit and Agreement
Exhibit H Form of Transferor Certificate
Exhibit I Form of Rule 144A Letter
Exhibit J Form of Request for Release
Exhibit K Form of Contents for Each Mortgage File
Exhibit L Power of Attorney
Exhibit M Form of Trust Administrator Certification
Exhibit N Form of Servicer Certification
Exhibit O Purchase Agreement
Exhibit P Standard & Poor's LEVELS(R) Glossary
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THIS POOLING AND SERVICING AGREEMENT, dated as of November 1, 2004, among
Fremont Mortgage Securities Corporation, as depositor (the "Depositor"), FREMONT
INVESTMENT & LOAN, as originator and servicer (the "Originator" and the
"Servicer", as applicable; and together "Fremont"), and Xxxxx Fargo Bank, N.A.,
as master servicer and trust administrator (the "Master Servicer" and "Trust
Administrator" in such capacities, respectively), and HSBC BANK USA, NATIONAL
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 Issuer intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of nineteen Classes of
Certificates, designated as (i) the Class 1-A-1 and Class 1-A-2 Certificates,
(ii) the Class 2-A Certificates, (iii) the Class 3-A-1, Class 3-A-2 and Class
3-A-3 Certificates, (iv) the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9 and Class M10 Certificates, (v) the Class
C Certificates, (vi) the Class P Certificates and (vii) the Class R Certificate.
The descriptions of REMIC I and REMIC II that follow are part of the Preliminary
Statement. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections described below.
REMIC I
As provided herein, the Trust Administrator will make an election to treat
the assets of the Trust Fund, other than the Certificate Cap Agreements, the Net
WAC Rate Carryover Reserve Account, any Net WAC Rate Carryover Amounts and the
rights of the Holders of the Offered Certificates and Class M10 Certificates to
receive such Net WAC Rate Carryover Amounts, including payments in respect of
the Certificate Cap Agreement, as a real estate mortgage investment conduit (a
"REMIC") for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC I." The Class R-I Interest will represent the sole
class of "residual interests" in REMIC I for purposes of the REMIC Provisions
under federal income tax law. Interest on all Classes of REMIC I Regular
Interests will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
The following table irrevocably sets forth the designation, the
Uncertificated REMIC I Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury Regulations Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Interests.
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UNCERTIFICATED INITIAL
REMIC PASS- UNCERTIFICATED LATEST POSSIBLE
DESIGNATION THROUGH RATE PRINCIPAL BALANCE MATURITY DATE (1)
----------- ------------ ----------------- -----------------
LTAA Variable(2) 388,493,260.61 December 2034
LT1A1 Variable(2) 896,970.00 December 2034
LT1A2 Variable(2) 224,245.00 December 2034
LT2A Variable(2) 1,107,375.00 December 2034
LT3A1 Variable(2) 282,555.00 December 2034
LT3A2 Variable(2) 562,055.00 December 2034
LT3A3 Variable(2) 66,855.00 December 2034
LTM1 Variable(2) 191,865.00 December 2034
LTM2 Variable(2) 126,855.00 December 2034
LTM3 Variable(2) 77,305.00 December 2034
LTM4 Variable(2) 67,390.00 December 2034
LTM5 Variable(2) 69,375.00 December 2034
LTM6 Variable(2) 57,480.00 December 2034
LTM7 Variable(2) 53,520.00 December 2034
LTM8 Variable(2) 39,640.00 December 2034
LTM9 Variable(2) 39,640.00 December 2034
LTM10 Variable(2) 59,465.00 December 2034
LTZZ Variable(2) 4,005,843.89 December 2034
LT1SUB Variable(2) 5,855.71 December 2034
LT1GRP Variable(2) 28,310.01 December 2034
LT2SUB Variable(2) 5,813.01 December 2034
LT2GRP Variable(2) 27,960.51 December 2034
LT3SUB Variable(2) 4,784.53 December 2034
LT3GRP Variable(2) 23,013.83 December 2034
LTXX Variable(2) 396,325,926.90 December 2034
LTP Variable(2) $ 100 December 2034
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(1) Solely for purposes of Treasury Regulations Section 1.860G-1(a)(4)(iii),
the Distribution Date in the month following the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
REMIC II
As provided herein, the Trust Administrator shall make an election to
treat the segregated pool of assets consisting of the REMIC I Regular Interests
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC II." The Class R-II Interest represents the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
Interest on all Regular Certificates will be calculated on the basis of the
actual number of days in the related Interest Accrual Period and a 360-day year.
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The following table sets forth (or describes) the Class designation,
Certificate Interest Rate and original Class Certificate Balance for each Class
of Certificates comprising the interests in the Trust Fund created hereunder:
ORIGINAL CLASS CERTIFICATE ASSUMED FINAL
CLASS CERTIFICATE BALANCE INTEREST RATE MATURITY DATES (1)
----- ------------------- ------------- ------------------
1-A-1 $179,394,000.00 (2) December 2034
1-A-2 $44,849,000.000 (2) December 2034
2-A $221,475,000.00 (2) December 2034
3-A-1 $ 56,511,000.00 (2) December 2034
3-A-2 $112,411,000.00 (2) December 2034
3-A-3 $ 13,371,000.00 (2) December 2034
M1 $ 38,373,000.00 (2) December 2034
M2 $ 25,371,000.00 (2) December 2034
M3 $ 15,461,000.00 (2) December 2034
M4 $ 13,478,000.00 (2) December 2034
M5 $ 13,875,000.00 (2) December 2034
M6 $ 11,496,000.00 (2) December 2034
M7 $ 10,704,000.00 (2) December 2034
M8 $ 7,928,000.00 (2) December 2034
M9 $ 7,928,000.00 (2) December 2034
M10 $ 11,893,000.00 (2) December 2034
C (3) (3) December 2034
P $ 100 (4) December 2034
R N/A N/A December 2034
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date following the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each Class of Certificates and for the
REMIC II Uncertificated Regular Interests, each of which represents one or
more of the "regular interests" in REMIC II.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class C Interest will accrue interest at the Class C Pass-Through Rate
on the Notional Amount of the Class C Interests outstanding from time to
time which shall equal the aggregate of the Uncertificated Principal
Balances of the REMIC I Uncertificated Regular Interest. The Class C
Interest will have an initial principal balance equal to the Initial
Overcollateralization Amount. The Class C Interest will not accrue
interest on the REMIC II Uncertificated Principal Balance.
(4) The Class P Certificates do not bear interest. The Class P Certificates
represent the right to receive payments in respect of Prepayment Premiums.
The minimum denomination for each Class of the Offered Certificates will
be $25,000, with integral multiples of $1 in excess thereof except that one
Certificate in each Class may be issued in a different amount. The minimum
denomination for (a) each of the Class M10 Certificates will be $100,000, with
integral multiples of $1 in excess thereof except that one Certificate in each
Class may be issued in a different amount, (b) each of the Class P and Class R
Certificates will be a 100% Percentage Interest in such Class and (c) the Class
C Certificates will be a 10% Percentage Interest in such Class.
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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.
ERISA-Restricted Certificates...... Class R Certificates, Class P
Certificates, Class C Certificates
and Class M10 Certificates; and any
other certificate with a rating below
the lowest applicable permitted
rating under the Underwriters'
Exemption.
LIBOR Certificates................. The Senior Certificates and the Class
M Certificates.
Non-Delay Certificates............. The Offered Certificates, the Class
M10 and the Class C Certificates.
Offered Certificates............... All Classes of Certificates other
than the Private Certificates.
Physical Certificates.............. Class C, Class P and Class R
Certificates.
Private Certificates............... Class M10, Class C, Class P and Class
R Certificates.
Rating Agencies.................... Moody's and Standard & Poor's.
Regular Certificates............... All Classes of Certificates other
than the Class P and Class R
Certificates.
Residual Certificates.............. Class R Certificates.
Senior Certificates................ Class 1-A-1, Class 1-A-2, Class 2-A,
Class 3-A-1, Class 3-A-2 and Class
3-A-3 Certificates.
Subordinated Certificates.......... Class M1, Class M2, Class M3, Class
M4, Class M5, Class M6, Class M7,
Class M8, Class M9 and Class M10
Certificates.
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any Mortgage Loan, as
applicable, (1) either (x) those mortgage master servicing practices of prudent
mortgage lending institutions which master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located to the extent applicable to the Master Servicer
(except in its capacity as successor to the Servicer), or (y) as provided in
Section 3A.01 hereof, but in no event below the standard set forth in clause (x)
and (2) in accordance with applicable local, state and federal laws, rules and
regulations.
Accepted Servicing Practices: With respect to any Mortgage Loan, as
applicable, (1) either (x) those mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the same type and
quality as such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located to the extent applicable to the Servicer, or (y) as provided
in Section 3.01 hereof, but in no event below the standard set forth in clause
(x) and (2) in accordance with applicable local, state and federal laws, rules
and regulations.
Account: Any of the Collection Account, the Distribution Account, any
Escrow Account or the Net WAC Rate Carryover Reserve Account. Each Account shall
be an Eligible Account.
Accrued Certificate Interest Distribution Amount: With respect to any
Distribution Date for each Class of the Offered Certificates, 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.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan purchased
pursuant to the Purchase Agreement.
Adjusted Net Maximum Mortgage Interest Rate: As to each Mortgage Loan and
at any time, the per annum rate equal to the Maximum Mortgage Interest Rate less
the Expense Fee Rate.
Adjusted Net Mortgage Interest Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Interest Rate less the Expense
Fee Rate.
Adjustment Date: As to any Mortgage Loan, the first Due Date on which the
related Mortgage Interest Rate adjusts as set forth in the related Mortgage Note
and each Due Date thereafter on which the Mortgage Interest Rate adjusts as set
forth in the related Mortgage Note.
Advance: Any P&I Advance or Servicing Advance.
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Advance Facility: A financing or other facility as described in Section
10.07.
Advancing Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any P&I Advances or Servicing Advances have been
assigned pursuant to Section 10.07.
Adverse REMIC Event: As defined in Section 11.01(f)) hereof.
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.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which the aggregate Class Certificate Balance of the LIBOR
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: With respect to any Mortgage Loan, the value of the
related Mortgaged Property based upon the appraisal made for the originator at
the time of origination of such Mortgage Loan or the sales price of such
Mortgaged Property at such time of origination, whichever is less; provided,
however, that in the case of a refinanced Mortgage Loan, such value is based
solely upon the appraisal made at the time of origination of such refinanced
Mortgage Loan.
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.
Available Funds: With respect to any Distribution Date and the Mortgage
Loans to the extent received by the Trust Administrator (x) the sum of (i) all
scheduled installments of interest (net of the related Expense Fees) and
principal due on the Due Date on such Mortgage Loans in the related Due Period
and received on or prior to the related Determination Date, together with any
P&I Advances in respect thereof; (ii) all Condemnation Proceeds, Insurance
Proceeds and Liquidation Proceeds during the related Prepayment Period (in each
case, net of 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
together with all Compensating Interest thereon and any amounts paid by the
Servicer or Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Sections 3.25 and 3A.12, respectively
(excluding in each case Prepayment Premiums and any Prepayment Interest Excess);
(iv) any Subsequent Recoveries, and (v) amounts received with respect to such
Distribution Date as the Substitution Adjustment
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Amount or purchase price in respect of a Deleted Mortgage Loan or a Mortgage
Loan repurchased by the Originator or the Depositor as of such Distribution
Date; reduced by (y) amounts in reimbursement for P&I Advances and Servicing
Advances previously made with respect to the Mortgage Loans and other amounts to
which the Servicer, the Master Servicer, the Depositor, the Trust Administrator
or the Trustee (or co-trustee) are entitled to be paid or reimbursed pursuant to
this Agreement.
Base Rate: For any Distribution Date and any Class of LIBOR Certificates,
the sum of (i) one-month LIBOR plus (ii) the related Pass-Through Margin.
Best's: Best's Key Rating Guide, as the same shall be amended from time to
time.
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 states of New York,
Maryland, Minnesota and California, (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.
Certificate: Any one of the Certificates executed by the Trust
Administrator in substantially the forms attached hereto as exhibits.
Certificate Balance: With respect to any Class of Certificates, other than
the Class C or Class R Certificates, at any date, the maximum dollar amount of
principal to which the Holder 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 the Subordinate
Certificates, reduced by any Applied Realized Loss Amounts applicable to such
Class; provided, however, that the Certificate Balances of the Subordinated
Certificates then outstanding will be increased in direct order of seniority by
the amount of any Subsequent Recoveries distributed to any Class senior to such
Class. With respect to the Class C Certificate and any Distribution Date, the
excess, if any, of the then aggregate Uncertificated Principal Balances of the
REMIC I Regular Interests over the aggregate Certificate Balance of the Offered
Certificates, the Class M10 Certificates and the Class P Certificate then
outstanding. The Class R Certificates will not have a Certificate Balance.
Certificate Cap Agreement: Either or both of the Senior Certificate Cap
Agreement and/or the Subordinate Certificate Cap Agreement.
Certificate Cap Agreement Payments: The payments made under either or both
of the Certificate Cap Agreements.
Certificate Interest Rate: With respect to each Distribution Date during
the Interest Accrual Period and each Class of LIBOR Certificates and the Class C
Certificates, the related Pass-Through Rate.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.
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Certificate Register: The register maintained pursuant to Section 5.02.
Certificate Registrar: The registrar appointed 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, the Master Servicer or the Servicer or any affiliate
thereof 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 and the Trust Administrator are 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.
Class: All Certificates bearing the same Class designation as set forth in
the Preliminary Statement.
Class A Certificates: Any of the Class 1-A Certificates, Class 2-A
Certificates and the Class 3-A Certificates, as applicable.
Class 1-A Certificates: Any of the Class 1-A-1 Certificates and the Class
1-A-2 Certificates, as applicable.
Class 1-A-1 Certificates: All Certificates bearing the Class designation
of "Class 1-A-1 Certificates."
Class 1-A-2 Certificates: All Certificates bearing the Class designation
of "Class 1-A-2 Certificates."
Class 2-A Certificates: All Certificates bearing the Class designation of
"Class 2-A Certificates."
Class 3-A Certificates: Any of the Class 3-A-1 Certificates, Class 3-A-2
Certificates and the Class 3-A-3 Certificates, as applicable.
Class 3-A-1 Certificates: All Certificates bearing the Class designation
of "Class 3-A-1 Certificates."
Class 3-A-2 Certificates: All Certificates bearing the Class designation
of "Class 3-A-2 Certificates."
Class 3-A-3 Certificates: All Certificates bearing the Class designation
of "Class 3-A-3 Certificates."
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Class C Certificates: All Certificates bearing the Class designation of
"Class C Certificates."
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 C Distributable Amount: On any Distribution Date, the sum of (i) the
interest accrued on such Class C Certificate at its Pass-Through Rate calculated
on its Notional Amount less the amount (without duplication) of any Net WAC Rate
Carryover Payments paid pursuant to Section 4.02(a)(iii) and less the amount
applied as an Extra Principal Distribution Amount on such Distribution Date,
(ii) any amount of the Certificate Balance of the Class C Certificate that is
distributable as an Overcollateralization Release Amount and (iii) the aggregate
of amounts remaining in the Net WAC Rate Carryover Reserve Accounts after the
distributions in Sections 4.02(a)(iii)(F) and (G).
Class C Interest: The REMIC II Regular Interest represented by the Class C
Certificates as specified and described in the Preliminary Statement and the
related footnote thereto.
Class M1 Certificates: All Certificates bearing the Class designation of
"Class M1 Certificates."
Class M1 Principal Distribution Amount: With respect to any Distribution
Date, the excess (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date) and (ii) the aggregate
Certificate Balance of the Class M1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 68.10% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus $3,964,217.45.
Class M2 Certificates: All Certificates bearing the Class designation of
"Class M2 Certificates."
Class M2 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date) and (iii) the aggregate Certificate Balance of the Class M2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 74.50% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the
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9
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus $3,964,217.45.
Class M3 Certificates: All Certificates bearing the Class designation of
"Class M3 Certificates."
Class M3 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate Balance
of the Class M3 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 78.40% and (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) minus $3,964,217.45.
Class M4 Certificates: All Certificates bearing the Class designation of
"Class M4 Certificates."
Class M4 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date) and (v)
the aggregate Certificate Balance of the Class M4 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 81.80%
and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus $3,964,217.45.
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Class M5 Certificates: All Certificates bearing the Class designation of
"Class M5 Certificates."
Class M5 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date) and (vi) the aggregate Certificate Balance of the Class
M5 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 85.30% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$3,964,217.45.
Class M6 Certificates: All Certificates bearing the Class designation of
"Class M6 Certificates."
Class M6 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date) and (vii) the aggregate
Certificate Balance of the Class M6 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 88.20% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of
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11
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) minus $3,964,217.45.
Class M7 Certificates: All Certificates bearing the Class designation of
"Class M7 Certificates."
Class M7 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date) and (viii) the aggregate Certificate Balance of the Class M7 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 90.90% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus $3,964,217.45.
Class M8 Certificates: All Certificates bearing the Class designation of
"Class M8 Certificates."
Class M8 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after
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taking into account the distribution of the Class M4 Principal Distribution
Amount on such Distribution Date), (vi) the aggregate Certificate Balance of the
Class M5 Certificates (after taking into account the distribution of the Class
M5 Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date), (viii) the aggregate Certificate Balance of the Class M7 Certificates
(after taking into account the distribution of the Class M7 Principal
Distribution Amount on such Distribution Date) and (ix) the aggregate
Certificate Balance of the Class M8 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 94.90% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus $3,964,217.45.
Class M9 Certificates: All Certificates bearing the Class designation of
"Class M9 Certificates."
Class M9 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Balance of the Senior Certificates (after taking into account the distribution
of the Senior Principal Distribution Amount on such Distribution Date), (ii) the
aggregate Certificate Balance of the Class M1 Certificates (after taking into
account the distribution of the Class M1 Principal Distribution Amount on such
Distribution Date), (iii) the aggregate Certificate Balance of the Class M2
Certificates (after taking into account the distribution of the Class M2
Principal Distribution Amount on such Distribution Date), (iv) the aggregate
Certificate Balance of the Class M3 Certificates (after taking into account the
distribution of the Class M3 Principal Distribution Amount on such Distribution
Date), (v) the aggregate Certificate Balance of the Class M4 Certificates (after
taking into account the distribution of the Class M4 Principal Distribution
Amount on such Distribution Date), (vi) the aggregate Certificate Balance of the
Class M5 Certificates (after taking into account the distribution of the Class
M5 Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date), (viii) the aggregate Certificate Balance of the Class M7 Certificates
(after taking into account the distribution of the Class M7 Principal
Distribution Amount on such Distribution Date), (ix) the aggregate Certificate
Balance of the Class M8 Certificates (after taking into account the distribution
of the Class M8 Principal Distribution Amount on such Distribution Date) and (x)
the aggregate Certificate Balance of the Class M9 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 94.90%
and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled
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13
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus $3,964,217.45.
Class M10 Certificates: All Certificates bearing the Class designation of
"Class M10 Certificates."
Class M10 Principal Distribution Amount: With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the aggregate
Certificate Balance of the Class M1 Certificates (after taking into account the
distribution of the Class M1 Principal Distribution Amount on such Distribution
Date), (iii) the aggregate Certificate Balance of the Class M2 Certificates
(after taking into account the distribution of the Class M2 Principal
Distribution Amount on such Distribution Date), (iv) the aggregate Certificate
Balance of the Class M3 Certificates (after taking into account the distribution
of the Class M3 Principal Distribution Amount on such Distribution Date), (v)
the aggregate Certificate Balance of the Class M4 Certificates (after taking
into account the distribution of the Class M4 Principal Distribution Amount on
such Distribution Date), (vi) the aggregate Certificate Balance of the Class M5
Certificates (after taking into account the distribution of the Class M5
Principal Distribution Amount on such Distribution Date), (vii) the aggregate
Certificate Balance of the Class M6 Certificates (after taking into account the
distribution of the Class M6 Principal Distribution Amount on such Distribution
Date), (viii) the aggregate Certificate Balance of the Class M7 Certificates
(after taking into account the distribution of the Class M7 Principal
Distribution Amount on such Distribution Date), (ix) the aggregate Certificate
Balance of the Class M8 Certificates (after taking into account the distribution
of the Class M8 Principal Distribution Amount on such Distribution Date), (x)
the aggregate Certificate Balance of the Class M9 Certificates (after taking
into account the distribution of the Class M9 Principal Distribution Amount on
such Distribution Date) and (x) the aggregate Certificate Balance of the Class
M10 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 97.90% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
$3,964,217.45.
Class P Certificates: All Certificates bearing the Class designation of
"Class P Certificates" representing the right to distributions as set forth
herein and therein and representing an interest in REMIC II.
Class R Certificates: All Certificates bearing the Class designation of
"Class R Certificates" and evidencing the ownership of the Residual Interest in
each of REMIC I and REMIC II. The Class R Certificate represents the ownership
of the Class R-I Interest and the Class R-II Interest.
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Class R-I Interest: The residual interest in the REMIC I.
Class R-II Interest: The residual interest in REMIC II.
Closing Date: On or about November 23, 2004.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: As defined in Section 3.10.
Compensating Interest: For any Distribution Date, the lesser of (a) the
Prepayment Interest Shortfall, if any, for such Distribution Date, with respect
to voluntary Principal Prepayments in full by the Mortgagor (excluding any
payments made upon liquidation of the Mortgage Loan), and (b) the amount of the
Servicing Fee payable to the Servicer for such Distribution Date.
Condemnation Proceeds: All awards, compensation and/or settlements in
respect of a Mortgaged Property, whether permanent or temporary, partial or
entire, by exercise of the power of eminent domain or condemnation.
Corporate Trust Office. The designated office of the Trustee or the Trust
Administrator, as the case may be, 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 (i) with respect to
the Trustee, HSBC Bank USA, National Association, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or at such other address as the Trustee may designate from time
to time by notice to the Certificateholders, the Depositor, the Servicer, the
Master Servicer, the Originator and the Trust Administrator, or (ii) with
respect to the Trust Administrator, (A) for certificate transfer purposes, Xxxxx
Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate
Trust Services-Fremont 2004-D and (B) for all other purposes, 0000 Xxx Xxxxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxx 00000 Attn: Client Manager-Fremont 2004-D, facsimile
no. (000) 000-0000 and which is the address to which notices to and
correspondence with the Trust Administrator should be directed.
Corresponding Class: The Class of interests in one Trust REMIC created
under this Agreement that corresponds to the Class of interests in the other
Trust REMIC or to a Class of Certificates in the manner set out below:
CORRESPONDING REMIC I CLASSES CORRESPONDING REMIC II CLASSES
----------------------------- ------------------------------
LT1A1 Class 1-A-1 Certificates
LT1A2 Class 1-A-2 Certificates
LT2A Class 2-A Certificates
LT3A1 Class 3-A-1 Certificates
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LT3A2 Class 3-A-2 Certificates
LT3A3 Class 3-A-3 Certificates
LTM1 Class M1 Certificates
LTM2 Class M2 Certificates
LTM3 Class M3 Certificates
LTM4 Class M4 Certificates
LTM5 Class M5 Certificates
LTM6 Class M6 Certificates
LTM7 Class M7 Certificates
LTM8 Class M8 Certificates
LTM9 Class M9 Certificates
LTM10 Class M10 Certificates
LTP Class P Certificates
N/A Class C Certificate
Counterparty: Xxxxx Fargo Bank, N.A., and its successors in interest.
Credit 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
Overcollateralized Amount (in each case after taking into account the
distributions of the Principal Distribution Amount for such Distribution Date)
by (y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
Custodial File: With respect to each Mortgage Loan, the file retained by
the Trust Administrator consisting of items (a) - (h) as listed on Exhibit K
hereto.
Cut-off Date: With respect to each Mortgage Loan (other than a Substitute
Mortgage Loan), November 1, 2004. With respect to all Substitute Mortgage Loans,
their respective dates of substitution. References herein to the "Cut-off Date,"
when used with respect to more than one Mortgage Loan, shall be to the
respective Cut-off Dates for such Mortgage Loans.
Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the close of business on the Cut-off Date
(after giving effect to payments of principal due on that date).
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Data Tape Information: The information provided by the Originator as of
the Cut-off Date to the Depositor setting forth the following information with
respect to each Mortgage Loan: (1) the Originator's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the city, state and zip code; (4) a code indicating whether
the Mortgaged Property is owner-occupied, a second home or investment property;
(5) the number and type of residential units constituting the Mortgaged Property
(i.e., a single family residence, a 2-4 family residence, a unit in a
condominium project or a unit in a planned unit development, manufactured
housing); (6) the original months to maturity or the remaining months to
maturity from the Cut-off Date, in any case based on the original amortization
schedule and, if different, the maturity expressed in the same manner but based
on the actual amortization schedule; (7) the Loan-to-Value Ratio at origination;
(8) the Mortgage Interest Rate as of the Cut-off Date; (9) the date on which the
Scheduled Payment was due on the Mortgage Loan and, if such date is not
consistent with the Due Date currently in effect, such Due Date; (10) the stated
maturity date; (11) the amount of the Scheduled Payment as of the Cut-off Date;
(12) the last payment date on which a Scheduled Payment was actually applied to
pay interest and, if applicable, the outstanding principal balance; (13) the
original principal amount of the Mortgage Loan; (14) the principal balance of
the Mortgage Loan as of the close of business on the Cut-off Date, after
deduction of payments of principal due and collected on or before the Cut-off
Date; (15) with respect to Adjustable Rate Mortgage Loans, the Adjustment Date;
(16) with respect to Adjustable Rate Mortgage Loans, the Gross Margin; (17) with
respect to Adjustable Rate Mortgage Loans, the Lifetime Rate Cap under the terms
of the Mortgage Note; (18) with respect to Adjustable Rate Mortgage Loans, a
code indicating the type of Index; (19) with respect to Adjustable Rate Mortgage
Loans, the Periodic Mortgage Interest Rate Cap under the terms of the Mortgage
Note; (20) the type of Mortgage Loan (i.e., fixed rate, adjustable rate, first
lien); (21) a code indicating the purpose of the loan (i.e., purchase, rate and
term refinance, equity take-out refinance); (22) a code indicating the
documentation style (i.e., full documentation, easy documentation or stated
income); (23) the loan credit classification (as described in the Underwriting
Guidelines); (24) whether such Mortgage Loan provides for a Prepayment Premium;
(25) the Prepayment Premium period of such Mortgage Loan, if applicable; (26) a
description of the Prepayment Premium, if applicable; (27) the Mortgage Interest
Rate as of origination; (28) the credit risk score at origination; (29) the date
of origination; (30) the Mortgage Interest Rate adjustment period; (31)the
Mortgage Interest Rate floor; (32) the Mortgage Interest Rate calculation method
(i.e., 30/360, simple interest, other); (33) a code indicating whether the
Mortgage Loan is a High Cost Mortgage Loan; (34) a code indicating whether the
Mortgage Loan has been modified; (35) the current Loan-to-Value Ratio; (36)
[Reserved]; (37) the Due Date for the first Scheduled Payment; (38) the original
Scheduled Payment due; (39) with respect to the related Mortgagor, the
debt-to-income ratio; (40) the Appraised Value of the Mortgaged Property; (41)
the sales price of the Mortgaged Property if the Mortgage Loan was originated in
connection with the purchase of the Mortgaged Property; (42) the MERS
identification number; and (43) a code indicating if a Mortgage Loan is a 30-Day
Delinquency. With respect to the Mortgage Loans in the aggregate: (1) the number
of Mortgage Loans; (2) the current aggregate outstanding principal balance of
the Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the
Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans.
Fremont 2004-D
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Debt Service Reduction: With respect to any Mortgage Loan, a reduction by
a court of competent jurisdiction in a proceeding under the United States
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which became
final and non-appealable, except for 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 United States 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).
Deleted Mortgage Loan: As defined in Section 2.03(d).
Delinquency Rate: With respect to any month, the quotient (expressed as a
percentage) of (1) the Stated Principal Balance of the 60+ Day Delinquent
Mortgage Loans, divided by (2) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related month.
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: Fremont Mortgage Securities Corporation, a Delaware
corporation, and its successors 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 Institution: Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated P-1 by Moody's and A-1 by Standard & Poor's.
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 Distribution Date, the 18th of
the calendar month in which such Distribution Date occurs or, if such day is not
a Business Day, the immediately preceding Business Day.
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Distribution Account: The separate Eligible Account created and maintained
by the Trust Administrator pursuant to Section 3.27(b) in the name of the Trust
Administrator for the benefit of the Certificateholders and designated "Xxxxx
Fargo Bank, N.A. in trust for registered holders of Fremont Home Loan Trust
2004-D Mortgage-Backed Certificates, Series 2004-D." Funds in the Distribution
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement and may be invested in Permitted
Investments.
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, 2004.
Document Certification and Exception Report: The report attached to
Exhibit F 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 any Distribution Date, the period commencing
on the second day of the calendar month preceding the month in which the
Distribution Date occurs and ending on the first day of the calendar month in
which the Distribution Date occurs.
Eligible Account: Either (i) an account maintained with a federal or state
chartered depository institution or trust company the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1 by Standard & Poor's and P-1
by Moody's (and a comparable rating if another Rating Agency is specified by the
Depositor by written notice to the Servicer) at the time any amounts are held on
deposit therein, (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.
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 ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002) (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: Means any (i) Servicer Event of Default or (ii) Master
Servicer Event of Termination, each as defined in Section 7.01.
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Excess Cashflow: As to any Distribution Date, an amount equal to the
excess if any, of (i) the interest collected on the Mortgage Loans received by
the Servicer on or prior to the related Determination Date or advanced by the
Servicer for the related Remittance Date (net of Expense Fees) over (ii) the sum
of the amounts payable to the Classes of Certificates on such Distribution Date
pursuant to Section 4.02(a)(i).
Excess Overcollateralized Amount: With respect to any Distribution Date,
the excess, if any, of (a) the Overcollateralized Amount on such Distribution
Date over (b) the Overcollateralization Target Amount for such Distribution
Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: As to each Mortgage Loan, a per annum rate equal to the
sum of the Servicing Fee Rate, the Master Servicing Fee Rate and the Trust
Administration Fee Rate.
Expense Fees: As to each Mortgage Loan, the sum of the Servicing Fee, the
Master Servicing Fee and the Trust Administration Fee.
Extra Principal Distribution Amount: As of any Distribution Date, the
lesser of (x) the Excess Cashflow for such Distribution Date and (y) the related
Overcollateralization Deficiency for such Distribution Date.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Final Recovery Determination: With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Originator as contemplated by this Agreement), a determination made by the
Servicer that all Insurance Proceeds, Condemnation 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 and deliver a
certificate of a Servicing Officer evidencing such determination to the Master
Servicer.
Final Scheduled Distribution Date: The Final Scheduled Distribution Date
for each Class of Certificates is the Distribution Date occurring in December
2034.
Formula Rate: With respect to each Class of Class 1-A Certificates, the
lesser of the Base Rate for the such Class and the Group 1 Maximum Cap Rate.
With respect to the Class 2-A Certificates, the lesser of the Base Rate for such
Class and the Group 2 Maximum Cap Rate. With respect to each Class of Class 3-A
Certificates, the lesser of the Base Rate for such Class and the Group 3 Maximum
Cap Rate. With respect to each Class of the Subordinated Certificates the lesser
of the Base Rate for such Class and the Maximum Cap Rate.
Fremont: Fremont Investment & Loan, a California state chartered
industrial bank, and its successors in interest.
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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 Interest Rate.
Group 1 Allocation Percentage: For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is (i) the Principal Remittance
Amount for the Group 1 Mortgage Loans for such Distribution Date, and the
denominator of which is (ii) the Principal Remittance Amount for such
Distribution Date.
Group 1 Interest Remittance Amount: With respect to any Distribution Date,
that portion of the Available Funds for such Distribution Date attributable to
interest received or advanced with respect to the Group 1 Mortgage Loans,
reduced by the pro rata portion of the amounts specified in clause (y) of the
definition of Available Funds for such Distribution Date.
Group 1 Maximum Cap Rate: With respect to the Group 1 Mortgage Loans as of
any Distribution Date, the product of (i) the weighted average of the Adjusted
Net Maximum Mortgage Interest Rates then in effect on the beginning of the
related Due Period on the Group 1 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) 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.
Group 1 Mortgage Loans: The Mortgage Loans identified on the Mortgage Loan
Schedule as Group 1 Mortgage Loans.
Group 1 Net WAC Rate: A per annum rate equal to (a) the weighted average
of the Adjusted Net Mortgage Interest Rates then in effect at the beginning of
the related Due Period on the Group 1 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) multiplied by (b) 30 divided by the actual number of
days in such Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
the Uncertificated REMIC I Pass-Through Rate on REMIC I Regular Interest LT1GRP,
weighted on the basis of the Uncertificated Balance of such REMIC I Regular
Interest.
Group 1 Principal Distribution Amount: With respect to any Distribution
Date is the sum of (i) the excess of (x) the Principal Remittance Amount
relating to the Group 1 Mortgage Loans over (y) the Overcollateralization
Release Amount multiplied by the Group 1 Allocation Percentage for such
Distribution Date and (ii) the Extra Principal Distribution Amount for such
Distribution Date multiplied by the Group 1 Allocation Percentage.
Group 1 Senior Principal Distribution Amount: An amount equal to the
excess of (x) the aggregate Certificate Balance of the Class 1-A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 58.42% and (ii) the aggregate Stated Principal Balance of the
Group 1 Mortgage Loans as of the last day of the related Due Period (after
giving effect to Scheduled Payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group 1
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Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus $1,415,500.28.
Group 1 Sequential Trigger Event: With respect to any Distribution Date, a
Group 1 Sequential Trigger Event exists if (1) before December 2007, the
quotient (expressed as a percentage) of (x) the aggregate amount of Realized
Losses incurred since the Cut-off Date through the last day of the related
Prepayment Period divided by (y) the Cut-off Date Pool Principal Balance,
exceeds 3.00%, or (2) on or after December 2007, a Trigger Event is in effect.
Group 2 Allocation Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is (i) the Principal
Remittance Amount for the Group 2 Mortgage Loans for such Distribution Date, and
the denominator of which is (ii) the Principal Remittance Amount for such
Distribution Date.
Group 2 Interest Remittance Amount: With respect to any Distribution Date,
that portion of the Available Funds for such Distribution Date attributable to
interest received or advanced with respect to the Group 2 Mortgage Loans,
reduced by the pro rata portion of the amounts specified in clause (y) of the
definition of Available Funds for such Distribution Date.
Group 2 Maximum Cap Rate: With respect to the Group 2 Mortgage Loans as of
any Distribution Date, the product of (i) the weighted average of the Adjusted
Net Maximum Mortgage Interest Rates then in effect on the beginning of the
related Due Period on the Group 2 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) 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.
Group 2 Mortgage Loans: The Mortgage Loans identified on the Mortgage Loan
Schedule as Group 2 Mortgage Loans.
Group 2 Net WAC Rate: A per annum rate equal to (a) the weighted average
of the Adjusted Net Mortgage Interest Rates then in effect at the beginning of
the related Due Period on the Group 2 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period), multiplied by (b) 30 divided by the actual number of
days in such Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
the Uncertificated REMIC I Pass-Through Rate on REMIC I Regular Interest LT2GRP,
weighted on the basis of the Uncertificated Balance of such REMIC I Regular
Interest.
Group 2 Principal Distribution Amount: With respect to any Distribution
Date, the sum of (i) the excess of (x) the Principal Remittance Amount with
respect to the Group 2 Mortgage Loans over (y) the Overcollateralization Release
Amount multiplied by the Group 2 Allocation Percentage for such Distribution
Date and (ii) the Extra Principal Distribution Amount for such Distribution Date
multiplied by the Group 2 Allocation Percentage.
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Group 2 Senior Principal Distribution Amount: An amount equal to the
excess of (x) the aggregate Certificate Balance of the Class 2-A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 58.42% and (ii) the aggregate Principal Balance of the Group 2
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Principal Balance of
the Group 2 Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus $1,398,025.54.
Group 3 Allocation Percentage: For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is (i) the Principal Remittance
Amount for the Group 3 Mortgage Loans for such Distribution Date, and the
denominator of which is (ii) the Principal Remittance Amount for such
Distribution Date.
Group 3 Interest Remittance Amount: With respect to any Distribution Date,
that portion of the Available Funds for such Distribution Date attributable to
interest received or advanced with respect to the Group 3 Mortgage Loans,
reduced by the pro rata portion of the the amounts specified in clause (y) of
the definition of Available Funds for such Distribution Date.
Group 3 Maximum Cap Rate: With respect to the Group 3 Mortgage Loans as of
any Distribution Date, the product of (i) the weighted average of the Adjusted
Net Maximum Mortgage Interest Rates then in effect on the beginning of the
related Due Period on the Group 3 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) 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.
Group 3 Mortgage Loans: The Mortgage Loans identified on the Mortgage Loan
Schedule as Group 3 Mortgage Loans.
Group 3 Net WAC Rate: A per annum rate equal to (a) the weighted average
of the Adjusted Net Mortgage Interest Rates then in effect at the beginning of
the related Due Period on the Group 3 Mortgage Loans (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period) multiplied by (b) 30 divided by the actual number of
days in such Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
the Uncertificated REMIC I Pass-Through Rate on REMIC I Regular Interest LT3GRP,
weighted on the basis of the Uncertificated Balance of such REMIC I Regular
Interest.
Group 3 Principal Distribution Amount: With respect to any Distribution
Date is the sum of (i) the excess of (x) the Principal Remittance Amount
relating to the Group 3 Mortgage Loans over (y) the Overcollateralization
Release Amount multiplied by the Group 3 Allocation Percentage for such
Distribution Date and (ii) the Extra Principal Distribution Amount for such
Distribution Date multiplied by the Group 3 Allocation Percentage.
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Group 3 Senior Principal Distribution Amount: An amount equal to the
excess of (x) the aggregate Certificate Balance of the Class 3-A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 58.42% and (ii) the aggregate Stated Principal Balance of the
Group 3 Mortgage Loans as of the last day of the related Due Period (after
giving effect to Scheduled Payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group 3 Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) minus $1,150,691.63.
Group Subordinate Amount: With respect to any Distribution Date and (i)
the Group 1 Mortgage Loans, will be equal to the excess of the aggregate
Principal Balance of the Group 1 Mortgage Loans as of the first day of the
related Collection Period over the aggregate Certificate Balance of the Class
1-A Group Certificates immediately prior to such Distribution Date, (ii) the
Group 2 Mortgage Loans, will be equal to the excess of the aggregate Principal
Balance of the Group 2 Mortgage Loans as of the first day of the related
Collection Period over the Certificate Balance of the Class 2-A Certificates
immediately prior to such Distribution Date, and (iii) the Group 3 Mortgage
Loans, will be equal to the excess of the aggregate Principal Balance of the
Group 3 Mortgage Loans as of the first day of the related Collection Period over
the aggregate Certificate Balance of the Class 3-A Group Certificates
immediately prior to such Distribution Date.
High Cost Mortgage Loan: A Mortgage Loan classified as (a) a "high cost"
loan under the Home Ownership and Equity Protection Act of 1994, (b) a "high
cost," "threshold," "covered" or "predatory" loan under any other applicable
state, federal or local law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest rates,
points and/or fees) or (c) a High Cost Loan or Covered Loan as defined in the
Standard & Poor's LEVELS(R) Glossary attached as Exhibit P (the "Glossary")
where (x) a "High Cost Loan" is each loan identified in the column "Category
under applicable anti-predatory lending law" of the table entitled "Standard &
Poor's High Cost Loan Categorization" in the Glossary as each such loan is
defined in the applicable anti-predatory lending law of the State or
jurisdiction specified in such table and (y) "Covered Loan" is each loan
identified in the column "Category under applicable anti-predatory lending law"
of the table entitled "Standard & Poor's High Covered Loan Categorization" in
the Glossary as each such loan is defined in the applicable anti-predatory
lending law of the State of jurisdiction specified in such table.
Index: As to each Adjustable Rate Mortgage Loan, the index from time to
time in effect for the adjustment of the Mortgage Interest Rate set forth as
such on the related Mortgage Note.
Initial Overcollateralization Amount: $8,324,856.63.
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.
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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 each Class of REMIC I Regular
Interests and any Distribution Date, the period commencing on the Distribution
Date occurring in the month preceding the month in which the current
Distribution Date occurs and ending on the day immediately preceding the current
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). For purposes of computing interest accruals on each Class of LIBOR
Certificates, each Interest Accrual Period has the actual number of days in such
month and each year is assumed to have 360 days.
Investment Account: As defined in Section 3.12(a).
Issuer: Fremont Home Loan Trust 2004-D,
Late Collections: With respect to any Mortgage Loan and any Due Period,
all amounts received after the Remittance Date immediately following such Due
Period, whether as late payments of Scheduled Payments or as Insurance Proceeds,
Condemnation 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.
LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Trust Administrator 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 Trust Administrator 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 Trust
Administrator (after consultation with the Depositor), 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 Determination Date: With respect to any Interest Accrual Period for
the LIBOR Certificates, the second London Business Day preceding the
commencement of such Interest Accrual Period.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the amount per annum set forth on the Mortgage Loan Schedule.
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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.
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: The amounts, other than Insurance Proceeds,
Condemnation Proceeds or those received following the acquisition of REO
Property, received in connection with the liquidation of a defaulted Mortgage
Loan, whether through the sale or assignment of such Mortgage Loan, trustee's
sale, foreclosure sale or otherwise.
Loan Group: The Group 1 Mortgage Loans, the Group 2 Mortgage Loans and the
Group 3 Mortgage Loans, as applicable.
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 either (a)
if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the least of (i) the purchase price of the Mortgaged
Property, or (ii) the Appraisal Value of the Mortgaged Property at origination,
or (b) if the Mortgage Loan was a refinancing or modification, the Appraisal
Value of the Mortgaged Property at the time of the refinancing or modification.
London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
Marker Rate: With respect to the Class C Certificates and any Distribution
Date, a per annum rate equal to two (2) times the weighted average of the
Uncertificated REMIC I Pass-Through Rates for REMIC I Regular Interest LT1A1,
REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular
Interest LT3A1, REMIC I Regular Interest LT3A2, REMIC I Regular Interest LT3A3,
REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular
Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular Interest LTM5,
REMIC I Regular Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular
Interest LTM8, REMIC I Regular Interest LTM9, REMIC Regular Interest LTM10 and
REMIC I Regular Interest LTZZ, (i) with the rate on each such REMIC Regular
Interest (other than REMIC I Regular Interest LTZZ) subject to a cap equal to
the Formula Rate of its Corresponding Class (taking into account in determining
any such Formula Rate the imposition of the Group 1 Net WAC Rate, the Group 2
Net WAC Rate, the Group 3 Net WAC Rate or the Net WAC Rate, as applied though
its corresponding Pass-Through Rate) for the purposes of this calculation and
(ii) with the rate on REMIC I Regular Interest LTZZ subject to a cap of zero for
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the purpose of this calculation; provided, however, that for this purpose,
calculations of the Uncertificated REMIC I Pass-Through Rate and the related
caps with respect to each such REMIC Regular Interest (other than REMIC I
Regular Interest LTZZ) shall be multiplied by a fraction, the numerator of which
is the actual number of days in the Interest Accrual Period and the denominator
of which is 30.
Master Servicer: As of the Closing Date, Xxxxx Fargo Bank, N.A. and
thereafter, its respective successors in interest who meet the qualifications of
this Agreement. As long as a Master Servicer is required under this Agreement,
the Master Servicer and the Trust Administrator shall at all times be the same
Person.
Master Servicer Event of Termination: One or more of the events described
in Section 7.01(c).
Master Servicing Fee: With respect to the Mortgage Loans and for any
calendar month, an amount, payable as provided in Section 3A.09, equal to the
Master Servicing Fee Rate accrued for one month on the same principal amount on
which interest on each Mortgage Loan accrues for such calendar month.
Master Servicing Fee Rate: 0.005% per annum; provided, however, if Fremont
Investment & Loan has been removed as Servicer or has resigned as Servicer, and
in either such case if a Master Servicer is no longer required hereunder, then
the Master Servicing Fee Rate shall be 0.00% per annum.
Master Servicing Officer: Any employee of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans,
whose name and specimen signature appear on a list of Master Servicing Officers
furnished by the Master Servicer to the Trustee, the Trust Administrator, the
Servicer and the Depositor on the Closing Date, as such list may from time to
time be amended.
Maximum Mortgage Interest Rate: With respect to an Adjustable Rate
Mortgage Loan, the specified maximum mortgage rate over the life of such
mortgage loan; with respect to a Mortgage Loan with a fixed rate, the Mortgage
Interest Rate.
Maximum Cap Rate: A per annum rate equal to (a) the weighted average of
the Adjusted Net Maximum Mortgage Interest Rates then in effect at the beginning
of the related Due Period on the Group 1 Mortgage Loans, Group 2 Mortgage Loans
and Group 3 Mortgage Loans with each such group weighted proportionately between
the Group 1 Mortgage Loans, Group 2 Mortgage Loans and the Group 3 Mortgage
Loans on the basis of the related Group Subordinate Amount and (adjusted for
Prepayments during such Due Period that were distributed on the Distribution
Date falling within such Due Period), multiplied by (b) 30 divided by the actual
number of days in the related Interest Accrual Period.
Maximum LTZZ Uncertificated Accrued Interest Deferral Amount: With respect
to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC I Pass-Through Rate applicable to REMIC I Regular Interest
LTZZ for such Distribution Date on a balance equal to the Uncertificated
Principal Balance of REMIC I Regular Interest LTZZ minus the REMIC I
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Overcollateralized Amount, in each case for such Distribution Date, over (b)
REMIC I Regular Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular
Interest LT2A, REMIC I Regular Interest LT3A1, REMIC I Regular Interest LT3A2,
REMIC I Regular Interest LT3A3, REMIC I Regular Interest LTM1, REMIC I Regular
Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4,
REMIC I Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular
Interest LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9 and
REMIC I Regular Interest LTM10, each subject to a cap equal to the Formula Rate
of its Corresponding Class (taking into account in determining any such Formula
Rate the imposition of the Group 1 Net WAC Rate, the Group 2 Net WAC Rate, the
Group 3 Net WAC Rate or the Net WAC Rate, as applied though its corresponding
Pass-Through Rate) for the purposes of this calculation; provided, however, that
for this purpose, calculations of the Uncertificated REMIC I Pass-Through Rate
and the related caps with respect to Uncertificated Accrued Interest on REMIC I
Regular Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest
LT2A, REMIC I Regular Interest LT3A1, REMIC I Regular Interest LT3A2, REMIC I
Regular Interest LT3A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest
LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I
Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest
LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9 and REMIC I
Regular Interest LTM10 multiplied by a fraction, the numerator of which is the
actual number of days in the Interest Accrual Period and the denominator of
which is 30.
MERS: As defined in Section 2.01.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the Originator
has designated or will designate MERS as, and has taken or will take such action
as is necessary to cause MERS to be, the mortgagee of record, as nominee for the
Originator, in accordance with MERS Procedure Manual and (b) the Originator has
designated or will designate the Trustee as the Investor on the MERS(R) System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Statement: The statement made available 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, the Servicer, the Master Servicer, the Trust Administrator and
the Trustee.
Mortgage: The mortgage, deed of trust or other instrument identified on
the Mortgage Loan Schedule as securing a Mortgage Note.
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Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note with respect to each Mortgage Loan.
Mortgage Loan: 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 Custodial File, the Servicing File,
the Scheduled Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition proceeds, Prepayment
Premiums and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan, excluding replaced or repurchased
Mortgage Loans.
Mortgage Loan Documents: The mortgage loan documents pertaining to each
Mortgage Loan.
Mortgage Loan Schedule: As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, attached hereto as Schedule I. The
Mortgage Loan Schedule shall set forth by Loan Group the following information
with respect to each Mortgage Loan in such Loan Group :
(i) the Mortgagor's name and the Originator's Mortgage Loan
identifying number;
(ii) the street address of the Mortgaged Property including the
state and zip code;
(iii) a code indicating whether the Mortgaged Property is
owner-occupied;
(iv) the number and type of residential dwelling constituting the
Mortgaged Property (i.e., a single family residence, a 2-4 family
residence, a unit in a condominium project or a unit in a planned unit
development, manufactured housing);
(v) the original months to maturity;
(vi) the Loan-to-Value Ratio, at origination;
(vii) the Mortgage Interest Rate in effect immediately following the
Cut-off Date;
(viii) the date on which the first monthly payment was due on the
Mortgage Loan;
(ix) the stated maturity date of such Mortgage Loan;
(x) the amount of the monthly payment (a) at origination and (b) due
on the first Due Date after the Cut-off Date;
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(xi) the last Due Date on which a monthly payment was actually
applied to the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage Loan as of the
date of origination;
(xiii) the Stated Principal Balance of the Mortgage Loan as of the
close of business on the Cut-off Date;
(xiv) with respect to each Adjustable Rate Mortgage Loan, the
Applicable Index and Gross Margin;
(xv) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase financing, rate/term refinancing, cash-out refinancing);
(xvi) with respect to each Adjustable Rate Mortgage Loan, the
maximum Mortgage Interest Rate;
(xvii) with respect to each Adjustable Rate Mortgage Loan, the
minimum Mortgage Interest Rate;
(xviii) the Mortgage Interest Rate at origination;
(xix) with respect to each Adjustable Rate Mortgage Loan, the
Periodic Mortgage Interest Rate Cap and the maximum first Adjustment Date
Mortgage Interest Rate adjustment;
(xx) a code indicating the documentation program;
(xxi) with respect to each Adjustable Rate Mortgage Loan, the first
Adjustment Date immediately following the Cut-off Date and the Adjustment
Date frequency;
(xxii) the value of the Mortgaged Property used to calculate the LTV
for the related Mortgage Loan;
(xxiii) the sale price of the Mortgaged Property, if applicable;
(xxiv) the Originator's risk grade;
(xxv) the actual interest "paid to date" of the Mortgage Loan as of
the Cut-off Date;
(xxvi) the number of years any Prepayment Premium is in effect;
(xxvii) the loan type (i.e. fixed, adjustable; 2/28, 3/27, etc.);
(xxviii) the actual unpaid principal balance of the Mortgage Loan as
of the Cut-off Date;
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(xxix) a code indicating whether such Mortgage Loan is a Group 1
Mortgage Loan, a Group 2 Mortgage Loan or a Group 3 Mortgage Loan;
(xxx) a code indicating whether the Mortgage Loan is a MERS
Designated Mortgage Loan and, if so, its corresponding mortgage
identification number; and
(xxxi) a code indicating whether the Mortgage Loan is subject to a
Prepayment Premium, if any.
The Mortgage Loan Schedule shall set forth the following information with
respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1) the
number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and (4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall set forth the aggregate Stated Principal Balance of the Mortgage
Loans. The Mortgage Loan Schedule shall be amended from time to time by the
Depositor in accordance with the provisions of this Agreement. With respect to
any Substitute Mortgage Loan, the Cut-off Date shall refer to the related
Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a 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.
Net WAC Rate: A per annum rate equal to (a) the weighted average of the
Adjusted Net Mortgage Interest Rates then in effect at the beginning of the
related Due Period on the Group 1 Mortgage Loans, Group 2 Mortgage Loans and
Group 3 Mortgage Loans with each such group weighted proportionately between the
Group 1 Mortgage Loans, Group 2 Mortgage Loans and the Group 3 Mortgage Loans on
the basis of the related Group Subordinate Amount (adjusted for prepayments
during such Due Period that were distributed on the Distribution Date falling
within such Due Period), multiplied by (b) 30 divided by the actual number of
days in such Interest Accrual Period. For federal income tax purposes, the
economic equivalent of such rate shall be expressed as the weighted average of
the Uncertificated REMIC 1 Pass-Through Rate on (x) REMIC I Regular Interest
LT1SUB, subject to a cap and floor equal to the weighted average of the Adjusted
Net Mortgage Interest Rates of the Group 1 Mortgage Loans, weighted on the basis
of the Uncertificated Balance of each such REMIC I Regular Interest, (y) REMIC I
Regular
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Interest LT2SUB, subject to a cap and floor equal to the weighted average of
the Adjusted Net Mortgage Interest Rates of the Group 2 Mortgage Loans, weighted
on the basis of the Uncertificated Balance of each such REMIC I Regular Interest
and (z) REMIC I Regular Interest LT3SUB, subject to a cap and floor equal to the
weighted average of the Adjusted Net Mortgage Interest Rates of the Group 3
Mortgage Loans, weighted on the basis of the Uncertificated Balance of each such
REMIC I Regular Interest.
Net WAC Rate Carryover Amount: With respect to each Class of LIBOR
Certificates, as of any Distribution Date, if on such Distribution Date the
Pass-Through Rate for any Class of LIBOR Certificates is based upon a Maximum
Cap Rate or a Net WAC Rate, the sum of (A) the excess of the Base Rate for that
Class of LIBOR Certificates over (i) with respect to the Class 1-A Group
Certificates, the lesser of the Group 1 Maximum Cap Rate or the Group 1 Net WAC
Rate, (ii) with respect to the Class 2-A Certificates, the lesser of the Group 2
Maximum Cap Rate or the Group 2 Net WAC Rate, (iii) with respect to the Class
3-A Group Certificates, the lesser of the Group 3 Maximum Cap Rate or the Group
3 Net WAC Rate and (iv) with respect to the Class M Certificates, the lesser of
the Maximum Cap Rate or the Net WAC Rate and (B) the Net WAC Rate Carryover
Amount for such Class of Certificates for all previous Distribution Dates not
previously paid, together with interest thereon at the applicable Pass-through
Rate for such Class (without giving effect to any such limitations) of LIBOR
Certificates for such Distribution Date.
Net WAC Rate Carryover Payment: For any Distribution Date, an amount equal
to the aggregate of the Net WAC Rate Carryover Amounts for such Distribution
Date.
Net WAC Rate Carryover Reserve Account: The separate Eligible Account
created and maintained by the Trustee pursuant to Sections 3.27(a) in the name
of the Trust Administrator for the benefit of the Holders of Regular
Certificates and designated "Xxxxx Fargo Bank, N.A. in trust for registered
holders of Fremont Home Loan Trust 2004-D, Mortgage-Backed Certificates, Series
2004-D." Funds in the Net WAC Rate Carryover Reserve Account shall be held in
trust for the Holders of Regular Certificates for the uses and purposes set
forth in this Agreement. Amounts on deposit in the Net WAC Rate Carryover
Reserve Account shall not be invested. The Net WAC Rate Carryover Reserve
Account shall not be an asset of REMIC I or REMIC II.
NIM Trust: Fremont NIM Trust 2004-D, a Delaware statutory trust.
Non-Delay Certificates: As specified in the Preliminary Statement.
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, Condemnation Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
Nonrecoverable Servicing 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,
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would not, be ultimately recoverable from related Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds or otherwise.
Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.
Notional Amount: With respect to the Class C Certificates, a notional
amount equal to the aggregate principal balance of the REMIC I Regular Interests
(other than REMIC I Regular Interest LTP).
Offered Certificates: As defined 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 required to be
serviced by the Servicer and listed on a list delivered to the Trustee or Trust
Administrator, as applicable, pursuant to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer or a Subservicer, the Master Servicer, the Originator
or the Depositor, reasonably acceptable to the Trustee and the Trust
Administrator; provided, that any Opinion of Counsel relating to (a)
qualification of any Trust REMIC as 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: Any Distribution Date when the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is equal to 10% or less of the Cut-off Date Pool Principal Balance that
has been designated as an Optional Termination Date by the Servicer or holder of
the Class R Certificate.
Originator: Fremont.
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 the Trust
Administrator or delivered to the Trustee or the Trust Administrator for
cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee or the Trust
Administrator 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
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prior to such Due Date and which did not become a Liquidated Mortgage Loan prior
to such Due Date.
Overcollateralized Amount: As of any Distribution Date, the excess, if
any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties for such Distribution Date over (b) the aggregate of the Class
Certificate Balances of the LIBOR Certificates and the Class P Certificate as of
such Distribution Date (after giving effect to the payment of the Principal
Remittance Amount on such Certificates on such Distribution Date).
Overcollateralization Deficiency: With respect to any Distribution Date,
the excess, if any, of (a) the Overcollateralization Target Amount applicable to
such Distribution Date over (b) the Overcollateralized Amount applicable to such
Distribution Date.
Overcollateralization Floor: With respect to any Distribution Date, 0.50%
of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date.
Overcollateralization Release Amount: With respect to any Distribution
Date, an amount equal to the lesser of (a) the Excess Overcollateralized Amount
and (b) the Excess Cashflow.
Overcollateralization Target Amount: With respect to any Distribution Date
(i) prior to the Stepdown Date, an amount equal to 1.05% of the Cut-off Date
Pool Principal Balance, (ii) on and after the Stepdown Date provided a Trigger
Event is not in effect, an amount equal to the greater of (A) the lesser of (x)
2.10% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (y) 1.05% of the aggregate Cut-off Date Pool Principal Balance of
all of the Mortgage Loans and (B) 0.50% of the aggregate Cut-off Date Pool
Principal Balance of all of the Mortgage Loans and (iii) on or after the
Stepdown Date if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution 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 representing the aggregate of all
payments of principal and interest, net of the Servicing Fee, that were due
during the related Due Period on the Mortgage Loans and that were delinquent on
the related Remittance 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 LIBOR Certificates, the
following percentages:
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PRIOR TO OPTIONAL ON AND AFTER OPTIONAL
TERMINATION DATE TERMINATION DATE
---------------- ----------------
Class 1-A-1 Certificates 0.350% 0.700%
Class 1-A-2 Certificates 0.380% 0.760%
Class 2-A Certificates 0.370% 0.740%
Class 3-A-1 Certificates 0.150% 0.300%
Class 3-A-2 Certificates 0.280% 0.560%
Class 3-A-3 Certificates 0.460% 0.920%
Class M1 Certificates 0.580% 0.870%
Class M2 Certificates 0.600% 0.900%
Class M3 Certificates 0.630% 0.945%
Class M4 Certificates 0.950% 1.425%
Class M5 Certificates 1.000% 1.500%
Class M6 Certificates 1.200% 1.800%
Class M7 Certificates 1.700% 2.550%
Class M8 Certificates 1.850% 2.775%
Class M9 Certificates 3.000% 4.500%
Class M10 Certificates 3.500% 5.250%
Pass-Through Rate: Any of the Class 1-A-1 Pass-Through Rate, the Class
1-A-2 Pass-Through Rate, the Class 2-A Pass-Through Rate, the Class 3-A-1
Pass-Through Rate, the Class 3-A-2 Pass-Through Rate, the Class 3-A-3
Pass-Through Rate, the Class M1 Pass-Through Rate, the Class M2 Pass-Through
Rate, the Class M3 Pass-Through Rate, the Class M4 Pass-Through Rate, the Class
M5 Pass-Through Rate, the Class M6 Pass-Through Rate, the Class M7 Pass-Through
Rate, the Class M8 Pass-Through Rate, the Class M9 Pass-Through Rate and the
Class M10 Pass-Through Rate; and in the case of any Regular Interest, the
Uncertificated REMIC I Pass-Through Rate.
With respect to the Class C Certificates and any Distribution Date, a per
annum rate equal to the percentage equivalent of a fraction, the numerator of
which is the sum of the amounts calculated pursuant to clauses (A) through (S)
below, and the denominator of which is the aggregate of the Uncertificated
Principal Balances of REMIC I Regular Interest LT1A1, REMIC I Regular Interest
LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular Interest LT3A1, REMIC I
Regular Interest LT3A2, REMIC I Regular Interest LT3A3, REMIC I Regular Interest
LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I
Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest
LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I
Regular Interest LTM9, REMIC I Regular Interest LTM10 and REMIC I Regular
Interest LTZZ. For purposes of calculating the Pass-Through Rate for the Class C
Certificates, the numerator is equal to the sum of the following components:
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(A) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTAA minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTAA;
(B) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT1A1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT1A1;
(C) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT1A2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT1A2;
(D) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT2A minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT2A;
(E) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT3A1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT3A1;
(F) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT3A2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LT3A2;
(G) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LT3A3 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Xxxxxxxx XX0X0;
(H) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM1;
(I) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM2;
(J) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM3 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM3;
(K) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM4 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM4;
(L) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM5 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM5;
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(M) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM6 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM6;
(N) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM7 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM7;
(O) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM8 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM8;
(P) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM9 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM9;
(Q) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTM10 minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTM10; and
(R) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTZZ minus the Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC I Regular
Interest LTZZ; and
(S) 100% of the Interest on REMIC I Regular Interest LTP.
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.
Periodic Mortgage Interest Rate Cap: With respect to each Adjustable Rate
Mortgage Loan, the provision of each Mortgage Note which provides for an
absolute maximum amount by which the Mortgage Interest Rate therein may increase
or decrease on an Adjustment Date above or below the Mortgage Interest Rate
previously in effect. The Periodic Mortgage Interest Rate Cap for each
Adjustable Rate Mortgage Loan is the rate set forth on the Mortgage Loan
Schedule.
Periodic Mortgage Interest Rate Floor: With respect to each Adjustable
Rate Mortgage Loan, the provision of each Mortgage Note which provides for an
absolute minimum amount by which the Mortgage Interest Rate therein may increase
or decrease on an Adjustment Date above or below the Mortgage Interest Rate
previously in effect. The Periodic Mortgage Interest Rate Floor for each
Adjustable Rate Mortgage Loan is the rate set forth on the Mortgage Loan
Schedule.
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
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Depositor, the Servicer, the Master Servicer, the Trust Administrator, 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 Depository Institution and rated P-1 by Moody's and A-1+ by
Standard & Poor's;
(iii) repurchase obligations with respect to any security described
in clause (i) above entered into with a Depository 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;
(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 or managed by the Depositor, the Trustee or the Trust
Administrator or an Affiliate thereof, that have been rated "Aaa" by
Moody's, "AAAm" or "AAAMG" by Standard & Poor's; and
(vii) if previously confirmed in writing to the Trustee and the
Trust Administrator, 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
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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 or a U.S.
Person with respect to whom income from a Residual Certificate is attributable
to a foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of such Person or any other 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 any Trust REMIC 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 Xxxxxxx Mac, 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.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances of the Mortgage Loans for such Distribution
Date that were Outstanding Mortgage Loans on the Due Date in the related Due
Period.
Prepayment Interest Excess: With respect to any Remittance Date, the sum
of, for each Mortgage Loan that was, during the related Prepayment Period, the
subject of a Principal Prepayment in Full that was applied by the Servicer to
reduce the outstanding principal balance of such Mortgage Loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
the product of (a) the Mortgage Interest Rate net of the Servicing Fee Rate for
such Mortgage Loan, (b) the amount of the Principal Prepayment in Full for such
Mortgage Loan, (c) 1/360 and (d) the number of days commencing on the first day
of the calendar month in which such Remittance Date occurs and ending on the
date on which such Principal Prepayment in Full was applied.
Prepayment Interest Shortfall: With respect to any Remittance Date, the
sum of, for each Mortgage Loan that was, during the related Prepayment Period,
the subject of a Principal Prepayment in Full that was applied by the Servicer
to reduce the outstanding principal balance of such Mortgage Loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
the product of (a) the Mortgage Interest Rate net of the Servicing Fee Rate for
such Mortgage Loan, with respect to the Servicer's obligation in respect of any
Prepayment Interest Shortfall, or the sum of the Servicing Fee Rate and the
Master Servicing Fee Rate, with respect to the Master Servicer's obligation in
respect of any Prepayment Interest Shortfall,
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(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 related Prepayment Period.
Prepayment Period: With respect to any Remittance Date, (a) with respect
to a Principal Prepayment in Full, the period from and including the 16th day of
the month preceding the month in which such Remittance Date occurs to and
including the 15th day of the month in which such Remittance Date occurs, and
(b) with respect to Principal Prepayments in part, the calendar month prior to
such Remittance Date.
Prepayment Premium: 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.
Principal Distribution Amount: For any Distribution Date, the sum of (i)
the Group 1 Principal Distribution Amount for such Distribution Date, (ii) the
Group 2 Principal Distribution Amount for such Distribution Date and (iii) the
Group 3 Principal Distribution Amount for such Distribution Date
Principal Prepayment: Any 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 Premium
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 Distribution Date, the
amount equal to the sum of the following amounts (without duplication) with
respect to the related Due Period: (i) each scheduled payment of principal on a
Mortgage Loan due during such Due Period and received by the Servicer on or
prior to the Determination Date or advanced by the Servicer prior to the related
Remittance Date (including the portion of Insurance Proceeds or Condemnation
Proceeds allocable to principal), and all Principal Prepayments received during
the related Prepayment Period, (ii) the Liquidation Proceeds on the Mortgage
Loans allocable to principal actually collected by the Servicer during the
related Prepayment Period, (iii) the portion of the purchase price allocable to
principal with respect to each Deleted Mortgage Loan, the repurchase obligation
for which arose during the related Prepayment Period, that was repurchased
during the period from the prior Distribution Date through the Remittance Date
for the current Distribution Date, (iv) the principal portion of all
Substitution Adjustment Amounts with respect to the substitutions of Mortgage
Loans that occur during the calendar month in which such Distribution Date
occurs and (v) the allocable portion of the proceeds received with respect to
the termination of the Trust Fund (to the extent such proceeds relate to
principal), less any amounts payable or reimbursable to the Servicer, the Master
Servicer, the Trust Administrator or the Trustee hereunder on such Distribution
Date to the extent not already reimbursed or paid from the Group 1 Interest
Remittance Amount, the Group 2 Interest Remittance Amount, or the Group 3
Interest Remittance Amount.
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Private Certificates: As defined in the Preliminary Statement.
Prospectus Supplement: The Prospectus Supplement, dated November 22, 2004,
relating to the Offered Certificates.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A planned unit development.
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as of
November 1, 2004, by and between Fremont and the Depositor.
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(c), 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.
Realized Loss Percentage: For purposes of the Servicer Termination Test,
the percentage produced by the following calculation: (i) (a) the aggregate
amount of cumulative Realized Losses incurred on the Mortgage Loans since the
Cut-off Date through the last day of the related Due Period, minus (b) any
amount received with respect to Realized Losses on the Mortgage Loans subsequent
to a Final Recovery Determination being made with respect to the Mortgage Loans,
divided by (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the Cut-off Date; provided however, that for purposes of this definition, the
term "Realized Losses" shall not include Debt Service Reductions or Deficient
Valuations.
Realized Losses: With respect to any date of determination and any
Liquidated Mortgage Loan, the amount, if any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan together with accrued and unpaid
interest thereon exceeds (b) the Liquidation Proceeds with respect thereto net
of the expenses incurred by the Servicer in connection with the liquidation of
such Liquidated Mortgage Loan and net of any amount of unreimbursed Servicing
Advances with respect to such Liquidated Mortgage Loan.
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 day of the month immediately
preceding the related Distribution Date (or if such day is not a Business Day,
on the immediately preceding Business Day).
Reference Bank: As defined in Section 4.04.
Regular Certificates: As defined in the Preliminary Statement.
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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 Servicemembers Civil Relief Act, as amended, or any similar
state statutes.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC I Interest Loss Allocation Amount: With respect to any Distribution
Date, an amount equal to (a) the product of (i) 50% of the sum of the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest LTAA minus the Marker Rate, divided by (b) 12.
REMIC I Marker Allocation Percentage: 50% of any amount payable from or
loss attributable to the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest LTAA, REMIC I Regular Interest LT1A1, REMIC I Regular Interest
LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular Interest LT3A1, REMIC I
Regular Interest LT3A2, REMIC I Regular Interest LT3A3, REMIC I Regular Interest
LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I
Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest
LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I
Regular Interest LTM9, REMIC I Regular Interest LTM10, REMIC I Regular Interest
LTZZ and REMIC I Regular Interest LTP.
REMIC I Overcollateralization Target Amount: 0.50% of the Target
Overcollateralization Amount.
REMIC I Overcollateralized Amount: With respect to any date of
determination, (i) 0.50% of the aggregate Uncertificated Principal Balances of
the REMIC I Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC I Regular Interest REMIC I Regular Interest LT1A1,
REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular
Interest LT3A1, REMIC I Regular Interest LT3A2, REMIC I Regular Interest LT3A3,
REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular
Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular Interest LTM5,
REMIC I Regular Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular
Interest LTM8, REMIC I Regular Interest LTM9, REMIC I Regular Interest LTM10 and
REMIC I Regular Interest LTP, in each case as of such date of determination.
REMIC I Principal Loss Allocation Amount: With respect to any Distribution
Date, an amount equal to (a) the product of (i) 50% of the aggregate Principal
Balance of the Mortgage Loans and related REO Properties then outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the aggregate of
the Uncertificated Principal Balances of REMIC I Regular Interest LT1A1, REMIC I
Regular Interest LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular Interest
LT3A1, REMIC I Regular Interest LT3A2, REMIC I Regular Interest LT3A3, REMIC I
Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest
LTM3, REMIC I Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC I
Regular Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest
LTM8, REMIC I
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Regular Interest LTM9 and REMIC I Regular Interest LTM10 and the denominator of
which is the aggregate of the Uncertificated Principal Balances of REMIC I
Regular Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest
LT2A, REMIC I Regular Interest LT3A1, REMIC I Regular Interest LT3A2, REMIC I
Regular Interest LT3A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest
LTM2, REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I
Regular Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest
LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC I
Regular Interest LTM10 and REMIC I Regular Interest LTZZ.
REMIC I Regular Interest LTAA: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTAA shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Xxxxxxxx XX0X0: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT1A1 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Xxxxxxxx XX0X0: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT1A2 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LT2A: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT2A shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Xxxxxxxx XX0X0: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT3A1 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Xxxxxxxx XX0X0: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT3A2 shall accrue
interest at the related Uncertificated REMIC I
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Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I Regular Xxxxxxxx XX0X0: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT3A3 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM1 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM2: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM2 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM3: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM3 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM4: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM4 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM5: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM5 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
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REMIC I Regular Interest LTM6: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM6 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM7: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM7 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM8: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM8 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM9: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM9 shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTM10: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTM10 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTP shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LT1SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT1SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal,
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subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I Regular Interest LT1GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT1GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LT2SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT2SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LT2GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT2GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LT3SUB: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT3SUB shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LT3GRP: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LT3GRP shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTXX: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTXX shall accrue interest
at the related Uncertificated REMIC I Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I Regular Interest LTZZ: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC
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I. REMIC I Regular Interest LTZZ shall accrue interest at the related
Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.
REMIC I Regular Interests: REMIC I Regular Interest LTAA, REMIC I Regular
Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A,
REMIC I Regular Interest LT3A1, REMIC I Regular Interest LT3A2, REMIC I Regular
Interest LT3A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2,
REMIC I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular
Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest LTM7,
REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, REMIC I Regular
Interest LTM10, REMIC I Regular Interest LTP, REMIC I Regular Interest LT1SUB,
REMIC I Regular Interest LT1GRP, REMIC I Regular Interest LT2SUB, REMIC I
Regular Interest LT2GRP, REMIC I Regular Interest LT3SUB, REMIC I Regular
Interest LT3GRP, REMIC I Regular Interest LTXX and REMIC I Regular Interest
LTZZ.
REMIC I Sub WAC Allocation Percentage: 50% of any amount payable or loss
attributable from the Mortgage Loans, which shall be allocated to REMIC I
Regular Interest LT1SUB, REMIC I Regular Interest LT1GRP, REMIC I Regular
Interest LT2SUB, REMIC I Regular Interest LT2GRP, REMIC I Regular Interest
LT3SUB, REMIC I Regular Interest LT3GRP and REMIC I Regular Interest LTXX.
REMIC I Subordinated Balance Ratio: The ratio among the Uncertificated
Principal Balances of each REMIC I Regular Interest ending with the designation
"SUB," equal to the Group Subordinate Amount of the related Group of Mortgage
Loans.
REMIC II Regular Interest: As defined in the Preliminary Statement.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time as well as provisions of applicable state laws.
Remittance Date: With respect to any Distribution Date, no later than
12:00 PM, Central Time on the Business Day immediately preceding such
Distribution Date.
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 Interest 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 3.15 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.
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Reporting Date: The 18th day of each calendar month or the immediately
preceding Business Day if the 18th is not a Business Day.
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, (ii) interest on such unpaid principal balance of such
Mortgage Loan at the Mortgage Interest Rate from the last date through which
interest has been paid and distributed to the Trustee to the date of repurchase,
(iii) all unreimbursed Servicing Advances and (iv) all expenses incurred by the
Servicer, the Trust, the Trust Administrator or the Trustee, as the case may be,
in respect of a breach or defect, including, without limitation, (a) expenses
arising out of the Servicer's, the Trust Administrator's or Trustee's, as the
case may be, enforcement of the Originator's repurchase obligation, to the
extent not included in clause (iii), and (b) any costs and damages incurred by
the Trust in connection with any violation by such Mortgage Loan of any
predatory lending law or abusive lending law.
Request for Release: The Request for Release submitted by the Servicer to
the Trust Administrator, substantially in the form of Exhibit J.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee means any
officer in the Corporate Trust Office with direct responsibility for the
administration of this Agreement and any other officer to whom a particular
matter is referred because of such officer's knowledge of and familiarity with
the particular subject; and when used with respect to the Trust Administrator
means any vice president, any assistant vice president, any assistant secretary,
any assistant treasurer, any associate or any other officer of the Trustee or
the Trust Administrator 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.
Rolling Three-Month Delinquency Rate: With respect to any Distribution
Date, the weighted average of the Delinquency Rates for each of three calendar
months immediately preceding such Distribution Date; provided, that with respect
to the first two Distribution Dates, it shall refer to the preceding one or two
calendar months, as appropriate.
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.
Securities Act: The Securities Act of 1933, as amended.
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Senior Certificate Cap Agreement: The cap agreement, dated as of November
23, 2004, between the Trustee, on behalf of the Issuer, and the Counterparty,
having an initial notional amount of $595,209,900.
Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of the Group 1 Senior Principal Distribution Amount, Group 2
Senior Principal Distribution Amount and Group 3 Senior Principal Distribution
Amount, as applicable.
Servicer: Fremont, and if a successor servicer is appointed hereunder,
such successor servicer.
Servicer Certification: A written certification signed by an officer
of the Servicer that complies with (i) the Xxxxxxxx-Xxxxx Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Xxxxxxxx-Xxxxx Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superseded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Xxxxxxxx-Xxxxx Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Servicer, materially more
onerous than the form of the required certification as of the Closing Date, the
Servicer Certification shall be as agreed to by the Servicer and the Depositor
following a negotiation in good faith to determine how to comply with any such
new requirements.
Servicer Event of Default: One or more of the events described in Section
7.01(a).
Servicer Remittance Report: As defined in Section 4.03(d).
Servicer Termination Test: With respect to any Distribution Date, the
Servicer will fail the Servicer Termination Test if the Realized Loss Percentage
for the Mortgage Loans exceeds the applicable percentages set forth below or
such other higher amounts as set by any of the Rating Agencies with respect to
such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
December 2005 through November 2006 1.75%
December 2006 through November 2007 2.75%
December 2007 through November 2008 3.75%
December 2008 through November 2009 5.50%
December 2009 through November 2010 7.00%
December 2010 through November 2011 8.00%
December 2011 and thereafter 8.00%
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
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default, delinquency or other unanticipated event, including, but not limited
to, the cost of (i) the preservation, restoration, inspection 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, and (iv) the performance of its obligations under Sections
3.01, 3.09, 3.13 and 3.15. Servicing Advances also include any reasonable
"out-of-pocket" costs and expenses (including legal fees) incurred by the
Servicer in connection with executing and recording instruments of satisfaction,
deeds of reconveyance or Assignments of Mortgage in connection with any
satisfaction or foreclosures in respect of any Mortgage Loan to the extent not
recovered from the Mortgagor or otherwise payable under this Agreement. The
Servicer shall not be required to make any Nonrecoverable Servicing Advances.
Servicing Fee: With respect to each Mortgage Loan and any Distribution
Date, an amount equal to the product of (i) one-twelfth of the Servicing Fee
Rate, and (ii) the Stated Principal Balance of such Mortgage Loan as of the
first day of the calendar month preceding the month in which such Distribution
Date occurs. 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, Insurance Proceeds, Condemnation Proceeds and proceeds received with
respect to REO Properties, to the extent permitted by Section 3.11) of such
Scheduled 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 Trust Administrator in the Custodial File
and copies of the Mortgage Loan Documents set forth in Exhibit K hereto.
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, the Master Servicer, the Trust Administrator and the Depositor by the
Servicer on the Closing Date pursuant to this Agreement, as such list may from
time to time be amended.
Servicing Rights: Any and all of the following: (a) all rights and
obligations to service the Mortgage Loans; (b) any compensation for servicing
the Mortgage Loans; (c) any late fees, penalties or similar payments with
respect to the Mortgage Loans (other than prepayment penalties); (d) all
agreements or documents creating, defining or evidencing any such servicing
rights to the extent they relate to such servicing rights; (e) any interest on
Escrow Accounts allowed by law or other similar payments with respect to the
Mortgage Loans and any amounts actually collected with respect thereto; (f) all
accounts and other rights to payment related to any of the property described in
this paragraph; (g) the right to possess and use any and all servicing files,
servicing records, data tapes, computer records, or other information pertaining
to the Mortgage Loans to the extent relating to the past, present or prospective
servicing of the Mortgage Loans; and (h) all rights, powers and privileges
incident to any of the foregoing.
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Servicing Transfer Costs: All reasonable out-of-pocket costs and expenses
(including all extraordinary expenses) incurred by the Master Servicer in
connection with the transfer of servicing from a terminated Servicer, including,
without limitation, any such costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Master Servicer to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Master Servicer (or any successor Servicer appointed pursuant to Section 7.02)
to service the Mortgage Loans properly and effectively.
Six-Month LIBOR Index: With respect to each applicable Adjustable Rate
Mortgage Loan, the rate as determined on the basis of rates at which six-month
U.S. dollar deposits are offered to prime banks in the London interbank market
on such date as provided in the related Mortgage Note.
60+ Day Delinquent Mortgage 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.
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 Standard & Poor's, 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Surveillance
Group - Fremont 2004-D, or such other address as Standard & Poor's may hereafter
furnish to the Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee.
Start-up Day: As defined in Section 11.01(b).
Stated Principal Balance: As to each Mortgage Loan and as of any date of
determination, (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,
minus (ii) all amounts previously remitted 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 by the Servicer on or
prior to the related Determination Date or advanced by the Servicer for the
related Remittance Date and any unscheduled principal payments and other
unscheduled principal collections received during the related Prepayment Period.
Stepdown Date: The earlier to occur of (a) the date on which the aggregate
Class Certificate Balances of the Senior Certificates have been reduced to zero,
and (b) the later to occur of (i) the Distribution Date in December 2007, and
(ii) the first Distribution Date on which the Credit Enhancement Percentage
(calculated for this purpose only after taking into account distributions of
principal on the Mortgage Loans but prior to distribution of the Group 1
Principal Distribution Amount, the Group 2 Principal Distribution Amount and the
Group 3
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Principal Distribution Amount to the holders of the Certificates then entitled
to distributions of principal on such Distribution Date) is greater than or
equal to the 41.58%
Subordinate Certificate Cap Agreement: The cap agreement, dated as of
November 23, 2004, between the Trustee, on behalf of the Issuer, and the
Counterparty, having an initial notional amount of $140,856,300.
Subordinated Certificates: As specified in the Preliminary Statement.
Subsequent Recovery: Amounts recovered by the Servicer in respect of a
liquidated Mortgage Loan in regard to which a Realized Loss has occurred.
Subservicer: As defined in Section 3.02(a).
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the Originator
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit J, (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 the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) be accruing interest at a
rate no lower than and not more than 1.00% 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 Section 2.03.
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(g).
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).
Termination Price: As defined in Section 9.01.
30-Day Delinquency: Each Mortgage Loan with respect to which any portion
of a Scheduled Payment is, as of the last day of the prior Due Period, one month
past due (without giving effect to any grace period).
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
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Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: With respect to any Distribution Date, a Trigger Event
exists if (i) the Rolling Three Month Delinquency Rate as of the last day of the
related Due Period, equals or exceeds 38.40% of the Credit Enhancement
Percentage as of the last day of the prior Due Period or (ii) the quotient
(expressed as a percentage) of (x) the aggregate amount of Realized Losses
incurred since the Cut-off Date through the last day of the related Prepayment
Period divided by (y) the Cut-off Date Pool Principal Balance, exceeds the
applicable percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN LOSS PERCENTAGE
------------------------------ ---------------
December 2007 through November 2008 3.00% for the first month, plus an
additional 1/12th of 1.75% for
each month thereafter
December 2008 through November 2009 4.75% for the first month, plus an
additional 1/12th of 1.25% for
each month thereafter
December 2009 through November 2010 6.00% for the first month, plus an
additional 1/12th of 0.75% for
each month thereafter
December 2010 and thereafter 6.75%
Trust: The express trust created hereunder in Section 2.01(c).
Trust Administration Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to the product of (i) one-twelfth of the Trust
Administration Fee Rate, and (ii) the Stated Principal Balance of such Mortgage
Loan as of the first day of the calendar month preceding the month in which such
Distribution Date occurs.
Trust Administration Fee Rate: 0.005% per annum.
Trust Administrator: Xxxxx Fargo Bank, N.A., and its successors in
interest and, if a successor trust administrator is appointed hereunder, such
successor.
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) the Collection
Account, Net WAC Rate Carryover Reserve Account, the Distribution 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) the Certificate Cap
Agreements, and (v) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing.
Trust REMIC: Either of REMIC I and REMIC II.
Trustee: HSBC Bank USA, National Association, and its successors in
interest and, if a successor trustee is appointed hereunder, such successor.
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Uncertificated Accrued Interest: With respect to each REMIC I Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated REMIC I Pass-Through Rate on the Uncertificated
Principal Balance of such REMIC Regular Interest. In each case, Uncertificated
Accrued Interest will be reduced by any Prepayment Interest Shortfalls and
Relief Act Interest Shortfalls (allocated to such REMIC Regular Interests based
on their respective entitlements to interest irrespective of any Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for such Distribution
Date).
Uncertificated Principal Balance: The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Principal
Balance of each REMIC I Regular Interest shall be reduced by all distributions
of principal made on such REMIC I Regular Interest on such Distribution Date
pursuant to Section 4.08 and, if and to the extent necessary and appropriate,
shall be further reduced on such Distribution Date by Realized Losses as
provided in Section 4.08. The Uncertificated Balance of REMIC I Regular Interest
LTZZ shall be increased by interest deferrals as provided in Section 4.08. The
Uncertificated Balance of each REMIC I Regular Interest shall never be less than
zero.
Uncertificated REMIC I Pass-Through Rate: With respect to REMIC I
Regular Interest LTAA, REMIC I Regular Interest LT1A1, REMIC I Regular Interest
LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular Interest LT3A1, REMIC I
Regular Interest LT3A2, REMIC I Regular Interest LT3A3, REMIC I Regular Interest
LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I
Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest
LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC I
Regular Interest LTM9, REMIC I Regular Interest LTM10, REMIC I Regular Interest
LTZZ, REMIC I Regular Interest LTP, REMIC I Regular Interest LT1SUB, REMIC I
Regular Interest LT2SUB, REMIC I Regular Interest LT3SUB and REMIC I Regular
Interest LTXX, the Net WAC Rate. With respect to REMIC I Regular Interest
LT1GRP, the Group 1 Net WAC Rate. With respect REMIC I Regular Interest LT2GRP,
the Group 2 Net WAC Rate. With respect to REMIC I Regular Interest LT3GRP, the
Group 3 Net WAC Rate.
Underwriters' Exemption: Any exemption listed in footnote 1 of, and
amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (2002),
or any successor exemption.
Underwriting Guidelines: The underwriting guidelines attached to the
Purchase Agreement.
Unpaid Interest Amounts: As of any Distribution Date and any Class of
Certificates, the sum of (a) the portion of the Accrued Certificate Interest
Distribution Amount from prior Distribution Dates remaining unpaid and (b)
interest on such unpaid amount at the applicable Pass-Through Rate (to the
extent permitted by applicable law).
U.S. Person: (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
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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 C 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.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
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, together with all rights
of the Depositor under the Certificate Cap Agreements (if any), and the Trustee,
on behalf of the Trust, hereby accepts the Trust Fund.
(a) In connection with the transfer and assignment of each Mortgage Loan,
the Depositor has delivered or caused to be delivered to the Trustee or the
Trust Administrator, as applicable, for the benefit of the Certificateholders,
the following documents or instruments with respect to each Mortgage Loan so
assigned:
(i) the original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsement from the originator to the last
endorsee, endorsed "Pay to the order of _____________, without recourse"
and signed (which may be by facsimile signature) in the name of the last
endorsee 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 Depositor that state law so allows;
(ii) the original of any guarantee executed in connection with the
Mortgage Note;
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(iii) with respect to each Mortgage Loan, the original Mortgage with
evidence of recording thereon or a certified true copy of such Mortgage
submitted for recording. If in connection with any Mortgage Loan, the
Originator cannot deliver or cause to be delivered the original Mortgage
with evidence of recording thereon on or prior to the Closing 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, the Originator (to the extent that it has not previously
delivered the same to the Depositor, the Trustee or the Trust
Administrator) shall deliver or cause to be delivered to the Trustee or
Trust Administrator, (1) a photocopy of such Mortgage, certified by the
Originator (or certified by the title company, escrow agent, or closing
attorney) to be a true and complete copy of such Mortgage dispatched to
the appropriate public recording office for recordation; and (2) upon
receipt thereof by the Originator, the original recorded Mortgage, or, 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 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 provided), with evidence of recording thereon or
a certified true copy of such agreement submitted for recording;
(v) except with respect to each MERS Designated Mortgage Loan, the
original Assignment of Mortgage for each Mortgage Loan endorsed in blank
and in recordable form;
(vi) with respect to each Mortgage Loan, the originals of all
intervening Assignments of Mortgage (if any) evidencing a complete chain
of assignment from the applicable originator (or MERS with respect to each
MERS Designated Mortgage Loan) to the last endorsee 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, the Originator (to the extent that it has not previously
delivered the same to the Depositor, the Trustee or the Trust
Administrator) shall deliver or cause to be delivered to the Trustee or
the Trust Administrator, (1) a photocopy of such intervening assignment,
certified by the Originator (or certified by the title company, escrow
agent, or closing attorney) to be a complete copy of such intervening
Assignment of Mortgage dispatched to the appropriate public recording
office for recordation upon receipt thereof by the Originator, and (2) the
original recorded intervening assignment or in the case where an
intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;
(vii) the original or duplicate lender's title policy and any riders
thereto or, any one of an original title binder, an original or copy of
the preliminary title report or an original or copy of the title
commitment, and if, copies then certified by the title company;
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(viii) a security agreement, chattel mortgage or equivalent document
executed in connection with the Mortgage (if provided); and
(ix) original powers of attorney, if applicable, with evidence of
recording thereon, if required.
Each Mortgage Loan for which a Mortgage Note is missing shall be evidenced
by a lost note affidavit as of the Closing Date. In the event, for purposes of
the Closing Date, one or more lost note affidavits are provided to cover
multiple missing Mortgage Notes, the Originator shall deliver to the Trustee or
the Trust Administrator the applicable individual lost note affidavits within
ten (10) Business Days of the Closing Date. If the Originator fails to deliver
the required individual lost note affidavits within the specified period of
time, the Trustee or the Trust Administrator shall notify the Originator to take
such remedial actions, including, without limitation, the repurchase by the
Originator of such Mortgage Loan within 30 days of the Closing Date.
The Originator shall deliver to the Trustee or the Trust Administrator the
applicable recorded document promptly upon receipt from the respective recording
office but in no event later than 150 days from the Closing Date.
If any Mortgage has been recorded in the name of Mortgage Electronic
Registration System, Inc. ("MERS") or its designee, no Assignment of Mortgage in
favor of the Trustee will be required to be prepared or delivered and instead,
the Servicer shall take all reasonable actions as are necessary at the expense
of the Depositor to cause the Trustee to be shown as the owner of the related
Mortgage Loan on the records of MERS for the purpose of the system of recording
transfers of beneficial ownership of mortgages maintained by MERS.
From time to time, the Originator shall forward with respect to the
Mortgage Loans, to the Trustee or the Trust Administrator additional original
documents, and additional documents evidencing an assumption, modification,
consolidation or extension of a Mortgage Loan approved by the Originator in
accordance with the terms of this Agreement. All such mortgage documents held by
the Trustee or the Trust Administrator as to each Mortgage Loan shall constitute
the "Custodial File."
The requirements of this paragraph relate only to Mortgage Loans that are
not MERS Designated Mortgage Loans. On or prior to the Closing Date, the
Originator shall deliver to the Trustee or Trust Administrator Assignments of
Mortgages, in blank, for each Mortgage Loan (except with respect to each MERS
Designated Mortgage Loan). The Originator shall cause such Assignments of
Mortgage with completed recording information to be provided to the Trustee or
the Trust Administrator in a reasonably acceptable manner. No later than thirty
(30) Business Days following the later of the Closing Date and the date of
receipt by the Servicer of the fully completed Assignments of Mortgages in
recordable form, the Servicer shall promptly submit or cause to be submitted for
recording, at the expense of the Originator at no expense to the Trust Fund, the
Master Servicer, the Trust Administrator, the Trustee or the Depositor in the
appropriate public office for real property records, each Assignment of Mortgage
referred to in Section 2.01(a)(vi). Notwithstanding the foregoing, however, for
administrative convenience and facilitation of servicing and to reduce closing
costs, the Assignments of Mortgage shall not
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be required to be completed and submitted for recording with respect to any
Mortgage Loan if the Trustee, the Trust Administrator and each Rating Agency
have received an opinion of counsel, satisfactory in form and substance to the
Trustee and Trust Administrator and each Rating Agency, to the effect that the
recordation of such Assignments of Mortgage in any specific jurisdiction is not
necessary to protect the Trustee's interest in the related Mortgage Note. If the
Assignment of Mortgage is to be recorded, the Mortgage shall be assigned by the
Originator at the Originator's expense to "HSBC Bank USA, National Association,
as trustee under the Pooling and Servicing Agreement dated as of November 1,
2004, Fremont Home Loan Trust 2004-D." In the event that any such assignment is
lost or returned unrecorded because of a defect therein, the Originator shall
promptly prepare a substitute assignment to cure such defect and thereafter
cause each such assignment to be duly recorded.
On or prior to the Closing Date, the Depositor shall deliver to the
Trustee, the Servicer and the Trust Administrator a copy of the Data Tape
Information in an electronic, machine readable medium in a form mutually
acceptable to the Depositor, the Servicer, the Master Servicer, the Trust
Administrator and the Trustee. Within ten (10) Business Days of the Closing
Date, the Depositor shall deliver a copy of the complete Mortgage Loan Schedule
to the Trustee, the Master Servicer, the Trust Administrator and the Servicer.
In the event, with respect to any Mortgage Loans, that such original or
copy of any document submitted for recordation to the appropriate public
recording office is not so delivered to the Trustee or the Trust Administrator
within 150 days following the Closing 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 related Mortgage Loan
shall, upon the request of the Depositor, be repurchased by the Originator at
the price and in the manner specified in Section 2.03. The foregoing repurchase
remedy shall not apply in the event that the 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 Originator
shall instead deliver a recording receipt of such recording office or, if such
recording receipt is not available, an officer's certificate of an officer of
the Originator confirming that such document has been accepted for recording.
Notwithstanding anything to the contrary contained in this Section 2.01,
in those instances where the public recording office retains or loses the
original Mortgage or assignment after it has been recorded, the obligations of
the Originator shall be deemed to have been satisfied upon delivery by the
Originator to the Trustee or the Trust Administrator prior to the Closing Date
of a copy of such Mortgage or assignment, as the case may be, certified (such
certification to be an original thereof) by the public recording office to be a
true and complete copy of the recorded original thereof.
(b) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust (the "Trust") to be known, for convenience, as "Fremont Home Loan Trust
2004-D" and HSBC Bank USA, N.A. is hereby appointed as Trustee in accordance
with the provisions of this Agreement.
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(c) The Trust shall have the capacity, power and authority, and the
Trustee on behalf of the Trust is hereby authorized, to accept the sale,
transfer, assignment, set over and conveyance by the Depositor to the Trust of
all the right, title and interest of the Depositor in and to the Trust Fund
(including, without limitation, the Mortgage Loans) pursuant to Section 2.01(a)
and, solely in its capacity as Trustee on behalf of the Certificateholders, to
enter into the Certificate Cap Agreements.
Section 2.02. Acceptance by the Trustee or Trust Administrator of the
Mortgage Loans.
The Trustee or the Trust Administrator on its behalf acknowledges receipt
of the documents identified in its initial certification in the form annexed
hereto as Exhibit E (the "Initial Certification"), and declares that it, or the
Trust Administrator on its behalf, holds and will hold such documents and the
other documents delivered to it pursuant to Section 2.01, and that it holds or
will hold such other assets as are included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future Certificateholders. Each of
the Trustee and the Trust Administrator, as applicable, on its behalf
acknowledges that it will maintain possession of the related Mortgage Notes in
any of the states of Minnesota, California or Utah, unless otherwise permitted
by the Rating Agencies.
Prior to and as a condition to the Closing, the Trustee shall deliver, or
cause the Trust Administrator to deliver, via facsimile (with original to follow
the next Business Day) to the Depositor, the Master Servicer and the Servicer
the Initial Certification prior to the Closing Date, or as the Depositor agrees,
on the Closing Date, certifying receipt of a Mortgage Note and Assignment of
Mortgage for each Mortgage Loan with any exceptions thereon. The Trustee or the
Trust Administrator, as applicable, shall not be responsible to verify the
validity, sufficiency or genuineness of any document in any Custodial File.
On the Closing Date, the Trustee or the Trust Administrator, as
applicable, shall ascertain that all documents required to be reviewed by it are
in its possession, and shall deliver to the Depositor, the Master Servicer and
the Servicer the Initial Certification and shall deliver to the Depositor and
the Servicer a Document Certification and Exception Report, in the form annexed
hereto as Exhibit F, within 90 days after the Closing Date 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 received by 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 (i), (ii) and (xiii) of
the Mortgage Loan Schedule and items (1), (2), (3) and (13) 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 or Trust Administrator, as applicable, shall not be responsible to
verify the validity, sufficiency or genuineness of any document in any Custodial
File.
The Trustee or the Trust Administrator, as applicable, 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 or the Trust Administrator, as applicable, upon the execution or
receipt thereof, the originals of such other documents or
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instruments constituting the Custodial File as come into the possession of the
Servicer from time to time.
The Originator shall deliver to the Servicer copies of all trailing
documents required to be included in the Custodial File at the same time the
original or certified copies thereof are delivered to the Trustee or the Trust
Administrator, as applicable, including but not limited to such documents as the
title insurance policy and any other Mortgage Loan documents upon return from
the public recording office. The documents shall be delivered by the Originator
at the Originator's expense to the Servicer and in no event shall the Servicer
be responsible for such expense.
Section 2.03. Representations, Warranties and Covenants of the Originator
and the Servicer.
(a) The Originator hereby makes the representations and warranties set
forth in Schedule IV hereto to the Depositor, the Trust Administrator and the
Trustee as of the Closing Date.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.03 shall survive the transfer of the Mortgage Loans
by the Depositor to the Trustee, and shall inure to the benefit of the
Depositor, the Trust Administrator and the Trustee 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 Originator, the Depositor, the Trustee, the Trust
Administrator, the Master Servicer or the Servicer of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the others.
(c) Within 30 days of the earlier of either discovery by or notice to the
Originator that any Mortgage Loan does not conform to the requirements as
determined in the Trustee's or the Trust Administrator's review of the related
Custodial File or within 60 days of the earlier of either discovery by or notice
to the Originator of any breach of a representation or warranty set forth in
Section 2.03(b), that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Originator shall use its best efforts to cause to be remedied a material defect
in a document constituting part of a Mortgage File or promptly to cure such
breach in all material respects and, if such defect or breach cannot be
remedied, the Originator shall, (i) if such 30- or 60-day period, as applicable,
expires prior to the second anniversary of the Closing Date, remove such related
Mortgage Loan (a "Deleted 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 clause (i) above shall not be effected prior to the delivery to the Trustee
and the Trust Administrator of the Opinion of Counsel required by Section 2.04,
if any, and a Request for Release substantially in the form of Exhibit J, and
the Mortgage File for any such Substitute Mortgage Loan; provided, further, that
with respect to any representations and warranties which are made to the best of
the Originator's knowledge, if it is discovered by the Originator, the Servicer,
the Master Servicer, the Trust Administrator, the Depositor or the Trustee that
the substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loans or materially and adversely affects the interests of the Trustee or the
Certificateholders therein or such inaccuracy materially and
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adversely affects the value of the related Mortgage Loan or materially and
adversely affects the interests of the Trustee or the Certificateholders therein
in the case of a representation and warranty relating to a particular Mortgage
Loan, notwithstanding the Originator's lack of knowledge with respect to the
substance of such representation and warranty, such inaccuracy shall be deemed a
breach of the applicable representation and warranty. In the event that a breach
which materially and adversely affects the value of the related Mortgage Loan or
Mortgage Loans, as the case may be, or the interests of the Trustee or the
Certificateholders therein, shall involve any representation or warranty set
forth in Schedule IV, and such breach cannot be cured within 60 days of the
earlier of either discovery by or notice to the Originator of such breach, all
of the Mortgage Loans shall, at the Depositor's option, be repurchased by the
Originator at the Repurchase Price. Notwithstanding the foregoing, a breach
which causes a Mortgage Loan not to constitute a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code, or by the Originator of any of the
representations and warranties set forth in clauses I(tt), I(uu) or I(lll) of
Schedule IV, in each case, will be deemed automatically to materially and
adversely affect the value of such Mortgage Loan and the interests of the
Trustee and Certificateholders in such Mortgage Loan. In the event that the
Trustee or the Trust Administrator receives notice of a breach by the Originator
of any of the representations and warranties set forth in clauses I(tt), I(uu)
or I(lll) of Schedule IV, the Trustee shall give notice of such breach to the
Originator and request the Originator to repurchase the Mortgage Loan at the
Repurchase Price within sixty (60) days of the Originator's receipt of such
notice. The Originator shall repurchase each such Deleted Mortgage Loan within
60 days of the earlier of discovery or receipt of notice with respect to each
such Deleted Mortgage Loan.
(d) With respect to any Substitute Mortgage Loan or Loans, the Originator
shall deliver to the Trustee or the Trust Administrator 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 Originator on the next succeeding
Distribution Date. For the Due Period of substitution, distributions to
Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the Originator shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan.
(e) In connection with any repurchase or substitution of a Mortgage Loan
pursuant to this Section 2.03, the Servicer shall, based on information provided
by the Originator, amend the Mortgage Loan Schedule for the benefit of the
Certificateholders 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, the Trust
Administrator and the Master Servicer. Upon such substitution, the Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Originator 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 Section 2.03(b) with respect to
such Mortgage Loan. Upon any such substitution and the deposit to the Collection
Account of
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the amount required to be deposited therein in connection with such substitution
as described in the following paragraph, the Trustee or the Trust Administrator,
as applicable, shall release the Mortgage File held for the benefit of the
Certificateholders relating to such Deleted Mortgage Loan to the Originator and
shall execute and deliver at the direction of the Originator such instruments of
transfer or assignment prepared by the Originator in each case without recourse,
as shall be necessary to vest title in the Originator or its designee, the
Trustee's interest in any Deleted Mortgage Loan substituted for pursuant to this
Section 2.03.
(f) For any month in which the Originator 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 unpaid 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 Scheduled
Payments due in the Due Period of substitution). The amount of such shortage
(the "Substitution Adjustment Amount") plus an amount equal to the aggregate of
any unreimbursed Advances with respect to such Deleted Mortgage Loans shall be
remitted by the Originator to the Servicer for deposit into the Collection
Account on or before the next Remittance Date.
(g) In addition to such repurchase or substitution obligations, the
Originator shall indemnify the Depositor, any of its Affiliates, the Servicer,
the Master Servicer, the Trust Administrator and the Trustee and hold such
parties harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, a breach by the Originator of any of its
representations and warranties contained in this Agreement.
(h) In the event that a Mortgage Loan shall have been repurchased pursuant
to this Agreement, the proceeds from such repurchase shall be deposited in the
Collection Account by the Servicer pursuant to Section 3.10 on or before the
next Remittance Date and upon such deposit of the Repurchase Price, the delivery
of the Opinion of Counsel required by Section 2.04, if applicable, and receipt
of a Request for Release in the form of Exhibit J hereto, the Trustee or the
Trust Administrator, as applicable, shall release the related Custodial File
held for the benefit of the Certificateholders 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, together with any related indemnification
obligations, shall constitute the sole remedy against such Persons respecting
such breach available to Certificateholders, the Depositor, the Servicer, the
Master Servicer, the Trust Administrator or the Trustee on their behalf.
The representations and warranties made pursuant to this Section 2.03
shall survive delivery of the respective Custodial Files to the Trustee or Trust
Administrator for the benefit of the Certificateholders.
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Section 2.04. Delivery of Opinion of Counsel in Connection with
Substitution; Non-Qualified Mortgages.
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 90 days after the
Closing Date unless the Originator delivers to the Trustee and the Trust
Administrator an Opinion of Counsel, which Opinion of Counsel shall not be at
the expense of either the Trustee, the Trust Administrator or the Trust Fund,
addressed to the Trustee and the Trust Administrator, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on any Trust REMIC or contributions after the Start-up Day, as
defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(b) Upon discovery by the Depositor, the Originator, the Master Servicer,
the Trust Administrator, the Servicer or the Trustee that any Mortgage Loan does
not constitute a "qualified mortgage" within the meaning of Section 860G(a)(3)
of the Code, the party discovering such fact shall promptly (and in any event
within five (5) Business Days of discovery) give written notice thereof to the
other parties. In connection therewith, the Trustee shall require the Originator
to repurchase the affected Mortgage Loan within 30 days of the earlier of
discovery or receipt of notice in the same manner as it would a Mortgage Loan
for a breach of representation or warranty made pursuant to Section 2.03. The
Trustee shall reconvey to the Originator the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.
Section 2.05. 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, the Trust
Administrator 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.
Section 2.06. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Trust Administrator, the Master Servicer, the Servicer and the Originator
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;
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(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 due authorization, execution and delivery hereof by the
Servicer, the Originator and the Trustee, 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;
(h) Immediately prior to the transfer and assignment by the Depositor to
the Trustee on the Closing Date, the Depositor had good title to, and was the
sole owner of each Mortgage Loan, free of any interest of any other Person, and
the Depositor has transferred all right, title and interest in each Mortgage
Loan to the Trustee. The transfer of each Mortgage Note and each 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, 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, the
security interest referred to in Section 10.04;
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(i) None of the Mortgage Loans has a prepayment penalty period in excess
of three years;
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.06 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.
Within 60 days of the earlier of either discovery by or notice to the
Depositor of a breach of the representations and warranties set forth in clause
(h) or (i) above that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Depositor shall use its best efforts to promptly cure such breach in all
material respects and if such defect or breach cannot be remedied, the Depositor
shall either (i) if such 60-day period expires prior to the second anniversary
of the Closing Date, remove such Deleted 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 Section 2.03, or (ii) repurchase such Mortgage Loan
at the Repurchase Price. The obligations of the Depositor to cure such breach or
to substitute or purchase any Mortgage Loan constitute the sole remedies
respecting a material breach of any such representation or warranty to the
Holders of the Certificates and the Trustee.
Section 2.07. Representations, Warranties and Covenants of the Servicer,
the Originator and the Master Servicer.
(a) The Servicer hereby represents, warrants and covenants to the Trustee,
the Trust Administrator, the Master Servicer, the Originator and the Depositor
that as of the Closing Date or as of such date specifically provided herein:
(i) The Servicer is a state chartered industrial bank duly
organized, validly existing and in good standing under the laws of the
State of California and is duly authorized and qualified to transact any
and all business contemplated by this Agreement to be conducted by the
Servicer in any state in which a Mortgaged Property related to a Mortgage
Loan 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 serviced and to service the
Mortgage Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to service each
Mortgage Loan which the Servicer is required to service hereunder, and to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and has duly authorized by all
necessary action on the part of the Servicer the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery thereof by the Depositor, the
Originator, the Master Servicer, the Trust Administrator and the Trustee,
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 hereof 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
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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;
(iii) The execution and delivery of this 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 Servicer to perform its obligations under this Agreement or (y) the
business, operations, financial condition, properties or assets of the
Servicer taken as a whole;
(iv) The Servicer is a HUD-approved non-supervised mortgagee
pursuant to Section 203 and Section 211 of the National Housing Act, and
no event has occurred, including but not limited to a change in insurance
coverage, that would make the Servicer unable to comply with HUD
eligibility requirements or which would require notification to HUD;
(v) No litigation is pending or, to the best knowledge of the
Servicer, threatened against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
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;
(vi) 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
Agreement or the consummation by the Servicer of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date;
(vii) The Servicer will not waive any Prepayment Premium or part of
a Prepayment Premium unless such waiver would, in the reasonable opinion
of the Servicer, maximize recovery of total proceeds taking into account
the value of such Prepayment Premium and 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 Premium in connection
with a refinancing of a Mortgage Loan that is related to a default or an
imminent default), and in no event will it waive a Prepayment Premium
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in connection with a refinancing of a Mortgage Loan that is not related to
a default or an imminent default. Notwithstanding the previous sentence,
if the Servicer has not received any document or information necessary for
the Servicer to verify the existence or amount of the related Prepayment
Premium or if the Servicer determines that any Prepayment Premium is not
legally enforceable under the circumstances in which the related Principal
Prepayment occurs, then the Servicer shall not be required to attempt to
collect the applicable Prepayment Premium, and shall have no liability or
obligation with respect to such Prepayment Premium pursuant to Section
3.07(a) hereof;
(viii) For each Mortgage Loan, the Servicer will accurately, fully
and in a timely manner report its borrower credit files to each of the
three credit repositories; and
(ix) the Servicer is a member of MERS in good standing and will
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Designated Mortgage Loans for as
long as such Mortgage Loans are registered with MERS.
(b) The Originator hereby represents, warrants and covenants to the
Trustee, the Trust Administrator, the Master Servicer, the Servicer and the
Depositor that as of the Closing Date or as of such date specifically provided
herein:
(i) The Originator is a state chartered industrial bank duly
organized, validly existing and in good standing under the laws of the
state of California;
(ii) The Originator has full power and authority to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement;
(iii) The execution and delivery by the Originator of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Originator; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated herein, nor
compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
the Originator or its properties or the certificate of incorporation or
by-laws of the Originator, except those conflicts, breaches or defaults
which would not reasonably be expected to have a material adverse effect
on the Originator's ability to enter into this Agreement and to consummate
the transactions contemplated hereby;
(iv) The execution, delivery and performance by the Originator of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any state, federal or other governmental authority or agency, except those
consents, approvals, notices, registrations or other actions as have
already been obtained, given or made and, in connection with the
recordation of the Mortgages, powers of attorney or assignments of
Mortgages not yet completed;
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(v) This Agreement has been duly executed and delivered by the
Originator and, assuming due authorization, execution and delivery by the
Trustee, the Servicer, the Master Servicer, the Trust Administrator and
the Depositor, constitutes a valid and binding obligation of the
Originator, enforceable against it in accordance with its terms (subject
to applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally);
(vi) There are no actions, litigation, suits or proceedings pending
or, to the knowledge of the Originator, threatened against the Originator
before or by any court, administrative agency, arbitrator or governmental
body (i) with respect to any of the transactions contemplated by this
Agreement or (ii) with respect to any other matter which in the judgment
of the Originator if determined adversely to the Originator would
reasonably be expected to materially and adversely affect the Originator's
ability to perform its obligations under this Agreement; and the
Originator is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by this Agreement;
(vii) The Originator hereby makes the representations and warranties
set forth in Exhibit A to the Mortgage Loan Purchase Agreement, as of the
Closing Date, or the date specified therein, with respect to the Mortgage
Loans identified on Schedule I hereto; and
(viii) The Originator is a member of MERS in good standing and will
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Mortgage Loans for as long as
such Mortgage Loans are registered with MERS.
(c) The Master Servicer hereby represents, warrants and covenants to the
Servicer, the Originator, the Depositor and the Trustee, for the benefit of each
of the Trustee and the Certificateholders, that as of the Closing Date or as of
such date specifically provided herein:
(i) The Master Servicer is a national banking association duly
formed, validly existing and in good standing under the laws of the United
States of America and is duly authorized and qualified to transact any and
all business contemplated by this Agreement to be conducted by the Master
Servicer;
(ii) The Master Servicer has the full power and authority to conduct
its business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated
by this Agreement. The Master Servicer has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Depositor, the Originator, the Servicer and
the Trustee, constitutes a legal, valid and binding obligation of the
Master Servicer, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity;
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(iii) The execution and delivery of this Agreement by the Master
Servicer, the consummation by the Master 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 Master
Servicer and will not (A) result in a breach of any term or provision of
charter and by-laws of the Master 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 Master
Servicer is a party or by which it may be bound, or any statute, order or
regulation applicable to the Master Servicer of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
the Master Servicer; and the Master 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 Master Servicer's knowledge, would in the
future materially and adversely affect, the ability of the Master Servicer
to perform its obligations under this Agreement;
(iv) The Master Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
made by it and contained in this Agreement;
(v) No litigation is pending against the Master Servicer that would
materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Master Servicer to perform any of
its other obligations hereunder in accordance with the terms hereof;
(vi) There are no actions or proceedings against, or investigations
known to it of, the Master Servicer before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the consummation of the transactions contemplated
by this Agreement or (C) that might prohibit or materially and adversely
affect the performance by the Master Servicer of its obligations under, or
validity or enforceability of, this Agreement; and
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the consummation by it of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior
to the Closing Date.
(d) It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.07 shall survive delivery of the Mortgage
Files to the Trustee. Upon discovery by any of the Depositor, the Originator,
the Master Servicer, the Trust Administrator, the Servicer or the Trustee of a
breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Premium or the interests therein of the Certificateholders, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such
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discovery) to the other such parties. The obligation of the Originator set forth
in Section 2.03(d) to cure breaches shall constitute the sole remedy against the
Originator available to the Certificateholders, the Depositor, the Trust
Administrator or the Trustee on behalf of the Certificateholders respecting a
breach of the Originator's representations, warranties and covenants contained
in paragraph (b)(vii) of this Section 2.07. The obligation of the Servicer set
forth in Section 3.07(a) to pay the amount of any waived Prepayment Premium
shall constitute the sole remedy against the Servicer available to the
Certificateholders, the Depositor, the Trust Administrator or the Trustee on
behalf of the Certificateholders respecting a breach of the Servicer's
representations, warranties and covenants contained in paragraph (a)(vii) of
this Section 2.07.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Servicer to Service Mortgage Loans.
(a) For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with the terms of this
Agreement and the respective Mortgage Loans, to the extent consistent with such
terms and in accordance with Accepted Servicing Practices 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
related 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 Accepted Servicing Practices, 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
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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 under any standard hazard
insurance policy. Subject to Section 3.16, 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 any power of attorney, in the form
annexed hereto as Exhibit L, furnished to it by the Servicer 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), in accordance with Accepted Servicing
Practices, 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
Interest 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 (except for (A) a reduction of interest payments resulting
from the application of the Servicemembers Civil Relief Act, as amended, or any
similar state statutes or (B) as provided in Section 3.07, if the Mortgagor is
in default with respect to the Mortgage Loan or such default is, in the judgment
of the Servicer, reasonably foreseeable) 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 Trust REMIC to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions after the
start-up day" under the REMIC Provisions, or (iii) except as provided in Section
3.07(a), waive any Prepayment Premiums.
(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.
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Section 3.02. Subservicing Agreements between the Servicer and
Subservicers.
(a) The Servicer may enter into subservicing agreements with subservicers
(each, a "Subservicer"), for the servicing and administration of the Mortgage
Loans ("Subservicing Agreements").
(b) Each Subservicer shall be (i) authorized to transact business in the
state or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement and (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. 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 Master Servicer, the Trust Administrator 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.
Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be deemed to be between the
Subservicer and the Servicer alone, and the Depositor, the Master Servicer and
the Trust Administrator and the Trustee shall have no obligations, duties or
liabilities with respect to a Subservicer including no obligation, duty or
liability of the Depositor, the Master Servicer and the Trust Administrator or
Trustee, to pay a Subservicer's fees and expenses.
For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the related
Mortgage Loans that are received by a related Subservicer regardless of whether
such payments are remitted by the Subservicer to the Servicer.
(c) 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 to which the Servicer is a party, 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
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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.
The Servicer shall pay all fees, expenses or penalties necessary in order
to terminate the rights and responsibilities of its Subservicer from the
Servicer's own funds without any right of reimbursement from the Depositor, the
Trustee, the Master Servicer, the Trust Administrator or the Collection Account.
Section 3.03. Successor Subservicers.
The Servicer shall be entitled to terminate any Subservicing Agreement to
which the Servicer is a party 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 party to the related Subservicing Agreement
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.
Any Subservicing Agreement shall include the provision that such agreement
may be immediately terminated by the Master Servicer, the Trustee or the Trust
Administrator without fee, in accordance with the terms of this Agreement, in
the event that the Servicer (or the Master Servicer, the Trust Administrator or
the Trustee, if then acting as Servicer) shall, for any reason, no longer be the
Servicer (including termination due to a Servicer 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
such 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.
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Section 3.05. No Contractual Relationship between Subservicers and the
Trustee, Master Servicer, Trust Administrator or Certificateholder.
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, the Master Servicer, the Trust Administrator and the
Certificateholder (or any successor to the 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 or Trust Administrator.
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 Servicer Event of
Default), the Master Servicer or any other successor to Servicer pursuant to
this Agreement, 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 Master Servicer prior to the Master
Servicer assuming such rights and obligations, unless the Master Servicer elects
to terminate any Subservicing Agreement in accordance with its terms as provided
in Section 3.03.
Upon such assumption, the Master Servicer, 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
Trustee, the Trust Administrator, the Master Servicer, their designees or any
successor to the 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 Master Servicer,
the Trust Administrator or the Trustee, deliver to the assuming party all
documents and records relating to each Subservicing Agreement and the Mortgage
Loans then being serviced by it 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.
(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 and
Accepted Servicing Practices, the Servicer may (i) waive any late payment charge
or, if
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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, in the event that
any Mortgage Loan is in default or is a 60+ Day Delinquent Mortgage Loan, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Interest Rate, forgive the payment of principal
or interest, extend the final maturity date of such Mortgage Loan or waive, in
whole or in part, a Prepayment Premium), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
(any and all such waivers, modifications, variances, forgiveness of principal or
interest, postponements, or indulgences collectively referred to herein as
"forbearance"); provided, however, that the Servicer's approval of a
modification of a Due Date shall not be considered a modification for purposes
of this sentence; provided, further, that the final maturity date of any
Mortgage Loan may not be extended beyond the Final Scheduled Distribution Date
for the Offered Certificates. The Servicer's analysis supporting any forbearance
and the conclusion that any forbearance meets the standards of Section 3.01
shall be reflected in writing in the applicable Servicing File. In addition,
notwithstanding the foregoing, the Servicer may also waive, in whole or in part,
a Prepayment Premium if such Prepayment Premium is (i) not permitted to be
collected by applicable law or the collection thereof would be considered
"predatory" pursuant to written guidance published by any applicable federal,
state or local regulatory authority having jurisdiction over such matters, or
(ii) the enforceability thereof is limited (1) by bankruptcy, insolvency,
moratorium, receivership or other similar laws relating to creditor's rights or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment. In order to waive a Prepayment Premium other than as permitted above,
then the Servicer, as a condition to any such waiver of Prepayment Premium, is
required to first pay the amount of such waived Prepayment Premium, 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; provided, however, that the Servicer shall not have an
obligation to pay the amount of any uncollected Prepayment Premium if the
failure to collect such amount is the direct result of inaccurate or incomplete
information on the Mortgage Loan Schedule in effect at such time.
(b) The Servicer shall give notice to the Trustee, the Trust
Administrator, the Master Servicer, each Rating Agency and the Depositor of any
proposed change of the location of the Collection Account within a reasonable
period of time prior to any change thereof.
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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 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 of the Servicer
or remit such proceeds to the Servicer for deposit in the Collection Account of
the Servicer 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 related Mortgage Loans
shall be covered by a paid-in-full, life-of-the-loan tax service contract in
effect with respect to each related Mortgage Loan (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. To the
extent the related Mortgage Loan provides for Escrow Payments, 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) apply
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to the restoration or repair of the Mortgaged Property in accordance with the
Section 3.13; (v) transfer to the Collection Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note; (vi) pay interest to the Servicer and, if
required and as described below, to Mortgagors on balances in the Escrow
Account; (vii) clear and terminate the Escrow Account at the termination of the
Servicer's obligations and responsibilities in respect of the related Mortgage
Loans under this Agreement; or (viii) 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 use commercially reasonable efforts
consistent with Accepted Servicing Practices to 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 a tax sale or the foreclosure as a result
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 Cut-off Date (other than in
respect of principal or interest on the related Mortgage Loans due on or before
the Cut-off Date), 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 Servicing Fee)
on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds (to the
extent such Insurance Proceeds and Condemnation 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
all Liquidation Proceeds;
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(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;
(vii) all Substitution Shortfall Amounts; and
(viii) all Prepayment Premiums collected by the Servicer.
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, 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 Trust Administrator, the Master Servicer 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 Trust
Administrator for deposit into the Distribution Account all Available
Funds in respect of the related Distribution Date together with all
amounts representing Prepayment Premiums 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 Scheduled 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, Condemnation Proceeds, Insurance Proceeds or other
amounts as may be collected by the Servicer from a
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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 Originator, with respect to each Mortgage Loan
that has previously been repurchased or replaced 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 (A) 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 and (B) any unpaid
Servicing Fees to the extent not recoverable from Liquidation Proceeds,
Insurance Proceeds or other amounts received with respect to the related
Mortgage Loan under Section 3.11(a)(iii);
(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, the Master
Servicer, the Trust Administrator or the Trustee for expenses incurred by
or reimbursable to the Servicer, the Depositor, the Trustee, the Master
Servicer or the Trust Administrator, as the case may be, pursuant to this
Agreement;
(ix) to reimburse the Servicer, the Master Servicer, the Trust
Administrator or the Trustee, as the case may be, for expenses reasonably
incurred in respect of the breach or defect giving rise to the repurchase
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 repurchase 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.
To the extent that the Servicer does not timely make the remittance
referred to in clause (i) above, the Servicer shall pay the Trust Administrator
for the account of the Trust Administrator interest on any amount not timely
remitted at the prime rate, from and including the applicable Remittance Date to
but excluding the date such remittance is actually made.
(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), (iv), (v), (vi), (vii), (viii) and
(ix) above. The Servicer shall provide written notification to the Depositor, on
or prior
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to the next succeeding Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclause (a)(vi) above.
Section 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may invest the funds in the Collection Account and the
Trust Administrator may invest funds in the Distribution Account (for purposes
of this Section 3.12, each such Account is referred to as 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
on which such funds are required to be withdrawn from such account pursuant to
this Agreement. 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 Trust Administrator. The Trust Administrator shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection 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 Trust Administrator or
its agent, together with any document of transfer necessary to transfer title to
such investment to the Trust Administrator. In the event amounts on deposit in
an Investment Account are at any time invested in a Permitted Investment payable
on demand, the Trust Administrator 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 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 to the extent that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds deposited in
the Collection Account and Escrow 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. Any other benefit derived from the
Collection Account and Escrow Account associated with the receipt, disbursement
and accumulation of principal, interest, taxes, hazard insurance, mortgage
blanket insurance, and like sources, shall accrue to the benefit of the
Servicer, except that the Servicer shall not realize any economic benefit from
any forced charging of services. The Servicer shall deposit in the Collection
Account and Escrow Account 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) All income and gain realized from the investment of funds deposited in
the Distribution Account held by the Trust Administrator, shall be for the
benefit of the Trust Administrator. The Trust Administrator shall deposit in the
Distribution Account 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.
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(d) 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.
(e) The Trustee and the Trust Administrator or their respective Affiliates
are permitted to receive additional compensation that could be deemed to be in
their respective economic self-interest for (i) serving as investment adviser,
administrator, shareholder, servicing agent, custodian or sub-custodian with
respect to certain of the Permitted Investments, (ii) using Affiliates to effect
transactions in certain Permitted Investments and (iii) effecting transactions
in certain Permitted Investments.
Section 3.13. Maintenance of Hazard Insurance, 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, (iii) the maximum insurable value of the improvements which are a
part of such Mortgaged Property, and (iv) the amount determined by applicable
federal or state law, 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 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 Interest 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 any 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. If the Mortgagor fails
to provide Mortgage Loan hazard insurance coverage after thirty (30) days of
Servicer's written notification, the Servicer shall put in place such hazard
insurance coverage on the Mortgagor's behalf. Any out-of-pocket expense or
advance made by the Servicer on such force placed hazard insurance coverage
shall be deemed a Servicing Advance. Any cost incurred by any 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
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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 minimum
amount required, under the terms of coverage, to compensate for any damage or
loss on a replacement cost basis (or the unpaid principal balance of the related
Mortgage Loan if replacement cost coverage is not available for the type of
building insured) and (ii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. If at any time
during the term of the Mortgage Loan, the Servicer determines in accordance with
applicable law and pursuant to the Federal Emergency Management Agency Guides
that a Mortgaged Property is located in a special flood hazard area and is not
covered by flood insurance or is covered in an amount less than the amount
required by the Flood Disaster Protection Act of 1973, as amended, the Servicer
shall notify the related Mortgagor to obtain such flood insurance coverage, and
if said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor's behalf. Any
out-of-pocket expense or advance made by the Servicer on such force placed flood
insurance coverage shall be deemed a Servicing Advance.
In the event that any Servicer shall obtain and maintain a blanket policy
with an insurer having a General Policy Rating of "B" 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. The Servicer
shall provide the Trustee or Trust Administrator upon request 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
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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 and such substitution is in
the best interest of the Certificateholders as determined by the Servicer. 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 Interest Rate
and the amount of the Scheduled Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof and in accordance with Section
3.01(c) herein. 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.
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 whatsoever. 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 Accepted
Servicing Practices, 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
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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 a 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, Condemnation 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 Event or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds, Condemnation
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 accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the Mortgage Interest 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 Event or REO Disposition; third, to reimburse any Servicer for any
related xxxxxxxxxxxx X&X Advances, pursuant to Section 3.11; 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 Interest 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 Interest 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, to the Trust Administrator for distribution 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 and the Depositor with a written report of the
environmental inspection.
After reviewing the environmental inspection report, the Depositor shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
In the event (a) the
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environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (b) the Depositor
directs the Servicer 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. In the event the
Depositor directs the Servicer 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. Neither
the Trustee nor the Master Servicer shall be responsible for any direction given
by the Depositor to the Servicer pursuant to this paragraph.
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 or the Trust Administrator, as
applicable, 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 by completing a Request for Release
(in the form of Exhibit J or in an electronic format acceptable to the Trust
Administrator). Upon receipt of such certification and Request for Release, the
Trustee or Trust Administrator shall promptly release the related Custodial File
to the Servicer within three (3) 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 or Trust
Administrator, as applicable, shall, upon request of the Servicer and delivery
to the Trustee or Trust Administrator, as applicable, of a Request for Release
(in the form of Exhibit J or in an electronic format acceptable to the Trust
Administrator), release the related Custodial File to the Servicer, and the
Trustee or Trust Administrator shall, at the direction of the Servicer, execute
such documents provided to it 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 or Trust Administrator, as applicable, when the need therefor by
the Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation 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 or Trust
Administrator, as applicable, a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
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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 shall be released by the Trustee or
Trust Administrator, as applicable, to the Servicer or its designee. Upon
receipt of a Request for Release under this Section 3.16, the Trustee or Trust
Administrator, as applicable, shall deliver the related Custodial File to the
Servicer by overnight courier (such delivery to be at the Servicer's expense);
provided, however, that in the event the Servicer has not previously received
copies of the relevant Mortgage Loan Documents necessary to service the related
Mortgage Loan in accordance with Accepted Servicing Practices, the Originator
shall reimburse the Servicer for any overnight courier charges incurred for the
requested Custodial Files.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to any Servicer copies of 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 Servicer shall cause the deed or certificate of sale to be issued
in the name of the Trustee, on behalf of the Certificateholders, or the
Trustee's nominee.
(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.
(c) [Reserved.]
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(d) 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.
(e) 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, 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.
(f) 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.
(g) Any net proceeds from an REO Disposition which are in excess of the
unpaid principal balance of the related Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date of the REO Disposition shall be
retained by the Servicer as additional servicing compensation.
(h) The Servicer shall use Accepted Servicing Practices, 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, and is
granted, 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, the Trust Administrator and the Servicer, to the effect
that the holding by REMIC I of such REO Property subsequent to such period will
not result in the imposition of taxes on "prohibited transactions" as defined in
Section 860F of the Code or cause any Trust 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 any 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 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. Neither the
Trustee nor the Master Servicer has any obligation with respect to REO
Dispositions.
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Section 3.18. Notification of Adjustments.
With respect to each Mortgage Loan, the Servicer shall adjust the Mortgage
Interest Rate on the related 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 Interest Rate and Scheduled Payment
adjustments. The Servicer shall promptly, upon written request therefor, deliver
to the Trustee, the Trust Administrator and the Master Servicer 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, the Trust
Administrator or the Master Servicer that the Servicer has failed to adjust a
Mortgage Interest 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 Trustee, the Trust Administrator, the Master Servicer, the OTS or
the FDIC and the examiners and supervisory agents thereof, access to the
documentation regarding the Mortgage Loans in its possession required by
applicable regulations of the OTS. Such access shall be afforded without charge,
but only upon 15 days' (or, if a Servicer Event of Default has occurred and is
continuing, 2 days') 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, Condemnation 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 applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account, the Distribution Account or any Escrow 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
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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
Condemnation 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 and as otherwise permitted in
Section 3.11. Except as provided in Section 6.06, 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 Premiums) 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 Sections 3.09(b)(vi)
and 3.11(a)(iv) to withdraw from the Collection 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 any Subservicer to the extent not
retained by such Subservicer 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
Master Servicer, the Trust Administrator, the Rating Agencies and the Trustee on
or before March 15th of each calendar year, commencing in 2005, an Officer's
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 or a similar agreement has been made under such officer's
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. Promptly after receipt of such Officer's Certificate,
the Depositor shall review such Officer's Certificate and, if applicable,
consult with the Servicer as to the nature of any defaults by the Servicer in
the fulfillment of any of the Servicer's obligations.
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Section 3.23. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
Not later than March 15th of each calendar year commencing in 2005, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Depositor, the Master
Servicer, the Trust Administrator, 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 calendar 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. Promptly after receipt of such report, the Depositor shall review
such report and, if applicable, consult with the Servicer as to the nature of
any defaults by the Servicer in the fulfillment of any of the Servicer's
obligations.
Section 3.24. Master Servicer to Act as Servicer.
(a) In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of a Servicer Event of Default), the
Master Servicer or its successor shall thereupon assume all of the rights and
obligations of the Servicer hereunder arising thereafter (except that the Master
Servicer shall not be (i) liable for losses of such predecessor Servicer
pursuant to Section 3.10 or any acts or omissions of such 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.
(b) If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Servicer Event of Default), the Master Servicer (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 Master Servicer (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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(c) The Servicer shall, upon request of the Master Servicer, 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 and 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 Trust Administrator for deposit into the
Distribution Account on each Remittance Date an amount from its own funds equal
to Compensating Interest payable by the Servicer for such Remittance Date.
Section 3.26. Credit Reporting; Xxxxx-Xxxxx-Xxxxxx Act.
(a) With respect to each Mortgage Loan, the Servicer shall fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on the related Mortgagor credit files to three of the national credit
repositories, on a monthly basis.
(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. Net WAC Rate Carryover Reserve Account; Distribution
Account.
(a) The Trust Administrator shall establish and maintain the Net WAC Rate
Carryover Reserve Account, on behalf of the Holders of the Class C Certificates,
to receive any Net WAC Rate Carryover Payments and any Certificate Cap Agreement
Payments and to pay to the Holders of the Offered Certificates and the Class M10
Certificates any Net WAC Rate Carryover Amounts. On each Distribution Date, the
Trust Administrator shall deposit the amount of any Certificate Cap Agreement
Payments for such date into the Net WAC Rate Carryover Reserve Account.
On each Distribution Date on which there exists a Net WAC Rate Carryover
Amount on any Class of Offered Certificates or on the Class M10 Certificates,
the Trust Administrator shall (1) withdraw from the Distribution Account and
deposit in the Net WAC Rate Carryover Reserve Account, as set forth in Section
4.02(a)(iii)(U), the lesser of the Class C Distributable Amount (to the extent
remaining after the distributions specified in Sections 4.02(a)(iii)(A)-(T)) and
the aggregate Net WAC Rate Carryover Amount and (2) withdraw from the Net WAC
Rate Carryover Reserve Account amounts necessary to pay to such Class or Classes
of Certificates the applicable Net WAC Rate Carryover Amounts. Such payments
shall be allocated to those Classes based upon the amount of Net WAC Rate
Carryover Amount owed to each such Class and shall be paid in the priority set
forth in Sections 4.02(a)(iii)(V)-(X). In the event that the Certificate Balance
of any Class of Subordinate Certificates is permanently reduced because of
Applied Realized Loss Amounts, the applicable Certificateholders will not be
entitled (except to the extent of Subsequent Recoveries and as otherwise set
forth herein) to receive Net WAC Rate
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Carryover Amounts on the written down amounts on such Distribution Date or any
future Distribution Dates, even if funds are otherwise available for
distribution.
The Trust Administrator shall account for the Net WAC Rate Carryover
Reserve Account as an outside reserve fund within the meaning of Treasury
Regulations Section 1.860G-2(h) and not as an asset of any Trust REMIC created
pursuant to this Agreement. The beneficial owners of the Net WAC Rate Carryover
Reserve Account are the Holders of the Class C Certificates. For all federal
income tax purposes, amounts transferred by REMIC II to the Net WAC Rate
Carryover Reserve Account shall be treated as first distributed by the Trust
Administrator to the Holders of the Class C Certificates in respect of the Class
C Interest, and then contributed by the Holders of the Class C Certificates to
the Net WAC Rate Carryover Reserve Account.
Any Net WAC Rate Carryover Amounts paid by the Trust Administrator to the
Holders of the Offered Certificates or the Class M10 Certificates shall be
accounted for by the Trust Administrator as amounts paid first to the Holders of
the Class C Certificates and then to the respective Class or Classes of Offered
Certificates or the Class M10 Certificates. In addition, the Trustee shall
account for the rights of Holders of each Class of Offered Certificates or the
Class M10 Certificates to receive payments of Net WAC Rate Carryover Amounts as
rights in a separate limited recourse interest rate cap contract written by the
Holders of the Class C Certificates in favor of Holders of each such Class.
Notwithstanding any provision contained in this Agreement, the Trust
Administrator shall not be required to make any payments from the Net WAC Rate
Carryover Reserve Account except as expressly set forth in this Section 3.27(a).
(b) The Trust Administrator shall establish and maintain the Distribution
Account on behalf of the Certificateholders. The Trust Administrator shall,
promptly on the Business Day received, deposit in the Distribution Account and
retain therein the following:
(i) the aggregate amount remitted by the Servicer to the Trust
Administrator pursuant to Section 3.11;
(ii) any amount deposited by the Servicer pursuant to Section
3.12(b) 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, the Servicer may at any time direct the Trust Administrator 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 Trust Administrator which describes the amounts deposited in error
in the Distribution Account. All funds deposited in the Distribution Account
shall be held by the Trust Administrator in trust for the Certificateholders
until disbursed in accordance with this Agreement or withdrawn in accordance
with Section 4.02.
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Section 3.28. Optional Purchase of Delinquent Mortgage Loans.
The Depositor, in its sole discretion, shall have the option, but shall
not be obligated, to purchase any 90+ Delinquent Mortgage Loans from the Trust
Fund. The purchase price for any such Mortgage Loan shall be 100% of the unpaid
principal balance of such Mortgage Loan plus accrued and unpaid interest on the
related Mortgage Loan at the applicable Mortgage Interest Rate, plus the amount
of any unreimbursed Servicing Advances made by the Servicer. Upon receipt of
such purchase price, the Servicer shall provide to the Trustee or Trust
Administrator, as applicable, a Request for Release and the Trustee or Trust
Administrator, as applicable, shall promptly release to the Depositor, the
Mortgage File relating to the Mortgage Loan being repurchased.
Section 3.29. REMIC-Related Covenants.
For as long as each REMIC shall exist, the Servicer shall act in
accordance herewith to treat such REMIC as a REMIC, and the Servicer shall
comply with any directions of the Trustee or the Trust Administrator to assure
such continuing treatment. In particular, the Servicer shall not (a) sell or
permit the sale of all or any portion of the Mortgage Loans or of any investment
of deposits in either the Collection Account or the Distribution Account unless
such sale is as a result of a repurchase of the Mortgage Loans pursuant to this
Agreement or the Trustee and Trust Administrator has received an Opinion of
Counsel prepared at the expense of the Trust Fund stating that such contribution
will not result in an Adverse REMIC Event (as defined in Section 11.01(f)); and
(b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.03 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day (as defined in Section 2.06)
without receipt of an Opinion of Counsel stating that such contribution will not
result in an Adverse REMIC Event (as defined in Section 11.01(f)).
ARTICLE IIIA
ADMINISTRATION AND MASTER SERVICING OF
THE MORTGAGE LOANS BY THE MASTER SERVICER
Section 3A.01 Master Servicer.
The Master Servicer shall supervise, monitor and oversee the obligation of
the Servicer to service and administer the Mortgage Loans in accordance with the
terms of the Agreement and shall have full power and authority to do any and all
things which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with the
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by the Servicer and
shall cause the Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by the Servicer under this Agreement. The
Master Servicer shall independently and separately monitor the Servicer's
servicing activities with respect to each related Mortgage Loan, reconcile the
results of such monitoring
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with such information provided in the previous sentence on a monthly basis and
coordinate corrective adjustments to the Servicer's and Master Servicer's
records. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicer to the Distribution
Account pursuant to the terms hereof based on information provided to the Master
Servicer by the Trust Administrator pursuant to the third paragraph of Section
8.01. Notwithstanding any provision of this Agreement to the contrary, the
Master Servicer shall have no duty or obligation to supervise, monitor or
oversee the activities of, or to enforce the obligations of, the Servicer with
respect to the servicing or administration of defaulted or delinquent Mortgage
Loans and the management, sale or disposition of any REO Properties or for any
actions of the Depositor, the Seller or the Trustee in connection therewith;
provided, however, that the foregoing limitation shall not affect (i) the
obligation of the Servicer to deliver the requisite information relating to any
such delinquent or defaulted loans to the Trust Administrator pursuant to
Section 4.03, (ii) the obligation of the Trust Administrator to make available
the monthly statement required pursuant to Section 4.03, or (iii) the obligation
of the Master Servicer to exercise the remedies set forth in Section 3A.03, to
the extent that it has actual knowledge or receives written notice of a default
by the Servicer hereunder.
The Trustee shall furnish the Master Servicer with any limited powers of
attorney and other documents in form as provided to it necessary or appropriate
to enable the Master Servicer to perform its master servicing obligations. The
Trustee shall have no responsibility for any action of the Master Servicer
pursuant to any such limited power of attorney and shall be indemnified by the
Master Servicer, as applicable, for any cost, liability or expense incurred by
the Trustee in connection with the Master Servicer's misuse of any such power of
attorney.
The Master Servicer shall provide access to the records and documentation
in possession of the Master Servicer regarding the related Mortgage Loans and
REO Property and the servicing thereof to the Certificateholders, the FDIC, and
the supervisory agents and examiners of the FDIC, such access being afforded
only upon reasonable prior written request and during normal business hours at
the office of the Master Servicer; provided, however, that, unless otherwise
required by law, the Master Servicer shall not be required to provide access to
such records and documentation if the provision thereof would violate the legal
right to privacy of any Mortgagor. The Master Servicer shall allow
representatives of the above entities to photocopy any of the records and
documentation and shall provide equipment for that purpose at a charge that
covers the Master Servicer's actual costs.
Section 3A.02 REMIC-Related Covenants.
For as long as each REMIC shall exist, the Master Servicer shall act in
accordance herewith to treat such REMIC as a REMIC, and the Master Servicer
shall comply with any directions of the Trustee or the Trust Administrator to
assure such continuing treatment. In particular, the Master Servicer shall not
(a) sell all or any portion of the Mortgage Loans or of any investment of
deposits in either the Collection Account or the Distribution Account unless
such sale is as a result of a repurchase of the Mortgage Loans pursuant to this
Agreement or the Trustee and Trust Administrator has received an Opinion of
Counsel prepared at the expense of the Trust Fund stating that such contribution
will not result in an Adverse REMIC Event (as defined in Section 11.01(f)); and
(b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.03 of this Agreement, as applicable, accept any
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contribution to any REMIC after the Startup Day (as defined in Section 2.06)
without receipt of an Opinion of Counsel stating that such contribution will not
result in an Adverse REMIC Event (as defined in Section 11.01(f)).
Section 3A.03 Monitoring of Servicer.
(a) Subject to Section 3A.01, The Master Servicer shall be responsible for
monitoring compliance by the Servicer with its duties under this Agreement. In
the review of the Servicer's activities, the Master Servicer may rely upon an
Officer's Certificate of the Servicer with regard to the Servicer's compliance
with the terms of this Agreement. In the event that the Master Servicer, in its
judgment, determines that the Servicer should be terminated in accordance with
the terms hereof, or that a notice should be sent pursuant to the terms hereof
with respect to the occurrence of an event that, unless cured, would constitute
a Servicer Event of Default, the Master Servicer shall notify the Servicer and
the Trustee thereof and the Master Servicer shall issue such notice or take such
other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under this
Agreement, and shall, in the event that the Servicer fails to perform its
obligations in accordance with this Agreement, subject to the preceding
paragraph and Article VII, cause the Trustee to terminate the rights and
obligations of the Servicer hereunder in accordance with the provisions of
Article VII. Such enforcement, including, without limitation, the legal
prosecution of claims and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall not be
required to prosecute or defend any legal action except to the extent that the
Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.
(c) The Master Servicer shall be entitled to be reimbursed by the Servicer
(or from amounts on deposit in the Distribution Account if the Servicer does not
timely fulfill its obligations hereunder) for all reasonable out-of-pocket or
third party costs associated with the transfer of servicing from the predecessor
Servicer (or if the predecessor Servicer is the Master Servicer, from the
Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.
(d) Subject to Section 3A.01, the Master Servicer shall require the
Servicer to comply with the remittance requirements and other obligations set
forth in this Agreement.
(e) If the Master Servicer acts as successor Servicer, it will not assume
liability for the representations and warranties of the terminated Servicer.
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(f) The Master Servicer shall not be liable for any acts or omissions of
the Servicer.
Section 3A.04 Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a blanket
fidelity bond and an errors and omissions insurance policy, affording coverage
with respect to all directors, officers, employees and other Persons acting on
such Master Servicer's behalf, and covering errors and omissions in the
performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
Section 3A.05 Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and shall have
full power and authority, subject to the REMIC Provisions and the provisions of
Article XI, to do any and all things that it may deem necessary or desirable in
connection with the master servicing and administration of the Mortgage Loans;
provided, however, that the Master Servicer shall not knowingly or intentionally
take any action, or fail to take (or fail to cause to be taken) any action
reasonably within its control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, would cause any REMIC created hereunder to fail to qualify as a
REMIC or result in the imposition of a tax upon the Trust Fund (including but
not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Master Servicer has received an Opinion
of Counsel (but not at the expense of the Master Servicer) to the effect that
the contemplated action will not cause any REMIC created hereunder to fail to
qualify as a REMIC or result in the imposition of a tax upon any REMIC created
hereunder. The Trustee shall execute and deliver such other documents, as the
Master Servicer or the Servicer may request, to enable the Master Servicer to
master service and administer the Mortgage Loans and carry out its duties
hereunder, in each case in accordance with Accepted Master Servicing Practices.
If the Master Servicer or the Trustee has been advised that it is likely that
the laws of the state in which action is to be taken prohibit such action if
taken in the name of the Trustee or that the Trustee would be adversely affected
under the "doing business" or tax laws of such state if such action is taken in
its name, the Master Servicer shall join with the Trustee in the appointment of
a co-trustee pursuant to Section 8.10. In the performance of its duties
hereunder, the Master Servicer shall be an independent contractor and shall not,
except in those instances where it is taking action in the name of the Trustee,
be deemed to be the agent of the Trustee.
Section 3A.06 Due-on-Sale Clauses; Assumption Agreements.
To the extent Mortgage Loans contain enforceable due-on-sale clauses, the
Master Servicer shall cause the Servicer to enforce such clauses in accordance
with this Agreement.
Section 3A.07 Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.
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(a) The Master Servicer shall transmit to the Trustee or the Trust
Administrator such documents and instruments coming into the possession of the
Master Servicer from time to time as are required by the terms hereof to be
delivered to the Trustee or the Trust Administrator. Any funds received by the
Master Servicer in respect of any Mortgage Loan or which otherwise are collected
by the Master Servicer as Liquidation Proceeds or Insurance Proceeds in respect
of any Mortgage Loan shall be remitted to the Trust Administrator for deposit in
the Distribution Account. The Master Servicer shall, and, subject to Section
3.19, shall cause the Servicer to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices of
the Master Servicer designated by it. In fulfilling such a request the Master
Servicer shall not be responsible for determining the sufficiency of such
information.
(b) All funds collected or held by, or under the control of, the Master
Servicer, in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds or Insurance
Proceeds, shall be remitted to the Trust Administrator for deposit in the
Distribution Account.
Section 3A.08 [RESERVED].
Section 3A.09 Compensation for the Master Servicer.
As compensation for the activities of the Master Servicer hereunder, the
Master Servicer shall be entitled to the Master Servicing Fee, payable to the
Master Servicer by the Trust Administrator on each Distribution Date (with
respect to the calendar month that immediately preceded the month of such
Distribution Date) from funds in the Distribution Account. The Master Servicing
Fee payable to the Master Servicer in respect of any Distribution Date shall be
reduced as applicable in accordance with Section 3A.12. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
ordinary activities hereunder and shall not be entitled to reimbursement
therefor except as provided in this Agreement.
Section 3A.10 Annual Officer's Certificate as to Compliance.
(a) Not later than the earlier of (a) March 15th of each calendar year
(other than the calendar year during which the Closing Date occurs) or (b) with
respect to any calendar year during which the Depositor's annual report on Form
10-K is required to be filed pursuant to Section 4.07(b), 15 calendar days
before each date on which the Depositor's annual report on Form 10-K is required
to be filed pursuant to Section 4.07(b)(or if such day is not a Business Day,
the immediately preceding Business Day), the Master Servicer shall deliver to
the Depositor, the Servicer, the Trust Administrator, the Trustee and the Rating
Agencies an Officer's Certificate certifying that with respect to the period
ending December 31 of the prior year: (i) such Master Servicing Officer has
reviewed the activities of such Master Servicer during
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the preceding calendar year or portion thereof and its performance under this
Agreement, (ii) to the best of such Master Servicing Officer's knowledge, based
on such review, such Master Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a default in the fulfillment of any
such duties, responsibilities or obligations, specifying each such default known
to such Master Servicing Officer and the nature and status thereof, (iii)
nothing has come to the attention of such Master Servicing Officer to lead such
Master Servicing Officer to believe that the Master Servicer has failed to
perform any of its duties, responsibilities and obligations under this Agreement
in all material respects throughout such year, or, if there has been a material
default in the performance or fulfillment of any such duties, responsibilities
or obligations, specifying each such default known to such Master Servicing
Officer and the nature and status thereof.
(b) Copies of such Officer's Certificate shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trust
Administrator at the Master Servicer's expense if the Master Servicer failed to
provide such copies (unless (i) the Master Servicer shall have failed to provide
the Trust Administrator with such statement or (ii) the Trust Administrator
shall be unaware of the Master Servicer's failure to provide such statement).
Section 3A.11 Annual Independent Accountant's Servicing Report.
Not later than the earlier of (a) March 15 of each calendar year (other
than the calendar year during which the Closing Date occurs) or (b) with respect
to any calendar year during which the Depositor's annual report on Form 10-K is
required to be filed pursuant to Section 4.07(b), 15 calendar days before each
date on which the Depositor's annual report on Form 10-K is required to be filed
pursuant to Section 4.07(b)(or if such day is not a Business Day, the
immediately preceding Business Day), if the Master Servicer has, during the
course of any calendar year, directly serviced any of the Mortgage Loans, then
the Master Servicer at its expense shall cause a nationally recognized firm of
independent certified public accountants to furnish a statement to the Trustee,
the Trust Administrator, the Rating Agencies and the Depositor to the effect
that, with respect to the most recently ended fiscal year, such firm has
examined certain records and documents relating to the Master Servicer's
performance of its servicing obligations under this Agreement and pooling and
servicing and trust agreements in material respects similar to this Agreement
and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Xxxxxxx Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Xxxxxxx Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trust
Administrator at the expense of the Master Servicer if the Master Servicer shall
fail to provide such copies. If such report discloses exceptions that are
material, the Master Servicer shall advise the Trustee and the Trust
Administrator whether such exceptions have been cured or are susceptible of
cure, and will take prompt action to do so.
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Section 3A.12 Obligation of the Master Servicer in Respect of Prepayment
Interest Shortfalls.
In the event that the Servicer fails to perform on any Remittance Date its
obligations pursuant to Section 3.25, the Master Servicer shall remit to the
Trust Administrator not later than the Distribution Date an amount equal to the
lesser of (i) the aggregate amounts required to be paid by the Servicer with
respect to Prepayment Interest Shortfalls attributable to Principal Prepayments
on the related Mortgage Loans for the related Distribution Date, and not so paid
by the Servicer and (ii) the Master Servicing Fee for such Distribution Date,
without reimbursement therefor.
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) the
aggregate amount of Scheduled Payments (with each interest portion thereof net
of the Servicing Fee), due during the Due Period immediately preceding such
Remittance Date in respect of the Mortgage Loans, which Scheduled Payments were
not received as of the close of business on the related Determination Date, 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 REO Imputed
Interest) that would have been due on the related Due Date in respect of the
related Mortgage Loan, 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 Trust Administrator for deposit into the Distribution
Account 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 or (ii) from the Collection
Account, to the extent of funds held therein for future distribution (in which
case, it will cause to be made an appropriate entry in the records of the
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.
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(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 Servicing Advance. The determination by the Servicer
that it has made a Nonrecoverable P&I Advance or a Nonrecoverable Servicing
Advance or that any proposed P&I Advance or Servicing Advance, if made, would
constitute a Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance,
respectively, shall be evidenced by an Officer's Certificate of the Servicer
delivered to the Trustee, the Master Servicer and the Trust Administrator. The
Master Servicer shall be entitled to rely on any non-recoverability analysis
made by the Servicer.
(e) Except as otherwise provided herein, the Servicer shall be entitled to
reimbursement pursuant to Section 3.11 for 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 Trust Administrator shall make the
disbursements and transfers from amounts then on deposit in the Distribution
Account in the following order of priority and to the extent of the Available
Funds remaining:
(i) Interest remittances shall be distributed as follows:
(I) the Group 1 Interest Remittance Amount for such
Distribution Date will be distributed in the following
manner:
(A) concurrently, to the Holders of the Class 1-A-1
Certificates and Class 1-A-2 Certificates, on a
pro rata basis based on the entitlement of each
such Class, the Accrued Certificate Interest
Distribution Amount and the Unpaid Interest
Amount, if any, for each such Class;
(B) concurrently, to the Holders of the Class 2-A
Certificates and the Class 3-A Certificates, on a
pro rata basis based on the entitlement of each
such Class, an amount equal to the excess if any,
of (x) the amount required to be distributed
pursuant to clause (II)(A) or (III)(A), as
appropriate, for such Distribution Date over (y)
the amount actually distributed pursuant to such
clause from the related interest remittance
amount.
(II) the Group 2 Interest Remittance Amount for such
Distribution Date will be distributed in the following
manner:
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(A) to the Holders of the Group 2 Certificates, the
Accrued Certificate Interest Distribution Amount
and the Unpaid Interest Amount, if any, for such
Class;
(B) concurrently, to the Holders of the Class -A
Certificates and the Class 3-A Certificates, on a
pro rata basis based on the entitlement of each
such Class, an amount equal to the excess if any,
of (x) the amount required to be distributed
pursuant to clause (I)(A) or (III)(A), as
appropriate, for such Distribution Date over (y)
the amount actually distributed pursuant to such
clause from the related interest remittance
amount.;
(III) the Group 3 Interest Remittance Amount for such
Distribution Date will be distributed in the following
manner:
(A) concurrently, to the Holders of the Class 3-A-1
Certificates, Class 3-A-2 Certificates and Class
3-A-3 Certificates, on a pro rata basis based on
the entitlement of each such Class, the Accrued
Certificate Interest Distribution Amount and the
Unpaid Interest Amount, if any, for each such
Class;
(B) concurrently, to the Holders of the Class 1-A
Certificates and the Class 2-A Certificates, on a
pro rata basis based on the entitlement of each
such Class, an amount equal to the excess if any,
of (x) the amount required to be distributed
pursuant to clause (I)(A) or (II)(A), as
appropriate, for such Distribution Date over (y)
the amount actually distributed pursuant to such
clause from the related interest remittance
amount; and
(IV) following the distributions made pursuant to clauses
(I), (II) and (III) above, the remaining Group 1
Interest Remittance Amount, Group 2 Interest Remittance
Amount and Group 3 Interest Remittance Amount will be
distributed in the following manner:
(A) first, to the Holders of the Class M1
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(B) second, to the Holders of the Class M2
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
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(C) third, to the Holders of the Class M3
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(D) fourth, to the Holders of the Class M4
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(E) fifth, to the Holders of the Class M5
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(F) sixth, to the Holders of the Class M6
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(G) seventh, to the Holders of the Class M7
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(H) eighth, to the Holders of the Class M8
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class;
(I) ninth, to the Holders of the Class M9
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class; and
(J) tenth, to the Holders of the Class M10
Certificates, the related Accrued Certificate
Interest Distribution Amount and the Unpaid
Interest Amount, if any, for such Class.
(ii) Principal remittances shall be distributed as follows:
(I)(A) On each Distribution Date on which a Group 1 Sequential
Trigger Event is in effect, distributions of principal
to the extent of the Group 1 Principal Distribution
Amount shall be distributed in the following amounts and
order of priority:
(1) first, to the Holders of the Class 1-A-1
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(2) second, to the Holders of the Class 1-A-2
Certificates, until the Certificate Balance
thereof has been reduced to zero; and
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(3) third, after taking into account the amount
distributed to the Holders of the Class 2-A
Certificates and Class 3-A Certificates on such
Distribution Date in respect of principal, to the
holders of the Class 2-A Certificates and Class
3-A Certificates, pro rata, based on the
entitlement of each such Class pursuant to the
priorities set forth in this clause (ii), until
the Certificate Balances thereof have been reduced
to zero.
(I)(B) On each Distribution Date prior to the Stepdown Date
when no Group 1 Sequential Trigger Event is in effect,
distributions of principal to the extent of the Group 1
Principal Distribution Amount shall be distributed in
the following amounts and order of priority:
(1) first, to the Holders of the Class 1-A-1
Certificates and Class 1-A-2 Certificates, pro
rata based on the outstanding Certificate
Balances, until the Certificate Balances thereof
have been reduced to zero; and
(2) second, after taking into account the amount
distributed to the Holders of the Class 2-A
Certificates and Class 3-A Certificates on such
Distribution Date in respect of principal, to the
holders of the Class 2-A Certificates and Class
3-A Certificates, pro rata, based on the
entitlement of each such Class pursuant to the
priorities set forth in this clause (ii), until
the Certificate Balances thereof have been reduced
to zero.
(II) On each Distribution Date (x) prior to the Stepdown Date
or (y) on which a Trigger Event is in effect,
distributions in respect of principal to the extent of
the Group 2 Principal Distribution Amount shall be
distributed in the following amounts and order of
priority:
(A) first, to the Holders of the Class 2-A
Certificates until the Certificate Balances
thereof have been reduced to zero; and
(B) second, after taking into account the amount
distributed to the Holders of the Class 1-A
Certificates and Class 3-A Certificates on such
Distribution Date in respect of principal, to the
Holders of the Class 1-A Certificates and the
Class 3-A Certificates, pro rata, based on the
entitlement of each such Class pursuant to the
priorities
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set forth in this clause (ii), until the
Certificate Balances thereof have been reduced to
zero
(III) On each Distribution Date (x) prior to the Stepdown Date
or (y) on which a Trigger Event is in effect,
distributions in respect of principal to the extent of
the Group 3 Principal Distribution Amount shall be
distributed in the following amounts and order of
priority:
(A) first, to the Holders of the Class 3-A-1
Certificates until the Certificate Balances
thereof have been reduced to zero;
(B) Second, to the Holders of the Class 3-A-2
Certificates until the Certificate Balances
thereof have been reduced to zero;
(C) third, to the Holders of the Class 3-A-3
Certificates until the Certificate Balances
thereof have been reduced to zero; and
(D) fourth, after taking into account the amount
distributed to the Holders of the Class 1-A
Certificates and Class 2-A Certificates on such
Distribution Date in respect of principal, to the
Holders of the Class 1-A Certificates and the
Class 2-A Certificates, pro rata, based on the
entitlement of each such Class pursuant to the
priorities set forth in this clause (ii), until
the Certificate Balances thereof have been reduced
to zero
(IV) On each Distribution Date (x) prior to the Stepdown Date
or (y) on which a Trigger Event is in effect,
distributions in respect of principal to the extent of
the sum of the Group 1 Principal Distribution Amount,
the Group 2 Principal Distribution Amount and the Group
3 Principal Distribution Amount remaining undistributed
for such Distribution Date after the reduction of the
Certificate Balance of each of the Class A Certificates
to zero (after giving effect to clauses (I), (II) and
(III) above) shall be distributed in the following
amounts and order of priority:
(A) first, to the Holders of the Class M1
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(B) second, to the Holders of the Class M2
Certificates, until the Certificate Balance
thereof has been reduced to zero;
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(C) third, to the Holders of the Class M3
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(D) fourth, to the Holders of the Class M4
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(E) fifth, to the Holders of the Class M5
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(F) sixth, to the Holders of the Class M6
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(G) seventh, to the Holders of the Class M7
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(H) eighth, to the Holders of the Class M8
Certificates, until the Certificate Balance
thereof has been reduced to zero;
(I) ninth, to the Holders of the Class M9
Certificates, until the Certificate Balance
thereof has been reduced to zero; and
(J) tenth, to the Holders of the Class M10
Certificates, until the Certificate Balance
thereof has been reduced to zero.
(V) On each Distribution Date (x) on or after the Stepdown
Date and (y) on which a Trigger Event is not in effect,
distributions in respect of principal to the extent of
the Group 1 Principal Distribution Amount shall be
distributed in the following amounts and order of
priority:
(A) first, to the Holders of the Class 1-A-1
Certificates and Class 1-A-2 Certificates, pro
rata, based on Certificate Balance, the Group 1
Senior Principal Distribution Amount until the
Certificate Balance thereof has been reduced to
zero; and
(B) second, to the Holders of the Class 2-A
Certificates and Class 3-A Certificates, pro rata,
up to an amount equal to the excess, if any, of
(x) the amount required to be distributed pursuant
to clause (VI)(A) or (VII)(A) below for each Class
on such Distribution Date over (y) the amount
actually distributed pursuant to clause (VI)(A) or
(VII)(A) for each Class from the Group 2 Principal
Distribution Amount or Group 3 Principal
Distribution Amount, as applicable, on such
Distribution Date, to be
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distributed in accordance with clause (VI)(A) or
(VII)(A), as applicable.
(VI) On each Distribution Date (x) on or after the Stepdown
Date and (y) on which a Trigger Event is not in effect,
distributions in respect of principal to the extent of
the Group 2 Principal Distribution Amount shall be
distributed in the following amounts and order of
priority:
(A) first, to the Holders of the Class 2-A
Certificates, the Group 2 Senior Principal
Distribution Amount until the Certificate Balances
thereof have been reduced to zero;
(B) second, to the Holders of the Class 1-A
Certificates and Class 3-A Certificates, pro rata,
up to an amount equal to the excess, if any, of
(x) the amount required to be distributed pursuant
to clause (V)(A) above or (VII)(A) below for each
Class on such Distribution Date over (y) the
amount actually distributed pursuant to clause
(V)(A) or (VII)(A) for each Class from the Group 1
Principal Distribution Amount or Group 3 Principal
Distribution Amount, as applicable, on such
Distribution Date, to be distributed in accordance
with clause (V)(A) or (VII)(A), as applicable.
(VII) On each Distribution Date (x) on or after the Stepdown
Date and (y) on which a Trigger Event is not in effect,
distributions in respect of principal to the extent of
the Group 3 Principal Distribution Amount shall be
distributed in the following amounts and order of
priority:
(A) first, to the Holders of the Class 3-A-1
Certificates, the Group 3 Senior Principal
Distribution Amount until the Certificate Balance
thereof has been reduced to zero;
(B) second, to the Holders of the Class 3-A-2
Certificates, the Group 3 Senior Principal
Distribution Amount until the Certificate Balance
thereof has been reduced to zero;
(C) third, to the Holders of the Class 3-A-3
Certificates, the Group 3 Senior Principal
Distribution Amount until the Certificate Balance
thereof has been reduced to zero; and
(D) fourth, to the Holders of the Class 1-A
Certificates and Class 2-A Certificates, pro rata,
up to an amount equal to the excess, if any, of
(x) the amount required to be
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distributed pursuant to clause (V)(A) or (VI)(A)
above for each Class on such Distribution Date
over (y) the amount actually distributed pursuant
to clause (V)(A) or (VI)(A) for each Class from
the Group 1 Principal Distribution Amount or Group
2 Principal Distribution Amount, as applicable, on
such Distribution Date, to be distributed in
accordance with clause (V)(A) or (VI)(A), as
applicable.
(VIII) On each Distribution Date (x) on or after the Stepdown
Date and (y) on which a Trigger Event is not in effect,
distributions in respect of principal to the extent of
the sum of the Group 1 Principal Distribution Amount,
the Group 2 Principal Distribution Amount and the Group
3 Principal Distribution Amount remaining undistributed
for such Distribution Date (after giving effect to
distributions pursuant to clauses (V), (VI) and (VII)
above) shall be distributed in the following amounts and
order of priority:
(A) first, to the Holders of the Class M1
Certificates, the Class M1 Principal Distribution
Amount until the Certificate Balance thereof has
been reduced to zero;
(B) second, to the Holders of the Class M2
Certificates, the Class M2 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
(C) third, to the Holders of the Class M3
Certificates, the Class M3 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
(D) fourth, to the Holders of the Class M4
Certificates, the Class M4 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
(E) fifth, to the Holders of the Class M5
Certificates, the Class M5 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
(F) sixth, to the Holders of the Class M6
Certificates, the Class M6 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
(G) seventh, to the Holders of the Class M7
Certificates, the Class M7 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
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(H) eighth, to the Holders of the Class M8
Certificates, the Class M8 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero;
(I) ninth, to the Holders of the Class M9
Certificates, the Class M9 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero; and
(J) tenth, to the Holders of the Class M10
Certificates, the Class M10 Principal Distribution
Amount, until the Certificate Balance thereof has
been reduced to zero.
(iii) On each Distribution Date, the Excess Cashflow, if any, will
be distributed as follows:
(A) to the Trustee, Master Servicer or Trust
Administrator any amounts to which such Persons
are entitled to under this Agreement to the extent
such amounts have not otherwise been paid or
reimbursed;
(B) to the Holders of the Class or Classes of
Certificates then entitled to receive
distributions in respect of principal, in an
amount equal to any Extra Principal Distribution
Amount, distributable to such Holders as part of
the Group 1 Principal Distribution Amount, Group 2
Principal Distribution Amount and/or the Group 3
Principal Distribution Amount;
(C) to the Net WAC Rate Carryover Reserve Account, the
amount by which any Net WAC Rate Carryover Amounts
for such Distribution Date exceed Certificate Cap
Agreement Payments on deposit in the Net WAC Rate
Carryover Reserve Account for such Distribution
Date;
(D) from funds on deposit in the Net WAC Rate
Carryover Reserve Account (including any
Certificate Cap Agreement Payments in respect of
the Senior Certificate Cap Agreement included in
such account), an amount equal to any Net WAC Rate
Carryover Amount with respect to the Class A
Certificates for such Distribution Date, to such
Certificates in the same order and priority in
which the Accrued Certificate Interest
Distribution Amount is allocated among those
Classes of Class A Certificates with the
allocation to such Class A Certificates being pro
rata based on their respective Net WAC Rate
Carryover Amounts;
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(E) from funds on deposit in the Net WAC Rate
Carryover Reserve Account (including any
Certificate Cap Agreement Payments in respect of
the Subordinate Certificate Cap Agreement included
included in such account), an amount equal to any
Net WAC Rate Carryover Amount with respect to the
Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9 and Class
M10 Certificates for such Distribution Date, to
such Certificates in the same order and priority
in which the Accrued Certificate Interest
Distribution Amount is allocated among those
Classes of Certificates;
(F) to the Holders of the Class M1 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M1 Certificates;
(G) to the Holders of the Class M2 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M2 Certificates;
(H) to the Holders of the Class M3 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M3 Certificates;
(I) to the Holders of the Class M4 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M4 Certificates;
(J) to the Holders of the Class M5 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M5 Certificates;
(K) to the Holders of the Class M6 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M6 Certificates;
(L) to the Holders of the Class M7 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M7 Certificates;
(M) to the Holders of the Class M8 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M8 Certificates;
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(N) to the Holders of the Class M9 Certificates, in an
amount equal to the Applied Realized Loss Amount
allocable to the Class M9 Certificates;
(O) to the Holders of the Class M10 Certificates, in
an amount equal to the Applied Realized Loss
Amount allocable to the Class M10 Certificates;
(P) to the holders of the Class C Certificates, the
remainder of the Class C Distributable Amount and
any remaining Certificate Cap Agreement Payments
not distributed pursuant to Sections
4.02(a)(iii)(D) and (E); and
(Q) to the holders of the Class R Certificates, any
remaining amount.
If on any Distribution Date, as a result of the foregoing allocation
rules, any Class of Senior Certificates does not receive the related Accrued
Certificate Interest Distribution Amount or the related Unpaid Interest Amounts,
if any, then that unpaid amount will be recoverable by the holders of those
Classes, with interest thereon, on future Distribution Dates, as Unpaid Interest
Amounts, subject to the priorities described above. In the event the Class
Certificate Balance of any Class of Subordinate Certificates has been reduced to
zero, that Class of Certificates shall no longer be entitled to receive any
related unpaid Net WAC Rate Carryover Amounts.
(b) On each Distribution Date, all amounts representing Prepayment
Premiums from the Mortgage Loans received during the related Prepayment Period
shall be distributed to the holders of the Class P Certificates. Such
distributions shall not be applied to reduce the Certificate Balance of the
Class P Certificates. On the Distribution Date in January 2008, the Class P
Certificates shall be entitled to receive $100.00 in retirement of the principal
balance of the REMIC regular interest represented by Class P, which distribution
shall be made immediately before any distribution pursuant to Section
4.02(a)(iii)(Y) on such Distribution Date.
(c) Notwithstanding the provisions of this Section 4.02, if on any
Distribution Date Senior Certificates related to a Loan Group are no longer
outstanding, the pro rata portion of the applicable Principal Distribution
Amount, otherwise allocable to such Senior Certificates will be allocated among
the remaining group or groups of Senior Certificates, on a pro rata basis based
on the outstanding aggregate Certificate Balance for such groups, in the same
manner and order of priority described in Section 4.02(a).
(d) On any Distribution Date, any Relief Act Interest Shortfalls and Net
Prepayment Interest Shortfalls for such Distribution Date will be allocated pro
rata, as a reduction of the Accrued Certificate Interest for the Senior
Certificates and Class M Certificates, based on the amount of interest to which
such Classes would otherwise be entitled on such Distribution Date.
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Section 4.03. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trust Administrator shall
make available to each Certificateholder, the Servicer, the Master Servicer, the
Trustee, the Depositor 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 Net WAC Rate
Carryover Amount for such Distribution Date and the amount of all Net WAC
Rate Carryover Amount covered by withdrawals from the Net WAC Rate
Carryover Reserve 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 Net WAC Rate Carryover Amount not covered by
amounts in the Net WAC Rate Carryover Reserve 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 any Subservicer (with respect to the Subservicers, in the
aggregate) with respect to such Distribution Date;
(vii) the amount of the Master Servicing Fees to be paid to or
retained by the Master Servicer with respect to such Distribution Date;
(viii) the amount of the Trust Administration Fees to be paid to or
retained by the Trust Administrator with respect to such Distribution
Date;
(ix) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(x) the amount of P&I Advances included in the distribution on such
Distribution Date and the aggregate amount of P&I Advances reported by the
Servicer as outstanding as of the close of business on the Determination
Date immediately preceding such Distribution Date;
(xi) the number and aggregate outstanding 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
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(4) that are in bankruptcy, in each case as of the close of business on
the last Business Day of the immediately preceding month;
(xii) For each of the preceding 12 calendar months, or all calendar
months since the related Cut-off Date, whichever is less, the aggregate
dollar amount of the Scheduled Payments (A) due on all Outstanding
Mortgage Loans on each of the Due Dates in each such month and (B)
delinquent 60 days or more on each of the Due Dates in each such month;
(xiii) with respect to all Mortgage Loans that became REO Properties
during the preceding calendar month, the aggregate number of such Mortgage
Loans and the aggregate Stated Principal Balance of such Mortgage Loans as
of the close of business on the Determination Date preceding such
Distribution Date and on the date of acquisition thereof;
(xiv) 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;
(xv) whether a Trigger Event has occurred and is continuing
(including the calculation thereof and the aggregate outstanding balance
of all 60+ Day Delinquent Mortgage Loans);
(xvi) the amount on deposit in the Net WAC Rate Carryover Reserve
Account (after giving effect to distributions on such Distribution Date);
(xvii) the aggregate amount of Applied Realized Loss Amounts
incurred during the preceding calendar month and aggregate Applied
Realized Loss Amounts through such Distribution Date;
(xviii) 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 Loss Amounts and Unpaid Interest Amounts;
(xix) the Overcollateralized Amount and Overcollateralization Target
Amount;
(xx) Prepayment Premiums collected by the Servicer;
(xxi) the Certificate Cap Agreement Payments, if any, for such
Distribution Date; and
(xxii) the amount distributed on the Class C Certificates.
(b) The Trust Administrator's responsibility for providing the above
statement to the Certificateholders, each Rating Agency, the Servicer, the
Originator and the Depositor is limited to the availability, timeliness and
accuracy of the information derived from the Servicer. The Trust Administrator
will make the above statement available via the Trust Administrator's internet
website. The Trust Administrator's website will initially be located at
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xxxx://xxx.xxxxxxx.xxx and assistance in using the website can be obtained by
calling the Trust Administrator's customer service desk at 0-000-000-0000.
Parties that are unable to use the above distribution method are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trust Administrator shall have the right
to change the manner in which the above statement is distributed in order to
make such distribution more convenient and/or more accessible, and the Trust
Administrator shall provide timely and adequate notification to the
Certificateholders and the parties hereto regarding any such changes.
The Trust Administrator shall also be entitled to rely on, but shall not
be responsible for the content or accuracy of, any information provided by the
Servicer for purposes of preparing the above statement and may affix thereto any
disclaimer it deems appropriate in its reasonable discretion (without suggesting
liability on the part of any other party hereto).
As a condition to access the Trust Administrator's internet website, the
Trust Administrator may require registration and the acceptance of a disclaimer.
The Trust Administrator will not be liable for the dissemination of information
in accordance with this Agreement.
Upon written request from any Certificateholder, the Trust Administrator
shall provide the information provided for in Sections 4.03(d) to such
Certificateholder, at the expense of the requesting Certificateholder. The Trust
Administrator's responsibility for providing the information provided for in
Sections 4.03(d) to the Certificateholders is limited to the availability and
timeliness of the information provided by the Servicer. The Trust Administrator
shall provide the information provided for in Sections 4.03(d) in the same
format as received from the Servicer upon request by the Certificateholders. The
Trust Administrator shall have no duty or obligation to monitor, review or take
any action regarding such information received pursuant to Section 4.03(d) other
than forwarding copies to Certificateholders. The Trust Administrator shall have
no liability for the accuracy, completeness or otherwise for such information.
(c) Upon request, within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall cause to be furnished each Person
who at any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i) and (a)(ii) 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 Trust
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trust
Administrator pursuant to any requirements of the Code as are from time to time
in effect.
(d) Not later than the Reporting Date, the Servicer shall furnish to the
Trust Administrator and the Master Servicer a monthly remittance advice
statement (in a format mutually agreed upon by the Servicer and the Trust
Administrator) containing such information as shall be reasonably requested by
the Trust Administrator 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
Remittance Report").
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The Servicer shall furnish to the Trust Administrator 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 Trust Administrator no later than
the Reporting 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 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;
(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 aggregate of any expenses reimbursed to the Servicer during
the prior distribution period pursuant to Section 3.11;
(vi) the number and aggregate outstanding principal balances of
Mortgage Loans (a) delinquent (1) 31 to 60 days, (2) 61 to 90 days, or (3)
91 days or more; (b) as to which foreclosure has commenced; and (c) as to
which REO Property has been acquired;
(vii) each Mortgage Loan which has been altered, modified or varied
during such month, and the reason for such modification (i.e., extension
of maturity date, Mortgage Interest Rate);
(viii) with respect to each Mortgage Loan, the amount of any
Realized Losses for such Mortgage Loan; and
(ix) any other information reasonably required by the Trust
Administrator to enable it to prepare the monthly statement referred to in
Section 4.03(a).
Section 4.04. Certain Matters Relating to the Determination of LIBOR.
Until all of the LIBOR Certificates are paid in full, the Trust
Administrator will at all times retain at least four Reference Banks for the
purpose of determining LIBOR with respect to each LIBOR Determination Date. The
Trust Administrator initially shall designate the Reference Banks (after
consultation with the Depositor). 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 Trust Administrator 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 Trust Administrator should terminate
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its appointment as Reference Bank, the Trust Administrator shall promptly
appoint or cause to be appointed another Reference Bank (after consultation with
the Depositor). The Trust Administrator 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 Trust Administrator 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 Trust Administrator 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 Trust
Administrator shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Certificate and the Trustee.
Section 4.05. Allocation of Applied Realized Loss Amounts.
Any Applied Realized Loss Amounts will be allocated to the most junior
Class of Subordinated Certificates then outstanding in reduction of the Class
Certificate Balance thereof. In the event Applied Realized Loss Amounts are
allocated to any Class of Subordinated Certificates, their Class Principal
Balances shall be permanently reduced by the amount so allocated, and no funds
will be distributable (except to the extent of Subsequent Recoveries and as
otherwise set forth herein) with respect to the written down amounts (including
without limitation Net WAC Rate Carryover Amounts) or with respect to interest
on the written down amounts on that Distribution Date or any future Distribution
Dates, even if funds are otherwise available for distribution.
Section 4.06. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee and the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trustee and the Trust Administrator reasonably believe are applicable
under the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trust Administrator does withhold any amount from
interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trust
Administrator shall indicate the amount withheld to such Certificateholders.
Section 4.07. Commission Reporting.
(a) The Trust Administrator, the Master Servicer and the Servicer shall
reasonably cooperate with the Depositor in connection with the Trust's
satisfying the reporting requirements under the Exchange Act. Except for the
initial current report on Form 8-K in connection with the filing of this
Agreement, the Trust Administrator shall prepare on behalf of the Trust any
Forms
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8-K customary for similar securities as required by the Exchange Act and the
rules and regulations of the Commission thereunder, and the Trust Administrator
shall execute and file such Forms 8-K (via XXXXX) on behalf of the Depositor.
The Depositor hereby grants to the Trust Administrator a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until the earlier of (i) receipt by the Trust
Administrator or the Master Servicer, as applicable, from the Depositor of
written termination of such power of attorney and (ii) the termination of the
Trust.
(b) Each Form 8-K (or other comparable form containing the same or
comparable information or other information mutually agreed upon) shall be filed
by the Trust Administrator within 15 days after each Distribution Date, with a
copy of the statement to the Certificateholders for such Distribution Date as an
exhibit thereto. The Depositor hereby grants to the Trust Administrator a
limited power of attorney to execute and file each Form 8-K on behalf of the
Depositor. Such power of attorney shall continue until either the earlier of (i)
receipt by the Trust Administrator from the Depositor of written termination of
such power of attorney and (ii) the termination of the Trust Fund.
(c) Upon any filing with the Commission, the Trust Administrator shall
promptly deliver to the Depositor a copy of any executed report filed by it with
the Commission.
(d) Prior to January 31, 2005, the Trust Administrator shall, in
accordance with industry standards, file a Form 15 Suspension Notification with
respect to the Trust Fund, if applicable. Prior to March 31, 2005, the Trust
Administrator shall file (but will not execute) a Form 10-K, in substance
conforming to industry standards, with respect to the Trust Fund, and shall
forward such Form 10-K to the Servicer for execution, and the Servicer shall
execute the Form 10-K and return it to the Trust Administrator for filing with
the Commission by such date. The Depositor hereby grants to the Servicer a
limited power of attorney to execute the Form 10-K, and to the Trust
Administrator a limited power of attorney to execute the Form 15 Suspension
Notice and to file each such document on behalf of the Depositor. Such Form 10-K
shall include as exhibits (i) the Servicer's annual statement of compliance
described under Section 3.22 and the accountant's report described under Section
3.23, (ii) the Servicer Certification and (iii) the Master Servicer's annual
statement of compliance described under Section 3A.10 and, if applicable, the
accountant's report described under Section 3A.11. If the documents listed in
the preceding sentence are not timely delivered, the Trust Administrator shall
file an amended Form 10-K including such documents as exhibits promptly after
they are delivered to the Trust Administrator. The Trust Administrator shall
have no liability with respect to any failure to properly or timely prepare or
file such periodic reports resulting from or relating to the Trust
Administrator's inability or failure to obtain any information not resulting
from its own negligence or willful misconduct. The Trust Administrator shall
have no responsibility to file any items other than those specified in this
Section 4.07.
(e) The Trust Administrator shall deliver to the Depositor, on or before
March 15 of each calendar year beginning in 2005 (or, if any such day is not a
Business Day, the immediately preceding Business Day) or such alternative date
reasonably specified by the Servicer which shall occur not earlier than 15 days
prior to the date any Form 10-K is required to be filed with the Commission in
connection with the transactions contemplated by this Agreement, a
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certification in the form attached hereto as Exhibit M. Such certification shall
be signed by a senior officer of the Trust Administrator.
The Servicer shall deliver to the Trust Administrator, at such time agreed
upon between the Master Servicer and the Trust Administrator, but in no event
later than March 30th of any calendar year in which the Trust Administrator is
required to file a Form 10-K on behalf of the Trust, the Servicer Certification.
Such certification shall be signed by the senior officer in charge of servicing
of the Servicer. In addition , the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer which shall be required to enable the Trust
Administrator to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended pursuant to Section 4.07 hereof.
(f) If the Commission issues additional interpretative guidance or
promulgates additional rules or regulations, or if other changes in applicable
law occur, that would require the reporting arrangements, or the allocation of
responsibilities with respect thereto, described in this Section 4.07, to be
conducted differently than as described, the Depositor, the Originator, the
Master Servicer, the Trust Administrator, the Servicer and the Trustee will
reasonably cooperate to amend the provisions of this Section 4.07 (or other
sections of this Agreement, if necessary) in order to comply with such amended
reporting requirements and such amendment of this Section 4.07. Any such
amendment shall be made in accordance with Section 10.01 without further consent
of the Certificateholders, and may result in the reduction of the reports filed
by the Trust Administrator on behalf of the Trust under the Exchange Act.
Notwithstanding the foregoing, the Depositor, the Originator, the Master
Servicer, the Trust Administrator, Servicer and Trustee shall not be obligated
to enter into any amendment pursuant to this Section 4.07 that adversely affects
its obligations and immunities under this Agreement.
(g) In filing any Form 8-K or Form 10-K, the Trust Administrator or the
Master Servicer, respectively, shall not undertake any analysis of, and shall
have no responsibility for, any financial information, accountant's report,
certification or other matter contained therein, except for computations
performed by the Trust Administrator and reflected in distribution reports.
Section 4.08. REMIC Distributions and Allocation of Losses.
(a) On each Distribution Date, the Trust Administrator shall cause in the
following order of priority, the following amounts to be distributed by REMIC I
to REMIC II on account of the REMIC I Regular Interests or withdrawn from the
Distribution Account and distributed to the Holders of the Class R Certificates
(in respect of the Class R-I Interest), as the case may be:
(i) to Holders of REMIC I Regular Interest LTAA, REMIC I Regular
Interest LT1A1, REMIC I Regular Interest LT1A2, REMIC I Regular Interest
LT2A, REMIC I Regular Interest LT3A1, REMIC I Regular Interest LT3A2,
REMIC I Regular Interest LT3A3, REMIC I Regular Interest LTM1, REMIC I
Regular Interest LTM2, REMIC I Regular Interest LTM3, REMIC I Regular
Interest LTM4, REMIC I Regular Interest LTM5, REMIC I Regular Interest
LTM6, REMIC I Regular Interest LTM7, REMIC I Regular Interest LTM8, REMIC
I Regular Interest LTM9, REMIC I Regular Interest LTM10, REMIC I Regular
Interest LTZZ and REMIC I Regular Interest LTP, pro rata, in
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an amount equal to (A) the Uncertificated Accrued Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates. Amounts payable as Uncertificated
Accrued Interest in respect of REMIC I Regular Interest LTZZ shall be
reduced and deferred when the REMIC I Overcollateralized Amount is less
than the REMIC I Overcollateralization Target Amount, by the lesser of (x)
the amount of such difference and (y) the Maximum LTZZ Uncertificated
Accrued Interest Deferral Amount and such amount will be payable to the
Holders of REMIC I Regular Interest LT1A1, REMIC I Regular Interest LT1A2,
REMIC I Regular Interest LT2A, REMIC I Regular Interest LT3A1, REMIC I
Regular Interest LT3A2, REMIC I Regular Interest LT3A3, REMIC I Regular
Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular Interest
LTM3, REMIC I Regular Interest LTM4, REMIC I Regular Interest LTM5, REMIC
I Regular Interest LTM6, REMIC I Regular Interest LTM7, REMIC I Regular
Interest LTM8, REMIC I Regular Interest LTM9 and REMIC I Regular Interest
LTM10 in the same proportion as the Overcollateralization Deficiency is
allocated to the Corresponding Certificates;
(ii) to Holders of REMIC I Regular Interest LT1SUB, REMIC I Regular
Interest LT1GRP, REMIC I Regular Interest LT2SUB, REMIC I Regular Interest
LT2GRP, REMIC I Regular Interest LT3SUB, REMIC I Regular Interest LT3GRP
and REMIC I Regular Interest LTXX, pro rata, in an amount equal to (A) the
Uncertificated Accrued Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution
Dates;
(iii) to the Holders of REMIC I Regular Interests, in an amount
equal to the remainder of the REMIC I Marker Allocation Percentage of
Available Funds for such Distribution Date after the distributions made
pursuant to clause (i) above, allocated as follows:
(1) 98% of such remainder to REMIC I Regular Interest LTAA and
REMIC I Regular Interest LTP, until the Uncertificated
Principal Balance of such Uncertificated REMIC I Regular
Interests is reduced to zero; provided, however, that REMIC I
Regular Interest LTP shall not be reduced until the
Distribution Date immediately following the expiration of the
latest Prepayment Premium or any Distribution Date thereafter,
at which point such amount shall be distributed to REMIC I
Regular Interest I-LTP, until $100 has been distributed
pursuant to this clause;
(2) 1.00% of such remainder to REMIC I Regular Interest LT1A1,
REMIC I Regular Interest LT1A2, REMIC I Regular Interest LT2A,
REMIC I Regular Interest LT3A1, REMIC I Regular Interest
LT3A2, REMIC I Regular Interest LT3A3, REMIC I Regular
Interest LTM1, REMIC I Regular Interest LTM2, REMIC I Regular
Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular
Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular
Interest LTM7, REMIC I Regular Interest LTM8, REMIC I Regular
Interest LTM9 and REMIC I Regular Interest LTM10 in the same
proportion as principal payments are allocated to the
Corresponding Certificates, until the Uncertificated
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Principal Balances of such REMIC I Regular Interests are
reduced to zero; and 1.00% of such remainder to REMIC I
Regular Interest LTZZ until the Uncertificated Principal
Balance of such REMIC I Regular Interest is reduced to zero;
(3) any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-I Interest);
provided, however, that (i) 98.00% and (ii) 2.00% of any principal payments that
are attributable to an Overcollateralization Reduction Amount shall be allocated
to (i) REMIC I Regular Interest LTAA and REMIC I Regular Interest LTP and (ii)
REMIC I Regular Interest LTZZ, respectively; and
(iv) to the Holders of REMIC I Regular Interests, in an amount equal
to the REMIC I Sub WAC Allocation Percentage of Available Funds for such
Distribution Date after the distributions made pursuant to clause (i)
above, such that distributions of principal shall be deemed to be made to
the REMIC I Regular Interests first, so as to keep the Uncertificated
Principal Balance of each REMIC I Regular Interest ending with the
designation "GRP" equal to 0.01% of the aggregate Principal Balance of the
Mortgage Loans in the related group of Mortgage Loans; second, to each
REMIC I Regular Interest ending with the designation "SUB," so that the
Uncertificated Principal Balance of each such REMIC I Regular Interest is
equal to 0.01% of the Group Subordinate amount of the related group of
Mortgage Loans (except that if any such amount is a larger number than in
the preceding distribution period, the least amount of principal shall be
distributed to such REMIC I Regular Interests such that the REMIC I
Subordinated Balance Ratio is maintained); and third, any remaining
principal to REMIC I Regular Interest LTXX.
(b) The Trust Administrator shall cause the following allocation of
losses:
(i) The REMIC I Marker Allocation Percentage of the aggregate amount
of any Prepayment Interest Shortfalls and the REMIC I Marker Allocation
Percentage of the aggregate amount of any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date shall
be allocated first, to Uncertificated Accrued Interest payable to REMIC I
Regular Interest LTAA and REMIC I Regular Interest LTZZ up to an aggregate
amount equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%,
respectively, and thereafter among REMIC I Regular Interest LT1A1, REMIC I
Regular Interest LT1A2, REMIC I Regular Interest LT2A, REMIC I Regular
Interest LT3A1, REMIC I Regular Interest LT3A2, REMIC I Regular Interest
LT3A3, REMIC I Regular Interest LTM1, REMIC I Regular Interest LTM2, REMIC
I Regular Interest LTM3, REMIC I Regular Interest LTM4, REMIC I Regular
Interest LTM5, REMIC I Regular Interest LTM6, REMIC I Regular Interest
LTM7, REMIC I Regular Interest LTM8, REMIC I Regular Interest LTM9, and
REMIC I Regular Interest LTM10, REMIC I Regular Interest LTZZ pro rata
based on, and to the extent of, one month's interest at the then
applicable respective Uncertificated REMIC I Pass-Through Rate on the
respective Uncertificated Principal Balance of each such REMIC I Regular
Interest;
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(ii) The REMIC I Sub WAC Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls and the REMIC I Sub WAC
Allocation Percentage of the aggregate amount of any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution
Date shall be allocated first, to Uncertificated Accrued Interest payable
to REMIC I Regular Interest LT1SUB, REMIC I Regular Interest LT1GRP, REMIC
I Regular Interest LT2SUB, REMIC I Regular Interest LT2GRP REMIC I Regular
Interest LT3SUB, REMIC I Regular Interest LT3GRP and REMIC I Regular
Interest LTXX, pro rata based on, and to the extent of, one month's
interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate on the respective Uncertificated Principal Balance of
each such REMIC I Regular Interest;
(iii) The REMIC I Marker Percentage of all Realized Losses on the
Mortgage Loans shall be allocated by the Trustee on each Distribution Date
to the following REMIC I Regular Interests in the specified percentages,
as follows: first, to Uncertificated Accrued Interest payable to (a) REMIC
I Regular Interest LTAA and REMIC I Regular Interest LTP and (b) REMIC I
Regular Interest LTZZ up to an aggregate amount equal to the REMIC I
Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Principal Balances of REMIC I Regular Interest LTAA and
REMIC I Regular Interest LTZZ up to an aggregate amount equal to the REMIC
I Principal Loss Allocation Amount, 98% and 2%, respectively; third, to
the Uncertificated Principal Balances of REMIC I Regular Interest LTAA,
REMIC I Regular Interest LTZZ, and to each of the REMIC I Regular
Interests corresponding to the Class M Certificates, sequentially and in
reverse order of priority, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of each such REMIC I Regular Interest has
been reduced to zero; and
(iv) The REMIC I Sub WAC Allocation Percentage of all Realized
Losses shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Principal
Balance of each REMIC I Regular Interest ending with the designation "GRP"
equal to 0.01% of the aggregate Stated Principal Balance of the Mortgage
Loans in the related Group; second, to each REMIC I Regular Interest
ending with the designation "SUB," so that the Uncertificated Principal
Balance of each such REMIC I Regular Interest is equal to 0.01% of the
Group Subordinate Amount of the related group of Mortgage Loans (except
that if any such amount is a larger number than in the preceding
distribution period, the least amount of Realized Losses shall be applied
to such REMIC I Regular Interests such that the REMIC I Subordinated
Balance Ratio is maintained); and third, any remaining Realized Losses
shall be allocated to REMIC I Regular Interest LTXX.
(c) On each Distribution Date, all amounts representing Prepayment
Premiums will be distributed from REMIC I to the holder of the Class P
Certificate. Such amounts shall not reduce the Certificate Balance of the Class
P Certificate.
(d) Notwithstanding anything to the contrary contained herein, the above
distributions in this Section 4.08 (other than on the Certificates) are deemed
distributions, and distributions of funds from the Distribution Account shall be
made only in accordance with Sections 4.01 and 4.02 hereof.
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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.
The Depositor hereby directs the Trust Administrator to register the Class
C Certificates and the Class P Certificates in the name of Fremont or its
designee. Pursuant to written direction by Fremont on the date specified
thereon, the Trust Administrator shall transfer the Class C Certificates and the
Class P Certificates as follows: "Xxxxx Fargo Bank, N.A., as Indenture Trustee
on behalf of the Noteholders of the Fremont NIM Trust 2004-D", and deliver such
Class C Certificates and Class P Certificates to Xxxxx Fargo Bank, N.A., as
indenture trustee of the NIM Trust.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trust Administrator 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 as
directed by that Certificateholder by written wire instructions provided to the
Trust Administrator or (y), in the event that no wire instructions are provided
to the Trust Administrator, 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 Trust Administrator 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 Trust Administrator
shall bind the Trust Administrator, 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 Trust
Administrator 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
Trust Administrator 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 Trust
Administrator on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
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Section 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trust Administrator 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 Trust Administrator
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 Trust Administrator 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 Trust Administrator. Whenever any
Certificates are so surrendered for exchange, the Trust Administrator shall
execute, authenticate, and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Trust Administrator
duly executed by the holder thereof or his attorney duly authorized in writing.
In the event the Depositor or an Affiliate transfers the Class C Certificates,
or a portion thereof, to another Affiliate, it shall notify the Trust
Administrator in writing of the affiliated status of the transferee. The Trust
Administrator shall have no liability regarding the lack of notice with respect
thereto.
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 Trust Administrator in
accordance with the Trust Administrator'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 initial transfer of the Class C and Class P Certificates to
the NIM Trust, in the event that a transfer of a Private Certificate which is a
Physical Certificate 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 Trust Administrator in writing the facts surrounding the transfer
in substantially the form set forth in Exhibit H (the "Transferor Certificate")
and either (i) there shall be delivered to the Trust Administrator a letter in
substantially the form of Exhibit I (the "Rule 144A Letter") or (ii) in the case
of the Class C Certificates, there shall be delivered to the Trustee and the
Trust Administrator at the expense of the transferor an Opinion of Counsel that
such transfer may be made without registration under the Securities Act. In the
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event that a transfer of a Private Certificate which is a Book-Entry Certificate
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 will be deemed to have made
as of the transfer date each of the certifications set forth in the Transferor
Certificate in respect of such Certificate and the transferee will be deemed to
have made as of the transfer date each of the certifications set forth in the
Rule 144A Letter in respect of such Certificate, in each case as if such
Certificate were evidenced by a Physical Certificate. 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, the
Trust Administrator, the Master Servicer 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, the Trust
Administrator, the Master Servicer, 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 C and Class P
Certificates to the NIM Trust, no transfer of an ERISA-Restricted Certificate
shall be made unless the Trust Administrator shall have received either (i) a
representation from the transferee of such Certificate acceptable to and in form
and substance satisfactory to the Trust Administrator (in the event such
Certificate is a Private Certificate or a Residual Certificate, such requirement
is satisfied only by the Trust Administrator's receipt of a representation
letter from the transferee substantially in the form of Exhibit I), to the
effect that such transferee is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or to Section 4975 of the Code or a person
acting for, on behalf of or with the assets of, any such plan or arrangement,
(ii) in the case of an ERISA-Restricted Certificate other than a Residual
Certificate or a Class P 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 or (iii) in the
case of an ERISA-Restricted Certificate presented for registration in the name
of an employee benefit plan subject to Section 406 of ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments) or a person
acting for, on behalf of or with the assets of, any such plan or arrangement, an
Opinion of Counsel satisfactory to the Trustee, the Trust Administrator and the
Servicer, which Opinion of Counsel shall not be an expense of the Trustee, the
Trust Administrator, the Master Servicer, the Servicer or the Trust Fund,
addressed to the Trustee and the Trust Administrator, to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not result in a
non-exempt prohibited transaction under Section 406 of ERISA and/or Section 4975
of the Code and will not subject the Trustee, the Trust Administrator, the
Master Servicer, or the Servicer to any obligation in
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addition to those expressly undertaken in this Agreement or to any liability.
For purposes of the preceding sentence, with respect to an ERISA-Restricted
Certificate that is not a Private Certificate or a Residual 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
and the Trust Administrator by the transferee's (including an initial
acquirer's) acceptance of the ERISA-Restricted Certificates. In the event that
such representation is violated, or any attempt to transfer to a plan or
arrangement subject to Section 406 of ERISA or Section 4975 of the Code or a
person acting for, on behalf of or with the assets of, any such plan or
arrangement, without such Opinion of Counsel, 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 Trust Administrator shall be under no liability to any Person
for any registration or 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 Trust Administrator 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 Trust
Administrator shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to the
Trust Administrator under subparagraph (b) above, the Trust Administrator
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 G;
(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 and (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 is not a
Permitted Transferee;
(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
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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
Trust Administrator 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
Trust Administrator 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 Trust Administrator shall be paid and delivered by the
Trust Administrator, to the last preceding Permitted Transferee of such
Certificate; and
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trust Administrator, 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 Trust Administrator of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trust Fund, the Trustee, the
Trust Administrator, the Master Servicer, the Originator or the Servicer, to the
effect that the elimination of such restrictions will not cause any Trust REMIC
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 Trust Administrator, 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 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 Trust
Administrator 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 Trust
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Administrator 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 Trust Administrator 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 (i) the Depository or the Depositor advises the Trust Administrator in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trust Administrator or the
Depositor is unable to locate a qualified successor, the Trust Administrator
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 Trust Administrator of the related Class of
Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trust Administrator shall issue the Definitive
Certificates. None of the Servicer, the Master Servicer, the Trust
Administrator, the Depositor or 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
Trust Administrator with an adequate inventory of Certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates and the Trust Administrator shall recognize the Holders
of the Definitive Certificates as Certificateholders hereunder; provided, that
the Trust Administrator 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.
(f) Each Private Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
and accompanied by IRS Form W-8ECI, W-8BEN, W-8IMY (and all appropriate
attachments) or W-9 in form satisfactory to the Trust Administrator and the
Certificate Registrar, duly executed by the Certificateholder or his attorney
duly authorized in writing. Each Certificate presented or surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Certificate Registrar in accordance with its customary practice. No
service charge shall be made for any registration of transfer or exchange of
Private Certificates, but the Trust Administrator or the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Private
Certificates.
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Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trust
Administrator, or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate and (b) there is delivered
to the Depositor, the Servicer and the Trust Administrator such security or
indemnity as may be required by them to hold each of them harmless, then, in the
absence of notice to the Trust Administrator that such Certificate has been
acquired by a protected purchaser, the Trust Administrator 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 Trust Administrator 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 Trust Administrator) 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 Master Servicer, the Trust Administrator, the Trustee,
the Depositor and any agent of the Servicer, the Master Servicer, the Trust
Administrator, the Depositor 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 none of the Servicer, the Trustee, the Depositor or any
agent of the Servicer, the Master Servicer, the Trust Administrator, the
Depositor 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 Trust Administrator, (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 the Servicer shall request such information in writing from the
Trust Administrator, then the Trust Administrator 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 Trust Administrator, if any.
The Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Trust Administrator shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 5.06. Maintenance of Office or Agency.
The Trust Administrator will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in Minneapolis, Minnesota
where Certificates may be surrendered for registration of transfer or exchange.
The Trust Administrator initially designates
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its offices located at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000 for such purposes. The Trust Administrator will give prompt written notice
to the Certificateholders of any change in such location of any such office or
agency.
ARTICLE VI
THE DEPOSITOR, THE ORIGINATOR, THE MASTER SERVICER AND THE SERVICER
Section 6.01. Respective Liabilities of the Depositor, the Originator, the
Master Servicer and the Servicer.
The Depositor, the Originator, the Master Servicer 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, the Originator,
the Master Servicer or the Servicer.
The Depositor, the Originator, the Master Servicer and the Servicer will
each keep in full effect its existence, rights and franchises as a corporation,
national bank or state chartered industrial 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, the Originator, the Master Servicer
or the Servicer may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Depositor, the Originator, the Master
Servicer or the Servicer shall be a party, or any person succeeding to the
business of the Depositor, the Originator, the Master Servicer or the Servicer,
shall be the successor of the Depositor, the Originator, the Master Servicer 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 such merger,
consolidation or succession does not adversely affect the then current rating or
ratings on the Offered Certificates.
Section 6.03. Limitation on Liability of the Depositor, the Originator,
the Master Servicer, the Trust Administrator, the Servicer and Others.
None of the Depositor, the Originator, the Master Servicer, the Trust
Administrator, the Servicer 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 or any such Person
against any breach of representations or warranties made by it herein or protect
the Depositor, the Originator, the Master Servicer, the Servicer or any such
Person from any liability which would otherwise be imposed by reasons of willful
misfeasance, bad faith or negligence (or gross negligence in the case of the
Depositor) in the performance of duties or by reason of reckless disregard of
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obligations and duties hereunder. The Depositor, the Originator, the Master
Servicer, the Servicer and any director, officer, employee or agent of the
Depositor, the Originator, the Master Servicer and the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Depositor, the
Originator, the Master Servicer, the Servicer and any director, officer,
employee or agent of the Depositor, the Originator, the Master Servicer and the
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any audit, controversy,
judicial proceeding or legal action relating to a governmental taxing authority
or to this Agreement, the Certificates or the Mortgage Loans or any other
unanticipated or extraordinary expense, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence (or
gross negligence in the case of the Depositor) in the performance of their
respective duties hereunder or by reason of reckless disregard of their
respective obligations and duties hereunder. Neither the Originator, the Master
Servicer, the Depositor nor the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and which in its opinion may involve it in any
expense or liability; provided, however, that each of the Depositor, the
Originator, the Master Servicer and the Servicer may in its discretion undertake
any such action (or direct the Trustee or the Trust Administrator to undertake
such actions pursuant to Section 2.03 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, the Originator, the Trust
Administrator, the Trustee the Master Servicer and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account.
The Master Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from a breach of the
Master Servicer's obligations and duties under this Agreement. Such indemnity
shall survive the termination or discharge of this Agreement and the resignation
or removal of the Trustee. Any payment hereunder made by the Master Servicer to
the Trustee shall be from the Master Servicer's own funds, 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 (i) by mutual consent of the
Servicer, the Depositor, the Master Servicer, the Trust Administrator and the
Trustee or (ii) upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer without the incurrence of unreasonable expense. Any such determination
permitting the resignation of the Servicer under clause (ii) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Depositor,
the Master Servicer, the Trust Administrator and the Trustee which Opinion of
Counsel shall be in form and substance acceptable to the Depositor, the Trust
Administrator, the Master Servicer and the Trustee. No such resignation shall
become effective until a successor shall have assumed the Servicer's
responsibilities and obligations hereunder.
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Section 6.05. Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify the Originator, the Depositor, the Master
Servicer, the Trust Administrator 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 (i) any of its representations and warranties referred to in
Section 2.03(a), (ii) any error in any tax or information return prepared by the
Servicer, or (iii) 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 Master Servicer, the Trust
Administrator and the Trustee if such claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the prior written
consent of the Depositor, the Trust Administrator, the Master Servicer 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
Originator, the Depositor, the Master Servicer, the Trust Administrator or the
Trustee in respect of such claim.
Section 6.06. Rights of the Depositor, the Master Servicer, the Trust
Administrator and the Trustee in Respect of the Servicer.
The Servicer shall afford (and any Subservicing Agreement shall provide
that each Subservicer shall afford) the Depositor, the Master Servicer, the
Trust Administrator and the Trustee, upon reasonable notice, during normal
business hours, access to all records maintained by the Servicer (and any such
Subservicer) in respect of the Servicer's rights and obligations hereunder and
access to officers of the Servicer (and those of any such Sub-Servicer)
responsible for such obligations. Upon request, the Servicer shall furnish to
the Depositor, the Master Servicer, the Trust Administrator and the Trustee its
(and any such Sub-Servicer's) most recent financial statements and such other
information relating to the Servicer's capacity to perform its obligations under
this Agreement that it possesses. To the extent such information is not
otherwise available to the public or is deemed confidential by the Servicer, the
Depositor, the Master Servicer, the Trust Administrator and the Trustee shall
not disseminate any information obtained pursuant to the preceding two sentences
without the Servicer's (or any such Subservicer's) written consent, except as
required pursuant to this Agreement or to the extent that it is necessary to do
so (i) in working with legal counsel, auditors, taxing authorities or other
governmental agencies, rating agencies or reinsurers or (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Depositor, the Trustee,
the Master Servicer, the Trust Administrator or the Trust Fund, and in either
case, the Depositor, the Master Servicer, the Trust Administrator or the
Trustee, as the case may be, shall each use its best efforts to assure the
confidentiality of any such disseminated non-public information. Nothing in this
Section shall limit the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section. Nothing in this
Section 6.06 shall require the Servicer to collect, create, collate or otherwise
generate any information that it does not generate in its usual course of
business. The Servicer shall not be required to
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make copies of or ship documents to any party unless provisions have been made
for the reimbursement of the costs thereof.
The Depositor may, but is not obligated to, enforce the obligations of the
Servicer under this Agreement and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Servicer under this
Agreement or exercise the rights of the Servicer under this Agreement; provided
that the Servicer shall not be relieved of any of its obligations under this
Agreement by virtue of such performance by the Depositor or its designee. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Servicer and is not obligated to supervise the performance
of the Servicer under this Agreement or otherwise.
Section 6.07. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) with written confirmation
from each Rating Agency (which confirmation shall be furnished to the Depositor,
the Trust Administrator, the Master Servicer and the Trustee) that such
resignation will not cause such Rating Agency to reduce the then current rating
of any Class of Offered Certificates. Any such determination pursuant to clause
(i) of the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Trust
Administrator. No resignation of the Master Servicer shall become effective
until a successor master servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Section 6.08. Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and delegate its duties
and obligations in their entirety as Master Servicer under this Agreement;
provided, however, that: (i) the purchaser or transferee accept in writing such
assignment and delegation and assume the obligations of the Master Servicer
hereunder and that the purchaser or transferee (a) have a net worth of not less
than $5,000,000 (unless otherwise approved by each Rating Agency pursuant to
clause (ii) below); (b) be reasonably satisfactory to the Trustee, the Servicer
and the Depositor (as evidenced in a writing signed by the Trustee and the
Depositor); and (c) execute and deliver to the Trustee and the Depositor an
agreement, in form and substance reasonably satisfactory to the Trustee and the
Depositor, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it after the date of such assumption as master servicer under this
Agreement; (ii) each Rating Agency shall be given prior written notice of the
identity of the proposed successor to the Master Servicer and each Rating
Agency's rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer, the Depositor and the Trustee; and
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee and the Depositor an officer's certificate and an Opinion
of Independent counsel, each stating that all conditions precedent to such
action
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under this Agreement have been completed and such action is permitted by and
complies with the terms of this Agreement. No such assignment or delegation
shall affect any liability of the Master Servicer arising out of acts or
omissions prior to the effective date thereof.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
(a) "Servicer Event of Default," wherever used herein, means any one of
the following events:
(i) any failure by the Servicer to remit to the Trust Administrator
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, the Trustee, the
Master Servicer or the Trust Administrator, or to the Servicer, the
Depositor, the Master Servicer, the Trust Administrator and the Trustee by
Certificateholders entitled to at least 25% of the Voting Rights; or
(ii) the 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 thirty days after the earlier of (i) the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Depositor, the
Trustee, the Master Servicer or the Trust Administrator, or to the
Servicer, the Depositor, the Master Servicer, the Trust Administrator and
the Trustee by Certificateholders entitled to at least 25% of the Voting
Rights and (ii) actual knowledge of such failure by a Servicing Officer of
the Servicer; provided, however, that in the case of a failure or breach
that cannot be cured within 30 days after notice or actual knowledge by
the Servicer, the cure period may be extended for an additional 30 days
upon delivery by the Servicer to the Master Servicer, the Trust
Administrator and the Trustee of a certificate to the effect that the
Servicer believes in good faith that the failure or breach can be cured
within such additional time period and the Servicer is diligently pursuing
remedial action; or
(iii) the failure by the Servicer in any month to deliver the
Servicer Remittance Report to the Trust Administrator, and such failure
continues uncured for more than 30 days 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, the Trustee, the Master Servicer
or the Trust Administrator, or to the Servicer, the Depositor, the Master
Servicer, the Trust Administrator and the Trustee by Certificateholders
entitled to at least 25% of the Voting Rights; or
(iv) 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
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entered against the Servicer and such decree or order shall have remained
in force undischarged or unstayed for a period of sixty days; or
(v) 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
(vi) 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
(vii) for so long as Fremont Investment & Loan is the Servicer, any
failure by the Servicer of the Servicer Termination Test; or
(viii) 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
(ix) 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, the Master Servicer, the
Trust Administrator or the Depositor, or to the Servicer, the Trustee, the
Master Servicer, the Trust Administrator and the Depositor by
Certificateholders entitled to at least 25% of the Voting Rights in the
Certificates; or
(x) any failure by the Servicer to duly perform within the required
time period, its obligations under Section 3.22, Section 3.23 or Section
4.07(c), which failure continues unremedied for a period of 10 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, the Master
Servicer, the Trust Administrator or the Depositor, or to the Servicer,
the Trustee, the Master Servicer, the Trust Administrator and the
Depositor by Certificateholders entitled to at least 25% of the Voting
Rights in the Certificates.
If a Servicer Event of Default shall occur, then, and in each and every
such case, so long as such Servicer Event of Default shall not have been
remedied, the Master Servicer, Trust Administrator or the Trustee may, or at the
direction of Certificateholders entitled to a majority of the Voting Rights, the
Trust Administrator shall direct the Trustee, and 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 Master Servicer or the
Trustee shall not be required to give written notice to the Servicer of the
occurrence of a Servicer Event of Default described in clauses (ii) through (x)
of this Section 7.01(a) unless and until a Responsible Officer of the Trustee or
a Master Servicing Officer has actual knowledge of the occurrence of such a
Servicer Event of Default. In the event
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that a Responsible Officer of the Trustee or a Master Servicing Officer has
actual knowledge of the occurrence of an event of default described in clause
(i) of this Section 7.01(a), the Master Servicer, the Trust Administrator or the
Trustee shall give written notice to the Servicer of the occurrence of such an
event within one Business Day of the first day on which the Responsible Officer
obtains actual knowledge of such occurrence; provided that failure to give such
notice shall not constitute a waiver of such Servicer 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 Master Servicer. The Master
Servicer 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
Master Servicer in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to the Master
Servicer of all cash amounts which shall at the time be credited to the
Collection Account of such predecessor Servicer, 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 from the Trust Fund, prior
to transfer of its servicing obligations hereunder, payment of all accrued and
unpaid portion of the Servicing Fees to which the Servicer would have been
entitled and reimbursement for all outstanding P&I Advances and Servicing
Advances, including Servicing Advances incurred prior to but not invoiced until
after the date of termination, in accordance with the terms of this Agreement.
In addition, the Servicer shall continue to be entitled to the benefits of
Section 6.03, notwithstanding any termination hereunder, with respect to events
occurring prior to such termination.
(b) On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Master Servicer pursuant
to and under this Section and, without limitation, the Master Servicer is hereby
authorized and empowered, as attorney-in-fact or otherwise, to execute and
deliver on behalf of and at the expense of the Servicer, any and all documents
and other instruments and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Servicer agrees, at its sole cost and
expense, promptly (and in any event no later than ten Business Days subsequent
to such notice) to provide the Master Servicer with all documents and records
requested by it to enable it to assume the Servicer's functions under this
Agreement, and to cooperate with the Master Servicer in effecting the
termination of the Servicer's responsibilities and rights under this Agreement,
including, without limitation, the transfer within one Business Day to the
Master Servicer for administration by it of all cash amounts which at the time
shall be or should have been credited by the Servicer to the Collection Account
held by or on behalf of the Servicer, or any REO Account or Servicing Account
held by or on behalf of the Servicer or thereafter be received with respect to
the Mortgage Loans or any REO Property. For purposes of this Section 7.01, the
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Master Servicer shall not be deemed to have knowledge of a Servicer Event of
Default unless a Master Servicing Officer of the Master Servicer has actual
knowledge thereof or unless written notice of any event which is in fact such a
Servicer Event of Default is received by the Master Servicer and such notice
references any of the Certificates, the Trust, the REMICs or this Agreement.
The Master Servicer shall be entitled to be reimbursed by the defaulting
Servicer (or by the Trust Fund if such Servicer is unable to fulfill its
obligations hereunder) for all reasonable out-of-pocket or third party costs
associated with the transfer of servicing from the predecessor Servicer (or if
the predecessor Servicer is the Master Servicer, from the Servicer immediately
preceding the Master Servicer), including without limitation, any reasonable
out-of-pocket or third party costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation of
such servicing data as may be required by the Master Servicer to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Master Servicer to service the Mortgage Loans properly and effectively, upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any Late Collection
of a Monthly Payment on a Mortgage Loan which was due prior to the notice
terminating 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 in accordance with
Section 3.11 and in the time period specified in Section 3.11 prior to the
termination of its activities hereunder. The Servicer shall continue to be
entitled to the benefits of Section 6.03, notwithstanding any termination
hereunder with respect to events occurring prior to such termination.
(c) If any one of the following events ("Master Servicer Events of
Termination") shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the
Distribution Account any amount required to be deposited by it under the
terms of this Agreement (including an Advance required to be made pursuant
to Section 4.01 hereof), which failure shall continue unremedied for one
Business Day after the date upon which written notice of such failure
shall have been given to the Master Servicer by the Trustee or the
Depositor or to the Master Servicer and the Trustee by the Holders of
Certificates having not less than 51% of the Voting Rights evidenced by
the Certificates; or
(ii) any failure on the part of the Master Servicer duly to observe
or perform in any material respect any of the covenants or agreements on
the part of the Master Servicer contained in this Agreement, or the breach
by the Master Servicer of any representation and warranty contained in
Section 2.08, which continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Depositor,
the Trustee, or to the Master Servicer, the Depositor and the Trustee by
the Holders of Certificates entitled to at least 25% of the Voting Rights;
or
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(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under
any present or future federal or state bankruptcy, insolvency or similar
law or the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its affairs,
shall have been entered against the Master Servicer and such decree or
order shall have remained in force undischarged or unstayed for a period
of 90 days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its
property; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations.
If a Master Servicer Event of Termination described in clause (i) of this
Section 7.03(c) shall occur, the Trustee shall, by notice to the Master Servicer
and the Depositor, immediately terminate all of the rights and obligations of
the Master Servicer under this Agreement (other than as a Holder of any
Certificate) and in and to the Mortgage Loans and the proceeds thereof. If a
Master Servicer Event of Termination described in clauses (ii) through (v) of
this Section 7.03(c) shall occur, then, and in each and every such case, so long
as such Master Servicer Event of Termination shall not have been remedied, the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of the Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor) with a copy to each Rating Agency,
terminate all of the rights and obligations of the Master Servicer in its
capacity as Master Servicer under this Agreement, to the extent permitted by
law, in and to the Mortgage Loans and the proceeds thereof. Upon such
termination, or on or after receipt by the Master Servicer of such written
notice, as the case may be, all authority, power and obligations of the Master
Servicer under this Agreement, whether with respect to the Certificates (other
than as a Holder of any Certificate) or the Mortgage Loans or otherwise
including, without limitation, the compensation payable to the Master Servicer
under this Agreement after the date of such termination, shall pass to and be
vested in the Trustee pursuant to and under this Section, and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver, on behalf of and at the expense of the
Master Servicer, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees promptly (and in any event no later than
ten Business Days subsequent to such notice) to provide the Trustee with all
documents and records requested by it to enable it to assume the Master
Servicer's functions under this Agreement, and to cooperate with the Trustee in
effecting the termination of the Master Servicer's responsibilities and rights
under this Agreement (provided, however, that the Master Servicer shall continue
to be entitled to receive all amounts accrued or owing to it under this
Agreement on or prior to the date of such termination and shall continue to be
entitled to the
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benefits of Section 6.03, notwithstanding any such termination, with respect to
events occurring prior to such termination). For purposes of this Section
7.01(c), the Trustee shall not be deemed to have knowledge of a Master Servicer
Event of Termination unless a Responsible Officer of the Trustee assigned to and
working in the Trustee's Corporate Trust Office has actual knowledge thereof or
unless written notice of any event which is in fact such a Master Servicer Event
of Termination is received by the Trustee and such notice references the
Certificates, the Trust or this Agreement. The Trustee shall promptly notify the
Rating Agencies of the occurrence of a Master Servicer Event of Termination of
which it has knowledge as provided above.
To the extent that the costs and expenses of the Trustee related to the
termination of the Master Servicer, appointment of a successor Master Servicer
or the transfer and assumption of the master servicing by the Trustee
(including, without limitation, (i) all legal costs and expenses and all due
diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Termination and (ii) all costs and expenses associated with the complete
transfer of the master servicing, including all master servicing files and all
master servicing data and the completion, correction or manipulation of such
master servicing data as may be required by the successor Master Servicer to
correct any errors or insufficiencies in the master servicing data or otherwise
to enable the successor Master Servicer to master service the Mortgage Loans in
accordance with this Agreement) and any other master servicing transfer costs
applicable with respect to a transfer of master servicing are not fully and
timely reimbursed by the terminated Master Servicer, the Trustee shall be
entitled to reimbursement of such costs and expenses from the Distribution
Account.
Section 7.02. Master Servicer to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01, the Master Servicer shall, subject to and to the
extent provided in Section 3.06, be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein, and shall immediately assume all the
responsibilities, duties and liabilities relating thereto and arising thereafter
(except for any representations or warranties of the Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.03(d)-(i)) by the terms and provisions hereof including, without limitation,
the Servicer's obligations to make P&I Advances pursuant to Section 4.01;
provided, however, that if the Master Servicer is prohibited by law or
regulation from obligating itself to make advances regarding delinquent mortgage
loans, then the Master Servicer shall not be obligated to make P&I Advances
pursuant to Section 4.01; and provided further, that any failure to perform such
duties or responsibilities caused by the Servicer's failure to deliver or
provide, or delay in delivering or providing, information, documents, records or
cash as required under this Agreement shall not be considered a default by the
Master Servicer as successor to the Servicer hereunder; and provided further,
that it is understood and acknowledged by the parties hereto that there will be
a period of transition (not to exceed 90 days) before the actual servicing
functions (other than the obligation to advance P&I Advances, which obligation
shall arise upon the receipt by the Servicer of notice of termination pursuant
to Section 7.01) can be fully transferred to the Master Servicer or any
successor Servicer appointed in accordance with this Agreement. As compensation
therefor, the Master Servicer shall be entitled to the Servicing Fee
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and all funds relating to the Mortgage Loans to which the Servicer would have
been entitled if it had continued to act as Servicer hereunder. Notwithstanding
the above and subject to the immediately following paragraph, the Master
Servicer may, if it shall be unwilling to so act, or shall, if it is unable to
so act promptly appoint or petition a court of competent jurisdiction to
appoint, a Person that satisfies the eligibility criteria set forth below as the
successor Servicer under this Agreement in the assumption of the
responsibilities, duties or liabilities of the Servicer under this Agreement.
Notwithstanding anything herein to the contrary, in no event shall the
Trustee, the Trust Administrator or the Master Servicer be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Servicer to act as
successor Servicer under this Agreement and the transactions set forth or
provided for herein.
Any successor Servicer appointed under this Agreement must (i) be an
established mortgage loan servicing institution, (ii) be approved by each Rating
Agency by a written confirmation from each Rating Agency that the appointment of
such successor Servicer would not result in the reduction or withdrawal of the
then current ratings of any outstanding Class of Certificates, (iii) have a net
worth of not less than $30,000,000 and (iv) assume all the responsibilities,
duties or liabilities of the Servicer (other than liabilities of the Servicer
hereunder incurred prior to termination of the Servicer under Section 7.01
herein) under this Agreement as if originally named as a party to this
Agreement.
(b) (i) All Servicing Transfer Costs incurred by the Trustee, the Trust
Administrator, the Master Servicer and any successor Servicer under
paragraph (b)(2) below shall be paid immediately by the terminated
Servicer upon presentation of reasonable documentation of such costs, and
if such predecessor or initial Servicer, as applicable, defaults in its
obligation to pay such costs, the successor Servicer, the Master Servicer,
the Trust Administrator and the Trustee shall be entitled to reimbursement
therefor from the assets of the Trust Fund.
(ii) No appointment of a successor to the Servicer under this
Agreement shall be effective until the assumption by the successor of all
of the Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the
Trustee, the Trust Administrator or the Master Servicer may make such
arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however,
that no such compensation shall be in excess of that permitted the
Servicer as such hereunder. The Depositor, the Trustee, the Trust
Administrator, the Master Servicer and such successor shall take such
action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Pending appointment of a successor to the
Servicer under this Agreement, the Master Servicer shall act in such
capacity as hereinabove provided.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of Servicer, in accordance with applicable federal and
state law, 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 3.13.
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Any such successor Servicer shall be required to satisfy the requirements
of a successor Servicer under this Section 7.02.
Section 7.03. Notification to Certificateholders.
(a) Upon any termination of a Servicer or appointment of a successor
Servicer, the Trust Administrator shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Servicer Event of Default
or Master Servicer Event of Termination, the Trust Administrator or Trustee
respectively shall transmit by mail to all Certificateholders and each Rating
Agency notice of each such Servicer Event of Default or Master Servicer Event of
Termination hereunder known to the Trustee or the Trust Administrator, as
applicable, unless such Servicer Event of Default or Master Servicer Event of
Termination shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
Section 8.01. Duties of the Trustee.
The Trustee, before the occurrence of a Servicer Event of Default or
Master Servicer Event of Termination and after the curing of all Servicer Events
of Default or Master Servicer Events of Termination that may have occurred,
shall undertake to perform such duties and only such duties as are specifically
set forth in this Agreement. In case a Master Servicer Event of Termination 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.
Each of the Trustee and the Trust Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to it 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. Neither the Trustee nor
the Trust Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order, or other
instrument.
The Trust Administrator agrees to notify the Master Servicer in writing no
later than 5:00 p.m. New York time on each Remittance Date of the aggregate
dollar amount of the funds received by the Trust Administrator from the Servicer
on such Remittance Date and any other information reasonably requested by the
Master Servicer, so as to enable the Master Servicer to make the reconciliations
and verifications required to be made by it pursuant to Section 3A.01. Neither
the Trustee nor the Trust Administrator shall be deemed to have knowledge of a
Servicer Event of Default or Master Servicer Event of Termination unless a
Responsible Officer of the Trustee or the Trust Administrator, respectively, has
actual knowledge thereof or unless written notice of any event which is in fact
such a Servicer Event of Default or Master Servicer Event of
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Termination is received by the Trustee or the Trust Administrator, respectively,
and such notice references any of the Certificates, the Trust, the REMICs or
this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
or the Trust Administrator from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) The duties and obligations of the Trust Administrator, and with
respect to the duties and obligations of the Trustee, prior to the
occurrence of a Servicer Event of Default or Master Servicer Event of
Termination, and after the curing of all such Servicer Events of Default
or Master Servicer Events of Termination which may have occurred, shall be
determined solely by the express provisions of this Agreement, the Trustee
and the Trust Administrator shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee or the Trust Administrator and, in the
absence of bad faith on the part of the Trustee or the Trust
Administrator, as applicable, the Trustee or the Trust Administrator, as
applicable, 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 it that conform to the requirements of this
Agreement;
(ii) Neither the Trustee nor the Trust Administrator shall be
personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or the Trust
Administrator, as applicable, unless it shall be proved that the Trustee
or the Trust Administrator, as the case may be, was negligent in
ascertaining the pertinent facts; and
Neither the Trustee nor the Trust Administrator shall be personally liable
with respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Certificates entitled
to at least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or the Trust
Administrator, or exercising any trust or power conferred upon the Trustee or
the Trust Administrator, under this Agreement.
Section 8.02. Certain Matters Affecting the Trustee and the Trust
Administrator.
(a) Except as otherwise provided in Section 8.01:
(i) Each of the Trustee or the Trust Administrator may request and
rely conclusively upon and shall be fully protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) Each of the Trustee and the Trust Administrator may consult
with counsel and any written advice or Opinion of Counsel shall be full
and complete authorization
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and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such written advice or
Opinion of Counsel;
(iii) Neither the Trustee nor the Trust Administrator shall be under
any obligation to exercise any of the trusts or powers vested in it by
this Agreement or to institute, conduct or defend any litigation hereunder
or in relation hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to it security or indemnity
satisfactory to it against the costs, expenses and liabilities which may
be incurred therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of a Servicer
Event of Default or Master Servicer Event of Termination (which has not
been cured or waived), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such Person's own affairs;
(iv) Neither the Trustee nor the Trust Administrator shall be
personally liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) The Trust Administrator shall not, and prior to the occurrence
of a Servicer Event of Default or a Master Servicer Event of Termination
hereunder and after the curing of all Master Servicer Events of
Termination which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Certificates entitled to
at least 25% of the Voting Rights; provided, however, that if the payment
within a reasonable time to the Trustee or the Trust Administrator, as
applicable, of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the Trustee
or the Trust Administrator, as applicable, not reasonably assured to the
Trustee or the Trust Administrator, as applicable, by such
Certificateholders, the Trustee or the Trust Administrator, as applicable,
may require reasonable indemnity against such expense, or liability from
such Certificateholders as a condition to taking any such action;
(vi) Each of the Trustee and the Trust Administrator may execute any
of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or attorneys and
shall not be responsible for any willful misconduct or negligence of such
agents, custodians, nominees or attorneys (as long as such agents,
custodians, nominees or attorneys were appointed with due and proper
care);
(vii) Neither the Trustee nor the Trust Administrator shall be
personally liable for any loss resulting from the investment of funds held
in the Collection Account by the Servicer pursuant to Section 3.12;
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(viii) Except as otherwise expressly provided herein, none of the
provisions of this Agreement shall require the Trustee or the Trust
Administrator to expend or risk its own funds or otherwise to incur any
liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or
indemnity satisfactory to it against such risk or liability is not assured
to it (not including expenses, disbursements and advances incurred or made
by the Trustee or the Trust Administrator, as applicable, including the
compensation and the expenses and disbursements of its agents and counsel,
in the ordinary course of its performance in accordance with the
provisions of this Agreement); and
(ix) Neither the Trustee nor the Trust Administrator shall be
personally liable for any loss resulting from any failure or omission of
any other party to this Agreement to comply with its obligations
hereunder.
(b) All rights of action under this Agreement or under any of the
Certificates enforceable by the Trustee or the Trust Administrator, as
applicable, may be enforced by it without the possession of any of the
Certificates, or the production thereof at the trial or any other proceeding
relating thereto, and any such suit, action or proceeding instituted by the
Trustee or the Trust Administrator, as applicable, shall be brought in its name
for the benefit of all the Holders of such Certificates, subject to the
provisions of this Agreement.
Section 8.03. Neither the Trustee Nor the Trust Administrator Liable for
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature of the Trust Administrator, the authentication of the Trust
Administrator on the Certificates, the acknowledgments of the Trustee and the
Trust Administrator contained in Article II and the representations and
warranties of the Trustee and the Trust Administrator in Section 8.11) shall be
taken as the statements of the Depositor, and the Trustee does not assume any
responsibility for their correctness. Neither the Trustee nor the Trust
Administrator makes any representation or warranty as to the validity or
sufficiency of this Agreement (other than as specifically set forth in Section
8.11) or of the Certificates (other than the signature of the Trustee and the
Trust Administrator and authentication of the Certificate Registrar on the
Certificates) or any Certificate Cap Agreement (other than the signature of the
Trustee) or of any Mortgage Loan or related document or of the MERS(R) System.
Neither the Trustee nor the Trust Administrator shall be accountable for the use
or application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer.
Section 8.04. Trustee and Trust Administrator May Own Certificates.
Each of the Trustee and the Trust Administrator 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 or the Trust Administrator,
as applicable.
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Section 8.05. Fees and Expenses of the Trustee and Trust Administrator.
(a) The Trust Administrator shall withdraw from the Distribution Account
on each Distribution Date and pay to itself the Trust Administration Fee with
respect to the calendar month that immediately preceded the month of such
Distribution Date. As additional compensation for all services rendered by it in
the execution of the Trust hereby created and in the exercise and performance of
any of the powers and duties of the Trust Administrator hereunder, the Trust
Administrator shall be permitted to retain the income, payable to the Trust
Administrator from time to time, from all income and gains (net of losses) on
amounts on deposit in the Distribution Account. The annual fees of the Trustee
hereunder shall be paid in accordance with a side letter agreement with the
Trust Administrator and at the sole expense of the Trust Administrator. The
initial fees of the custodian hereunder shall be paid in accordance with a side
letter agreement between the Originator and the Trust Administrator, as initial
custodian, and ongoing fees, if any, at the sole expense of the Trust
Administrator. Subject to Section 8.05(b), the Trustee and the Trust
Administrator, and any director, officer, employee or agent of either, shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense (including any unreimbursed fees or expenses for work relating to an
appointment of a successor Servicer or a successor Master Servicer under Article
VII herein, but not including expenses, disbursements and advances incurred or
made by the Trustee (or its custodian) or the Trust Administrator, as
applicable, including the reasonable compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of its
performance in accordance with the provisions of this Agreement) incurred by the
Trustee or the Trust Administrator arising out of or in connection with the
acceptance or administration of its obligations and duties under this Agreement
or any Certificate Cap Agreement, the Certificates or the Mortgage Loans, other
than any loss, liability or expense (i) resulting from the Trustee's or the
Trust Administrator's actions or omissions in connection with this Agreement and
the Mortgage Loans, (ii) that constitutes a specific liability of the Trustee or
the Trust Administrator pursuant to Section 11.01(c), or (iii) any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or as a result of a breach of the
its respective obligations under Article XI hereof. Any amounts payable to the
Trustee (or its custodian) or the Trust Administrator, and any director,
officer, employee or agent of the Trustee (or its custodian) or the Trust
Administrator, in respect of the indemnification provided by this paragraph (a),
or pursuant to any other right of reimbursement from the Trust Fund that the
Trustee (or its Custodian), the Trust Administrator and any director, officer,
employee or agent of the Trustee (or its custodian) or the Trust Administrator,
may have hereunder in its capacity as such, may be withdrawn by the Trust
Administrator from the Distribution Account at any time. Such indemnity shall
survive the termination of this Agreement and the resignation of the Trustee or
the Trust Administrator, as applicable.
(b) The foregoing indemnity shall survive the resignation or removal of
the Trustee or the Trust Administrator.
(c) Without limiting the Servicer's indemnification obligations under
Section 6.03, the Servicer agrees to indemnify the Trustee, the Master Servicer,
and the Trust Administrator from, and hold it harmless against, any loss,
liability or expense resulting from a breach of the Servicer's obligations and
duties under this Agreement. Such indemnity shall survive the
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termination or discharge of this Agreement and the resignation or removal of
the Trustee or the Trust Administrator. Any payment hereunder made by the
Servicer to the Trustee or the Trust Administrator shall be from the Servicer's
own funds, without reimbursement from the Trust Fund.
The Trustee agrees to indemnify each of the Master Servicer and the Trust
Administrator from, and hold it harmless against, any loss, liability or expense
resulting from a breach of the Trustee's obligations and duties under this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Master Servicer or the Trust
Administrator. Any payment hereunder made by the Trustee to the Master Servicer
or the Trust Administrator, as the case may be, shall be from the Trustee's own
funds, without reimbursement from the Trust Fund.
The Trust Administrator agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from a breach of the
Trust Administrator's obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trust Administrator. Any payment hereunder made by
the Trust Administrator to the Trustee shall be from the Trust Administrator's
own funds, without reimbursement from the Trust Fund.
(d) The Servicer shall pay any annual rating agency fees of S&P and
Xxxxx'x for ongoing surveillance from its own funds without right of
reimbursement.
Section 8.06. Eligibility Requirements for the Trustee and Trust
Administrator.
Each of the Trustee and the Trust Administrator hereunder shall at all
times be a corporation or an association (other than the Depositor, the
Originator, the Servicer or any Affiliate of the foregoing) organized and doing
business under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 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 conditions so published. In case at any time either
the Trustee or the Trust Administrator shall cease to be eligible in accordance
with the provisions of this Section, the Trustee or the Trust Administrator, as
applicable, shall resign immediately in the manner and with the effect specified
in Section 8.07.
Section 8.07. Resignation and Removal of the Trustee or Trust
Administrator.
The Trustee or the Trust Administrator may at any time resign and be
discharged from the trust hereby created by giving written notice thereof to the
Depositor, the Servicer, the Master Servicer, if the Trustee is resigning to the
Trust Administrator and if the Trust Administrator is resigning to the Trustee
and the Certificateholders. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee or successor trust
administrator, as applicable, by written instrument, in duplicate, which
instrument shall be
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delivered to the resigning Trustee or Trust Administrator, as applicable, and to
the successor trustee or successor trust administrator, as applicable. The
Depositor shall deliver a copy of such instrument to the Certificateholders, the
Master Servicer and the Servicer. If no successor trustee or successor trust
administrator, as applicable, shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee or Trust Administrator, as applicable, may petition any court
of competent jurisdiction for the appointment of a successor.
If at any time the Trustee or the Trust Administrator shall cease to be
eligible in accordance with the provisions of Section 8.06 and shall fail to
resign after written request by the Depositor, or if at any time the Trustee or
the Trust Administrator shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or the Trust Administrator
or of its respective property shall be appointed, or any public officer shall
take charge or control of the Trustee or the Trust Administrator or of its
respective property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Depositor may remove the Trustee or the Trust
Administrator, as applicable, and appoint a successor by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Trust
Administrator, as applicable, so removed and to the successor. The Depositor
shall deliver a copy of such instrument to the Certificateholders, the Master
Servicer and the Servicer.
The Holders of Certificates entitled to at least 25% of the Voting Rights
may at any time remove the Trustee or the Trust Administrator and appoint a
successor by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the Trustee
or Trust Administrator so removed and one complete set to the successor so
appointed. The Depositor shall deliver a copy of such instrument to the
Certificateholders, the Master Servicer and the Servicer.
Any resignation or removal of the Trustee or the Trust Administrator and
appointment of a successor pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor as
provided in Section 8.08.
Any resignation or removal of the initial Trust Administrator will result
in the removal of the initial Master Servicer.
Section 8.08. Successor Trustee or Trust Administrator.
Any successor appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor shall become effective and such successor, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with the like
effect as if originally named as trustee herein. The predecessor trustee or
trust administrator shall deliver to its successor all Mortgage Files and
related documents and statements, as well as all moneys, held by it hereunder
(other than any Mortgage Files at the time held by a custodian, if any, which
custodian shall become the agent of any successor trustee hereunder), and the
Depositor and the predecessor trustee or trust administrator shall execute and
deliver such instruments and do such
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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 or trust administrator shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
shall be eligible under the provisions of Section 8.06 and the appointment of
such successor shall not result in a downgrading of any Class of Certificates by
either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee or trust
administrator as provided in this Section, the Depositor shall mail notice of
the succession to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor, the successor shall cause such
notice to be mailed at the expense of the Depositor.
Section 8.09. Merger or Consolidation of the Trustee or the Trust
Administrator.
Any corporation into which the Trustee or the Trust Administrator 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 or
the Trust Administrator shall be a party, or any corporation succeeding to the
business of the Trustee or the Trust Administrator, shall be the successor of
the Trustee or the Trust Administrator, as applicable, 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 hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee, acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case a Servicer Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof. Any reasonable and
necessary expense of the Trustee related to the appointment of a co-trustee or a
separate trustee for the limited purpose of performing the Trustee's duties
pursuant to this Section 8.10 shall be reimbursable from the Trust Fund.
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In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the defaulting Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trust conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
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. Representations and Warranties of the Trustee and Trust
Administrator.
(a) The Trustee hereby represents and warrants to the Servicer, the Master
Servicer, the Trust Administrator and the Depositor, as of the Closing Date,
that:
(i) It is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of New York.
(ii) The execution and delivery of this Agreement by it, and the
performance and compliance with the terms of this Agreement by it, will
not violate its charter or articles of association or bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
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(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties, constitutes a valid, legal and binding
obligation of it, enforceable against it in accordance with the terms
hereof, subject to (A) applicable bankruptcy, insolvency, receivership,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, and (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
(b) The Trust Administrator hereby represents and warrants to the
Servicer, the Trustee and the Depositor, as of the Closing Date, that:
(i) It is a national banking association duly organized, validly
existing and in good standing under the laws of the United States.
(ii) The execution and delivery of this Agreement by it, and the
performance and compliance with the terms of this Agreement by it, will
not violate its charter or articles of association or bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties, constitutes a valid, legal and binding
obligation of it, enforceable against it in accordance with the terms
hereof, subject to (A) applicable bankruptcy, insolvency, receivership,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, and (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
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, the Master Servicer, the Trust Administrator and the
Trustee created hereby with respect to the Trust Fund shall terminate upon the
earlier of (a) the purchase, on or after the Optional Termination Date, by the
Servicer, of all Mortgage Loans (and REO Properties) at the price equal to the
sum of (i) 100% of the unpaid principal balance of each Mortgage Loan (other
than in respect of REO Property) plus accrued and unpaid interest thereon at the
applicable Mortgage Interest Rate, together with any unpaid remaining Net WAC
Rate Carryover Amounts 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 Person seeking to purchase such Mortgage
Loans, at the expense of such Person, plus accrued and unpaid interest on the
related Mortgage Loan at the applicable Mortgage Interest Rates and (y) the
unpaid principal
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balance of each Mortgage Loan related to any REO Property, in each case plus
accrued and unpaid interest thereon at the applicable Mortgage Interest Rate
("Termination Price"); and (b) the later of (i) the maturity or other
Liquidation Event (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 descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the
United States to the Court of St. James's, living on the date hereof.
Section 9.02. Final Distribution on the Certificates.
If on any Remittance 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
and the Trust Administrator promptly to send a Notice of Final Distribution to
each Certificateholder. If the Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date the
Notice of Final Distribution is to be mailed to the affected Certificateholders,
the Depositor shall notify the Servicer, the Trustee and the Trust Administrator
of the date the Depositor 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 Trust
Administrator by letter to Certificateholders mailed not later than the 15th day
of 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 Trust
Administrator 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 or the Trust Administrator of a
Request for Release therefor, the Trustee or the Trust Administrator shall
promptly release to the Depositor or its designee the Custodial Files for the
Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trust
Administrator shall cause to be distributed to the Certificateholders of each
Class (after reimbursement of all amounts due to the Servicer, the Depositor,
the Master Servicer, the Trust Administrator and the Trustee hereunder), 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
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same Class, an amount up to an amount equal to (i) as to each Class of Regular
Certificates (except the Class C Certificates), the Certificate Balance thereof
plus for each such Class and the Class C Certificates accrued interest thereon
in the case of an interest-bearing Certificate and all other amounts to which
such Classes are entitled pursuant to Section 4.02, (ii) as to the Residual
Certificates, the amount, if any, which remains on deposit in the Distribution
Account (other than the amounts retained to meet claims) after application
pursuant to clause (i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trust Administrator 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 Holders of the Class R Certificates 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 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 and the Trust Administrator have been supplied with an Opinion of
Counsel, at the expense of the Depositor, to the effect that the failure to
comply with the requirements of this Section 9.03 will not (i) result in the
imposition of taxes on "prohibited transactions" on any Trust REMIC as defined
in Section 860F of the Code, or (ii) cause any Trust 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 for cash, and, within 90 days of such sale, shall distribute to the
Certificateholders the proceeds of such sale in complete liquidation of each of
the Trust REMICs; and
(b) The Trustee or the Trust Administrator, as applicable, shall attach a
statement to the final federal income tax return for each of the Trust REMICs
stating that pursuant to Treasury Regulations Section 1.860F-1, the first day of
the 90-day liquidation period for each such Trust REMIC was the date on which
the Trustee sold the assets of the Trust Fund to the Servicer.
By their acceptance of the Certificates, the Holders thereof hereby agree
to authorize the Trustee or Trust Administrator to specify the 90-day
liquidation period for each REMIC created hereunder, which authorization shall
be binding upon all successor Certificateholders.
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ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Originator, the Servicer, the Master Servicer, the Trust Administrator and the
Trustee 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, the Master
Servicer or the Servicer, the Trust Administrator or the Trustee, (iv) to comply
with any requirements in the Code, (v) to conform the provisions of this
Agreement to the descriptions thereof in the Prospectus Supplement, (vi) to add
any other provisions with respect to matters or questions arising hereunder or
(vii) to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; provided, that any action pursuant to clause (vi)
or (vii) above shall not, as evidenced by an Opinion of Counsel (which Opinion
of Counsel shall not be an expense of the Trustee, the Trust Administrator or
the Trust Fund), adversely affect in any material respect the interests of any
Certificateholder; 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. The
Trustee, the Depositor, the Originator, the Master Servicer, the Trust
Administrator and the Servicer also may at any time and from time to time amend
this Agreement, but 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 each Trust REMIC under the REMIC
Provisions, (ii) avoid or minimize the risk of the imposition of any tax on any
Trust 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 and the Trust Administrator have 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 by the Depositor, the
Servicer, the Originator, the Master Servicer, the Trust Administrator and the
Trustee with the consent of the Holders of Certificates evidencing Percentage
Interests aggregating not less than 66 2/3% of each Class of Certificates
affected thereby for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (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 clause (i), without the consent of the
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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, neither of the
Trustee nor the Trust Administrator shall consent to any amendment to this
Agreement unless (i) it shall have first received an Opinion of Counsel, which
opinion shall not be an expense of the Trustee, the Trust Administrator or the
Trust Fund, to the effect that such amendment will not adversely affect in any
material respect the interest of any Certificateholder and will not cause the
imposition of any tax on any Trust REMIC or the Certificateholders or cause any
Trust REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding and (ii) the party seeking such amendment shall have provided
written notice to the Rating Agencies (with a copy of such notice to the Trustee
and the Trust Administrator) of such amendment, stating the provisions of the
Agreement to be amended.
Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee, the Trust Administrator, the Master Servicer or the Servicer, any
Certificate beneficially owned by the Depositor or any of its Affiliates or by
the Originator 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 Trust Administrator 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 either of the Trustee or the Trust
Administrator to enter into an amendment which modifies its obligations or
liabilities without its consent and in all cases without receiving an Opinion of
Counsel (which Opinion shall not be an expense of the Trustee, the Trust
Administrator or the Trust Fund), satisfactory to the Trustee or the Trust
Administrator, as applicable, 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.
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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 the expense of the Trust, but only upon
receipt of an Opinion of Counsel to the effect that such recordation materially
and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts 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, 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.
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Section 10.05. Notices.
(a) The Trust Administrator 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:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Servicer, the Master
Servicer, the Trust Administrator or the Trustee and the appointment of
any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.03, 2.07 or 3.28; and
(v) The final payment to Certificateholders.
(b) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency of a Master Servicer Event of Termination to the extent it
has actual knowledge thereof.
(c) In addition, the Trust Administrator shall promptly make available on
its internet website to each Rating Agency copies of each report to
Certificateholders described in Section 4.03.
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, Fremont Mortgage Securities Corporation, 0000 Xxxx Xxxxxxxx Xxxxxxx,
Xxxx, Xxxxxxxxxx 00000, telecopy number (000) 000-0000, or such other address as
may be hereafter furnished to the Trustee and the Servicer by the Depositor in
writing; (b) in the case of the Originator and the Servicer, Fremont Investment
& Loan, 0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxxxx 00000, telecopy number
(000) 000-0000, or such other address as may be hereafter furnished to the
Depositor, the Master Servicer, the Trust Administrator and the Trustee by the
Servicer in writing; (c) in the case of the Trustee, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, telecopy number (000) 000-0000, or such other address or
telecopy number as may hereafter be furnished to the other parties hereto; (d)
in the case of the Trust Administrator and Master Servicer to the Corporate
Trust Office and Xxxxx Fargo Bank, N.A., X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Services- Fremont 2004-D, or such other address as
the Trust Administrator may hereafter furnish to the Depositor, the Trustee or
the Servicer and (f) in the case of each of the Rating Agencies, the address
specified therefor in the definition corresponding to the name of such Rating
Agency.
Notices to Certificateholders shall be deemed given when mailed, first
class postage prepaid, to their respective addresses appearing in the
Certificate Register.
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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; Sales; Advance Facilities.
(a) Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may be assigned by the Servicer with
the prior written consent of the Depositor, the Master Servicer, the Trust
Administrator and the Trustee. In addition, for so long as the Servicer is
acting as the Servicer hereunder (i) the Servicer is hereby authorized to enter
into an advance facility ("Advance Facility") under which (A) the Servicer
sells, assigns or pledges to an Advancing Person the Servicer's rights under
this Agreement to be reimbursed for any P&I Advances or Servicing Advances
and/or (B) 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 and (ii) the Servicer is hereby authorized to assign its rights to the
Servicing Fee; it being understood neither the Trust Fund nor any party hereto
shall have a right or claim (including without limitation any right of offset)
to the portion of the Servicing Fee so assigned; it being further understood
that upon the resignation or termination of the Servicer, such Advance Facility
(in the case of clause (i)) and such assignment (in the case of clause (ii))
shall be terminated. No consent of the Trustee, the Trust Administrator,
Certificateholders or any other 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.
(b) Reimbursement amounts shall consist solely of amounts in respect of
P&I Advances and/or Servicing Advances made with respect to 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).
(c) 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.
(d) 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.
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(e) The documentation establishing any Advance Facility shall require that
such 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 such reimbursement amount distributed to such Advancing Person
or Advance Facility trustee on each Distribution Date, to enable the Advancing
Person or Advance Facility trustee to make the FIFO allocation of each such
reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed 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.
(f) Any amendment to this Section 10.07 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 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Depositor, the Master Servicer, the Trust Administrator and the
Servicer without the consent of any Certificateholder, notwithstanding anything
to the contrary in this Agreement, provided, that the Trustee and the Trust
Administrator have been provided an Opinion of Counsel that such amendment has
no material adverse effect on the Certificateholders which opinion shall be an
expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee, the Trust Administrator or the Trust Fund; 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 (instead of
obtaining an Opinion of Counsel) 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 rating 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. 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 Advances only to the extent
provided herein, and the Trustee, the Trust Administrator and the Trust are 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; and (c)
neither the Trustee nor the Trust Administrator shall have any responsibility to
track or monitor the administration of the financing arrangement between the
Servicer and the lender.
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.
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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 a Servicer
Event of Default or a Master Servicer Event of Termination and of the
continuance thereof, as herein provided, and unless the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
shall also have made written request to the Trustee to institute such action,
suit or proceeding in its own name as Trustee hereunder and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of 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 15 days' prior notice, it will permit any
representative of the Depositor or the Trustee during such Person's normal
business hours, to examine all the books of account, records, reports and other
papers of such Person 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 Depositor, the Master Servicer, the Trust
Administrator or the Trustee and to discuss its affairs, finances and accounts
relating to such 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 reasonable out-of-pocket expense of the Servicer incident to the
exercise by the Depositor, the Master Servicer, the Trust Administrator 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
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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. 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.
ARTICLE XI
REMIC PROVISIONS
Section 11.01. REMIC Administration.
(a) The Trustee shall elect to treat each REMIC created hereunder as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
the purposes of the REMIC election in respect of REMIC I, the REMIC I Regular
Interests shall be designated as the regular interests in REMIC I and the R-I
interest shall be designated as the residual interest in REMIC I. The
Certificates (other than the Class R Certificates and exclusive of any right to
receive Basis Risk Carryforward Amounts) shall be designated as the regular
interests in REMIC II and the R-II interest shall be designated as the residual
interest in REMIC II. The Trustee shall not permit the creation of any
"interests" in any REMIC created hereunder (within the meaning of Section 860G
of the Code) other than the REMIC I Regular Interests, the REMIC II Regular
Interests and the interests represented by the Class R Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(c) The Trust Administrator shall pay out of funds on deposit in the
Distribution Account, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any REMIC created
hereunder that involve the Internal Revenue Service or state tax authorities)
unless such expenses, professional fees or any administrative or judicial
proceedings are incurred by reason of the Trustee's or the Trust Administrator's
willful misfeasance, bad faith or negligence. The Trust Administrator, as agent
for all of REMIC I's and REMIC II's tax matters persons, shall (i) act on behalf
of the Trust Fund in relation to any tax matter or controversy involving any
REMIC created hereunder and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto and will be entitled to reimbursement from
the Trust Fund for any expenses incurred by the Trust Administrator in
connection therewith unless such administrative or judicial proceeding relating
to an examination or audit by any governmental taxing authority is incurred by
reason of the Trust Administrator's willful misfeasance, bad faith or
negligence. The
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holder of the largest Percentage Interest of each Class of Residual Certificates
shall be designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1, as the tax
matters person of the related REMIC created hereunder. By its acceptance
thereof, the holder of the largest Percentage Interest of the Residual
Certificates hereby agrees to irrevocably appoint the Trust Administrator or an
Affiliate as its agent to perform all of the duties of the tax matters person
for the Trust Fund.
(d) The Trust Administrator shall prepare and file, and the Trustee shall
sign, in a timely manner all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Trust Administrator without any right of reimbursement for such expenses.
The Servicer shall provide on a timely basis to the Trust Administrator or its
designee such information with respect to the assets of the Trust Fund as is in
its possession and reasonably required by the Trust Administrator to enable it
to perform its obligations under this Article.
(e) The Trust Administrator shall perform on behalf of each REMIC created
hereunder all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trust Administrator shall
provide (i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of each
REMIC created hereunder. The Servicer shall provide on a timely basis to the
Trust Administrator such information with respect to the assets of the Trust
Fund, including, without limitation, the Mortgage Loans, as is in its possession
and reasonably required by the Trust Administrator to enable it to perform its
obligations under this subsection. In addition, the Depositor shall provide or
cause to be provided to the Trust Administrator, within ten (10) days after the
Closing Date, all information or data that the Trust Administrator reasonably
determines to be relevant for tax purposes as to the valuations and issue prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trust Administrator and the Trustee shall take such action and
shall cause each REMIC created hereunder to take such action as shall be
necessary to create or maintain the status thereof as a REMIC under the REMIC
Provisions (and the Servicer shall assist the Trustee and the Trust
Administrator, to the extent reasonably requested by the Trustee or the Trust
Administrator to do specific actions in order to assist in the maintenance of
such status). Neither the Trustee nor the Trust Administrator shall take any
action, cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of any REMIC created
hereunder as a REMIC or (ii) result in the imposition of a tax upon the Trust
Fund (including but not limited to the tax on prohibited transactions as defined
in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
forth in Section 860G(d) of the Code) (either such event,
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an "Adverse REMIC Event") unless each of the Trustee and the Trust Administrator
has received an Opinion of Counsel, addressed to the Trustee and the Trust
Administrator (at the expense of the party seeking to take such action but in no
event at the expense of the Trustee or the Trust Administrator) to the effect
that the contemplated action will not, with respect to any REMIC created
hereunder, endanger such status or result in the imposition of such a tax, nor
shall the Servicer or the Master Servicer take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee and the Trust
Administrator has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action; provided that the Servicer or the Master Servicer may conclusively
rely on such Opinion of Counsel and shall incur no liability for its action or
failure to act in accordance with such Opinion of Counsel. In addition, prior to
taking any action with respect to any REMIC created hereunder or the respective
assets of each, or causing any REMIC created hereunder to take any action, which
is not contemplated under the terms of this Agreement, the Servicer and the
Master Servicer will consult with the Trust Administrator or its designee, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to any REMIC created hereunder, and neither the Servicer
nor the Master Servicer shall take any such action or cause any REMIC created
hereunder to take such action as to which the Trust Administrator has advised it
in writing that an Adverse REMIC Event could occur; provided that the Servicer
and the Master Servicer may conclusively rely on such writing and shall incur no
liability for its action or failure to act in accordance with such writing. The
Trust Administrator may consult with counsel to make such written advice, and
the cost of same shall be borne by the party seeking to take the action not
permitted by this Agreement, but in no event shall such cost be an expense of
the Trust Administrator. At all times as may be required by the Code, the Trust
Administrator will ensure that substantially all of the assets of each REMIC
created hereunder will consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of any such REMIC as defined in Section
860G(c) of the Code, on any contributions to any such REMIC after the Startup
Day pursuant to Section 860G(d) of the Code, or any other tax is imposed by the
Code or any applicable provisions of state or local tax laws, such tax shall be
charged (i) to the Trustee pursuant to Section 11.03 hereof, if such tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Article XI, (ii) to the Trust Administrator pursuant to Section 11.03
hereof, if such tax arises out of or results from a breach by the Trust
Administrator of any of its obligations under this Article XI, (iii) to the
Servicer pursuant to Section 11.03 hereof, if such tax arises out of or results
from a breach by the Servicer of any of its obligations under Article III or
this Article XI, or otherwise (iv) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) On or before April 15th of each calendar year (other than the calendar
year during which the Closing Date occurs), the Trust Administrator shall
deliver to the Servicer, the Depositor, the Trustee, each Rating Agency and the
Counterparty an Officer's Certificate from a Responsible Officer of the Trust
Administrator stating, without regard to any actions taken by any party other
than the Trust Administrator, the Trust Administrator's compliance with this
Article XI.
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(i) The Trust Administrator shall, for federal income tax purposes,
maintain books and records with respect to each REMIC created hereunder on both
a calendar year basis and an accrual basis.
(j) Following the Startup Day, neither the Trustee nor the Trust
Administrator shall accept any contributions of assets to any REMIC created
hereunder other than in connection with any Substitute Mortgage Loan delivered
in accordance with Section 2.03 unless the Trustee and the Trust Administrator
shall have received an Opinion of Counsel to the effect that the inclusion of
such assets in the Trust Fund will not cause the related REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding or subject
such REMIC to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
(k) Neither the Trustee, the Trust Administrator, the Master Servicer nor
the Servicer shall enter into any arrangement by which any REMIC created
hereunder will receive a fee or other compensation for services nor permit any
such REMIC to receive any income from assets other than "qualified mortgages" as
defined in Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
(l) The Trustee and the Trust Administrator shall treat the Net WAC Rate
Carryover Reserve Account as an outside reserve fund within the meaning of
Treasury Regulation 1.860G-2(h) that is owned by the Holders of the Class C
Certificates and that is not an asset of any REMIC. The Trustee and the Trust
Administrator shall treat the rights of the Holders of the Offered Certificates
and the Class M10 Certificates to receive payments from the Net WAC Rate
Carryover Reserve Account as rights in an interest rate cap contract written by
the Holder of the Class C Certificates in favor of the other Certificateholders.
Thus, each Certificate other than the Class R, Class C and Class P Certificates
shall be treated as representing ownership of not only REMIC II Regular
Interests, but also ownership of an interest in an interest rate cap contract.
For purposes of determining the issue price of the REMIC II Regular Interests,
the Trustee and the Trust Administrator shall assume that the interest rate cap
contract has a value of $10,000 and shall allocate such value proportionately to
each Class of Certificates entitled to receive Net WAC Rate Carryover Amounts
based on such Class's initial Certificate Balance.
(m) The Trust Administrator shall apply for an Employee Identification
Number from the IRS via a Form SS-4 or any other applicable method for all tax
entities and will also file a Form 8811.
Section 11.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer, the Master Servicer, the Trust
Administrator or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of the Trust Fund pursuant to Article IX of
this Agreement, (iv) a substitution pursuant to Article II of this Agreement or
(v) a purchase of Mortgage Loans pursuant to Article II or III of this
Agreement), nor acquire any assets for any REMIC created hereunder (other than
REO Property acquired in respect of a defaulted Mortgage Loan), nor sell or
dispose of any investments in the Collection Account or the Distribution Account
for gain, nor
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accept any contributions to any REMIC created hereunder after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Trustee and the Trust Administrator (at the expense of the party seeking to
cause such sale, disposition, substitution, acquisition or contribution but in
no event at the expense of the Trustee or the Trust Administrator) that such
sale, disposition, substitution, acquisition or contribution will not (a) affect
adversely the status of any of any REMIC Regular Interest created hereunder as a
REMIC or (b) cause any REMIC Regular Interest created hereunder to be subject to
a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.
Section 11.03. Indemnification.
(a) The Trustee agrees to indemnify, severally and not jointly, the Trust
Fund, the Depositor, the Trust Administrator, the Master Servicer and the
Servicer for any taxes and costs including, without limitation, any reasonable
attorneys fees imposed on or incurred by the Trust Fund, the Depositor, the
Trust Administrator, the Master Servicer or the Servicer, as a result of a
breach of its respective covenants set forth in this Article XI.
(b) The Servicer agrees to indemnify the Trust Fund, the Depositor, the
Master Servicer, the Trust Administrator and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer, the Trust
Administrator or the Trustee, as a result of a breach of the Servicer's
covenants set forth in Article III or this Article XI.
(c) The Trust Administrator agrees to indemnify, severally and not
jointly, the Trust Fund, the Depositor, the Trustee and the Servicer for any
taxes and costs including, without limitation, any reasonable attorneys' fees
imposed on or incurred by the Trust Fund, the Depositor, the Trustee or the
Servicer, as a result of a breach of its covenants set forth in this Article XI.
(d) The Master Servicer agrees to indemnify, severally and not jointly,
the Trust Fund, the Depositor, the Trustee, the Trust Administrator and the
Servicer for any taxes and costs including, without limitation, any reasonable
attorneys' fees imposed on or incurred by the Trust Fund, the Depositor, the
Trustee, the Trust Administrator or the Servicer, as a result of a breach of its
covenants set forth in this Article XI.
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IN WITNESS WHEREOF, the Depositor, the Trustee, the Master Servicer, the
Trust Administrator, the Servicer and the Originator have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
FREMONT MORTGAGE SECURITIES CORPORATION,
as Depositor
By: /s/ Xxxx Xxxxxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Vice President
XXXXX FARGO BANK, N.A.,
as Master Servicer and Trust Administrator
By: /s/ Xxx Xxxxx
----------------------------------------
Name: Xxx Xxxxx
Title: Vice President
HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Assistant Vice President
FREMONT INVESTMENT & LOAN,
as Servicer and Originator
By: /s/ Xxxx Xxxxxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Senior Vice President
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