EXECUTION COPY
SALE AND SERVICING AGREEMENT
Dated as of March 1, 2006
among
INDYMAC BANK, F.S.B.
(Seller and Servicer)
INDYMAC ABS, INC.
(Depositor)
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST, SERIES 2006-H1
(Trust)
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
(Indenture Trustee)
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions ............................................................................... 15
Section 1.02 Other Definitional Provisions ............................................................. 43
Section 1.03 Interest Calculations ..................................................................... 44
ARTICLE II.
CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans .......................................................... 44
Section 2.02 Acceptance by Indenture Trustee, Review of Documentation .................................. 50
Section 2.03 Representations and Warranties Regarding the Seller, the Depositor and the Servicer ....... 51
Section 2.04 Representations and Warranties of the Seller Regarding the Mortgage Loans ................. 54
Section 2.05 Substitution of Mortgage Loans ............................................................ 61
Section 2.06 Tax Treatment ............................................................................. 62
Section 2.07 [Reserved] ................................................................................ 63
Section 2.08 Representations, Warranties and Covenants of the Depositor ................................ 63
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Servicer .............................................................................. 64
Section 3.02 Collection of Certain Mortgage Loan Payments .............................................. 67
Section 3.03 Withdrawals from the Collection Account ................................................... 69
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses ............................. 70
Section 3.05 Maintenance of Mortgage Impairment Insurance Policy ....................................... 71
Section 3.06 Maintenance of Fidelity Bond and Errors and Omissions Insurance ........................... 71
Section 3.07 Management of and Realization upon Defaulted Mortgage Loans ............................... 72
Section 3.08 Indenture Trustee to Cooperate ............................................................ 73
Section 3.09 Servicing Compensation; Payment of Certain Expenses by Servicer ........................... 74
Section 3.10 Annual Statement as to Compliance ......................................................... 74
Section 3.11 Assessment of Compliance and Attestation Report ........................................... 75
Section 3.12 Access to Certain Documentation and Information Regarding the Mortgage Loans .............. 77
Section 3.13 Prepayment Charges ........................................................................ 77
Section 3.14 Commission Reporting ...................................................................... 78
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Section 3.15 Reports of Foreclosures and Abandonments of Mortgaged Properties, Returns Relating to
Mortgage Interest Received from Individuals and Returns Relating to Cancellation of
Indebtedness .............................................................................. 82
Section 3.16 Assumption Agreements ..................................................................... 82
Section 3.17 Payment of Taxes, Insurance and Other Charges ............................................. 83
Section 3.18 [Reserved] ................................................................................ 83
Section 3.19 Remittance Reports; Servicing Advances .................................................... 83
Section 3.20 [Reserved] ................................................................................ 83
Section 3.21 Allocation of Charge-Off Amounts .......................................................... 83
ARTICLE IV.
INSURER
Section 4.01 Claims upon the Policy .................................................................... 84
Section 4.02 Effect of Payments by the Insurer; Subrogation ............................................ 85
Section 4.03 Replacement Policy ........................................................................ 85
ARTICLE V.
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO CLASS A NOTEHOLDERS; RIGHTS OF CLASS A NOTEHOLDERS
Section 5.01 Distributions ............................................................................. 87
Section 5.02 Calculation of the Note Rate .............................................................. 89
Section 5.03 Servicing Certificate and Statement to Noteholders ....................................... 89
Section 5.04 Other Receipts ............................................................................ 96
Section 5.05 Payment Account ........................................................................... 96
Section 5.06 Reserve Account ........................................................................... 96
Section 5.07 The Certificate Account ................................................................... 97
Section 5.08 [Reserved] ................................................................................ 98
Section 5.09 Rapid Amortization Event .................................................................. 98
Section 5.10 Indenture Trustee Fees and Indemnification Expenses ....................................... 99
ARTICLE VI.
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor ................................... 100
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the Servicer
or the Depositor .......................................................................... 100
Section 6.03 Limitation on Liability of the Seller, the Depositor, the Servicer and Others ............. 100
Section 6.04 Servicer Not to Resign .................................................................... 101
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Section 6.05 Delegation of Duties ...................................................................... 101
Section 6.06 Indemnification of the Trust by the Servicer .............................................. 102
ARTICLE VII.
SERVICING TERMINATION
Section 7.01 Events of Servicing Termination ........................................................... 102
Section 7.02 Indenture Trustee to Act; Appointment of Successor ........................................ 105
Section 7.03 Waiver of Defaults ........................................................................ 106
Section 7.04 Notification to Noteholders ............................................................... 106
ARTICLE VIII.
TERMINATION
Section 8.01 Termination ............................................................................... 106
ARTICLE IX.
[RESERVED]
ARTICLE X.
THE INDENTURE TRUSTEE
Section 10.01 Indenture Trustee Not Liable for the Notes or Mortgage Loans............................... 109
Section 10.02 Indenture Trustee May Own Notes............................................................ 109
Section 10.03 Indenture Trustee's Fees and Expenses...................................................... 109
Section 10.04 Determination of LIBOR..................................................................... 110
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment ................................................................................. 110
Section 11.02 Recordation of Agreement .................................................................. 111
Section 11.03 Duration of Agreement ..................................................................... 112
Section 11.04 Governing Law ............................................................................. 112
Section 11.05 Notices ................................................................................... 112
Section 11.06 Severability of Provisions ................................................................ 112
Section 11.07 No Partnership ............................................................................ 112
Section 11.08 Counterparts .............................................................................. 113
Section 11.09 Successors and Assigns .................................................................... 113
Section 11.10 Headings .................................................................................. 113
Section 11.11 Reports to Rating Agencies ................................................................ 113
Section 11.12 Inconsistencies Among Transaction Documents ............................................... 113
Section 11.13 Rights of the Insurer to Exercise Rights of Class A Noteholders ........................... 113
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Section 11.14 Enforceability Rights of the Indenture Trustee ............................................ 114
Section 11.15 Matters Regarding the Trust ............................................................... 114
Section 11.16 Reports to Insurer ........................................................................ 114
Section 11.17 Matters Regarding the Indenture Trustee ................................................... 114
Section 11.18 Limitation of Owner Trustee Liability ..................................................... 114
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EXHIBITS
EXHIBIT A Mortgage Loan Schedule
EXHIBIT B List of Servicing Officers
EXHIBIT C Form of Annual Officer's Certificate
EXHIBIT D Form of Advance Notice
EXHIBIT E Form of Mortgage Note
EXHIBIT F Form of Mortgage
EXHIBIT G Specimen of the Policy
EXHIBIT H Form of Lost Certificate Affidavit
EXHIBIT I Form of Request for Release
EXHIBIT J Form of Initial Certification
EXHIBIT K Form of Final Certification
EXHIBIT L Form of Certification to be Provided by the Depositor with Form 10-K
EXHIBIT M Indenture Trustee's Officer's Certificate
EXHIBIT N Form of Withdrawal Certificate
EXHIBIT O Originators' Appraisal Matrix
EXHIBIT P Servicing Criteria
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This Sale and Servicing Agreement (the "Agreement") is entered into
effective as of March 1, 2006, among INDYMAC BANK, F.S.B., a federal savings
bank, as seller (in such capacity, the "Seller"), and as servicer (in such
capacity, the "Servicer"), INDYMAC ABS, INC., a Delaware corporation, as the
depositor (the "Depositor"), INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED
TRUST, SERIES 2006-H1, a Delaware statutory trust (the "Trust"), and DEUTSCHE
BANK NATIONAL TRUST COMPANY, a national banking association, as Indenture
Trustee on behalf of the Class A Noteholders (in such capacity, the "Indenture
Trustee").
PRELIMINARY STATEMENT
In consideration of the mutual agreements herein contained, the parties
hereto hereby agree as follows:
The following table sets forth the Class Designation, Note Rate, Original
Note Principal Amount and minimum denomination for the Notes of each Class
issued pursuant to the Indenture.
Class Original Note Minimum
Designation Note Rate Principal Amount Denominations
----------- --------- ---------------- -------------
Class A (1) $ 490,924,000 $ 25,000
Class M1 (2) $ 6,539,000 $ 100,000
Class M2 (3) $ 5,533,000 $ 100,000
----------
(1) The Note Rate with respect to any Payment Date (and the related Interest
Accrual Period) for the Class A Notes is the per annum rate equal to the
lesser of (i) LIBOR plus 0.17% and (ii) the Maximum Rate for such Payment
Date.
(2) The Note Rate with respect to any Payment Date (and the related Interest
Accrual Period) for the Class M1 Notes is the per annum rate equal to the
lesser of (i) LIBOR plus 3.00% and (ii) the Maximum Rate for such Payment
Date.
(3) The Note Rate with respect to any Payment Date (and the related Interest
Accrual Period) for the Class M2 Notes is the per annum rate equal to the
lesser of (i) LIBOR plus 3.00% and (ii) the Maximum Rate for such Payment
Date.
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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 meanings specified in this Article.
Accelerated Principal Payment: With respect to any Payment Date a payment
received as a payment of principal by the Noteholders, for the purpose of
increasing the related Overcollateralization Amount, and to be paid from the
Excess Cashflow, and equal to for any Payment Date the lesser of (x) the amount
of the Excess Cashflow and (y) the Overcollateralization Deficiency Amount.
Accepted Servicing Practices: The Servicer's normal servicing practices in
servicing and administering revolving home equity line of credit mortgage loans
for its own account, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account, mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
Accountant's Opinion: A written opinion of the Servicer's internal
accountants, delivered and acceptable to the Indenture Trustee.
Accrual Period: With respect to each Mortgage Loan and Due Date, the
period from and including the preceding Due Date to but not including such Due
Date.
Additional Balance: As to any Mortgage Loan and day, the aggregate amount
of all Draws conveyed to the Trust pursuant to Section 2.01(a).
Additional Balance Advance Amount: (A) As to any Payment Date during the
Managed Amortization Period, the excess, if any, for all prior Payment Dates of
(i) the aggregate principal amount of all Additional Balances created during the
Collection Period relating to each such Payment Date over (ii) Principal
Collections in respect of the Mortgage Loans relating to each such Payment Date
and (B) as to any Payment Date during the Rapid Amortization Period, the
aggregate principal of all Additional Balances created during the Collection
Period relating to each such Payment Date.
Administration Agreement: The Administration Agreement dated as of March
1, 2006 among the Issuer, the Administrator, the Owner Trustee and the
Depositor, as may be amended or supplemented from time to time.
Advance Notice: A notice to the Class L Certificateholder substantially in
the form of Exhibit D.
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Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Sale and Servicing Agreement and all amendments hereof and
supplements hereto.
Appraised Value: The appraised value of a Mortgaged Property based upon
the appraisal made by or for the originator, in compliance with the Servicer's
underwriting criteria (which criteria may permit an electronic appraisal or
other abbreviated appraisal process), in each case at the time of the
origination of the related Mortgage Loan or, if new appraisals are obtained, the
appraised value based upon the most recent appraisal.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to effect the sale of the Mortgage to the Indenture Trustee, on behalf
of the Trust, which assignment, notice of transfer or equivalent instrument may
be in the form of one or more blanket assignments covering the Mortgage Loans
secured by Mortgaged Properties located in the same jurisdiction.
Available Funds: With respect to any Payment Date, the amount then on
deposit in the Payment Account, after taking into account the deposits made
thereto pursuant to Section 3.02(c) of this Agreement, if any.
Book-Entry Note: Any Class A Note registered in the name of the Depository
or its nominee, ownership of a security entitlement with respect to which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking institutions in the States of New York or California or the
city in which the Corporate Trust Office or the office of the Insurer is located
are required or authorized by law to be closed.
Certificate Account: The account maintained by the Administrator pursuant
to Section 5.07
Certificate Principal Balance: The Class B Certificate Principal Balance,
the Class P Certificate Principal Balance, the Class L Certificate Principal
Balance or the Class R Certificate Principal Balance, as applicable.
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Certificate Register and Certificate Registrar: The register which
provides for the registration of the Certificates and the registration of
transfers of Certificates, which shall be maintained by the Indenture Trustee,
as Certificate Registrar.
Certificateholders: The holders of the Class B Certificates, the Class P
Certificates, the Class L Certificates or the Class R Certificates.
Certificates: The Class B Certificates, the Class P Certificates, Class L
Certificates and Class R Certificates.
Charge-Off Amount: With respect to any Charged-Off HELOC under clause (i)
of the definition thereof, the amount of the Principal Balance that has been
written down and with respect to any Charged-Off HELOC under clause (ii) of the
definition thereof, the entire Principal Balance of such Mortgage Loan minus the
Appraised Value of the related Mortgaged Property.
Charged-Off HELOC: Means (i) a Mortgage Loan with a Principal Balance that
has been written down on the related Servicer's servicing system in accordance
with its policies and procedures and (ii) any second lien Mortgage Loan that is
more than 180 days past due.
Class: All Notes and Certificates bearing the same class designation.
Class A Note: Any Note designated as a "Class A Asset-Backed Note" on the
face thereof, substantially in the form of Exhibit A-1 to the Indenture.
Class A Noteholder: The owner of the Class A Notes, as shown on the Note
Register.
Class A Principal Payment Amount: With respect to each Payment Date, (a)
prior to the Stepdown Date or if a Rapid Amortization Event has occurred, the
Principal Payment Amount and (b) on or after the Stepdown Date and if a Rapid
Amortization Event has not occurred, the lesser of (A) the excess of (i) the
Note Principal Amount of the Class A Notes immediately prior to the applicable
Payment Date over (ii) the Class A Target Amount and (B) the Principal Payment
Amount for such Payment Date.
Class A Target Amount: For each Payment Date, the lesser of (a) the
product of (i) approximately 94.20% and (ii) the Invested Amount at the end of
the related Collection Period and (b) the excess if any of (i) the Invested
Amount at the end of the related Collection Period over (ii) 0.50% of the
Cut-off Date Principal Balance.
Class B Certificate: A Certificate, substantially in the form of Exhibit
A-1 to the Trust Agreement.
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Class L Certificate: A Certificate, substantially in the form of Exhibit
A-2 to the Trust Agreement.
Class L Interest: The beneficial ownership interest in the assets of the
Trust not represented by the Class B Certificate, the Class P Certificate and
the Class R Certificate and is evidenced by the Class L Certificate.
Class L Interest Collections: With respect to any Payment Date and the
Class L Certificate, an amount equal to the Interest Collections allocable to
such Payment Date times the Class L Percentage.
Class L Percentage: For any Payment Date, 100% minus the Floating
Allocation Percentage for such Payment Date.
Class P Certificate: A Certificate, substantially in the form of Exhibit
A-3 to the Trust Agreement
Class R Certificate: A Residual Certificate, substantially in the form of
Exhibit A-4 to the Trust Agreement.
Class M1 Note: Any Note designated as a "Class M1 Asset-Backed Note" on
the face thereof, substantially in the form of Exhibit A-2 to the Indenture.
Class M1 Principal Payment Amount: With respect to any Payment Date, (a)
prior to the Stepdown Date or if a Rapid Amortization Event has occurred, (x) if
the Class A Notes are Outstanding, zero and (y) if the Class A Notes are no
longer Outstanding, the remaining Principal Payment Amount for such Payment Date
and (b) on or after the Stepdown Date and if a Rapid Amortization Event has not
occurred, the lesser of (i) the excess of (A) the aggregate of the Note
Principal Amount of the Class A Notes (after giving effect to payments of
principal on such Payment Date) and the Note Principal Amount of the Class M1
Notes immediately prior to such Payment Date over (B) the Class M1 Target Amount
and (ii) the Principal Payment Amount for such Payment Date after giving effect
to payments of principal to the Holders of the Class A Notes therefrom.
Class M1 Target Amount: With respect to each Payment Date, the lesser of
(a) the product of (i) approximately 96.80% and (ii) the Invested Amount at the
end of the related Collection Period and (b) the excess if any of (i) the
Invested Amount at the end of the related Collection Period over (ii) 0.50% of
the Cut-Off Date Pool Balance.
Class M2 Note: Any Note designated as a "Class M2 Asset-Backed Note" on
the face thereof, substantially in the form of Exhibit A-3 to the Indenture.
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Class M2 Principal Payment Amount: With respect to any Payment Date, (a)
prior to the Stepdown Date or if a Rapid Amortization Event has occurred, (x) if
any Class A Notes or Class M1 Notes are Outstanding, zero, and (y) if the Class
A Notes and the Class M1 Notes are no longer Outstanding, the remaining
Principal Payment Amount for such Payment Date and (b) on or after the Stepdown
Date and if a Rapid Amortization Event has not occurred, the lesser of (i)
excess of (A) the aggregate of the Note Principal Amount of the Class A Notes
(after giving effect to payments of principal on such Payment Date), the Note
Principal Amount of the Class M1 Notes (after giving effect to payments of
principal on such Payment Date) and the Note Principal Amount of the Class M2
Notes immediately prior to such Payment Date over (B) the Class M2 Target Amount
and (ii) the Principal Payment Amount for such Payment Date after giving effect
to payments of principal to the Holders of the Class A Notes and the Class M1
Notes therefrom.
Class M2 Target Amount: With respect to each Payment Date, the lesser of
(a) the product of (i) approximately 99.00% and (ii) the Invested Amount at the
end of the related Collection Period and (b) the excess if any of (i) the
Invested Amount at the end of the related Collection Period over (ii) 0.50% of
the Cut-Off Date Balance.
Class Principal Balance: With respect to the Class L Certificates and any
Payment Date during the Managed Amortization Period, the Additional Balance
Advance Amount for such Payment Date, less (x) the aggregate of all Charge-off
Amount for such Payment Date multiplied by the Class L Percentage. With respect
to the Class L Certificates and any Payment Date during the Rapid Amortization
Period, the sum of (a) the Additional Balance Advance Amount for the first
Payment Date in the Rapid Amortization Period and (b) the aggregate amount of
Draws conveyed to the Issuer during the Rapid Amortization Period, less (x) the
aggregate of all Charge-off Amounts for all Payment Dates from the first
Distribution Date in the Rapid Amortization Period to such Payment Date
multiplied by the Class L Percentage and (y) after the Notes are paid in full,
distributions to such Class pursuant to Section 3.11 of the Trust Agreement
representing principal payments on the Mortgage Loans.
With respect to the Class B Certificates and any Payment Date, an amount
equal to the excess of the Invested Amount on the last day of the related
Collection Period (after taking into account all Interest Collections and
Principal Collections for such Payment Date) over the sum of the aggregate Note
Principal Amount of the Notes immediately prior to such Payment Date.
With respect to the Class P Certificates and any Payment Date, the maximum
dollar amount of principal to which the Holder of the Class P Certificate is
then entitled, such amount being equal to the Class P Certificate's denomination
minus all distributions of principal previously made with respect thereto.
With respect to the Class R Certificates and any Payment Date, zero.
Close of Business: With respect to any Business Day, 5:00 p.m. (New York
time).
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Closing Date: March 31, 2006.
Code: The Internal Revenue Code of 1986, as amended from time to time, and
Treasury Regulations promulgated thereunder.
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Class A Noteholders, the Certificateholders
and the Insurer pursuant to Section 3.02(c).
Collection Period: With respect to any Payment Date and Mortgage Loan, the
calendar month immediately preceding such Payment Date.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan,
the sum of the Credit Limit of such Mortgage Loan at the time such Mortgage Loan
was originated or at the time such Mortgage Loan is modified pursuant to Section
3.01(h) and the outstanding principal balance of any Senior Liens as of the date
of origination of the Mortgage Loan, divided by the Appraised Value.
Commission: The Securities and Exchange Commission.
Controlling Class Notes: The Class A Notes, so long as any Class A Notes
are Outstanding, then the Class M1 Notes, so long as any Class M1 Notes are
Outstanding, then the Class M2 Notes.
Controlling Party: The Insurer, so long as the Class A Notes are
Outstanding or any Reimbursement Amounts remain due and owing to the Insurer and
no Insurer Default shall have occurred and be continuing, and the Majority
Securityholders, after the Class A Notes are no longer Outstanding and no
Reimbursement Amounts are due and owing to the Insurer or for so long as an
Insurer Default shall have occurred and is continuing.
Conveyed Assets: As defined in Section 2.01(a).
Corporate Trust Office: The principal office of the Indenture Trustee at
which at any particular time its corporate business shall be administered, which
office on the Closing Date is located at 0000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx
Xxx, Xxxxxxxxxx 00000-0000, Attention: IN06HI.
Credit Enhancement Percentage: With respect to the Class A Notes, a
percentage equal to (x) the sum of (i) the Note Principal Amount of the Class
M-1 Notes and the Class M-2 Notes and (ii) the Overcollateralization Amount,
divided by (y) the Invested Amount.
Credit Limit: As to any Mortgage Loan, the maximum principal balance
permitted under the terms of the related Mortgage Note.
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Credit Line Agreement: the Mortgage Note.
Cut-Off Date: As to any Mortgage Loan, the close of business on March 1,
2006.
Cut-Off Date Pool Balance: $502,306,681.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan
pursuant to Section 2.02 or 2.05).
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution by the Seller pursuant to Section 2.02 or 2.05.
Deferred Interest: With respect to the Notes of each Class and any Payment
Date, the excess, if any, of interest due at the applicable Formula Note Rate
over interest due at the applicable Note Rate.
Deficiency Amount: With respect to any Payment Date and the Class A Notes,
an amount, if any, equal to the sum of:
(a) the amount by which the aggregate amount of accrued interest on the
Class A Notes (excluding any Relief Act Shortfalls and prepayment interest
shortfalls on the mortgage loans during the related Collection Period) for
that Payment Date, at the Note Rate for that Payment Date exceeds the
amount on deposit in the Payment Account available for interest
distributions on that Payment Date; and
(b)(i) with respect to any Payment Date that is not the Final Scheduled
Payment Date, the amount by which the Note Principal Amount of the Class A
Notes exceeds the Invested Amount; or
(ii) on the Final Scheduled Payment Date, the aggregate outstanding
principal balance of the Class A Nnotes to the extent otherwise not paid
on that date.
Definitive Notes: As defined in the Indenture.
Delinquent Mortgage Loan and Delinquent: A Mortgage Loan is a Delinquent
Mortgage Loan if the Monthly Payment due thereon is not received by the close of
business on the Due Date in accordance with the related Mortgage Note and until
such delinquency is subsequently cured.
Deposit Date: With respect to each Payment Date, three Business Days
immediately preceding such Payment Date.
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Deposit Event: Either (i) the short-term debt obligations of the Servicer
not being rated at least "A-1" by Standard & Poor's and "P-1" by Moody's or (ii)
the occurrence of an Event of Servicing Termination.
Depositor: IndyMac ABS Inc., a Delaware corporation.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(a)(5) of the UCC of the State
of New York.
Depository Agreement: The agreement dated as of March 31, 2006, among the
Indenture Trustee, acting on behalf of the Trust, and The Depository Trust
Company, as the initial Depository, relating to the Book-Entry Notes.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Maturity: With respect to any LIBOR Determination Date, one
month; provided, that LIBOR for the Interest Period with respect to the first
Payment Date will be determined by straight-line interpolation, based on the
actual number of days in such Interest Period, between two rates determined in
accordance with the definition of LIBOR, one of which will be determined for a
Designated Maturity of one month and the other of which will be determined for a
Designated Maturity of two months.
Determination Date: With respect to any Payment Date, the 10th day of the
calendar month in which such Payment Date occurs or, if such 10th day is not a
Business Day, the Business Day immediately preceding such 10th day.
Draw: With respect to any Mortgage Loan, an additional borrowing by the
related Mortgagor subsequent to the Cut-Off Date in accordance with the related
Mortgage Note.
Draw Period: With respect to any Mortgage Loan, the period during which
the related Mortgagor is permitted to make Draws.
Due Date: With respect to any Mortgage Loan and any Monthly Payment, the
date on which such Monthly Payment is due from the related Mortgagor.
Eligible Account: An account maintained at an Eligible Institution.
Eligible Institution: Shall mean (1) any depository institution (which may
be the Indenture Trustee) organized under the laws of the United States or any
one of the States thereof, including the District of Columbia (or any domestic
branch of a foreign bank) which at all times
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(a) has a short-term unsecured debt rating of "P-1" by Moody's, (b) has a
short-term unsecured debt rating of "A-1" by Standard & Poor's and (c) has its
accounts fully insured by the FDIC or maintains trust accounts in a fiduciary
capacity, or (2) any other institution that is acceptable to each Rating Agency;
provided, however, that if such other institution does not satisfy the rating
criteria set forth in clause (1), such other institution shall also be
acceptable to the Insurer. If so qualified, the Indenture Trustee or the
Servicer may be considered an Eligible Institution for the purposes of this
definition.
Eligible Investments: Investments which meet the criteria of the rating
agencies from time to time as being consistent with their then current ratings
of the securities.
Eligible Substitute Mortgage Loan: With respect to Mortgage Loans, a
Mortgage Loan substituted by the Seller for a Mortgage Loan that constitutes a
Defective Mortgage Loan which must, on the date of such substitution, (i) have
an outstanding Principal Balance (or in the case of a substitution of more than
one Mortgage Loan for a Defective Mortgage Loan, an aggregate Principal
Balance), that is approximately equal to the Principal Balance of such Defective
Mortgage Loan; (ii) have a Loan Rate not less than the Loan Rate of the
Defective Mortgage Loan and not more than 1% in excess of the Loan Rate of such
Defective Mortgage Loan; (iii) have a Loan Rate Cap based on the Index,
determined in accordance with then current underwriting standards; (iv) have a
Margin that is not less than the Margin of the Defective Mortgage Loan and not
more than 1% higher than the Margin for the Defective Mortgage Loan; (v) have a
Mortgage of the same or higher level of priority as the Mortgage relating to the
Defective Mortgage Loan at the time such Mortgage was transferred to the Trust;
(vi) have a maturity not later than the Final Scheduled Payment Date; (vii)
comply with each representation and warranty set forth in Section 2.04 (deemed
to be made as of the date of substitution); and (viii) have an original Combined
Loan-to-Value Ratio not greater than that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if such Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
ERISA-Restricted Certificate: Any Class B Certificate, Class L
Certificate, Class P Certificate or the Class R Certificate.
Errors and Omissions Insurance Policy: As defined in Section 3.06.
Event of Servicing Termination: As defined in Section 7.01.
Excess Cashflow: With respect to any Payment Date, the Floating Allocation
Percentage of the Available Funds for such Payment Date which remain on deposit
in the Payment Account after taking into account the payments on such Payment
Date listed in (x) in the case of the Class
10
A Notes, clauses (A) through (G) of Section 5.01(a), (y) in the case of the
Class M1 Notes, clauses (A) through (H) of Section 5.01(a) and the Class M1
Principal Payment Amount paid to the Holders of the Class M1 Notes pursuant to
clause (I) of Section 5.01(a) and (z) in the case of the Class M2 Notes, clauses
(A) through (I) of Section 5.01(a) and the Class M2 Principal Payment Amount
paid to the Holders of the Class M2 Notes pursuant to clause (J) of Section
5.01(a).
Expense Fee Rate: Is an amount equal to the sum of (i) the Servicing Fee
Rate, (ii) the Owner Trustee Fee Rate, (iii) a per annum rate equal to a
fraction, the numerator of which is the product of (a) 12 and the sum of (b)(1)
current interest shortfalls resulting from the application of the Servicemembers
Civil Relief Act, or any similar state law, (2) any interest shortfalls
resulting from prepayments of the Mortgage Loans and (3) payments to the
Indenture Trustee in respect of the Indenture Trustee Expense Amount and the
denominator of which is the Pool Balance at the beginning of the related
Collection Period and (iv) the product of (a) the rate at which the Insurer
Premium is calculated and (b) a fraction, the numerator of which is the
principal balance of the Class A Notes immediately before the Payment Date and
the denominator of which is the Pool Balance at the beginning of the related
Collection Period.
Xxxxxx Xxx: Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
Fidelity Bond: As defined in Section 3.06.
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
Seller or the Servicer pursuant to or as contemplated by Sections 2.02, 2.04,
2.05, 3.07 or 8.01), a determination made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
Final Scheduled Payment Date: The Payment Date in April 25, 2036, whereby
the Holders of each Class of Notes shall be entitled to receive a payment of
principal in an amount equal to the Note Principal Amount of such Class of Notes
and any accrued and unpaid interest thereon.
Floating Allocation Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction the numerator of which is the Invested
Amount at the end of the previous Collection Period and the denominator of which
is the outstanding pool balance at the end of the previous Collection Period (in
the case of the first Payment Date, the outstanding pool balance as of the
Cut-Off Date), provided such percentage shall not be greater than 100%.
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Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the related aggregate Net Recoveries exceed (ii)
the related Principal Balance (without giving effect to any reduction thereto in
respect of any prior Charge-Off Amounts) immediately prior to receipt of the
final Recoveries plus accrued and unpaid interest thereon at the applicable Loan
Rate from the date interest was last paid through the date of receipt of the
final Recoveries.
Formula Note Rate: (i) with respect to the Class A Notes and any Interest
Accrual Period, the per annum rate equal to LIBOR plus 0.17%; (ii) with respect
to the Class M1 Notes and any Interest Accrual Period, the per annum rate equal
to LIBOR plus 3.00%; and (iii) with respect to the Class M2 Notes and any
Interest Accrual Period, the per annum rate equal to LIBOR plus 3.00%.
HELOC: Each of the home equity line of credit mortgage loans that is
transferred and assigned to the Trust pursuant to Sections 2.01, 2.05 and 2.09,
together with the Related Documents, exclusive of (i) home equity line of credit
mortgage loans that are transferred to the Seller, from time to time pursuant to
Sections 2.02 and 2.05 and (ii) home equity line of credit mortgage loans that
constitute Charged-Off HELOCs with respect to which the Charged-Off Amount is
equal to the Principal Balance of such Charged-Off HELOC immediately prior to
such charge-off, as from time to time are held as a part of the Trust, such home
equity line of credit mortgage loans originally so held being identified in the
Mortgage Loan Schedule delivered on the Closing Date and thereafter on the
Mortgage Loan Schedule as amended or supplemented pursuant to the terms hereof.
Holders: The holders of the Class A Notes, the Class M Notes, the Class B
Certificates, The Class P Certificates, the Class L Certificates or the Class R
Certificates.
Indenture: The Indenture dated as of March 1, 2006, between the Issuer and
the Indenture Trustee, as such may be amended or supplemented from time to time.
Indenture Trustee: Deutsche Bank National Trust Company, a national
banking association, as Indenture Trustee under this Agreement, or any successor
Indenture Trustee appointed in accordance with this agreement.
Indenture Trustee Fee: An amount as agreed upon between the Indenture
Trustee and the Seller and Servicer, pursuant to a side letter dated as of March
31, 2006.
Index: Means the Prime Rate.
IndyMac Affiliated Group: The affiliated group (as defined in Section 1504
of the Code) of corporations, the common parent of which is IndyMac Bancorp,
Inc., that files a consolidated federal income tax return.
Initial LIBOR Rate: 4.9925%.
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Insurance and Indemnity Agreement: The Insurance and Indemnity Agreement
dated as of March 31, 2006 among the Indenture Trustee, the Insurer and the
other parties thereto, including any amendments and supplements thereto in
accordance with the terms thereof.
Insurance Proceeds: Proceeds of any title policy or other insurance policy
covering a Mortgage Loan, to the extent such proceeds are not to be applied to
the restoration of the related Mortgaged Property or released to the Mortgagor
in accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, subject to the terms and conditions of
the related Mortgage Note and Mortgage.
Insured Amount: As defined in the Policy with respect to the Class A Notes
and each Payment Date.
Insurer: Financial Guaranty Insurance Company, a New York stock insurance
company, or any successor thereto.
Insurer Default: The failure by the Insurer to make a payment required
under the Policy in accordance with the terms thereof.
Interest Accrual Period: with respect to each Payment Date will be the
period from and including the preceding Payment Date (or, in the case of the
first Payment Date, from the Closing Date) to, but excluding the current Payment
Date.
Interest Collections: with respect to any Payment Date, is equal to the
sum of (a) all payments by or on behalf of mortgagors and any other amounts
constituting interest, including the portion of net liquidation proceeds and
insurance proceeds allocated to interest pursuant to the terms of the related
Mortgage Note (excluding the fees or late charges or similar administrative fees
paid by mortgagors) collected during the related Collection Period and all
Recoveries, less the Servicing Fee for the related Collection Period and (b) the
interest portion of (i) the purchase price paid for a HELOC repurchased by the
seller or the originator during the related Collection Period, (ii) any
Substitution Amounts in respect of a qualifying substitute mortgage loan which
is substituted by the seller or the originator during the related Collection
Period for a removed HELOC, and (iii) the interest portion of the Optional
Redemption Price in connection with any Optional Redemption of the Notes during
the related Collection Period. The terms of the related Mortgage Note shall
determine the portion of each payment in respect of such HELOC that constitutes
principal or interest.
Interest Payment Amount: With respect to the Notes of each Class and any
Payment Date, (x) the Note Rate applicable to such Class and Payment Date
multiplied by (y) the Outstanding Amount of such Class immediately prior to such
Payment Date multiplied by (z) a fraction, the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 360.
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Interest Rate Adjustment Date: With respect to each Mortgage Loan, the
date on which the related Loan Rate is adjusted in accordance with the terms of
the related Mortgage Note.
Invested Amount: on any Payment Date, is the Original Invested Amount
reduced by (i) the aggregate amount of principal collected on the HELOCs and
allocable to the Class A Notes, Class M1 Notes and Class M2 Notes as of the end
of the previous Collection Period and on the related Payment Date and (ii) the
aggregate of Investor Charge-Off Amounts since the Cut-Off Date, including the
Investor Charge-Off Amount for such Payment Date.
Investor Charge-Off Amount: For any Payment Date, the Charge-Off Amounts
incurred during the related Collection Period multiplied by the Floating
Allocation Percentage.
Investor Interest Amounts: For any Payment Date, the Floating Allocation
Percentage of Interest Collections for the related Collection Period.
Late Payment Rate: For any Payment Date, the lesser of (a) the greater of
(i) the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York, as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.), plus 2% per annum and (ii) the then applicable highest rate of
interest on the Notes and (b) the maximum rate permissible under applicable
usury or similar laws limiting interest rates. The Late Payment Rate shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
LIBOR: With respect to the first Interest Accrual Period, the Initial
LIBOR Rate. With respect to each subsequent Interest Accrual Period, a per annum
rate determined on the LIBOR Determination Date in the following manner by the
Indenture Trustee on the basis of the "Interest Settlement Rate" set by the
British Bankers' Association (the "BBA") for one-month United States dollar
deposits, as such rates appear on the Telerate Page 3750, as of 11:00 a.m.
(London time) on such LIBOR Determination Date.
(a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Indenture
Trustee will obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's page
"BBAM". If such rate is not published for such LIBOR Determination Date, LIBOR
for such date will be the most recently published Interest Settlement Rate. In
the event that the BBA no longer sets an Interest Settlement Rate, the Indenture
Trustee will designate an alternative index (which, so long as the Class A Notes
are Outstanding, is acceptable to the Insurer) that has performed, or that the
Indenture Trustee expects to perform, in a manner substantially similar to the
BBA's Interest Settlement Rate.
(b) The establishment of LIBOR by the Indenture Trustee and the
Indenture Trustee's subsequent calculation of the Note Rate for the relevant
Interest Accrual Period, in the absence of manifest error, will be final and
binding.
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LIBOR Business Day: Any day other than (i) a Saturday or a Sunday and (ii)
a day on which banking institutions in the State of New York or in the city of
London, England are required or authorized by law to be closed.
LIBOR Determination Date: With respect to any Interest Period, the second
LIBOR Business Day preceding the first day of such Interest Period.
Lien: Any lien, charge, mortgage, claim, participation interest, equity,
pledge or security interest of any nature, encumbrances or right of others.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan and are not
recoverable under the applicable primary mortgage insurance policy, if any,
including, without limitation, foreclosure and rehabilitation expenses, legal
expenses and unreimbursed amounts, if any, expended pursuant to Sections 3.07 or
3.08.
Liquidation Loss Amounts: With respect to any Payment Date and Mortgage
Loan that became a Liquidated Mortgage Loan during the related Collection
Period, the unrecovered portion of the related Principal Balance thereof at the
end of such Collection Period, after giving effect to the Net Liquidation
Proceeds applied in reduction of such Principal Balance.
Liquidated Mortgage Loan: Any Mortgage Loan as to which the Servicer has
determined that all Recoveries which it expects to recover in connection with
the disposition of such Mortgage Loan or related REO Property have been
recovered.
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 the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Sections 2.02, 2.04, 2.05 3.07 or 8.01. 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 the Trust Fund by reason of its being sold or purchased pursuant
to Sections 3.07(a) or 8.01.
Liquidation Proceeds: The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation, (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's foreclosure
sale or otherwise or (iii) the repurchase, substitution or sale of a Mortgage
Loan or an REO Property pursuant to or as contemplated by Sections 2.02, 2.04,
2.05, 3.07 or 8.01.
Loan Rate: With respect to any Mortgage Loan as of any day, the variable
interest rate applicable under the related Mortgage Note.
15
Loan Rate Cap: With respect to any Mortgage Loan, the lesser of (i) the
maximum Loan Rate permitted by the related Mortgage Note over the life of the
Mortgage Loan, and (ii) the applicable state usury ceiling.
Lost Certificate Affidavit: An affidavit in the form of Exhibit H.
Majority Securityholders: During the period that any Notes are
outstanding, the holder or holders of in excess of 50% of the Note Principal
Amount of the Controlling Class Notes; and thereafter, the holders of the
Certificates (voting collectively as a single class).
Managed Amortization Period: With respect to the Notes, the period
commencing on the first Payment Date and ending on the earlier to occur of (x)
the 120th Payment Date and (y) the Payment Date which immediately follows a
Rapid Amortization Event.
Margin: With respect to each Mortgage Loan, the fixed percentage amount
set forth in the related Credit Line Agreement which amount is added to the
Prime Rate in accordance with the terms of such Credit Line Agreement to
determine the Loan Rate for such Mortgage Loan, subject to any maximum rate of
interest.
Material Adverse Change: As defined in the Insurance and Indemnity
Agreement.
Maximum Principal Payment: With respect the Notes, (i) during the Managed
Amortization Period, the Net Principal Collections with respect to such Payment
Date, and (ii) during the Rapid Amortization Period, the Principal Collections
for such Payment Date.
Maximum Rate: With respect to the Notes on any Payment Date, the product
of (x) weighted average of the Loan Rates of the HELOCs as of the beginning of
the Collection Period, net of (i) the Servicing Fee Rate, (ii) the Owner Trustee
Fee Rate (expressed as a per annum rate), (iii) the Indenture Trustee Fee
(expressed as a per annum rate) (iv) a per annum rate equal to a fraction, the
numerator of which is the product of (a) 12 and (b) the sum of (1) any interest
shortfalls resulting from application of the Relief Act (2) any interest
shortfalls resulting from prepayments on the HELOCs and (3) any payments to the
Indenture Trustee for reimbursed expenses and the denominator of which is the
Pool Balance at the beginning of the related Collection Period, and (v) the
product of (1) the premiums payable to the Insurer (expressed as a per annum
rate) and (2) a fraction, the numerator of which is the principal balance of the
Class A Notes immediately before the Payment Date and the denominator of which
is the principal balance of the HELOCs at the beginning of the related
Collection Period, and (y) a fraction, the numerator of which is 30 and the
denominator of which is the number of days in the related Accrual Period.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
16
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage, or
an Assignment of Mortgage, has been or will be recorded in the name of MERS, as
nominee for the holder from time to time of the Credit Line Agreement.
Monthly Payment: With respect to a Mortgage Loan, the scheduled monthly
payment of principal and/or interest required to be made by a Mortgagor on such
Mortgage Loan.
Monthly Statement: The statement prepared by the Indenture Trustee
pursuant to Section 3.14
Moody's: Xxxxx'x Investors Service, Inc., or any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01(c)(i) and
(ii), pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan: A HELOC and the related Credit Line Agreement or other
evidences of indebtedness secured by each such Mortgage conveyed, transferred,
sold, assigned to or deposited with the Indenture Trustee for the benefit of the
Noteholders, including each Mortgage Loan listed on the Mortgage Loan Schedule.
Mortgage Loan Purchase Agreement: The mortgage loan purchase agreement,
dated as of March 1, 2006, between the Seller and the Depositor, relating to the
sale of the Mortgage Loans from the Seller to the Depositor.
Mortgage Loan Schedule: With respect to the Cut-Off Date, the schedule of
Mortgage Loans constituting assets of the Trust and thereafter as amended or
supplemented pursuant to the terms hereof. The Mortgage Loan Schedule is the
schedule set forth herein as Exhibit A, which schedule sets forth as to each
Mortgage Loan: (i) the Cut-Off Date Principal Balance, (ii) the loan number,
(iii) the Credit Limit, (iv) the CLTV as of the date of the origination of the
related Mortgage Loan, (v) occupancy and loan purpose, (vi) the Loan Rate as of
the Cut-Off Date, (vii) the Margin, (viii) the type of property, (ix) the
debt-to-income ratio, (x) the credit score, (xi) the Originator, (xii) the Loan
Rate Cap, (xiii) documentation type, (xiv) zip code, (xv) term of the draw
period, (xvi) lien position, (xvii) maximum rate, (xviii) original term and
(xix) remaining term.
Mortgage Note: With respect to a Mortgage Loan, the related credit line
account agreement executed by the related Mortgager and any amendment or
modification thereof.
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Mortgaged Property: With respect to each Mortgage Loan, the underlying
real property, including improvements thereon.
Mortgagee: With respect to any Mortgage Loan as of any date of
determination, the holder of the related Mortgage Note and any related Mortgage
as of such date.
Mortgagor: With respect to any Mortgage Loan, the obligor or obligors
under the related Mortgage Note.
Net Charge-Off Amount: With respect to any Mortgage Loan, the Charge-Off
Amount, less any Net Recoveries with respect to such Mortgage Loan.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property (including REO Property),
the related Liquidation Proceeds net of Servicing Advances, Servicing Fees and
any other accrued and unpaid servicing fees received and retained in connection
with the liquidation of such Mortgage Loan or Mortgaged Property.
Net Loan Rate: With respect to any Mortgage Loan on any day, the Loan Rate
less the Expense Fee Rate.
Net Mortgage Rate: With respect to any Mortgage Loan (or the related REO
Property), as of any date of determination, the Loan Rate minus the Servicing
Fee Rate.
Net Principal Collections: With respect to the Mortgage Loans and the
Collection Period, an amount equal the positive difference between (x) the
Floating Allocation Percentage of Principal Collections with respect to such
Payment Date minus (y) the aggregate principal amount of all Additional Balances
arising during the related Collection Period.; provided, however, that in no
event will Net Principal Collections be less than zero with respect to any
Payment Date.
Net Recoveries: With respect to any Charged-Off HELOC, Recoveries net of
unreimbursed Servicing Fees with respect thereto.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage Loan.
Nonrecoverable Advance: With respect to any Mortgage Loan, any portion of
a Servicing Advance previously made or proposed to be made by the Servicer.
Note Principal Amount: With respect to any Class of Notes and any date,
the Original Note Principal Amount, less the amount of all principal
distributions previously distributed with respect to such Note.
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Note Rate: With respect to each Class of Notes, the lesser of the
applicable Formula Note Rate and the Maximum Rate.
Note Register and Note Registrar: The register which provides for the
registration of the Class A Notes and the registration of transfers of the Class
A Notes, which shall be maintained by the Indenture Trustee, as Note Registrar.
Noteholder: Any owner of the Notes, as shown on the Note Register.
Notes: The Class A Notes, the Class M1 Notes and the Class M2 Notes,
collectively.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a Vice President, an Assistant Vice
President, the Treasurer, Assistant Treasurer, Cashier, Assistant Cashier,
Controller or Assistant Controller of the Servicer, Seller or the Depositor, as
the case may be, and delivered to the Indenture Trustee and the Insurer.
Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer (or its affiliate), the Depositor (or its affiliate),
the Seller (or its affiliate) or the Depositor (or its affiliate) (except that
any opinion pursuant to Section 2.01 or 6.04 or relating to taxation or
otherwise as required by the Insurer must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the Insurer, the
Indenture Trustee and the Rating Agency, is reasonably acceptable to each of
them.
Optional Redemption Date: As defined in Section 8.01(b) of this Agreement.
Optional Redemption Holder: The Servicer.
Optional Redemption Price: An amount equal to the greater of: (a) the sum
of (i) the aggregate outstanding Principal Balance of each Mortgage Loan, plus
accrued interest at the applicable Loan Rate, (ii) any costs and damages
incurred by the Trust in connection with a violation of any federal, state or
local predatory or abusive lending law, (iii) the fair market value of all other
property being purchased and (iv) any unreimbursed Servicing Advances,
unreimbursed expenses and any unpaid fees due to the Servicer, the Insurer, the
Indenture Trustee and the Owner Trustee, and (v) any Reimbursement Amounts and
(b) the sum of (i) the Note Principal Amount of the Class A Notes, the Class M1
Notes and the Class M2 Notes with interest due thereon (including Deferred
Interest), (ii) any costs and damages incurred by the Trust in connection with a
violation of any federal, state or local predatory or abusive lending laws,
(iii) any unreimbursed Servicing Advances, unreimbursed expenses and any unpaid
fees due to the Servicers, the Insurer, the Indenture Trustee, and the Owner
Trustee and (iv) any Reimbursement Amounts.
Original Class A Note Principal Balance: $490,253,000.
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Original Invested Amount: $502,306,681.
Original Note Principal Amount: (i) with respect to the Class A Notes,
$490,253,000, (ii) with respect to the Class M1 Notes, $6,530,000, and (iii)
with respect to the Class M2 Notes, $5,523,000.
Originator: With respect to each Mortgage Loan sold by the Seller, the
originator of such Mortgage Loan as specified in the Mortgage Loan Schedule.
Outstanding: The meaning specified in the Indenture.
Overcollateralization Amount: With respect to the Notes and any Payment
Date, the excess, if any, of (x) the Invested Amount as of the end of the
related Collection Period over (y) the sum of the Note Principal Amount of the
Notes as of such Payment Date (after taking into account any reductions to such
Note Principal Amount resulting from payments made pursuant to clauses (C), (D),
(H), (I) and (J) of Section 5.01(a) of this Agreement on such Payment Date).
Overcollateralization Deficiency Amount: With respect to the Notes and any
Payment Date, the excess, if any, of (i) the Specified Overcollateralization
Amount for such Payment Date over (ii) the Overcollateralization Amount for such
Payment Date.
Overcollateralization Deficit: With respect to the Class A Notes and any
Payment Date, the amount, if any, by which (a) the Note Principal Amount of the
Class A Notes, after taking into account the payment to the Holders of the Class
A Notes of all principal from all sources other than the Policy on such Payment
Date, exceeds (b) the Invested Amount as of as of the end of the related
Collection Period plus any Principal Collections due in the immediately
preceding Collection Period but received in the subsequent Collection Period
before the related Servicer Remittance Date.
Overcollateralization Reduction Amount: With respect to the Notes and any
Payment Date, the excess, if any, of (x) the Overcollateralization Amount over
(y) the Specified Overcollateralization Amount assuming that the Maximum
Principal Payment had been distributed to the Noteholders on such Payment Date.
Owner Trustee: Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as owner trustee under the Trust
Agreement, and any successor owner trustee under the Trust Agreement appointed
in accordance with the terms thereof.
Par Price: The price equal to 100% of the outstanding Class A Note
Principal Balance.
Payment Account: The segregated non-interest bearing trust account
established by the Indenture Trustee pursuant to Section 5.05.
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Payment Date: The 25th day of each month or, if such day is not a Business
Day, then the next Business Day, beginning in April 2006.
Permitted Activities: The activities allowed under Paragraph 35 of SFAS
140.
Percentage Interest: With respect to the Notes of any Class, the
percentage obtained by dividing the principal denomination of such Note by the
aggregate of the principal denominations of all Notes of such Class. With
respect to a Residual Certificate, the percentage set forth on the face of such
Residual Certificate.
Person: Any individual, corporation, partnership, joint venture, limited
partnership, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: An employee benefit plan or other retirement arrangement which is
subject to Section 406 of ERISA and/or Section 4975 of the Code or any entity
whose underlying assets include such plan's or arrangement's assets by reason of
their investment in the entity.
Policy: The financial guaranty insurance policy (No.06030041) with respect
to the Class A Notes and all endorsements thereto, if any, dated the Closing
Date, issued by the Insurer for the benefit of the Holders of the Class A Notes,
a copy of which is attached hereto as Exhibit G.
Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all of the Mortgage Loans as of such date.
Preference Event: As defined in Section 4.01(c).
Premium Amount: The premium payable to the Insurer for the Policy pursuant
to the Insurance and Indemnity Agreement.
Prepayment Charge: As to a Mortgage Loan, any charge paid by a Mortgagor
in connection with certain partial prepayments and all prepayments in full made
within the related Collection Period.
Prime Rate: As of any date, the prime rate of the United States money
center commercial banks as published in the latest edition of The Wall Street
Journal, Northeast Edition.
Principal Balance: As of any date of determination, an amount equal to the
Cut-off Date principal balance of the HELOC, plus (i) any Additional Balances
transferred to the trust in respect of the HELOC, minus (ii) all collections
credited against the principal balance of the HELOC in accordance with the
related Credit Line Agreement prior to that day, and minus (iii) all prior
related Charge-Off Amounts. For purposes of this definition, a Liquidated
Mortgage
21
Loan will have a Principal Balance equal to the Principal Balance of that HELOC
prior to the final recovery of liquidation proceeds and a Principal Balance of
zero thereafter.
Principal Collections: with respect to any Payment Date, is equal to the
sum of amounts allocated to principal collected during the related Collection
Period, the portion of net liquidation proceeds and insurance proceeds allocated
to principal pursuant to the terms of the Credit Line Agreements, any amounts
allocable to principal with respect to any HELOCs that are repurchased out of
the trust, the principal portion of any substitution amount and the principal
portion of any Option Redemption Price.
Principal Payment Amount: With respect to the Notes on any Payment Date,
the excess, if any, of (x) the Maximum Principal Payment over (y) the
Overcollateralization Reduction Amount.
Principal Prepayment: Any payment of principal made by the Mortgagor on a
HELOC which is received in advance of its scheduled Due Date and which is not
accompanied by an amount of interest representing the full amount of scheduled
interest due on any Due Date in any month or months subsequent to the month of
prepayment.
Purchase Price: An amount equal to the principal balance of the HELOC at
the time of any transfer Pursuant to Sections 2.03 or 2.04 plus (a) the greater
of (i) accrued and unpaid interest at the applicable mortgage loan rate net of
the servicing fee to the date of repurchase and (ii) 30 days' interest, computed
at the applicable mortgage loan rate and (b) any expenses incurred by the trust
as a result of the defect, including any costs and damages actually incurred and
paid by or on behalf of the trust in connection with any violation of such
mortgage loan of any predatory or abusive lending laws..
Purchaser: The Depositor, as purchasers of the Mortgage Loans under the
Mortgage Loan Purchase Agreement.
Qualifying SPE: As set forth in SFAS 140.
Rapid Amortization Event: As defined in Section 5.09.
Rapid Amortization Period: The period commencing on the day immediately
following the end of the Managed Amortization Period and continuing until the
termination of the Trust pursuant to Section 8.01.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Class A Notes at the request of the Depositor at the time of the
initial issuance of the Class A Notes. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Servicer and the Insurer,
notice of which designation shall be given to the Indenture Trustee. References
herein to the
22
highest short term unsecured rating category of a Rating Agency shall mean
"A-1+" or better in the case of Standard & Poor's and "P-1" or better in the
case of Moody's and in the case of any other Rating Agency shall mean the
ratings such other Rating Agency deems equivalent to the foregoing ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "AAA" in the case of Standard & Poor's and "Aaa" in the case of
Moody's and in the case of any other Rating Agency, the rating such other Rating
Agency deems equivalent to the foregoing ratings.
Ratings: The ratings initially assigned to the Notes and the Certificates
by the Rating Agencies, as evidenced by letters from the Rating Agencies.
Record Date: The Business Day immediately preceding the related Payment
Date; provided, however, that following the date on which Definitive Notes are
issued, the Record Date for such Definitive Notes shall be the last Business Day
of the calendar month preceding the month in which the related Payment Date
occurs
Recordation Event: Any of (i) the long-term senior unsecured debt rating
of the Seller (or any successor in interest thereto) is no longer being rated at
least "BBB-" by Standard & Poor's, (ii) the occurrence of an Event of Servicer
Termination, or (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Servicer; provided, that any Recordation Event may be waived by
the Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) by its providing written notice of such waiver to the
Servicer and the Indenture Trustee; and (vi) at the written request of the
Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) to the Indenture Trustee to cause the Custodian to record
Assignments of Mortgages because the Insurer has determined, in the exercise of
its reasonable judgment, that such recordation is necessary to protect the
Insurer's interest with respect to such Mortgage Loans because (a) a Material
Adverse Change with respect to the Seller or the Servicer has occurred, (b) the
Insurer has been so advised by counsel as a result of a change that occurred
after the Closing Date in applicable law or the interpretation thereof or (c)
with respect to a particular Mortgage Loan, the insolvency of the related
Mortgagor.
Recoveries: With respect to a Charged-Off HELOC, the proceeds (including
Released Mortgaged Property Proceeds but not including amounts drawn under the
Policy) received by the Servicer in connection with such Charged-Off HELOC minus
related Servicing Advances and any amount due the holder of any Senior Lien that
has not been previously paid.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Servicer and identified in writing to the
Indenture Trustee.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release
23
(Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg.
1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be
provided by the Commission or its staff from time to time.
Reimbursement Amount: As of any Payment Date with respect to the Class A
Notes, the sum of (x)(i) all Insured Payments paid by the Insurer, but for which
the Insurer has not been reimbursed prior to such Payment Date pursuant to
Section 5.01(a)(E) of this Agreement, plus (ii) interest accrued on such Insured
Payments not previously repaid calculated at the Late Payment Rate from the date
the Indenture Trustee received the related Insured Payments and (y), without
duplication, (i) any other amounts then due and owing to the Insurer under the
Insurance Agreement as certified to the Indenture Trustee by the Insurer plus,
(ii) interest on such amounts at the Late Payment Rate.
Related Documents: With respect to each Mortgage Loan, the documents
listed in Section 2.01(c)(ii)(B) through (E).
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with (i) applicable law, (ii) mortgage servicing
standards employed by the Servicer in servicing home equity line of credit
mortgage loans for its own account and (iii) this Agreement.
Relief Act: The Servicemembers Civil Relief Act.
Relief Act Interest Shortfall: With respect to any Payment Date, for any
Mortgage Loan with respect to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Collection Period or
(without duplication) any earlier Collection Period as a result of the
application of the Relief Act, the amount by which (i) interest collectible on
such Mortgage Loan during each such Collection Period is less than (ii) one
month's interest on the Stated Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
Remittance Report: As defined in Section 3.19.
REO Account: The account or accounts maintained by the Servicer in respect
of an REO Property pursuant to Section 3.07.
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REO Disposition: The sale or other disposition of an REO Property on
behalf of the Trust.
REO Imputed Interest: As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Loan Rate on the Stated Principal Balance
of such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the close of business on the Payment
Date in such calendar month.
REO Principal Amortization: With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Optional Redemption Price paid in connection with a purchase of all of the
Mortgage Loans and REO Properties pursuant to Section 8.01 that is allocable to
such REO Property) or otherwise, net of any portion of such amounts (i) payable
pursuant to Section 3.07 in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.07 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.
REO Property: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
Reserve Account: The account designated as the "Reserve Account" and
established pursuant to Section 5.06 hereof.
Residual Certificate: The Class L or Class R Certificate, as applicable.
Residual Certificateholder or Certificateholder: Any holder of a Residual
Certificate.
Responsible Officer: With respect to the Indenture Trustee, any Managing
Director, any Director, any Vice President, any Assistant Vice President, any
Associate, any Assistant Secretary, any Trust Officer, or any other officer of
the Indenture Trustee customarily performing functions similar to those
performed by any of the above designated officers who at such time shall be
officers to whom with respect to a particular matter, the matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and who has direct responsibility for administration of this Agreement.
When used with respect to a Seller, the Depositor or the Servicer, the Chief
Executive Officer or any Vice President, Assistant Vice President, Treasurer,
Assistant Treasurer, Cashier, Assistant Cashier or any Secretary or Assistant
Secretary.
Securityholders: The Noteholders and the Certificateholders.
25
Seller: IndyMac Bank, F.S.B., a federal savings bank, as seller under the
Mortgage Loan Purchase Agreement.
Senior Lien: With respect to any Mortgage Loan that is not a first
priority lien, the mortgage loan or mortgage loans relating to the corresponding
Mortgaged Property having priority senior to that of such Mortgage Loan.
Servicer: IndyMac Bank, F.S.B., a federal savings bank, as Servicer, or
any successor hereunder appointed in accordance with the terms hereof.
Servicer Employees: As defined in Section 3.06.
Servicer Remittance Date: With respect to any Payment Date, the Business
Day prior to such Payment Date.
Servicing Advances: All reasonable and customary unanticipated "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees paid
to any independent contractor in connection therewith, and (iv) compliance with
the obligations under Sections 3.04, 3.07 or 3.17 hereunder; provided however,
that such obligation with respect to any related Mortgage Loan shall cease if
the Servicer determines, in its sole discretion, that Servicing Advances with
respect to such Mortgage Loan are Nonrecoverable Advances.
Servicing Certificate: A certificate completed and executed by a Servicing
Officer on behalf of the Servicer in the form agreed to by the Servicer and the
Indenture Trustee.
Servicing Fee: With respect to any Payment Date and HELOCs, the product of
(i) the applicable Servicing Fee Rate and (ii) the aggregate Principal Balance
of Mortgage Loans as of the opening of business on the first day of the related
Collection Period (or at the Cut-Off Date with respect to the first Payment
Date), a portion of such Servicing Fee may be retained by a Sub-Servicer as its
servicing compensation..
Servicing Fee Rate: 0.50% per annum, with respect to Mortgage Loans.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Indenture Trustee (with a copy to the Insurer) by the Servicer on the Closing
Date, as such list may be amended from time to time, initially set forth in
Exhibit B.
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SFAS 140: Statement of Financial Accounting Standards No. 140 of the
Financial Accounting Standards Board, as in effect on the date hereof.
Six Month Rolling Delinquency Rate: With respect to any Payment Date on
and after the sixth Payment Date, the average of the Principal Balances of 60+
Day Delinquent Mortgage Loans for the related Collection Period and the five
preceding Collection Periods divided by the Pool Principal Balance, in each case
on the last day of those Collection Periods, respectively.
60+ Day Delinquent Mortgage Loan: For any Collection Period, any Mortgage
Loan that is (i) more than 60 days delinquent, (ii) for which the related
borrower has filed for bankruptcy protection, (iii) that is in foreclosure, or
(iv) with respect to which the related Mortgaged Property is characterized as
REO Property as of the end of such Collection Period.
Specified Overcollateralization Amount: on any Payment Date, is an amount
equal to (i) prior to the Stepdown Date, 0.50% of the Initial Invested Amount
and (ii) on or after the Stepdown Date the greater of (1) 0.50% of the Initial
Invested Amount and (2) 1.00% of the Invested Amount as of the end of the
related Collection Period, provided, however, that no reduction in clause (ii)
shall occur unless (a) the aggregate Floating Allocation Percentage of the
cumulative Liquidation Loss Amounts with respect to the Pool as a percentage of
the Initial Invested Amount are less than (i) with respect to the first Payment
Date to and including the 48th Payment Date, 1.75%, (ii) with respect to the
49th Payment Date to and including the 60th Payment Date, 2.50%, (iii) with
respect to the 61st Payment Date to and including the 72nd Payment Date, 3.00%,
(iv) with respect to the 73rd Payment Date and thereafter, 3.25% and (b) the Six
Month Rolling Delinquency Rate for such Payment Date is less than 3.50%.
Stated Principal Balance: With respect to any Mortgage Loan: (a) as of any
date of determination up to but not including the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the outstanding Stated Principal Balance of such Mortgage
Loan as of the Cut-Off Date, as shown in the Mortgage Loan Schedule, minus the
sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-Off Date, (ii) the portion of all Principal Prepayments
received after the Cut-Off Date, to the extent paid pursuant to Section 5.01 on
or before such date of determination, (iii) all Liquidation Proceeds and
Insurance Proceeds allocable to Principal to the extent paid pursuant to Section
5.01 on or before such date of determination, and (iv) any Charge-off Amount
incurred with respect thereto during or prior to the Collection Period for the
most recent Payment Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Payment Date on which the proceeds, if any, of a Liquidation
Event with respect to such Mortgage Loan would be paid, zero. With respect to
any REO Property: (a) as of any date of determination up to but not including
the Payment Date on which the proceeds, if any, of a Liquidation Event with
respect to such REO Property would be paid, an amount (not less than zero) equal
to the Stated Principal Balance of the related Mortgage Loan as of the date on
which such REO Property was acquired on behalf of the Trust Fund, minus the
aggregate amount of REO Principal Amortization in respect of such REO Property
for all previously ended calendar months, to the extent paid pursuant to Section
5.01 on or before such date of determination; and (b) as of any date of
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determination coinciding with or subsequent to the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be paid, zero.
Statement to Noteholders: As defined in Section 5.03(a) hereof.
Stepdown Date: With respect to the Notes, the later to occur of (a) the
31st Payment Date and (b) the first Payment Date on which the Credit Enhancement
Percentage is approximately 5.8%.
Subsequent Recoveries: As of any Payment Date, amounts received by the
Servicer (net of any related expenses permitted to be reimbursed to the
Servicer) specifically related to a Charged-off HELOC.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(a) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01, a copy of which shall be delivered, along
with any modifications thereto, to the Indenture Trustee and the Insurer.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
(accruing at the Loan Rate for such Defective Mortgage Loan) on such excess
through the Collection Period relating to the Payment Date for which such
Substitution Adjustment will be included as part of Available Funds and (y) 30
days' interest on such excess calculated on a 360-day year in each case at the
Loan Rate (or Loan Rate net of the Servicing Fee Rate if the related Seller is
the Servicer) and (c) if the Servicer is not the related Seller the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Defective Mortgage Loan and (d) the amounts referred to in clauses (iii)(y) and
(iv) of the definition of Purchase Price in respect of such Defective Mortgage
Loan.
Substitution Date: As defined in Section 2.05(b).
Supplemental Mortgage Loan Schedule: As defined in Section 2.05(b).
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Telerate Page 3750: The display designated as page 3750 on the Moneyline
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
Total Distribution Amount: With respect to any Payment Date, the sum of
(i) the Interest Collections for such date and (ii) the Principal Collections
for such date.
Transaction Documents: This Agreement, the Mortgage Loan Purchase
Agreement, the Indenture and the Insurance and Indemnity Agreement and the Trust
Agreement.
Trigger Event: As defined in Section 5.01 of the Insurance and Indemnity
Agreement.
Trust or Trust Fund: IndyMac Home Equity Mortgage Loan Asset-Backed Trust,
Series 2006-H1, a Delaware statutory trust, established pursuant to the Trust
Agreement, the corpus of which consists of the Mortgage Loans and Mortgage
Files, such other assets as shall from time to time be identified as deposited
in the Trust Accounts in accordance with this Agreement, property that secured a
Mortgage Loan and that has become REO Property, the interest of the Seller in
certain hazard insurance policies maintained by the Mortgagors or the Servicer
in respect of the Mortgage Loans, the Depositor's rights under the Mortgage Loan
Purchase Agreement and all proceeds of the foregoing.
Trust Accounts: The Collection Account, the Certificate Account, the
Payment Account and the Reserve Account.
Trust Agreement: The Trust Agreement, dated as of March 27, 2006, among
the Seller, the Depositor and the Owner Trustee, as amended and restated as of
March 31, 2006, among the Seller, the Depositor and the Owner Trustee.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Uninsured Cause: Any cause of damage to a Mortgaged Property such that the
complete restoration of such property is not fully reimbursable by the insurance
policies required to be maintained pursuant to Section 3.04 hereof.
Utilization Rate: As of any date, the percentage of the line of credit
relating to a HELOC that has been drawn upon.
Weighted Average Loan Rate Cap: With respect to any Payment Date, the
average of the Loan Rate Caps, weighted on the basis of the Principal Balance of
each Mortgage Loan on the first day of the related Collection Period.
Withdrawal Certificate: As set forth as Exhibit N hereto.
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Section 1.02 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture and the Trust Agreement, as
applicable.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Article, Section, Schedule and
Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
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Section 1.03 Interest Calculations.
All calculations of interest that are made in respect of the Principal
Balance of a Mortgage Loan shall be made on a daily basis using a 365-day year
and the actual number of days elapsed. All calculations of interest that are
made in respect of the Notes and the Certificates, shall be calculated on the
basis of a 360 day year and the actual number of days elapsed in the related
Interest Period. The calculation of the Premium Amount, the Servicing Fee and
the Indenture Trustee Fee shall be made on the basis of 30 days in each
Collection Period divided by 360. All dollar amounts calculated hereunder shall
be rounded to the nearest xxxxx with one-half of one xxxxx being rounded up.
ARTICLE II.
CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey to the
Indenture Trustee, for the benefit of the Trust, without recourse (subject to
Sections 2.02 and 2.04) all of its right, title and interest in and to (i) each
Mortgage Loan listed on the Mortgage Loan Schedule on the Closing Date and the
related Mortgage File (including the related Mortgage Note and Mortgage),
including its Cut-Off Date Principal Balance (including all rights of the
Depositor pursuant to the Mortgage Loan Purchase Agreement to purchase
Additional Balances resulting from Draws made pursuant to the related Mortgage
Note prior to the termination of this Agreement) and all related collections in
respect of interest and principal received after the Cut-Off Date (excluding
interest due on or prior to the Cut-off Date); (ii) related property that
secured a Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; (iii) its rights under any related insurance policies
maintained in respect of the Mortgage Loans (including any hazard, flood or
title insurance proceeds); (iv) the Collection Account, the Reserve Account, the
Payment Account, and all funds and other property on deposit from time to time
therein; (v) all other assets included or to be included in the Trust for the
benefit of the Noteholders, the Certificateholders and the Insurer (provided,
however, that neither the Indenture Trustee nor the Trust assumes any obligation
under any Mortgage Note for the funding of future Draws to the Mortgagor
thereunder, and neither the Indenture Trustee nor the Trust will be obligated or
permitted to fund any such future Draws); and (vii) any and all proceeds of the
foregoing (collectively, the "Conveyed Assets"). Additional Balances shall be
included in the related Principal Balance transferred to the Trust pursuant to
this Section 2.01 and therefore will be part of the corpus of the Trust.
The Indenture Trustee, by its execution and delivery of this Agreement,
acknowledges its acceptance of all right, title and interest in and to the
Conveyed Assets and declares that the Indenture Trustee holds and will hold such
right, title and interest on behalf of the Trust for the benefit of all then
present and future Noteholders, upon the terms set forth in this Agreement. In
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addition, on or prior to the Closing Date, the Depositor shall cause the Insurer
to deliver the Policy to the Indenture Trustee.
The Seller, the Depositor and the Indenture Trustee agree to take or cause
to be taken such actions (including without limitation the filing of the UCC-1
financing statements in the States of California, in the case of the Seller, and
the State of Delaware, in the case of the Depositor (which shall have been filed
on or before the Closing Date) describing the Cut-Off Date Principal Balances
and Additional Balances related to the Mortgage Loans, and naming the Seller as
debtor and the Depositor as secured party, in the case of the Seller, and naming
the Depositor as debtor and the Indenture Trustee as secured party, in the case
of the Depositor, and any amendments to such UCC-1 financing statements required
to reflect a change in the name or corporate structure of the Seller, the
Depositor, or the Indenture Trustee, as the case may be, or the filing of any
additional financing statement due to the change in the jurisdiction of
formation of the Seller, the Depositor or the Indenture Trustee, as the case may
be, within 30 days of any event necessitating such filing) as are necessary to
perfect and protect the Depositor's interest in the case of the Seller and the
Indenture Trustee's (on behalf of the Trust) and the Insurer's interest in the
case of the Depositor, in each case describing Cut-Off Date Principal Balance
and the Additional Balances related to the Mortgage Loans, the remainder of the
trust estate and the proceeds thereof. In addition, the Servicer agrees to file
continuation statements with respect to such UCC-1 financing statements as
required and as long as this Agreement remains outstanding with such
authorization and information as may be necessary to make such filing to be
provided by the applicable parties.
In the event any loss is suffered by the Insurer or the Indenture Trustee,
on behalf of the Trust, in respect of any Mortgage Loan, as a result of a
failure by the Seller or the Depositor to file the UCC-1 financing statements
when required to perfect or maintain the perfection of the Indenture Trustee's
security interest hereunder and afford it first priority, the Seller shall, on
the Business Day next preceding the Payment Date in the month following the
Collection Period during which such loss occurred, purchase such Mortgage Loan.
Such purchase shall be accomplished in the same manner as set forth in Section
2.02.
In addition, on or prior to the Closing Date, the Depositor shall cause
the Insurer to deliver the Policy to the Indenture Trustee, for the benefit of
the Class A Noteholders.
(b) Prior to the last day of the related Collection Period preceding the
month in which the commencement of the Rapid Amortization Period occurs, the
Holder of the Class L Certificate shall purchase the Additional Balance Advance
Amount, if any and, the Servicer shall deliver to the Indenture Trustee and the
Holder of the Class L Certificates two Business Days prior to the following
Remittance Date an Advance Notice including the aggregate amount of the expected
Additional Balance Advance Amount. Upon receipt of such notice and in any event
no later than two Business Days prior to the following Payment Date, the Holder
of the Class L Certificate shall make an advance to the Trust in the amount
specified in such Advance Notice by depositing such amount into the Reserve
Account. The Indenture Trustee shall cause such amount to be remitted to the
Servicer on such following Payment Date. In addition, on and after the first day
of the Collection Period in which the commencement of the Rapid Amortization
Period occurs,
32
the Holder of the Class L Certificate shall purchase Additional Balances that
are transferred to the Trust (as such Additional Balances are conveyed and in
the amounts specified by the Servicer) by depositing into the Reserve Account
the amount of the Draws relating to such Additional Balances, which amount shall
be disbursed by the Indenture Trustee to the Servicer. The Class Principal
Balance of the Class L Certificates will be increased by the amount of any such
Additional Balance Advance Amounts or Draws
(c) (i) In connection with such transfer, assignment, sale and conveyance
by the Depositor will deliver or have delivered to, and deposit with, the
Indenture Trustee (or its designee), on or before the Closing Date, the Mortgage
Loan Schedule in computer readable format.
(ii) In connection with such transfer, assignment, sale and conveyance by
the Depositor, the Depositor shall cause the Seller to deliver to and deposit
with the Indenture Trustee (x) the Mortgage Note in respect of each Mortgage
Loan and (y) the Related Documents within 90 days following the occurrence of
the Closing Date. The Mortgage Note and the Related Documents shall be in the
following form:
(A) the original Mortgage Note, endorsed in blank, or a copy
of such original Mortgage Note with an accompanying Lost Note
Affidavit;
(B) the original Assignment of Mortgage, from the Seller
either in blank or to "Deutsche Bank National Trust Company, as
Indenture Trustee for IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H1 under the Sale and Servicing Agreement dated
March 1, 2006," which assignment shall be in form and substance
acceptable for recording;
(C) the original Mortgage, with evidence of recording
thereon, provided that if the original Mortgage has been delivered
for recording to the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has not
yet been returned to the Seller by such recording office, the Seller
shall deliver to the Indenture Trustee a certified true copy of such
original Mortgage so certified by or on behalf of the Seller,
together with a certificate by or on behalf of the Seller certifying
that such original Mortgage has been so delivered to such recording
office; in all such instances, the Seller shall deliver or cause to
be delivered the original recorded Mortgage to the Indenture Trustee
promptly upon receipt of the original recorded Mortgage;
(D) [Reserved];
(E) intervening assignments, if any, with evidence of
recording thereon, provided that if such intervening assignment has
been delivered for recording to the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by
33
such recording office, the Seller shall deliver to the Indenture
Trustee a certified true copy of such intervening assignment so
certified by the Seller, together with a certificate by or on behalf
of the Seller certifying that such intervening assignment has been
so delivered to such recording office; in all such instances, the
Seller shall deliver or cause to be delivered the original
intervening assignment to the Indenture Trustee promptly upon
receipt of the original intervening assignment; and
provided, however, that as to any Mortgage Loan, if as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Indenture Trustee, the Insurer, and the Rating Agencies (x) an optical image or
other representation of the related document specified in clause (c)(ii)(C)
above is enforceable in the relevant jurisdictions to the same extent as the
original of such document and (y) such optical image or other representation
does not impair the ability of an owner of such Mortgage Loan to transfer or
perfect its interest in such Mortgage Loan, such optical image or other
representation may be delivered as required in clause (c)(ii).
The Seller and the Depositor each hereby confirms to the Indenture Trustee
and the Insurer that it has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been sold to the
Depositor by the Seller, and sold by the Depositor to the Depositor, and sold by
the Depositor to the Indenture Trustee, acting on behalf of the Trust. The
Servicer hereby confirms to the Indenture Trustee and the Insurer that it has
clearly and unambiguously made appropriate entries in its general accounting
records indicating that such Mortgage Loans constitute part of the Trust and are
serviced by it on behalf of the Trust in accordance with the terms hereof.
The Seller shall deliver to the Indenture Trustee, as initial custodian
and bailee for the benefit of the Trust, the documents and instruments listed
above in this clause (b).
The Assignments of Mortgage will be held by the Indenture Trustee, subject
to the conditions provided in the immediately preceding paragraph.
The Seller, at its expense shall within 90 days of its delivery of the
Mortgage Notes and the Related Documents to the Indenture Trustee, submit to the
appropriate recording offices Assignments of Mortgage to the Indenture Trustee
on behalf of the Trust, which may be blanket assignments if permitted by
applicable law, for the Mortgage Loans. In lieu of recording any such
Assignments of Mortgage, the Seller, at its expense, may provide to the
Indenture Trustee and the Insurer, an Opinion of Counsel in a form reasonably
acceptable to the Indenture Trustee and the Insurer, to the effect that
recordation of an Assignment of Mortgage in the state where the related
Mortgaged Property is located is not necessary to protect the interests of the
Indenture Trustee, the Noteholders or the Certificateholders in the related
Mortgage on or within 90 days after the Closing Date. In the event that any such
Assignment of Mortgage is lost or returned unrecorded because of a defect
therein, the Seller, at its own expense, shall promptly prepare a substitute
Assignment of Mortgage or cure such defect, as the case may be, and thereafter
the Seller shall be required to submit each such Assignment of Mortgage for
recording. Any failure
34
of the Seller to comply with this Section shall result in the obligation of the
Seller to purchase such Mortgage Loans pursuant to the provisions of Section
2.04 or substitute for the related Mortgage Loans pursuant to the provisions of
Section 2.05.
(d) It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans and the other property described above by the Depositor to
the Trust, as provided in this Agreement be, and be construed as, a sale of all
of the Depositor's right, title and interest in the Mortgage Loans and the other
property described above by the Depositor to the Trust. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans and the other property described above by the Depositor to the Trust to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans and the other
property described above are held to be property of the Depositor, or if for any
reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans and the other property described above, then, (x) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the UCC; and (y) the Depositor hereby grants to the Trust a security
interest in and to all of the Depositor's right, title, and interest, whether
now owned or hereafter acquired, in and to the Conveyed Assets.
The possession by the Indenture Trustee or its designee, of Mortgage
Files, including the Mortgage Notes and the Mortgages and such other goods,
letters of credit, advices of credit, instruments, money, documents, chattel
paper (tangible and electronic) or certificated securities in accordance with
the terms of this Agreement shall be deemed to be "possession by the secured
party," or possession by a purchaser or a person designated by him or her, for
purposes of perfecting the security interest pursuant to the UCC (including,
without limitation, Sections 9-313, 8-313 or 8-321 thereof); and notifications
to persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed to be notifications to, or
acknowledgments, receipts or confirmations from, securities intermediaries,
bailees or agents of, or persons holding for, the Indenture Trustee or its
designee, as applicable, for the purpose of perfecting such security interest
under applicable law. The Seller, the Servicer and the Depositor 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
Mortgage Loans and the proceeds thereof, 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. In connection
herewith, the Trust shall have all of the rights and remedies of a secured party
and creditor under the UCC. Notwithstanding the foregoing, in taking such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans and the proceeds thereof, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law, and maintaining such throughout the term of this
Agreement.
(e) Within 90 days after the Closing Date, the Indenture Trustee, will,
for the benefit of Noteholders and the Insurer, review each Mortgage File to
ascertain that all required documents set forth in Section 2.01 have been
received and appear on their face to contain the requisite signatures by or on
behalf of the respective parties thereto, and shall deliver to the Depositor,
the Servicer, the Insurer and the Indenture Trustee an initial certification
(the "Initial
35
Certification") in the form annexed hereto as Exhibit J to the effect that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan prepaid in full or any specifically identified in such
certification as not covered by such certification), (i) all of the applicable
documents specified in Section 2.01(c) are in its possession and (ii) such
documents have been reviewed by it and appear to relate to such Mortgage Loan.
The Indenture Trustee shall determine whether such documents are executed and
endorsed, but shall be under no duty or obligation to inspect, review or examine
any such documents, instruments, certificates or other papers to determine that
the same are valid, binding, legally effective, properly endorsed, genuine,
enforceable or appropriate for the represented purpose or that they have
actually been recorded or are in recordable form or that they are other than
what they purport to be on their face. The Indenture Trustee shall not have any
responsibility for verifying the genuineness or the legal effectiveness of or
authority for any signatures of or on behalf of any party or endorser.
(f) If in the course of the review described in paragraph (e) above the
Indenture Trustee discovers any document or documents constituting a part of a
Mortgage File that is missing, does not appear regular on its face (i.e., is
mutilated, damaged, defaced, torn or otherwise physically altered) or appears to
be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule, as
applicable (each, a "Material Defect"), the Indenture Trustee, upon discovering
such Material Defect shall promptly identify the Mortgage Loan to which such
Material Defect relates in the Interim Certification delivered to each of the
Depositor and the Servicer and give notice thereof to the Seller.
(g) Within 180 days following the Closing Date, the Indenture Trustee
shall deliver to the Depositor, the Servicer and the Insurer a final
certification (the "Final Certification") substantially in the form attached as
Exhibit K evidencing the completeness of the Mortgage Files in its possession or
control, with any exceptions noted thereto.
(h) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Estate, the Indenture Trustee, the Administrator, any
Custodian or the Noteholders of any unsatisfied duty, claim or other liability
on any Mortgage Loan or to any Mortgagor. The Indenture Trustee shall have no
responsibility for reviewing any Mortgage File except as expressly provided in
this Section 2.01. In reviewing any Mortgage File pursuant to this Section, the
Indenture Trustee shall have no responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if not assigned to the Indenture
Trustee or endorsed in blank, to determine if the Indenture Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, or whether a blanket assignment
is permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears regular on its face and is related to such Mortgage Loan, and, upon
the return of such document from the county recorder's office in accordance with
this section, that it purports to be recorded.
(i) The Indenture Trustee shall have the right to appoint a custodian to
act on its behalf with respect to its obligations under Section 2.01(e) through
(g).
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(j) (i) Upon the occurrence of a Recordation Event, the Indenture Trustee
shall within 90 days of such Recordation Event submit, at the expense of the
Seller, to the appropriate recording offices Assignments of Mortgage to the
Indenture Trustee on behalf of the Trust, which may be blanket assignments if
permitted by applicable law, for the Mortgage Loans. In lieu of recording any
such Assignments of Mortgage, the Servicer may provide to the Indenture Trustee
and the Insurer an Opinion of Counsel in a form reasonably acceptable to the
Owner Trustee, Indenture Trustee and the Insurer, to the effect that recordation
of an Assignment of Mortgage in the state where the related Mortgaged Property
is located is not necessary to protect the interests of the Owner Trustee, the
Indenture Trustee or the Securityholders in the related Mortgage. In the event
that any such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Indenture Trustee shall promptly prepare, at the expense of
the Seller, a substitute Assignment of Mortgage or cure such defect, as the case
may be, and thereafter the Indenture Trustee shall, at the expense of the
Seller, submit each such Assignment of Mortgage for recording.
(ii) With respect to each MERS Mortgage Loan, the Servicer shall, at the
expense of the Depositor, take such actions as are necessary to cause the
Indenture Trustee to be clearly identified as the owner of each such Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
Section 2.02 Acceptance by Indenture Trustee, Review of Documentation.
(a) The Indenture Trustee hereby acknowledges the issuance of the Policy
by the Insurer for the benefit of the Class A Noteholders and the sale and
assignment of the Mortgage Loans, and, subject to the review provided for in
Section 2.01, and declares that, when delivered to the Indenture Trustee in
accordance with Section 2.01(c), the Indenture Trustee will hold the documents
constituting the Mortgage Files and that all amounts received by it under the
Indenture in trust, upon the terms herein set forth, for the use and benefit of
all present and future Class A Noteholders and the Insurer.
(b) If the Seller is given notice under Section 2.01(f) and if the Seller
does not correct or cure the omission or defect within the 90-day period
specified in Section 2.01(f), the Seller shall purchase the Mortgage Loan from
the Trust or substitute an Eligible Substitute Mortgage Loan, as provided in
Section 2.05, for such Mortgage Loan. Any such purchase by the Seller shall be
at the Purchase Price and in each case shall be accomplished in the manner set
forth in Section 2.04. It is understood and agreed that the obligation of the
Seller to purchase any Mortgage Loan or substitute an Eligible Substitute
Mortgage Loan for such Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
against the Seller respecting such defect or omission available to the Insurer,
the Noteholders, the Indenture Trustee or the Certificateholders.
The Servicer, promptly following the transfer of (i) a Mortgage Loan with
a Material Defect from or (ii) an Eligible Substitute Mortgage Loan to the
Indenture Trustee pursuant to this Section and Section 2.05, as the case may be,
shall amend the Mortgage Loan Schedule and
37
make appropriate entries in its general account records to reflect such transfer
and the addition of any Eligible Substitute Mortgage Loan, if applicable.
Section 2.03 Representations and Warranties Regarding the Seller, the
Depositor and the Servicer.
(a) The Seller, the Depositor and the Servicer each represents and
warrants as to itself to the parties hereto and the Insurer that, as of the
Closing Date:
(i) Each of the Seller, the Depositor and the Servicer is duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization and has the power and authority to
own its assets and to transact the business in which it is currently
engaged. Each of the Seller, the Depositor and the Servicer is duly
qualified to do business and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties owned
or leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on (a) its business,
properties, assets or condition (financial or other), (b) its performance
of its obligations under this Agreement, (c) the value or marketability of
the Mortgage Loans or (d) the ability to foreclose on the related
Mortgaged Properties;
(ii) Each of the Seller, the Depositor and the Servicer has the
power and authority to make, execute, deliver and perform this Agreement
and to consummate all of the transactions contemplated under this
Agreement, and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement. When executed and delivered,
this Agreement will constitute its legal, valid and binding obligation
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
(iii) Each of the Seller, the Depositor and the Servicer holds all
necessary licenses, certificates and permits from all government
authorities necessary for conducting its business as it is presently
conducted. Neither the Seller, the Depositor, nor the Servicer is required
to obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement,
except for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or filed, as
the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
each of the Seller, the Depositor and the Servicer will not conflict with
or result in a breach of, or constitute a default under, any provision of
its charter documents, or constitute a material breach of or result in the
creation or imposition of any lien, charge or encumbrance upon
38
any of its properties pursuant to, any mortgage, indenture, contract or
any other agreement to which it is a party or by which it may be bound;
(v) No certificate of an officer, statement furnished in writing
or report delivered pursuant to the terms hereof by the Seller, the
Depositor or the Servicer contains any untrue statement of a material fact
or omits to state any material fact necessary to make the certificate,
statement or report not misleading;
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's, the Depositor's and the Servicer's
business;
(vii) None of the Seller, the Depositor nor the Servicer is
insolvent, nor will the Seller, the Depositor or the Servicer be made
insolvent by the transfer of the Mortgage Loans, nor are the Seller, the
Depositor or the Servicer aware of any pending insolvency;
(viii) None of the Seller, the Depositor or the Servicer is in
violation of, and the execution and delivery of this Agreement by it and
its performance and compliance with the terms of this Agreement will not
constitute a violation with respect to, any provision of any existing law,
any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over
the Seller, the Depositor or the Servicer, which violation would
materially and adversely affect the Seller's, the Depositor's or the
Servicer's ability to perform or meet any of their respective obligations
under this Agreement;
(ix) There are no actions or proceedings against, or investigations
of it, pending or, to the best of its knowledge, threatened, before any
court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit the Seller, the Depositor or the Servicer from
entering into this Agreement, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely affect
the Seller's, the Depositor's and the Servicer's performance of any of
their respective obligations under, or the validity or enforceability of,
this Agreement;
(x) The Servicer represents and warrants that the collection
practices used by the Servicer with respect to the Mortgage Loans have
been, in all material respects, legal, proper, prudent and customary in
the home equity mortgage servicing business and in accordance with
Accepted Servicing Practices;
(xi) The Servicer represents and warrants that it believes that the
Servicing Fee Rate provides a reasonable level of base compensation to the
Servicer for servicing the Mortgage Loans on the terms set forth herein;
(xii) The Seller represents and warrants that it did not sell the
Mortgage Loans to the Depositor, and the Depositor represents and warrants
that it did not sell the
39
Mortgage Loans to the Trust, in each case, with any intent to hinder,
delay or defraud any of its creditors; and neither the Seller nor the
Depositor will be rendered insolvent as a result of their sales under the
Mortgage Loan Purchase Agreement and this Agreement, as applicable;
(xiii) The Seller and the Depositor each represents and warrants
that it acquired title to the Mortgage Loans in good faith, without notice
of any adverse claim;
(xiv) The Seller and the Depositor each represents and warrants that
the transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller and the Depositor pursuant to the Mortgage Loan
Purchase Agreement and this Agreement are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction;
(xv) The Seller represents, warrants and covenants that so long as
the Notes remain outstanding, this Agreement shall be treated as an
official record of the Seller within the meaning of Section 13(e) of the
Federal Deposit Insurance Act (12 U.S.C. Section 1823(e));
(xvi) The Seller and the Depositor each represents and warrants that
it has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law
in order to perfect the security interest in the Mortgage Loans sold to
the Depositor and transferred to the Indenture Trustee on behalf of the
Trust, respectively, pursuant to the Mortgage Loan Purchase Agreement and
this Agreement;
(xvii) This Agreement creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code) in the
Mortgage Loans in favor of the Noteholders and the Certificateholders,
which security interest is prior to all other liens, and is enforceable as
such as against creditors of and purchasers from the Seller;
(xviii) Each of the Seller and the Depositor has caused or will have
caused, within ten days, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions
under applicable law in order to perfect the security interest in the
Mortgage Loans granted to the Depositor and the Indenture Trustee,
respectively, under the Mortgage Loan Purchase Agreement and hereunder;
and
(b) The representations and warranties set forth in Section 2.03(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affect the interests of the Indenture Trustee, the Noteholders, the
Certificateholders, the Depositor or the Insurer, the Person discovering such
breach shall give prompt written notice to the other parties and to the Insurer.
Within 60 days of its discovery or its receipt of notice of breach, or, with the
prior
40
written consent of the Insurer, such longer period specified in such consent,
the Seller, the Depositor or the Servicer, as appropriate, shall cure such
breach in all material respects.
Section 2.04 Representations and Warranties of the Seller Regarding the
Mortgage Loans.
(a) The Seller hereby represents and warrants to the Depositor and the
Insurer, and the Depositor hereby assigns its rights with respect to such
representations and warranties to the Trust, the Indenture Trustee on behalf of
the Noteholders and the Certificateholders and the Insurer as follows as of the
Closing Date, and with respect to each Eligible Substitute Mortgage Loan, as of
the date of such substitution (and to the extent expressly stated therein as of
such other time):
(i) The information with respect to each Mortgage Loan set forth
in the Mortgage Loan Schedule is complete, true and correct in all
material respects as of the Closing Date;
(ii) As of the Closing Date, for each Mortgage Loan, the related
Mortgage File contains the documents and instruments referred to in
Section 2.01(c)(ii);
(iii) Each Mortgaged Property relating to a Mortgage Loan is
improved by a residential dwelling, which does not include cooperatives or
mobile homes and does not constitute other than real property under state
law;
(iv) Each Mortgage Loan is being serviced by the Servicer or one or
more Subservicers according to Accepted Servicing Practices;
(v) Each Mortgage Note provides for (a) Monthly Payments which are
at least equal to accrued interest during such Accrual Period and (b) at
the maturity of the related Mortgage Loan, payment in full of the
principal balance of such Mortgage Note;
(vi) The Mortgage Notes related to Mortgage Loans bear a variable
Loan Rate and there is only one original of each such Mortgage Note;
(vii) Each Mortgage is a valid and subsisting first, second or third
lien of record on the Mortgaged Property subject, in the case of any
second or third Mortgage Loan, only to a Senior Lien or Senior Liens on
such Mortgaged Property and subject in all cases to the exceptions to
title set forth in the title insurance policy, if any, with respect to the
related Mortgage Loan, which exceptions are generally acceptable to second
mortgage lending companies (or first mortgage lending companies in the
case of first lien Mortgage Loans), and such other exceptions to which
similar properties are commonly subject and which do not individually, or
in the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage;
41
(viii) No Mortgage Note and related Mortgage has been assigned or
pledged and immediately prior to the transfer and assignment contemplated
in the Mortgage Loan Purchase Agreement, the Seller held good, marketable
and indefeasible title to, and was the sole owner and holder of, each
Mortgage Loan subject to no Liens (other than a Senior Lien, if any); the
Seller has full right and authority under all governmental and regulatory
bodies having jurisdiction over the Seller, subject to no interest or
participation of, or agreement with, any party, to sell and assign the
same pursuant to the Mortgage Loan Purchase Agreement; and immediately
upon the transfer and assignment therein contemplated, the Seller shall
have transferred all of its right, title and interest in and to each
Mortgage Loan to the Purchaser (or its assignee) and the Purchaser (or its
assignee) will hold good, equitable, and when recorded, marketable title
to, and be the sole owner of, each Mortgage Loan subject to no Liens
(other than a Senior Lien, if any); without limiting the generality of the
foregoing, the Seller has taken all steps necessary to effect the release
of each Mortgage Loan from any lien thereon held by a Federal Home Loan
Bank;
(ix) To the best of the Seller's knowledge, none of the Mortgage
Loans is subject to a bankruptcy proceeding;
(x) As of the Closing Date, none of the Mortgage Loans was more
than 30 days Delinquent;
(xi) No Mortgage Loan is subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Mortgage Note or Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set off, counterclaim or defense
has been asserted with respect thereto;
(xii) To the best of the Seller's knowledge, there is no mechanics'
lien or claim for work, labor or material affecting any Mortgaged Property
which is or may be a lien prior to, or equal or coordinate with, the lien
of the related Mortgage, and no rights are outstanding that under law
could give rise to such a lien except those which are insured against by
the title insurance policy;
(xiii) (a) Each Mortgage Loan at the time it was made complied with,
and each Mortgage Loan at all times was serviced in compliance with, in
each case, in all material respects, applicable state, local and federal
laws and regulations, including, without limitation, usury, equal credit
opportunity, consumer credit, applicable predatory and abusive lending
laws, truth in lending and disclosure laws and (b) no Mortgage Loan is
classified as (1) a "high cost" loan under the Home Ownership and Equity
Protection Act of 1994 or (2) a "high cost," "threshold," "covered,"
"predatory" or similar loan under any other applicable state, federal or
local law which applies to mortgage loans originated by a state-chartered
bank or any state or local law, rule or regulation applicable to the
42
Mortgage Loans (or a similar 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);
(xiv) (a) No Mortgage Loan is a "High Cost Loan" or "Covered Loan,"
as applicable (as such terms are defined in Standard & Poor's LEVELS(R)
Version 5.6(d) Glossary Revised, Appendix E), (b) no Mortgage Loan
originated on or after October 1, 2002 through March 6, 2003 is governed
by the Georgia Fair Lending Act and (c) no Mortgage Loan originated in the
State of Illinois is governed by the Illinois Interest Act (815 ILCS 205);
(xv) To the best of the Seller's knowledge, the improvements upon
each Mortgaged Property relating to Mortgage Loans are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage representing coverage
described in Sections 3.04 and 3.05;
(xvi) To the best of the Seller's knowledge, a flood insurance
policy is in effect with respect to each Mortgaged Property with a
generally acceptable carrier in an amount representing coverage described
in Sections 3.04 or 3.05, if and to the extent required by Sections 3.04
or 3.05;
(xvii) To the best of the Seller's knowledge, each Mortgage and
Mortgage Note is the legal, valid and binding obligation of the related
Mortgagor and is enforceable in accordance with its terms, except only as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law), and all parties to each
Mortgage Loan and the Mortgagee had full legal capacity to execute all
Mortgage Loan documents and to convey the estate therein purported to be
conveyed. No fraud, error, omission, misrepresentation, negligence or
similar occurrence with respect to a Mortgage Loan has taken place on the
part of the Seller or the Mortgagor or to the Seller's knowledge, on the
part of any other party involved in the origination of the Mortgage Loan;
(xviii) As of the Closing Date, 93.88% of the Mortgage Loans
(measured by the Cut-off Date Pool Balance) are secured by Mortgaged
Properties that are owner-occupied residences, based on representations by
the related Mortgagors made by such Mortgagors at origination.
(xix) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any material respect, except by a written
instrument which has been recorded or is in the process of being recorded
and which has been or will be held by the Seller or delivered to the
Indenture Trustee in accordance with the provisions of this Agreement. The
substance of any such alteration or modification is reflected on the
related Mortgage Loan Schedule and was approved, if required, by the
43
related primary mortgage guaranty insurer, if any. Each original Mortgage
was recorded, and all subsequent assignments of the original Mortgage have
been recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or are in the process of being recorded;
(xx) As of the Closing Date, no Mortgage has been satisfied,
cancelled or subordinated, in whole, or rescinded, and no instrument of
release or waiver has been executed in connection with any Mortgage Loan,
and no Mortgage has been released in whole or in part, in either case,
that would have a material adverse affect on the related Mortgage Loan;
(xxi) To the best of the Seller's knowledge (i) there is no
proceeding pending or threatened for the total or partial condemnation of
any Mortgaged Property, nor is such a proceeding currently occurring, and
(ii) as of the Cut-off Date and the Closing Date, each Mortgaged Property
is in good repair and is free of damage by waste, fire, earthquake or
earth movement, flood, tornado, hurricane or other casualty that would
affect adversely the value of the Mortgaged Property as security for the
related Mortgage Loan or the use for which the premises were intended;
(xxii) To the best of the Seller's knowledge, all of the
improvements which were included for the purpose of determining the
appraised value of the Mortgaged Property lie wholly within the boundaries
and building restriction lines of such property, and no improvements on
adjoining properties encroach upon the Mortgaged Property;
(xxiii) To the best of the Seller's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation and all inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities;
(xxiv) All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid, and no Mortgagor is entitled to
any refund of any such amount paid or due under the related Mortgage or
Mortgage Note;
(xxv) No Mortgage Note is or was secured by any collateral, pledged
account or other security except the lien of the corresponding Mortgage;
(xxvi) There is no obligation on the part of the Seller or any other
party to make payments in addition to those made by the Mortgagor;
(xxvii) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will
44
become payable by the Trust, the Indenture Trustee or the Noteholders to
the Indenture Trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(xxviii) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(xxix) To the best of the Seller's knowledge there is no delinquent
tax or assessment lien or judgment on any Mortgaged Property;
(xxx) Each Mortgage contains customary and enforceable provisions
which, subject to clause (xvii) above, render the rights and remedies of
the holder thereof adequate for the realization against the related
Mortgaged Property of the benefits of the security, including (A) in the
case of a Mortgage designated as a deed of trust, by trustee's sale and
(B) otherwise by judicial or non-judicial foreclosure, as applicable in
the relevant jurisdiction;
(xxxi) Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related security for the Mortgage Loan is
sold without the prior consent of the mortgagee thereunder;
(xxxii) Except as set forth in clause (x) above, to the best of the
Seller's knowledge, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note and
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration; and the Seller has not waived any default,
breach, violation or event of acceleration;
(xxxiii) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
(xxxiv) All of the Mortgage Loans were originated substantially in
accordance with the applicable Originator's underwriting criteria in
effect at the time of origination;
(xxxv) The Mortgage Loans were not selected by the Seller for
inclusion in the Trust on any basis intended to adversely affect the
Trust, the Noteholders the Certificateholders or the Insurer; and each
Mortgage Note and Mortgage is in substantially one of the forms attached
as Exhibit E and Exhibit F;
(xxxvi) Two of the Mortgage Loans had a Combined Loan to Value Ratio
of more than 100% as of the Cut-off Date;
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(xxxvii) Each Mortgage Loan was originated by the Originator listed
on the Mortgage Loan Schedule and was acquired in the ordinary course of
business by the Seller;
(xxxviii) As of the Closing Date, the Seller has not received a
notice of default of a Senior Lien which has not been cured;
(xxxix) Each of the documents and instruments included in a Mortgage
File referred to in Section 2.01(c)(ii)(A) and (C) through (F) is, and at
such time as Assignments of Mortgage are required to have been prepared,
such Assignments of Mortgage will have been, duly executed and in due and
proper form and each such document or instrument is or will be in a form
generally acceptable to prudent institutional mortgage lenders that
regularly originate or purchase mortgage loans similar to the Mortgage
Loans;
(xl) The Conveyed Assets constitute either "instruments" or
"general intangibles" within the meaning of the New York UCC;
(xli) All consents and approvals required by the terms of each
Mortgage Loan to the sale of such Mortgage Loan to the Purchaser under the
Mortgage Loan Purchase Agreement have been obtained;
(xlii) Other than the security interest granted by the Seller to the
Purchaser pursuant to the Mortgage Loan Purchase Agreement and other than
any security interest which shall have been released immediately prior to
the consummation of the transactions contemplated hereby, the Seller has
not pledged, assigned, released, sold, granted a security interest in, or
otherwise conveyed any of the Mortgage Loans. The Seller has not
authorized the filing of and is not aware of any financing statements
against the Seller that include a description of collateral covering the
Mortgage Loans other than any financing statement relating to the security
interest granted to the Purchaser under the Mortgage Loan Purchase
Agreement. The Seller is not aware of any judgment or tax lien filings
against the Seller;
(xliii) The Servicer has in its possession all original copies of
the Mortgage Notes that constitute or evidence the Mortgage Loans. The
Mortgage Notes that constitute or evidence the Mortgage Loans do not have
any marks or notations indicating that they have been pledged, assigned or
otherwise conveyed to any Person other than the Purchaser. All financing
statements filed or to be filed in favor of the Purchaser in connection
herewith describing the Mortgage Loans contain a statement to the
following effect: "A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the
Indenture Trustee;"
(xliv) As of the Closing Date, no Mortgage Loans are subject to
assumption or modification agreements;
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(xlv) Each Mortgage Loan contains an appraisal conforming to the
standards of the applicable Originator as described on Exhibit O to this
Agreement; and
(xlvi) No Mortgage Loan contains "subsidized buydown," graduated
payment or convertible loan features.
(xlvii) Each Mortgage Loan constitutes a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code.
It is understood and agreed that the each of the foregoing representations
and warranties of the Seller may not be waived and shall survive the issuance of
the Notes.
(b) With respect to the representations and warranties set forth in this
Section that are made to the best of the Seller's knowledge or as to which the
Seller has no knowledge, if it is discovered by the Seller, the Depositor, the
Servicer, the Owner Trustee, the Insurer or the Indenture Trustee (in the case
of the Indenture Trustee, upon a Responsible Officer of the Indenture Trustee
obtaining actual knowledge) that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan then, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or warranty
and with respect to any breach of such representation or warranty or of any
other representation or warranty, the Seller shall cure, repurchase or
substitute in accordance with this Agreement. Breach of the representations and
warranties made in clauses (ix) and (xvii) above shall require repurchase of
Mortgage Loans selected on a random basis to the extent necessary to cure the
breach.
(c) It is understood and agreed that the representations and warranties
set forth in this Section shall survive the transfer of the Mortgage Loans to
the Trust and the termination of the rights and obligations of the Servicer
pursuant to Section 6.04 or 7.01 herein. Upon discovery by the Seller, the
Depositor, the Servicer, the Owner Trustee, the Insurer or the Indenture Trustee
(in the case of the Indenture Trustee, upon a Responsible Officer of the
Indenture Trustee obtaining actual knowledge) of a breach of any of the
foregoing representations and warranties, without regard to any limitation set
forth therein concerning the knowledge of the Seller as to the facts stated
therein, which materially and adversely affects the value of the related
Mortgage Loan or the interests of the Trust, the Noteholders, the
Certificateholders or the Insurer in the related Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties
and the Insurer. Within 90 days of its discovery or its receipt of notice of
breach, the Seller shall use all reasonable efforts to cure such breach in all
material respects and if such breach is not cured by the end of such 90-day
period, the Seller shall purchase such Mortgage Loan from the Trust or
substitute an Eligible Substitute Mortgage Loan for such Mortgage Loan on the
Determination Date in the month following the month in which such 90-day period
expired at the Purchase Price of such Mortgage Loan or, in the case of a
substitution, in accordance with Section 2.05. The Purchase Price and any
Substitution Adjustments for the purchased Mortgage Loan shall be remitted to
the Servicer for deposit in the Collection Account
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on the Determination Date immediately following such 90-day period, as certified
by the Seller to the Indenture Trustee; provided that the Servicer shall remit
to the Indenture Trustee, who shall then remit to the Insurer, the portion of
the amount, if any, of the Purchase Price referred to in clause (iv) of the
definition thereof to the extent such amount is incurred by or imposed on the
Insurer. It is understood and agreed that the obligation of the Seller to
purchase any Mortgage Loan or substitute an Eligible Substitute Mortgage Loan
for such Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy against the Seller
respecting such defect or omission available to the Insurer, the Noteholders,
the Indenture Trustee or the Certificateholders.
The Servicer, promptly following the transfer of (i) a Defective Mortgage
Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to
this Section and Section 2.05, as the case may be, shall amend the Mortgage Loan
Schedule through a Supplemental Mortgage Loan Schedule and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable. It is understood and
agreed that the obligation of the Seller to cure, substitute or purchase any
Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such breach available
to the Noteholders, the Insurer and the Indenture Trustee on behalf of the
Noteholders and the Certificateholders in respect of their respective interests
in the Trust.
(d) Upon discovery by the Seller, the Depositor, the Servicer, the Owner
Trustee, the Insurer or the Indenture Trustee (in the case of the Indenture
Trustee, upon a Responsible Officer of the Indenture Trustee obtaining actual
knowledge) 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
breach shall give prompt written notice to the other parties and the Insurer. In
connection therewith, the Indenture Trustee shall require the Seller, at the
Seller's option, to either (i) substitute, if the conditions in Section 2.05
with respect to substitutions are satisfied, an Eligible Substitute Mortgage
Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within ninety (90) days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty made pursuant to
Section 2.04. The Indenture Trustee shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms,
as it would a Mortgage Loan repurchased for breach of a representation or
warranty contained in Section 2.04.
Section 2.05 Substitution of Mortgage Loans.
(a) On a Determination Date which is on or before the date on which the
Seller would otherwise be required to repurchase a Mortgage Loan under Section
2.02 or 2.04, the Seller may deliver to the Trust one or more Eligible
Substitute Mortgage Loans in substitution for any one or more of the Defective
Mortgage Loans which the Seller would otherwise be required to repurchase
pursuant to Sections 2.02 or 2.04, provided that no substitution pursuant to
Section 2.02 or 2.04 shall be made more than two years after the Closing Date
unless the Seller delivers to the Indenture Trustee an Opinion of Counsel, which
Opinion of Counsel shall not be at the expense of either the Indenture Trustee
or the Trust Fund, addressed to the Indenture Trustee, to
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the effect that such substitution will not (i) result in the imposition of the
tax on "prohibited transactions" on the Trust Fund or contributions after the
Startup Date, as defined in Sections 860F(a)(2) and 860G(D) of the Code,
respectively, or (ii) cause any REMIC created under this Agreement to fail to
qualify as a REMIC at any time that any Notes are outstanding. A substitution
pursuant to Section 2.02 or 2.04 that is made within two years after the Closing
Date to replace a "defective obligation" within the meaning of Section
860G(a)(4) of the Code shall not require the Seller to deliver to the Indenture
Trustee an Opinion of Counsel. In connection with any such substitution, the
Seller shall calculate the Substitution Adjustment, if any, and shall deposit
such amount to the Collection Account by 12:00 p.m. New York City time on the
third Business Day prior to the Payment Date in the month succeeding the
calendar month in which the related cure period expired.
(b) The Seller shall notify the Servicer, the Insurer and the Indenture
Trustee in writing not less than five Business Days before the related
Determination Date which is on or before the date on which the Seller would
otherwise be required to repurchase such Mortgage Loan pursuant to Section 2.02
or 2.04 of its intention to effect a substitution under this Section 2.05. On
such Determination Date (the "Substitution Date"), the Seller shall deliver to
the Insurer, the Servicer, the Depositor and the Indenture Trustee (1) a list of
the Eligible Substitute Mortgage Loans to be substituted for the Defective
Mortgage Loans, (2) a list of the Defective Mortgage Loans to be substituted for
by such Eligible Substitute Mortgage Loans, (3) an Opinion of Counsel that the
substitution of the Eligible Substitute Mortgage Loans will not adversely affect
the tax status of the REMICs created by the Trust Agreement, (4) an Officer's
Certificate (A) stating that no Event of Servicing Termination shall have
occurred and be continuing, (B) stating that all conditions precedent to such
substitution specified in subsection (a) have been satisfied and attaching as an
exhibit a supplemental Mortgage Loan schedule (the "Supplemental Mortgage Loan
Schedule") setting forth the same type of information as appears on the Mortgage
Loan Schedule and representing as to the accuracy thereof and (C) confirming
that the representations and warranties contained in Section 2.04 are true and
correct in all material respects with respect to the Eligible Substitute
Mortgage Loans on and as of such Determination Date, provided that remedies for
the inaccuracy of such representations are limited as set forth in Sections
2.02, 2.04 and this Section 2.05 and (5) a certificate stating that cash in the
amount of the related Substitution Adjustment, if any, has been deposited to the
Collection Account; provided that the Servicer shall remit to the Indenture
Trustee, who shall then remit to the Insurer, the portion of the amount, if any,
of the Substitution Adjustment referred to in clause (d) of the definition
thereof to the extent such amount is incurred by the Insurer. Upon receipt of
the foregoing, the Indenture Trustee shall release such Defective Mortgage Loan
to the Trust and the Trust shall release such Defective Mortgage Loans to the
Seller without recourse, representation or warranty.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) above and the transfer of such Eligible Substitute Mortgage
Loans to the Indenture Trustee pursuant to Section 2.05(a), Exhibit A to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or
49
after the related substitution date, as the case may be, as to such Eligible
Substitute Mortgage Loans.
(d) As to any Eligible Substitute Mortgage Loan or Loans, the Seller shall
cause to be delivered to the Indenture Trustee with respect to such Eligible
Substitute Mortgage Loan or Loans such documents and agreements as are required
to be held by the Indenture Trustee in accordance with Section 2.01. For any
Collection Period during which the Seller purchases one or more Defective
Mortgage Loans, the Servicer shall determine the amount that shall be deposited
by the Seller in the Collection Account at the time of substitution. Any amounts
received in respect of the Eligible Substitute Mortgage Loan during the
Collection Period in which the circumstances giving rise to such substitution
occur shall not be a part of the Trust and shall not be deposited by the
Servicer in the Collection Account. All amounts received by the Servicer during
the Collection Period in which the circumstances giving rise to such
substitution occur in respect of any Defective Mortgage Loan so removed by the
Indenture Trustee shall be deposited by the Servicer in the Collection Account.
Upon such substitution, the Eligible Substitute Mortgage Loan shall be subject
to the terms of this Agreement in all respects, and the Seller shall be deemed
to have made with respect to such Eligible Substitute Mortgage Loan, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 2.04. The procedures applied by the Seller in selecting each Eligible
Substitute Mortgage Loan shall not be materially adverse to the interests of the
Indenture Trustee, the Noteholders, the Certificateholders or the Insurer.
Section 2.06 Tax Treatment. The Trust Estate shall be treated as
comprising two segregated accounts each of which will be a real estate mortgage
investment conduit (each a "REMIC" or, in the alternative, the "Lower Tier
REMIC" and the "Upper Tier REMIC"); each of the Notes, the Class B Certificates
and the Class P Certificates shall represent ownership of a regular interest in
the Upper Tier REMIC; the Class L Certificate shall represent the sole class of
residual interest in the Lower Tier REMIC; and the Class R Certificate
represents ownership of the sole class of residual interest in the Upper Tier
REMIC.
Section 2.07 [Reserved].
Section 2.08 Representations, Warranties and Covenants of the Depositor.
(a) The Depositor represents and warrants to the Depositor, the Trust and
the Indenture Trustee on behalf of the Noteholders, the Certificateholders and
the Insurer as follows:
(i) This Agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
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(ii) Immediately prior to the transfer by the Depositor to the
Trust of each Mortgage Loan, the Depositor had good and equitable title to
each Mortgage Loan (insofar as such title was conveyed to it by the
Depositor) acquired in good faith and subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title and interest in the Mortgage Loans to the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay or defraud any of its creditors;
(v) The Depositor has been duly organized and is validly existing
as a corporation in good standing under the laws of Delaware, with full
power and authority to own its assets and conduct its business as
presently being conducted and the Depositor will not change its
jurisdiction of organizations without prior notice to the Rating Agencies,
the Servicer, the Indenture Trustee and the Insurer;
(vi) Other than the security interest granted to the Indenture
Trustee hereunder, the Depositor has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the Mortgage Loans.
The Depositor has not authorized the filing of and is not aware of any
financing statements against the Depositor that include a description of
collateral covering the Mortgage Loans other than any financing statement
relating to the security interest granted to the Indenture Trustee
hereunder or that has been terminated. The Depositor is not aware of any
judgment or tax lien filings against the Depositor;
(vii) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Depositor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction; and
(viii) The Depositor represents and warrants that it has caused the
filing of all appropriate financing statements in the proper filing office
in the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Mortgage Loans transferred to the Indenture
Trustee on behalf of the Trust, pursuant to this Agreement.
It is understood and agreed that the representations and warranties set
forth in (i) through (viii) above shall survive the transfer of the Mortgage
Loans to the Trust.
(b) The Depositor represents and covenants to the parties hereto and the
Insurer that:
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(i) Other than the security interest granted by the Depositor to
the Trust under this Agreement, the Depositor has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the
Mortgage Loans. The Depositor has not authorized the filing of and is not
aware of any financing statements against the Depositor that includes a
description of collateral covering the Mortgage Loans other than any
financing statement relating to the security interest granted to the Trust
under this Agreement. The Depositor is not aware of any judgment or tax
lien filings against the Depositor;
(ii) The Depositor will not engage in any activity that would
result in a downgrading of the Class A Notes without regard to the Policy;
and
(iii) The Depositor's location under the applicable UCC is in
Delaware and it will not change its principal place of business or its
jurisdiction of organization without prior notice to the Rating Agencies,
the Servicer, the Indenture Trustee and the Insurer.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Servicer.
(a) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with Accepted Servicing Practices
and shall have full power and authority, acting alone, to do any and all things
in connection with such servicing and administration which the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Mortgage Loans with any institution which (i) is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement, (ii) (x) has been designated an approved
Seller-Servicer by Xxxxxxx Mac or Xxxxxx Mae for first and second mortgage loans
or (y) is an affiliate of the Servicer or (z) is otherwise approved by the
Insurer. The Servicer shall give written notice to the Insurer and the Indenture
Trustee prior to the appointment of any Subservicer. Any such Subservicing
Agreement shall be consistent with and not violate the provisions of this
Agreement and shall be in form and substance acceptable to the Insurer. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and either itself
directly service the related Mortgage Loans or enter into a Subservicing
Agreement with a successor subservicer which qualifies hereunder.
(b) Notwithstanding any Subservicing Agreement or 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 for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
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Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when the Subservicer has received such payments. 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.
(c) 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 and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Depositor, the Owner Trustee,
the Indenture Trustee, the Noteholders and the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section
3.01(d) herein. 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.
(d) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Servicing Termination), the
Indenture Trustee or its designee approved by the Insurer or a successor
Servicer under Section 7.02(a) shall thereupon assume all of the rights and
obligations of the Servicer under each Subservicing Agreement that the Servicer
may have entered into, unless the Indenture Trustee or designee approved by the
Insurer or any successor Servicer elects to terminate any Subservicing Agreement
(except with respect to Subservicing Agreements that only allow for termination
of the related Subservicer for cause or require a termination fee for
termination without cause) in accordance with the terms of such Subservicing
Agreement. The Indenture Trustee shall not be responsible for any termination
fees under any Subservicing Agreement. In no event shall any Subservicing
Agreement require the Insurer or the Indenture Trustee as Successor Servicer to
pay compensation to a Subservicer or order the termination of such Subservicer.
Any fee payable or expense incurred in connection with such a termination will
be payable by the outgoing Servicer. If the Indenture Trustee does not terminate
a Subservicing Agreement, the Indenture Trustee, its designee or a successor
Servicer shall be deemed 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 the Subservicing Agreements had been assigned to the
assuming party, except that the Servicer shall not thereby be relieved of any
liability or obligations under the Subservicing Agreements with regard to events
that occurred prior to the date the Servicer ceased to be the Servicer
hereunder. The Servicer, at its expense and without right of reimbursement
therefor, shall, upon the request of the Indenture Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(e) No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall, for the purposes of payments to the Noteholders and
distributions to the Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and
53
empowered to execute and deliver on behalf of the Trust, each Noteholder and
each Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer and requested in writing, the Indenture
Trustee shall furnish the Servicer and, if directed by a Servicing Officer, any
Subservicer with any powers of attorney and other documents reasonably necessary
or appropriate to enable the Servicer and any such Subservicer to carry out its
servicing and administrative duties under this Agreement.
(f) On and after such time as the Indenture Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 6.04 herein, after receipt by the Indenture Trustee and the Insurer of
the Opinion of Counsel required pursuant to Section 6.04, the Indenture Trustee,
if it so elects, and with the consent of the Insurer, shall assume all of the
rights and obligations of the Servicer, subject to Section 7.02 herein. The
Servicer shall at its expense, deliver to the Indenture Trustee, all documents
and records relating to the Mortgage Loans and an accounting of amounts
collected and held by the Servicer and otherwise use its best efforts to effect
the orderly and efficient transfer of servicing rights and obligations to the
assuming party.
The defaulting Servicer agrees to cooperate with the Indenture Trustee and
any successor servicer in effecting the termination of the defaulting Servicer's
responsibilities and rights hereunder as Servicer including, without limitation,
notifying each Subservicer of the assignment of the servicing function and
providing the Indenture Trustee or its designee all documents and records in
electronic or other form reasonably requested by it to enable the Indenture
Trustee or its designee to assume the defaulting Servicer's functions hereunder
and the transfer to the Indenture Trustee for administration by it of all
amounts which shall at the time be or should have been deposited by the
defaulting Servicer in the Collection Account maintained by such defaulting
Servicer and any other account or fund maintained with respect to the Notes or
thereafter received with respect to the Mortgage Loans. The Servicer being
terminated (unless such Servicer is the Indenture Trustee, in which case the
initial Servicer) shall bear all costs of a servicing transfer, including but
not limited to those of the Indenture Trustee reasonably allocable to specific
employees and overhead, legal fees and expenses, accounting and financial
consulting fees and expenses, and costs of amending the Transaction Documents,
if necessary.
The Indenture Trustee shall be entitled to be reimbursed from the Servicer
(or by the Trust pursuant to Section 5.01(a)(M), if the Servicer is unable to
fulfill its obligations hereunder) for all costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
reasonably required by the Indenture Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture
Trustee or other successor Servicer to service the Mortgage Loans properly and
effectively. If the terminated Servicer does not pay such reimbursement within
thirty (30) days of its receipt of an invoice therefore, such reimbursement
shall be an expense of the Indenture Trustee pursuant to Section 5.01(a)(M);
provided that the terminated
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Servicer unless the terminated Servicer is the Indenture Trustee shall reimburse
the Trust for any such expense incurred by the Trust.
(g) The Servicer shall deliver a list of Servicing Officers to the
Indenture Trustee and the Insurer on or before the Closing Date and shall revise
such list from time to time, as appropriate, and shall deliver all revisions
promptly to the Indenture Trustee and the Insurer.
(h) Subject to the limitations set forth under Section 3.01(i) hereof, the
Servicer, without prior approval from the Rating Agencies, Indenture Trustee or
the Insurer, may (A) solicit Mortgagors for a reduction in Margins, provided
that the cumulative impact of any such Margin reductions shall not result in the
reduction of the weighted average Margin of the Mortgage Loans as of the Cut-Off
Date by more than 25 basis points taking into account any prior reductions; (B)
may agree to or solicit Mortgagors to change any other terms of the related
Mortgage Loans if the changes (i) do not materially and adversely affect the
interests of the Noteholders, the Certificateholders, or the Insurer and (ii)
are consistent with Accepted Servicing Practices as evidenced by a certificate
signed by a Servicing Officer delivered to the Indenture Trustee and the
Insurer, provided however, that in no event shall the Servicer modify the
maturity of any Mortgage Loan to a maturity that is later than the Final
Scheduled Payment Date. Nothing in this Agreement shall limit the right of the
Servicer to solicit mortgagors with respect to new loans (including mortgage
loans) that are not Mortgage Loans.
(i) The Servicer shall not make or permit any modification, waiver, or
amendment of any term of any Mortgage Loan that would cause the Trust Fund to
fail to qualify as a REMIC or result in the imposition of any tax under Section
860F(a) or Section 860G(d) of the Code. The Servicer covenants and agrees to
indemnify the Trust Fund against any liability for any taxes (including
prohibited transaction taxes) and any related interest, additions, and penalties
imposed on the Trust Fund established hereunder as a result of any modification
of a Mortgage Loan effected pursuant to this Section 3.01.
Section 3.02 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, follow such
collection procedures as it follows with respect to mortgage loans in its
servicing portfolio comparable to the Mortgage Loans. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Servicer
may in its discretion (i) pursuant to Section 3.13, waive any prepayment penalty
or late payment charge or any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loan, (ii) arrange
with a Mortgagor a schedule for the payment of principal and interest due and
unpaid; provided that such arrangement is consistent with the Servicer's
policies with respect to the mortgage loans it owns or services; provided,
further, that notwithstanding such arrangement such Mortgage Loans will be
included in the monthly information delivered by the Servicer to the Indenture
Trustee and the Insurer pursuant to Section 5.03 herein
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(b) [Reserved]
(c) The Servicer shall establish and maintain an Eligible Account (the
"Collection Account") entitled "IndyMac Bank, F.S.B., in trust for the
registered holders of IndyMac Home Equity Mortgage Loan Asset-Backed Trust,
Series 2006-H1" The Servicer shall notify the Indenture Trustee of the Eligible
Institution with which the Collection Account is maintained. The Servicer shall,
on the Closing Date, deposit any amounts representing payments on and any
collections in respect of the Mortgage Loans received after the Cut-Off Date
(excluding interest accrued on or prior to the Cut-Off Date) and prior to the
Closing Date, and thereafter, subject to Section 3.02(d), deposit within two
Business Days following receipt thereof, the following payments and collections
received or made by it (without duplication) to the Collection Account:
(i) all payments received by the Servicer after the Cut-Off Date
on account of principal on the Mortgage Loans;
(ii) all payments, net of related servicing fees, received by the
Servicer after the Cut-Off Date on account of interest on the Mortgage
Loans;
(iii) all Net Recoveries;
(iv) all Prepayment Charges;
(v) any amounts required to be deposited pursuant to Section 3.07
in connection with any REO Property;
(vi) [Reserved];
(vii) [Reserved];
(viii) [Reserved];
(ix) the Purchase Price of any Mortgage Loan and the amount of any
Substitution Adjustment paid by a Seller during the related Collection
Period pursuant to Sections 2.02, 2.04 and 2.05;
(x) all Released Mortgaged Property Proceeds; and
(xi) any amount required to be deposited therein pursuant to
Sections 3.02(d) and 5.08(e) herein;
The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not
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deposit in the Collection Account amounts representing fees (including annual
fees, assumption fees, modification fees, insufficient funds charges and other
ancillary income) or late charge penalties payable by Mortgagors or amounts
received by the Servicer for the accounts of Mortgagors for application toward
the payment of taxes, insurance premiums, assessments and similar items.
(d) All funds in the Collection Account shall be held uninvested.
Section 3.03 Withdrawals from the Collection Account. The Servicer shall
withdraw or cause to be withdrawn funds from the Collection Account for the
stated purposes in the following order of priority:
(i) to reimburse the Servicer for any accrued and unpaid Servicing
Fees;
(ii) on each Servicer Remittance Date, to transfer the following
amounts to the Indenture Trustee for deposit in the Payment Account:
(A) the portion of the Interest Collections and Principal
Collections for the related Collection Period then in the Collection
Account;
(B) [Reserved];
(C) any amounts required to be deposited pursuant to Section
3.07 in connection with any REO Property;
(D) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 10.01;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code 11
U.S.C. 101 et seq., as amended in accordance with a final, nonappealable
order of a court having competent jurisdiction;
(iv) [Reserved];
(v) to pay the Servicer as servicing compensation (in addition to
the Servicing Fee) on the Servicer Remittance Date any interest earned on
funds deposited in the Collection Account;
(vi) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein or were deposited therein in
error and to pay such funds to the appropriate Person;
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(vii) to pay the Servicer the servicing compensation for the related
Collection Period that it is entitled to receive pursuant to Section 3.09
herein;
(viii) to reimburse the Servicer for any Servicing Advance
previously made which the Servicer has determined to be a Nonrecoverable
Advance;
(ix) [Reserved];
(x) to withdraw funds necessary for the conservation and disposition
of REO Property pursuant to Section 3.07 to the extent not advanced by the
Servicer; and
(xi) to clear and terminate the Collection Account upon the
termination of this Agreement.
Prior to making any withdrawal from the Collection Account pursuant to
subclause (vii), the Servicer shall have delivered to the Indenture Trustee and
the Insurer a certificate of a Servicing Officer indicating the amount of any
previous Servicing Advance determined by the Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer verifies the existence at the origination of each
Mortgage Loan fire and hazard insurance naming the Servicer or its designee as
loss payee thereunder providing extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan from time to time, (ii) the combined principal
balance owing on such Mortgage Loan and any mortgage loan senior to such
Mortgage Loan and (iii) the minimum amount required to compensate for damage or
loss on a replacement cost basis. The Servicer shall also maintain on property
acquired upon foreclosure, or by deed in lieu of foreclosure, fire and hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the improvements
which are a part of such property, (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan at the
time of such foreclosure, or deed in lieu of foreclosure plus accrued interest
and the good-faith estimate of the Servicer of related Servicing Advances to be
incurred in connection therewith. Amounts collected by the Servicer under any
such policies shall be deposited in the Collection Account to the extent called
for by Section 3.02. In cases in which any Mortgaged Property is located in an
area identified in a federally designated flood area, the hazard insurance to be
maintained for the related Mortgage Loan shall include flood insurance to the
extent such flood insurance is available and the Servicer has determined such
insurance to be necessary in accordance with Accepted Servicing Practices of
prudent lending institutions. All such flood insurance shall be in amounts not
less than the lesser of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Reform Act of 1994, as amended. The Servicer shall be
under no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to
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maintain any such additional insurance on property acquired in respect of a
Mortgage Loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
Section 3.05 Maintenance of Mortgage Impairment Insurance Policy. In the
event that the Servicer shall obtain and maintain a blanket insurance policy
consistent with Accepted Servicing Practices, insuring against fire and hazards
of extended coverage on all of the Mortgage Loans, then, to the extent such
insurance policy names the Servicer or its designee as loss payee and provides
coverage in an amount equal to the aggregate unpaid principal balance on the
Mortgage Loans without coinsurance, and otherwise complies with the requirements
of Section 3.04, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under Section
3.04. Upon the request of the Insurer or the Indenture Trustee, the Servicer
shall cause to be delivered to the Insurer or the Indenture Trustee, as the case
may be, a certified true copy of such insurance policy. 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 Indenture Trustee, the
Insurer and the Trust, claims under any such insurance policy in a timely
fashion in accordance with the terms of such insurance policy.
Section 3.06 Maintenance of Fidelity Bond and Errors and Omissions
Insurance. The Servicer shall maintain with responsible companies, at its own
expense, a blanket fidelity bond ("Fidelity Bond") and an errors and omissions
insurance policy ("Errors and Omissions Insurance Policy"), with broad coverage
on all officers, employees or other persons acting in any capacity requiring
such persons to handle funds, money, documents or papers relating to the related
Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy may contain a deductible clause on terms
substantially equivalent to to those commercially available and maintained by
comparable servicers. If such Fidelity Bond and Errors and Omissions Insurance
Policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgage Property an insurance
policy comply with this Section, and there shall have been a loss that would
have been covered by such insurance policy, deposit into the Collection Account
the amount not otherwise payable under such insurance policy because of such
deductible clause. Any such Fidelity Bond and Errors and Omissions Insurance
Policy shall be in the form of the Mortgage Banker's Blanket Bond and shall
protect and insure the Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of the Servicer
Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also
shall protect and insure the Servicer against losses in connection with the
release or satisfaction of a related Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 3.06 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Servicer from its duties and obligations as
set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required
by Xxxxxx Xxx. Upon the request of the Indenture Trustee or the Insurer, the
Servicer shall cause to be delivered to the Indenture Trustee or the Insurer a
certificate of insurance of the insurer and the surety including a statement
from the surety.
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Section 3.07 Management of and Realization upon Defaulted Mortgage Loans.
(a) Management of REO Property. In the event the Issuer acquires ownership
of any REO Property in respect of any Mortgage Loan, the deed or certificate of
sale shall be issued to the Indenture Trustee, or to its nominee, on behalf of
the Securityholders. The Servicer shall use its reasonable best efforts to sell,
any REO Property as expeditiously as possible and in accordance with the
provisions of this Agreement and the related Servicing Agreement, as applicable,
but in all events within the time period, and subject to the conditions set
forth in Section 5.09 and prior to the close of the third taxable year after its
acquisition by the Issuer unless the Indenture Trustee and (so long as any Class
A Notes are Outstanding or any Reimbursement Amounts remain due and owing to the
Insurer and no Insurer Default has occurred and is continuing) the Insurer shall
have been supplied with an Opinion of Counsel to the effect that the holding by
the Issuer of such REO Property subsequent to such three-year period will not
result in the imposition of taxes on "prohibited transactions" of any REMIC
created under the Trust Agreement as defined in section 860F of the Code or
cause any REMIC created hereunder to fail to qualify as a REMIC at any time that
any Notes or Certificates are Outstanding, in which case the Issuer may continue
to hold such REO Property (subject to any conditions contained in such Opinion
of Counsel and the other requirements of this Section 3.07(a)). Pursuant to its
efforts to sell such REO Property, the Servicer shall protect and conserve, such
REO Property in the manner and to such extent required by this Agreement,
subject to Section 5.09 hereof. The decision of the Servicer to foreclose, or to
continue the foreclosure process, on a defaulted Mortgage Loan shall be subject
to a determination by the Servicer that the related Mortgaged Property will not
fail to qualify as "foreclosure property" within meaning of Section 860G(a)(8)
of the Code and that the proceeds of such foreclosure would more likely than not
exceed the costs and expenses of bringing such a proceeding and liquidating the
REO Property expected to be obtained through such foreclosure. Notwithstanding
any other provision of this Agreement, no Mortgaged Property acquired by the
Issuer shall be rented (or allowed to continue to be rented) or otherwise used
for the production of income by or on behalf of the Issuer in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (ii) subject any REMIC created under the Trust Agreement to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property, unless the Servicer has agreed to indemnify and hold
harmless the Issuer and the Trust Estate with respect to the imposition of any
such taxes..
The Servicer shall cause to be deposited, within the time period specified
in Section 3.02(d), as applicable, in the Collection Account, all revenues net
of Servicing Advances received with respect to the related REO Property and
shall retain, or cause to be withdrawn therefrom, funds necessary for the proper
operation, management and maintenance of the REO Property and the fees of any
managing agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer for
cash at such price, and upon such terms and conditions, as the Servicer deems to
be in the best interest of the Noteholders, the Certificateholders, the Trust
and the Insurer and, as soon as practicable thereafter, the expenses of such
sale shall be paid. The cash proceeds of the sale of the REO
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Property shall be promptly deposited in the Collection Account, pursuant to
Section 3.02(d), as applicable, net of any related unreimbursed Servicing
Advances (without duplication of amounts paid pursuant to Section 3.03(vii)),
payable to the Servicer in accordance with Section 3.03, for payment in
accordance with Section 5.01 herein.
(b) Realization Upon Defaulted Mortgage Loans. The Servicer shall
foreclose upon or otherwise comparably convert to ownership Mortgaged Properties
securing such of the Mortgage Loans as come into and continue in default when no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.01, subject to the provisions contained in the second
succeeding paragraph of this Section 3.07 and only if the Servicer determines
that there is sufficient equity in the related Mortgaged Property to justify
such foreclosure. In connection with foreclosure or other conversion, the
Servicer will follow Accepted Servicing Practices, including the practice that
the Servicer will not be required to expend its own funds in connection with
foreclosure or other conversion, correction of default on a related senior
mortgage loan or restoration of any Mortgaged Property unless, in its sole
judgment, foreclosure, correction or restoration will increase net liquidation
proceeds and that, in the event that the related 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 Mortgaged Property unless it
shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the Mortgage Loan after reimbursement to itself for
such expenses.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee or its nominee on behalf of the Trust
and the Insurer.
If the Servicer has actual knowledge that a Mortgaged Property which the
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within 1 mile of any site with environmental or hazardous
waste risks, the Servicer will notify the Insurer prior to acquiring the
Mortgaged Property and shall not take any action without prior written approval
of the Insurer.
Section 3.08 Indenture Trustee to Cooperate. Upon the payment in full of
any Mortgage Loan, the Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.01(e), if the related Assignment of
Mortgage has been recorded, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Servicer if
required by applicable law and be delivered to the Person entitled thereto. It
is understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Collection Account. If the Indenture Trustee is holding any
portion of the Mortgage Files, from time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Indenture Trustee shall, upon
request of the Servicer and delivery to the Indenture Trustee of a request for
release, in the form attached hereto as Exhibit I, signed by a Servicing
Officer, release the related portion of the Mortgage File to the Servicer, and
the Indenture Trustee shall execute such documents, at the expense of and in the
forms provided by the Servicer, as shall be necessary for the prosecution of any
such proceedings or the taking of other servicing actions. Such Request for
Release shall
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obligate the Servicer to return the portion of the Mortgage File released to it
to the Indenture Trustee when the need therefor by the Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified
(including a certification that the Servicer has deposited the proceeds of such
liquidated Mortgage Loan in the Collection Account), a copy of the Request for
Release shall be released by the Indenture Trustee to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Indenture Trustee
shall, if so requested in writing by the Servicer execute an appropriate
assignment in the form provided to the Trust and the Indenture Trustee by the
Servicer to assign such Mortgage Loan for the purpose of collection to the
Servicer (any such assignment shall unambiguously indicate that the assignment
is for the purpose of collection only) and, upon such assignment, such assignee
for collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan and deposit or credit the Net
Recoveries received with respect thereto in the Collection Account. In the event
that all delinquent payments due under any such Mortgage Loan are paid by the
Mortgagor and any other defaults are cured then the assignee for collection
shall promptly reassign such Mortgage Loan to the Indenture Trustee and return
it to the place where the related Mortgage File was being maintained.
Section 3.09 Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to retain the Servicing Fee in
accordance with Section 3.02 as compensation for its services in connection with
servicing the Mortgage Loans. Moreover, additional servicing compensation in the
form of late payment charges or other receipts not considered interest or
principal payments under the Mortgage Notes and Foreclosure Profits shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all other fees and expenses not expressly stated hereunder to be for the account
of the Trust) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
Section 3.10 Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Indenture Trustee (via electronic
mail to XXXXX.Xxxxxxxxxxxxx@xx.xxx), the Depositor and the Rating Agencies on or
before March 15 of each year, commencing in 2007, unless and until a Form 15
Suspension Notice shall have been filed an officer's certificate, an officer's
certificate in the form of Exhibit C hereof, certifying that with respect to the
period ending December 31st of the prior year: (i) the Servicer or such
Servicing Officer, as applicable, has reviewed the activities of the Servicer
during the preceding calendar year or portion thereof and its performance under
this Agreement and (ii) to the best of the Servicer's or such Servicing
Officer's knowledge, as applicable based on such review, the 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 Servicing Officer and the nature and
status thereof. Copies of any such statement shall be
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provided by the Indenture Trustee to any Certificateholder and to any Person
identified to the Indenture Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Servicer to the Indenture Trustee. In addition to
the foregoing, the Servicer will, to the extent reasonable, give any other
servicing information required by the Commission pursuant to applicable law. The
Servicer shall indemnify and hold harmless the Depositor and its officers,
directors and Affiliates from and against any actual losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses that such Person may sustain based upon a
breach of the Servicer's obligations under this Section 3.10.
Section 3.11 Assessment of Compliance and Attestation Report.
The Servicer shall service and administer the Mortgage Loans in accordance with
all applicable requirements of the Servicing Criteria (as set forth in Exhibit P
hereto). Pursuant to Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122
of Regulation AB, the Servicer shall deliver to the Indenture Trustee (via
electronic mail to XXXXX.Xxxxxxxxxxxxx@xx.xxx) on or before March 15th of each
calendar year beginning in 2007, a report regarding the Servicer's assessment of
compliance (an "Assessment of Compliance") with the Servicing Criteria during
the preceding calendar year. The Assessment of Compliance must be reasonably
satisfactory to the Indenture Trustee, and as set forth in Regulation AB, the
Assessment of Compliance must contain the following:
(a) A statement by such officer of its responsibility for
assessing compliance with the Servicing Criteria applicable to the Servicer;
(b) A statement by such officer that such officer used the
Servicing Criteria, and which will also be attached to the Assessment of
Compliance, to assess compliance with the Servicing Criteria applicable to the
Servicer;
(c) An assessment by such officer of the Servicer's compliance
with the applicable Servicing Criteria for the period consisting of the
preceding calendar year, including disclosure of any material instance of
noncompliance with respect thereto during such period, which assessment shall be
based on the activities it performs with respect to asset-backed securities
transactions taken as a whole involving the Servicer, that are backed by the
same asset type as the Mortgage Loans;
(d) A statement that a registered public accounting firm has
issued an attestation report on the Servicer's Assessment of Compliance for the
period consisting of the preceding calendar year; and
(e) A statement as to which of the Servicing Criteria, if any, are
not applicable to the Servicer, which statement shall be based on the activities
it performs with respect to asset-backed securities transactions taken as a
whole involving the Servicer, that are backed by the same asset type as the
Mortgage Loans.
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Such report at a minimum shall address each of the Servicing Criteria
specified on Exhibit P hereto which are indicated as applicable to the Servicer.
On or before March 15th of each calendar year beginning in 2007, the
Servicer shall furnish to the Indenture Trustee a report (an "Attestation
Report") by a registered public accounting firm that attests to, and reports on,
the Assessment of Compliance made by the Servicer, as required by Rules 13a-18
and 15d-18 of the Exchange Act and Item 1122(b) of Regulation AB, which
Attestation Report must be made in accordance with standards for attestation
reports issued or adopted by the Public Company Accounting Oversight Board.
The Servicer shall cause and any sub-servicer, and each subcontractor
determined by the Servicer to be "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, to deliver to the Indenture
Trustee and the Depositor an Assessment of Compliance and Attestation Report as
and when provided above.
Such Assessment of Compliance, as to any Sub-Servicer, shall at a minimum
address each of the Servicing Criteria specified on Exhibit P hereto which are
indicated as applicable to any "primary servicer." Notwithstanding the
foregoing, as to any subcontractor, an Assessment of Compliance is not required
to be delivered unless it is required as part of a Form 10-K with respect to the
Trust Fund.
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If the Servicer cannot deliver any Assessment of Compliance or Attestation
Report by March 15th of such year, the Indenture Trustee, at its sole option,
may permit a cure period for the Servicer to deliver such Assessment of
Compliance or Attestation Report, but in no event later than March 25th of such
year.
Failure of the Servicer to timely comply with this Section 3.11 may be
deemed an Event of Default. The Indenture Trustee shall, with the consent of the
Depositor, in addition to whatever rights the Indenture Trustee may have under
this Agreement and at law or equity or to damages, including injunctive relief
and specific performance, give notice to Certificateholders that they have ten
Business Days to object. If no such objection is received, the Indenture Trustee
shall immediately terminate all the rights and obligations of the Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof without
compensating the Servicer for the same. This paragraph shall supersede any other
provision in this Agreement or any other agreement to the contrary.
The Indenture Trustee shall also provide an Assessment of Compliance and
Attestation Report, as and when provided above, which shall at a minimum address
each of the Servicing Criteria specified on Exhibit P hereto which are indicated
as applicable to the "trustee."
Section 3.12 Access to Certain Documentation and Information Regarding the
Mortgage Loans. The Servicer shall provide to the Indenture Trustee, the
Insurer, Noteholders that are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC, such access being afforded without charge but
only upon reasonable request and during normal business hours at the offices of
the Servicer. Nothing in this Section 3.12 shall derogate from 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 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12; provided that the Servicer makes
reasonable efforts to provide such information without violation of law.
Section 3.13 Prepayment Charges
(a) The Servicer shall not waive any part of any Prepayment Charge
unless the waiver relates to a default or a reasonably foreseeable default, the
collection of any Prepayment Charge would violate any relevant law or regulation
or the waiving of the Prepayment Charge would otherwise benefit the Trust Fund
and it is expected that the waiver would maximize recovery of total proceeds
taking into account the value of the Prepayment Charge and related Mortgage Loan
and doing so is standard and customary in servicing similar Mortgage Loans
(including any waiver of a Prepayment Charge in connection with a refinancing of
a Mortgage Loan that is related to a default or a reasonably foreseeable
default). The Servicer shall not waive a Prepayment Charge in connection with a
refinancing of a Mortgage Loan that is not related to a default or a reasonably
foreseeable default.
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(b) The Seller represents and warrants to the Depositor and the
Indenture Trustee, as of the Closing Date, that the information in the
Prepayment Charge Schedule (including the attached prepayment charge summary) is
complete and accurate in all material respects at the dates as of which the
information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms under applicable state law.
(c) Upon discovery by the Seller or a Responsible Officer of the
Indenture Trustee of a breach of the foregoing clause (b) that materially and
adversely affects right of the Holders of the Class P Certificate to any
Prepayment Charge, the party discovering the breach shall give prompt written
notice to the other parties. Within sixty (60) days of the earlier of discovery
by the Servicer or receipt of notice by the Servicer of breach, the Servicer
shall cure the breach in all material respects or shall pay into the Collection
Account the amount of the scheduled Prepayment Charge, less any amount
previously collected and paid by the Servicer into the Collection Account. If
the covenant made by the Servicer in clause (a) above is breached, the Servicer
must pay into the Collection Account the amount of the waived Prepayment Charge.
Section 3.14 Commission Reporting.
(a) Unless and until a Form 15 Suspension Notice shall have been filed,
the Indenture Trustee shall, within 15 days after each Distribution Date and in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System ("XXXXX"), a Distribution Report on Form
10-D (the "Distribution Report") with a copy of the Monthly Statement to be
furnished by the Indenture Trustee to the Certificateholders for such
Distribution Date and, if applicable, including the information required by each
of the items set forth in Part II thereof, subject to the receipt of the
information set forth in (f) below, in the case of information not required to
be provided by the Indenture Trustee.
(b) Except with respect to the Distribution Report to be filed following
the first Distribution Date, the Indenture Trustee shall prepare each
Distribution Report and, no later than 5 Business Days prior to the date on
which such Distribution Report is required to be filed, deliver a copy of such
Distribution Report to the Depositor for review. No later than the Business Day
following the receipt thereof, the Depositor shall notify the Indenture Trustee
of any changes to made to the Distribution Report. The Indenture Trustee shall
make any changes thereto requested by the Depositor and deliver the final
Distribution Report to the Depositor for signature no later than three Business
Days prior to the date on which such Distribution Report must be filed by the
Indenture Trustee in accordance with clause (a) above. The Depositor shall
execute the final Distribution Report and deliver the same to the Indenture
Trustee via electronic mail to XXXXX.Xxxxxxxxxxxxx@xx.xxx or facsimile no later
than the Business Day following receipt of the same (which, unless not received
within such time frame from the Indenture Trustee, shall be no later than two
Business Days prior to the date on which the Distribution Report is required to
be filed), with an original executed hard copy to follow by overnight mail. With
respect to the Distribution Report to be filed following the first Distribution
Date, the Depositor shall prepare and execute such Distribution Report and, no
later than 5 Business Days prior to the date on which such Distribution Report
is required to be filed, deliver a copy of such Distribution Report to the
Indenture Trustee. The Indenture Trustee shall attach thereto the
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Monthly Statement furnished by the Indenture Trustee to the Certificateholders
for such Distribution Date and file such Distribution Report in accordance with
clause (a) above.
(c) The Depositor shall prepare and file Current Reports on Form 8-K, as
and when required.
(d) Prior to January 30th of the first year in which the Indenture
Trustee is able to do so under applicable law, the Indenture Trustee shall, in
accordance with industry standards, file a Form 15 Suspension Notice with
respect to the Trust Fund.
(e) Prior to (x) March 15, 2007 and (y) unless and until a Form 15
Suspension Notice shall have been filed, prior to March 15th of each year
thereafter, the Servicer shall provide the Indenture Trustee with an Annual
Compliance Statement, together with a copy of the Assessment of Compliance and
Attestation Report to be delivered by the Servicer pursuant to Sections 3.10 and
3.11. Prior to (x) March 31, 2007 and (y) unless and until a Form 15 Suspension
Notice shall have been filed, March 31st of each year thereafter, the Indenture
Trustee shall, subject to subsection (e) below, file a Form 10-K, with respect
to the Trust Fund. The Indenture Trustee shall prepare each Form 10-K and, no
later than 5 Business Days prior to the date on which such Form 10-K is required
to be filed, deliver a copy of such Form 10-K to the Depositor for review. No
later than the Business Day following the receipt thereof, the Depositor shall
notify the Indenture Trustee of any changes to made to the Form 10-K. The
Indenture Trustee shall make any changes thereto requested by the Depositor and
deliver the final Form 10-K to the Depositor for signature no later than three
Business Days prior to the date on which such Form 10-K must be filed by the
Indenture Trustee in accordance with this clause (d). The Depositor shall
execute the final Form 10-K and deliver the same to the Indenture Trustee via
electronic mail to XXXXX.Xxxxxxxxxxxx@xx.xxx or facsimile no later than Business
Day following receipt of the same (which, unless not received within such time
frame from the Indenture Trustee, shall be no later than two Business Days prior
to the date on which the From 10-K is required to be filed), with an original
executed hard copy to follow by overnight mail. Such Form 10-K shall include the
Assessment of Compliance, Attestation Report, Annual Compliance Statements and
other documentation provided by the Servicer pursuant to Sections 3.10 and 3.11
and a certification in the form attached hereto as Exhibit L (the "Depositor
Certification"), which shall be signed by the senior officer of the Depositor in
charge of securitization.
(f) As to each item of information required to be included in any Form
10-D, Form 8-K or Form 10-K, the Indenture Trustee's or Depositor's obligation
to include the information in the applicable report is subject to receipt from
the entity that is indicated in Exhibit P as the responsible party for providing
that information, if other than the Indenture Trustee or the Depositor, as
applicable, as and when required as described above. Each of the Indenture
Trustee, the Servicer and the Depositor, as applicable, hereby agree to notify
and provide to the Indenture Trustee and the Depositor all information that is
required to be included in any Form 10-D, Form 8-K or Form 10-K, with respect to
which that entity is indicated in Exhibit P as the responsible party for
providing that information. In the case of information to be included in the
From 10-D, such information shall be delivered to the Indenture Trustee via
email to
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XXXXX.Xxxxxxxxxxxxx@xx.xxx no later than no later than 5 calendar days following
each Distribution Date. In the case of information to be included in the Form
8-K, such information shall be delivered to the Depositor no later than no later
2 Business Days following the occurrence of a reportable event. In the case of
information to be included in the From 10-K, such information, other than the
documentation provided pursuant to Sections 3.10, 3.11 and 3.14(f), shall be
delivered to the Indenture Trustee via email to XXXXX.Xxxxxxxxxxxxx@xx.xxx no
later than no later than (x) March 1, 2007 and (y) unless and until a Form 15
Suspension Notice shall have been filed, March 1st of each year thereafter. The
Servicer shall be responsible for determining the pool concentration applicable
to any subservicer or originator at any time, for purposes of disclosure as
required by Items 1117 and 1119 of Regulation AB. The Indenture Trustee shall
provide electronic or paper copies of all Form 10-D, 8-K and 10-K filings free
of charge to any Certificateholder upon request.
(g) The Indenture Trustee shall sign a certification (in the form
attached hereto as Exhibit L) for the benefit of the Depositor and its officers,
directors and Affiliates. The Indenture Trustee's certification shall be
delivered to the Depositor by no later than March 18th of each year (or if such
day is not a Business Day, the immediately preceding Business Day) and the
Depositor shall deliver the Depositor Certification to the Indenture Trustee for
filing no later than March 20th of each year (or if such day is not a Business
Day, the immediately preceding Business Day).
(h) The Indenture Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon (i) a breach of the Indenture Trustee's obligations under this
Section 3.14, Section 3.11 or (ii) any material misstatement or omission
contained in any information provided by the Indenture Trustee including,
without limitation, in the certification provided by the Indenture Trustee in
the form of Exhibit L or the Assessment of Compliance provided pursuant to
Section 3.11. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Depositor, then the Indenture Trustee, in
connection with (i) a breach of the Indenture Trustee's obligations under this
Section 3.14, Section 3.11 or (ii) any material misstatement or omission
contained in any information provided by the Indenture Trustee including,
without limitation, in the certification provided by the Indenture Trustee in
the form of Exhibit L, or in the Assessment of Compliance provided pursuant to
Section 3.11, agrees that it shall contribute to the amount paid or payable by
the Depositor as a result of the losses, claims, damages or liabilities of the
Depositor in such proportion as is appropriate to reflect the relative fault of
the Depositor on the one hand and the Indenture Trustee on the other. This
indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
(i) The Servicer shall indemnify and hold harmless the Depositor, the
Indenture Trustee and their respective officers, directors and Affiliates from
and against any actual losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses that such Person may sustain based upon (i) a breach of the
Servicer's obligations under Sections 3.10, 3.11 or 3.14 or (ii) any material
misstatement or
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omission contained in any information provided by the Servicer including,
without limitation, in the information provided pursuant to Sections 3.10 and
3.11. This indemnification shall survive the termination of this Agreement or
the termination of any party to this Agreement.
(j) The Depositor shall indemnify and hold harmless the Servicer, the
Indenture Trustee and their respective officers, directors and Affiliates from
and against any actual losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses that such Person may sustain based upon (i) a breach of the
Depositor's obligations under this Section 3.14 or (ii) any material
misstatement or omission contained in any information provided by the Depositor.
(k) The Indenture Trustee will have no duty or liability to verify the
accuracy or sufficiency of any information not prepared by it included in any
Form 10-D, Form 10-K or Form 8-K. The Indenture Trustee shall have no liability
with respect to any failure to properly prepare or file any Form 10-D or Form
10-K resulting from or relating to the Indenture Trustee's inability or failure
to obtain any information in a timely manner from the party responsible for
delivery of such disclosure information. The Indenture Trustee shall have no
liability with respect to any failure to properly file any Form 10-D or 10-K
resulting from or relating to the Depositor's failure to timely comply with the
provisions of this section. Nothing herein shall be construed to require the
Indenture Trustee or any officer, director or Affiliate thereof to sign any Form
10-D, Form 10-K or Form 8-K. Copies of all reports filed by the Indenture
Trustee under the Exchange Act shall be sent to the Depositor electronically or
at the address set forth herein. Fees and expenses incurred by the Indenture
Trustee in connection with this Section 3.14 shall not be reimbursable from the
Trust Fund.
(l) Upon any filing with the Commission, the Indenture Trustee shall
promptly deliver to the Depositor a copy of any executed report, statement or
information.
(m) To the extent that, following the Closing Date, the Depositor
certifies that reports and certifications differing from those required under
this Section 3.14 are necessary to comply with the reporting requirements under
the Exchange Act, the parties hereto hereby agree that each will reasonably
cooperate to amend the provisions of this Section 3.14(b) in order to comply
with such amended reporting requirements and such amendment of this Section
3.14. Any such amendment may result in the reduction of the reports executed by
and filed on behalf of the Depositor under the Exchange Act. Notwithstanding the
foregoing, the Indenture Trustee shall not be obligated to enter into any
amendment pursuant to this Section that adversely affects its obligations and
immunities under this Agreement.
Each of the parties acknowledges and agrees that the purpose of Sections
3.10, 3.11 and this Section 3.14 of this Agreement is to facilitate compliance
by the Depositor with the provisions of Regulation AB. Therefor, each of the
parties agree that (a) the obligations of the parties hereunder shall be
interpreted in such a manner as to accomplish that purpose, (b) the parties'
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance in respect
of the requirements of Regulation AB, (c) the parties shall comply with
reasonable requests made by the Depositor for
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delivery of additional or different information as the Depositor may determine
in good faith is necessary to comply with the provisions of Regulation AB, and
(d) no amendment of this Agreement shall be required to effect any such changes
in the parties' obligations as are necessary to accommodate evolving
interpretations of the provisions of Regulation AB.
Section 3.15 Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall, beginning
in 2007, make annual reports of foreclosures and abandonments of any Mortgaged
Property. The Servicer shall file or cause to be filed reports relating to each
instance occurring during the previous calendar year in which the Servicer (i)
on behalf of the Trust acquires an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Mortgage Loan or (ii) knows or has reason to know that any Mortgaged Property
has been abandoned. The reports shall be in form and substance sufficient to
meet the reporting requirements imposed by Sections 6050J, 6050H and 6050P of
the Code.
Section 3.16 Assumption Agreements. When a Mortgaged Property has been or
is about to be conveyed by the Mortgagor, the Servicer shall, to the extent it
has knowledge of such conveyance or prospective conveyance, exercise its right
to accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law. In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, provided that pursuant to which assumption agreement, such person
shall become liable under the Mortgage Note and, unless prohibited by applicable
law, the Mortgagor shall remain liable thereon and, in connection with such
assumption, no material term of the Mortgage Note may be changed. The Servicer,
in accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans, is also authorized to enter into a substitution
of liability whereby such person is substituted as mortgagor and becomes liable
under the Mortgage Note. The Servicer shall notify the Indenture Trustee and the
Insurer in writing that any such substitution or assumption agreement has been
completed, and add such agreement 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. In connection
with any assumption or substitution agreement entered into pursuant to this
Section 3.16, the Servicer shall not change the Loan Rate or the Monthly
Payment, defer or forgive the payment of principal or interest, reduce the
outstanding principal amount or extend the final maturity date on such Mortgage
Loan.
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 any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
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Section 3.17 Payment of Taxes, Insurance and Other Charges. With respect
to each Mortgage Loan, the Servicer shall not be required to maintain records
relating to payment of taxes.
Section 3.18 [Reserved]
Section 3.19 Remittance Reports; Servicing Advances.
(a) Remittance Report. On a date not later than the third Business Day
prior to the related Payment Date, the Servicer shall provide to the Indenture
Trustee and the Insurer in electronic form the information needed to determine
the payments to be made pursuant to Section 5.01 and any other information on
which the Servicer and the Indenture Trustee mutually agree. On or before the
fifth Business Day following the end of each Collection Period (but in no event
later than the third Business Day prior to the related Payment Date), the
Servicer shall deliver to the Indenture Trustee and the Insurer (which delivery
may be by electronic data transmission) a report in substantially the form
agreed to by the Servicer and the Indenture Trustee (the "Remittance Report").
The Indenture Trustee shall not be responsible to recompute, recalculate or
verify any information provided to it by the Servicer.
(b) Servicing Advances. Notwithstanding anything herein to the contrary,
no Servicing Advance shall be required to be made hereunder by the Servicer if
such Servicing Advance would, if made, constitute a Nonrecoverable Advance. The
determination by the Servicer that it has made a Nonrecoverable Advance or that
any proposed Servicing Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officer's Certificate of the Servicer
delivered to the Depositor, the Indenture Trustee and the Insurer
(c) [Reserved].
(d) [Reserved].
Section 3.20 [Reserved].
Section 3.21 Allocation of Charge-Off Amounts.
(a) For each Payment Date, the Servicer shall calculate the amount of
Charge-off Amounts for the preceding Collection Period, and shall include such
calculation in its Remittance Report.
(b) For each Payment Date, the Investor Charge-off Amounts shall be
allocated as follows: first, to Excess Cashflow until the Excess Cashflow is
reduced to zero, second, to the Overcollateralization Amount until the
Overcollateralization Amount is reduced to zero, third, the Class M-2 Notes
until the Note Principal Amount of the Class M-2 Notes is reduced to zero,
fourth, to the Class M-1Notes until the Note Principal Amount of the Class M-1
Notes is reduced
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to zero and, fifth, to the Class A Notes. No allocations of Charge-off Amounts
shall be made to the Certificate Principal Balance of the Class P Certificates.
ARTICLE IV.
INSURER
Section 4.01 Claims upon the Policy.
(a) As soon as possible, and in no event later than 12:00 noon New York
City time on the second Business Day immediately preceding the Payment Date, the
Indenture Trustee shall furnish the Insurer and the Servicer with a completed
notice in the form set forth as Exhibit A to the Policy (the "Notice for
Payment") in the event that the Insured Amount for such Payment Date is an
amount greater than zero. The Notice for Payment shall specify the amount of the
Insured Amount and shall constitute a claim for an Insured Amount pursuant to
the Policy. Upon receipt of an Insured Amount on behalf of the Holders of the
Class A Notes under the Policy, the Indenture Trustee shall deposit such Insured
Amount in the Payment Account and shall distribute such Insured Amount pursuant
to Section 5.01 (a)(A) or (a)(E), as the case may be (provided that any amount
paid under clause (a) of the definition of "Class A Principal Distribution
Amount" in the Policy shall be paid to the Class A Noteholders as a payment of
principal).
(b) The Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid from moneys received under the Policy. The
Insurer shall have the right to inspect such records at reasonable times during
normal business hours of the Indenture Trustee upon four Business Days' prior
written notice to the Indenture Trustee.
(c) If a payment to the Class A Noteholders which is guaranteed pursuant
to the Policy is voided (a "Preference Event") under any applicable bankruptcy,
insolvency, receivership or similar law in an insolvency proceeding (as such
term is used in the Policy), and, as a result of such a Preference Event, the
Indenture Trustee is required to return such voided payment, or any portion of
such voided payment, made in respect of the Class A Notes (an "Preference
Amount"), the Indenture Trustee shall furnish to the Insurer (i) a certified
copy of a final non-appealable order of a court or other body exercising
jurisdiction in such insolvency proceeding to the effect that the Indenture
Trustee, or Holder, as applicable, is required to return any such payment or
portion thereof during the term of the Policy because such payment was voided as
a preferential transfer or otherwise rescinded or required to be restored by the
Indenture Trustee or Holder (the "Final Order"), (ii) an Opinion of Counsel
satisfactory to the Insurer that such order is final and not subject to any
stay, (iii) an assignment, in form and substance satisfactory to the Insurer,
duly executed and delivered by the Indenture Trustee or Holder, irrevocably
assigning to the Insurer all rights and claims of the Indenture Trustee and/or
such Holder relating to or arising under this Agreement against the estate of
the Indenture Trustee or otherwise with respect to such Preference Amount, (iv)
appropriate instruments in form satisfactory to the Insurer to effect the
appointment of the Insurer as agent for the Indenture Trustee and such Holder in
any legal proceeding relating to such Preference Amount and (v) a Notice for
Payment appropriately
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completed and executed by the Indenture Trustee. Such payment shall be disbursed
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Final Order and not to the Indenture Trustee directly (unless a
Class A Noteholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order in which
case such payment shall be disbursed to the Indenture Trustee for payment to
such Class A Noteholder upon delivery of (a) the items referred to in clauses
(i), (ii), (iii), (iv) and (v) above and (b) evidence satisfactory to the
Insurer that payment has been made to such court or receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order). The
Indenture Trustee is not permitted to make a claim on the Trust or on any Class
A Noteholder for payments made to any Class A Noteholder which are characterized
as preference payments by any bankruptcy court having jurisdiction over any
bankrupt Mortgagor unless ordered to do so by such bankruptcy court.
(d) Any amounts received by the Indenture Trustee pursuant to the Policy
in respect of the Class A Notes shall be deposited to the Payment Account.
Section 4.02 Effect of Payments by the Insurer; Subrogation. Anything
herein to the contrary notwithstanding, any payment with respect to principal of
or interest on any of the Class A Notes which are made with moneys received
pursuant to the terms of the Policy shall not be considered payment of such
Class A Notes, as applicable, from the Trust and shall not result in the payment
of or the provision for the payment of the principal of or interest on such
Class A Notes, as applicable, within the meaning of Section 5.01 herein. The
Seller, the Depositor, the Servicer and the Indenture Trustee acknowledge, and
each Holder by its acceptance of a Class A Note agrees, that without the need
for any further action on the part of the Insurer, the Seller, the Depositor,
the Servicer, the Indenture Trustee or the Certificate Registrar (a) to the
extent the Insurer makes payments, directly or indirectly, on account of
principal of or interest on any Class A Notes to the Holders of such Class A
Notes, the Insurer will be fully subrogated to the rights of such Holders to
receive such principal and interest, as applicable, from the Trust and (b) the
Insurer shall be paid such principal and interest but only from the sources and
in the manner provided herein and in the Insurance Agreement for the payment of
such principal and interest.
The Indenture Trustee and the Servicer shall cooperate in all respects
with any reasonable request by the Insurer for action to preserve or enforce the
Insurer's rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders of the Class A Notes as otherwise set
forth herein.
Section 4.03 Replacement Policy. In the event of a default by the Insurer
under the Policy or if the financial strength of the Insurer, within the
two-year period commencing on the Closing Date, is not rated at least "AA-" by
Standard & Poor's and "Aa3" by Xxxxx'x (in each case, a "Replacement Event"),
the Seller may, in accordance with and upon satisfaction of the conditions set
forth in the Policy and the Insurance and Indemnity Agreement, the payment in
full of all amounts owed to the Insurer, and the receipt of a statement in
writing from each Rating Agency stating that the substitution referred to below
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Class A Notes (without regard to the Policy), but shall not be
required to, substitute a new insurance policy or insurance policies for
73
the existing Policy, or may arrange for any other form of credit enhancement;
provided, however, that in each case the Class A Notes shall be rated no lower
than the rating assigned by each Rating Agency to the Class A Notes immediately
prior to such Replacement Event. It shall be a condition to substitution of any
new credit enhancement that there be delivered to the Indenture Trustee (i) a
legal opinion, acceptable in form and substance to the Indenture Trustee, from
counsel to the provider of such new credit enhancement with respect to the
enforceability thereof and such other matters as the Indenture Trustee may
require and (ii) an Opinion of Counsel to the effect that such substitution
would not have a materially adverse tax effect on the Class A Noteholders or the
Trust. Upon receipt of the items referred to above and the taking of physical
possession of the new credit enhancement, the Indenture Trustee shall, within
five Business Days following receipt of such items and such taking of physical
possession, deliver the replaced Policy to the Insurer.
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ARTICLE V.
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO
CLASS A NOTEHOLDERS; RIGHTS OF CLASS A NOTEHOLDERS
Section 5.01 Distributions.
(a) Distributions on the Notes and Certificates. On each Payment Date, the
Indenture Trustee, shall distribute out of the Payment Account, Available Funds
net of the Servicing Fee, payment to the Owner Trustee for services rendered
pursuant to the Trust Agreement, Prepayment Charges (which are distributable
only to the holders of the Class P Certificates), the Indenture Trustee Fee and
the amount of Principal Collections for the related Payment Date applied to
purchase Additional Balances (the "Net Available Funds"), the following amounts
and in the following order of priority to the following Persons (based on the
information set forth in the Servicing Certificate):
I. From Net Available Funds, the Floating Allocation Percentage of the
Interest Collections, the Maximum Principal Payment, together with any
Insured Amounts or Preference Amounts (applied as provided in Section
4.01(a) hereof), if any:
(A) to the Insurer, the Premium Amount with respect to the
Class A Notes for such Payment Date;
(B) to the Class A Noteholders, the Interest Payment Amount
with respect to the Class A Notes for such Payment Date;
(C) to the Class A Noteholders, as a payment of principal,
the Class A Principal Payment Amount for such Payment Date;
(D) to the Class A Noteholders, as a payment of principal,
in the following order, (a) the Floating Allocation Percentage of
the Charge-Off Amounts incurred during the preceding calendar month
and (b) the Floating Allocation Percentage of the Charge-Off Amounts
incurred during previous periods that were not subsequently funded
by Interest Collections, overcollateralization or draws under the
Policy in respect of an Overcollateralization Deficit;
(E) to the Insurer, the Reimbursement Amount, if any, then
due to it;
(F) to the Class M1 Noteholders, the Interest Payment Amount
with respect to the Class M1 Notes for such Payment Date;
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(G) to the Class M2 Noteholders, the Interest Payment Amount
with respect to the Class M2 Notes for such Payment Date;
(H) to the Class A Noteholders, the Accelerated Principal
Payment, if any;
(I) To the Class M1 Noteholders, the Class M1 Principal
Payment Amount for such Payment Date, together with any Accelerated
Principal Payment not paid to the Holders of the Class A Notes in
accordance with clause (H) above;
(J) To the Class M2 Noteholders, the Class M2 Principal
Payment Amount for such Payment Date, together with any Accelerated
Principal Payment not paid to the Holders of the Class A Notes or
the Class M1 Notes in accordance with clause (H) or (I) above;
(K) to the Servicer, to pay certain amounts that may be
required to be paid to the Servicer under the Servicing Agreement
including expenses associated with the transition to any new
servicer) and not previously reimbursed;
(L) sequentially, to the Class A, Class M1 and Class M2
Noteholders (in that order) to pay current Deferred Interest and any
previously unreimbursed Deferred Interest for any prior Payment Date
and interest thereon at the applicable Note Rate;
(M) pari passu, (a) to the Indenture Trustee, any
unreimbursed expenses due and owing to the Indenture Trustee and not
otherwise previously paid on such Payment Date, and (b) to the Owner
Trustee, any unpaid fees and unreimbursed expenses due and owing to
the Owner Trustee and not otherwise previously paid on such Payment
Date;
(N) Prepayment Charges to the Holders of the Class P
Certificates; and
II. to the Owner Trustee, amounts remaining in the Payment Account after
all amounts distributable under Section 5.01(a)(I) have been made, to be
deposited in the Certificate Account for payment to the Certificateholders
(other than the Class P Certificateholders), as set forth in Section 3.11
of the Trust Agreement.
(b) Prepayment Charges. On each Distribution Date, an amount equal to all
Prepayment Charges received during the related Collection Period together with
the amounts paid in respect thereof pursuant to Section 3.13 will be distributed
to the holders of the Class P Certificates. The payment of the foregoing amounts
to the Holders of the Class P Certificates shall not reduce the Certificate
Balances thereof.
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(c) Method of Distribution. The Indenture Trustee shall make payments and
distributions in respect of a Payment Date to the Noteholders and the
Certificateholders of record on the related Record Date (other than as provided
in Section 8.01 respecting the final payment) by check or money order mailed to
such Noteholders and Certificateholders at the address appearing in the Note
Register and the Certificate Register, respectively, or upon written request by
a Noteholder or Certificateholder, as applicable, delivered to the Indenture
Trustee at least five Business Days prior to such Record Date, by wire transfer,
or by such other means of payment as such Noteholder or Certificateholder and
the Indenture Trustee shall agree. Distributions among Class A Noteholders,
Class M Noteholders and the Certificateholders shall be made in proportion to
the Percentage Interests evidenced by the Class A Notes or Class M Notes held by
such Noteholder, as applicable, and the Percentage Interests evidenced by the
Certificates held by such Certificateholders.
(d) Payments on Book-Entry Notes. Each payment with respect to a
Book-Entry Note shall be paid to the Depository, which shall credit the amount
of such payment to the accounts of its Depository Participants in accordance
with its normal procedures. Each Depository Participant shall be responsible for
disbursing such payment to the Class A Notes that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Class A Note Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Note are to be
made by the Depository and the Depository Participants in accordance with the
provisions of the Class A Notes. None of the Indenture Trustee, the Note
Registrar, the Seller, the Insurer, the Trust or the Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.
Section 5.02 Calculation of the Note Rate. With respect to the Notes, on
the second LIBOR Business Day immediately preceding each Payment Date (or as of
the second LIBOR Business Day prior to the Closing Date, in the case of the
first Payment Date), the Indenture Trustee shall determine LIBOR for the
Interest Period commencing on such Payment Date and inform the Servicer (at the
facsimile number given to the Indenture Trustee in writing) of such rates. On or
prior to each Payment Date, the Indenture Trustee shall determine the applicable
Note Rate for the related Payment Date.
Section 5.03 Servicing Certificate and Statement to Noteholders.
(a) Not later than 12:00 noon, New York time, on the third Business Day
prior to the related Payment Date, the Servicer shall deliver to the Indenture
Trustee, the Paying Agent and the Depositor an electronic file containing the
information required pursuant to the Servicing Certificate and in the form
agreed to by the Servicer and the Indenture Trustee with respect to the Mortgage
Loans on an aggregate basis as of the end of the preceding Collection Period and
such other information as the Indenture Trustee shall reasonably require. Not
later than 12:00 noon, New York time, on each Payment Date, the Indenture
Trustee shall make available on its website to the Depositor, the Servicer, the
Paying Agent, and the Insurer, a statement (the "Statement to Noteholders")
containing the information set forth below with respect to such Payment Date:
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IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H1
Statement to Noteholders
LIBOR: _________ LIBOR Determination Date: _________
Class A Note Rate: _________ Collection Period for
HELOCs: _________
Class M-1 Note Rate: _________
Class M-2 Note Rate _________
Interest Period: ________ - _________ Payment Date: _________
Number of days in
Interest Period: _________
I. Pool Balance:
A. Cut-Off Date Pool Balance $_________
B. Cumulative Charge-Off Amounts (including the current
Collection Period) $_________
C. Pool Balance at beginning of Collection Period $_________
D. Charge-Off Amounts incurred during the related
Collection Period $_________
E. Aggregate amount of Principal Collections received during
the Collection Period $_________
F. Additional Balances (Draws) conveyed to the Trust during
the related Collection Period $_________
G. Pool Balance at end of Collection Period $_________
H. Number of Mortgage Loans outstanding at beginning of
related Collection Period _________
I. Number of Mortgage Loans outstanding at end of related
Collection Period _________
II. Principal Balance of the Notes:
A. Original Class A Note Principal Balance $_________
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B. Class A Note Principal Balance at beginning and end of
Collection Period $_________
C. Class M1 Note Principal Balance at beginning and end of
Collection Period $_________
D. Class M2 Certificate Principal Balance at beginning and
end of Collection Period $_________
III. Invested Amount after all payments and distributions on the
Payment Date: $_________
IV. Collections on Mortgage Loans:
A. Aggregate amount of Interest Collections received during
the related Collection Period $_________
B. Principal Collections received during the related
Collection Period $_________
C. Net Recoveries received during the related Collection
Period $_________
V. Insured Amount: $_________
VI. Distributions:
A. Premium Amount paid to the Insurer on the Payment Date $_________
B. Class A Interest Payment Amount payable $_________
C. Class M1 Interest Payment Amount $_________
D. Class M2 Interest Payment Amount $_________
E. Class A Interest Payment Amount for the Class A Notes
paid on the Payment Date $_________
F. Class A Outstanding Interest Carryover Shortfall
remaining after all payments on the Payment Date $_________
G. Specified Overcollateralization Amount $_________
H. Any other amounts paid to the Insurer pursuant to the
Insurance Agreement $_________
I. Amount actually paid to Class A Noteholders in respect of
principal $_________
J. Amount actually paid to the Class M1 Noteholders in
respect of principal
K. Amount actually paid to the Class M2 Noteholders in
respect of principal
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VII. Modified Loans (cumulative Collection Periods including the
Current Collection Period):
A. Aggregate Principal Balance of Mortgage Loans modified
after giving effect to modifications $_________
B. Aggregate Credit Limit of Mortgage Loans modified on a
cumulative basis after giving effect to modifications $_________
C. Weighted average of Credit Limits of Mortgage Loans at
the end of Collection Period after giving effect to
modifications $_________
VIII. Substitute Loans:
A. Purchase Prices $_________
B. Substitution Adjustment $_________
IX. Weighted Averages:
A. Weighted average of the Loan Rates at end of related
Collection Period $_________
B. Weighted average of the Loan Rate Cap at end of related
Collection Period $_________
C. Weighted average Margin at end of related Collection
Period $_________
X. Delinquent Accounts:
Principal
# of Accounts Balance
A. 31-60 days delinquent _________ $_________
_________ $_________
B. 61-90 days delinquent
_________ $_________
C. over 90 days delinquent
_________ $_________
D. REO Properties
_________ $_________
E. Foreclosures
_________ $_________
F. Bankruptcies
_________%
G. Six Month Rolling Average
XI. Rapid Amortization:
A. Has a Rapid Amortization Event occurred? _________
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B. What was the Rapid Amortization Event? _________
XII. Allocations to Class A Noteholders (for each $1,000 of
original principal): $_________
A. Aggregate amount of Principal Collections received during
the related Collection Period $_________
B. Amount actually paid to Class A Noteholders in respect of
principal $_________
C. Interest Distribution payable to the Class A Noteholders $_________
D. Interest Distribution for the Class A Notes paid on the
Payment Date $_________
E. Class A Note Principal Balance after all payments on the
Payment Date $_________
F. Aggregate amount of any Relief Act Interest Shortfalls $_________
XIII Allocations to Class M1 Noteholders (for each $1,000 of
original principal)
A. Aggregate amount of Principal Collections received during
the related Collection Period $_________
B. Amount actually paid to Class M1 Noteholders in respect
of principal $_________
C. Interest Distribution payable to the Class M1 Noteholder $_________
D. Interest Distribution for the Class M1 Notes paid on the
Payment Date $_________
E. Class M1 Note Principal Balance after all payments on the
Payment Date $_________
F. Class M1 Note Principal Balance after all payments on the
Payment Date $_________
XIV Allocations to the Class M2 Noteholders (for each $1,000 of
original principal) $_________
A. Aggregate amount of Principal Collections received during
the related Collection Period $_________
B. Amount actually paid to Class M2 Noteholders in respect
of principal $_________
C. Interest Distribution payable to the Class M2 Noteholder $_________
D. Interest Distribution for the Class M2 Notes paid on the
Payment Date $_________
E. Class M2 Note Principal Balance after all payments on the
Payment Date $_________
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F. Class M2 Note Principal Balance after all payments on the
Payment Date $_________
XV. Step-Down Date:
A. Step-Down Date Occurred? Yes___ No___
B. Step-Down Test Satisfied? Yes___ No___
C. Cumulative Net Charge-Off Amounts $________
The Indenture Trustee shall make available the Statement to Noteholders
via its website (xxxxx://xxx.XXX.xx.xxx/xxxx) on the related Payment Date. The
Indenture Trustee may fully and conclusively rely upon and shall have no
liability with respect to information provided by the Servicer.
(b) Within 90 days, or such shorter period as may be required by statute
or regulation, after the end of each calendar year, the Indenture Trustee shall
have prepared and shall make available to each Person who at any time during the
calendar year was a Noteholder or Certificateholder of record, and make
available to Security Owners (identified as such by the Clearing Agency) in
accordance with applicable regulations, a report summarizing the items provided
to the such Noteholders or Certificateholders pursuant to Section 5.03(a) on an
annual basis as may be required to enable such Holders to prepare their federal
income tax returns; provided, however, that this Section 5.03(b) shall not be
applicable where relevant reports or summaries are required elsewhere in this
Agreement. Such information shall include the amount of original issue discount
accrued on each Class of Securities and information regarding the expenses of
the Issuer. The Servicer shall provide the Indenture Trustee with such
information as is necessary for the Indenture Trustee to prepare such reports.
The Indenture Trustee shall furnish any other information that is required
by the Code and regulations thereunder to be made available to the Noteholders
or Certificateholders. The Servicer shall provide the Indenture Trustee with
such information as is necessary for the Indenture Trustee to prepare such
reports (and the Indenture Trustee may rely solely upon such information).
(c) The Indenture Trustee shall furnish to each Noteholder,
Certificateholder and to the Insurer (if requested in writing), during the term
of this Agreement, such periodic, special or other reports or information (so
long as the Indenture Trustee has such information), whether or not provided for
herein, as shall be necessary, reasonable or appropriate with respect to the
Noteholder, Certificateholder or the Insurer, as the case may be, or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions (if requested in writing) as the Noteholder, Certificateholder or the
Insurer, as the case may be, may reasonably require; provided that the Indenture
Trustee shall be entitled to be reimbursed by such Noteholder, Certificateholder
or the Insurer, as the case may be, for its fees and actual expenses associated
with providing such reports, if such reports are not generally produced in the
ordinary course of their respective businesses or readily obtainable.
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(d) [Reserved].
(e) Reports and computer tapes furnished by the Servicer pursuant to this
Agreement shall be deemed confidential and of a proprietary nature, and shall
not be copied or distributed except to the extent provided in this Agreement and
to the extent required by law or to the Rating Agencies, the Depositor, the
Insurer's attorneys, reinsurers, parent, regulators, liquidity providers and
auditors and to the extent the Servicer instructs the Indenture Trustee in
writing to furnish information regarding the Trust or the Mortgage Loans to
third-party information providers; notwithstanding anything herein to the
contrary, the foregoing shall not be construed to prohibit (i) disclosure of any
and all information that is or becomes publicly known, or information obtained
by Indenture Trustee from sources other than the other parties hereto, (ii)
disclosure of any and all information (A) if required to do so by any applicable
law, rule or regulation, (B) to any government agency or regulatory body having
or claiming authority to regulate or oversee any respects of Indenture Trustee's
business or that of its affiliates, (C) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which Indenture Trustee or any affiliate
or an officer, director, employer or shareholder thereof is a party or (D) to
any affiliate, independent or internal auditor, agent, employee or attorney of
Indenture Trustee having a need to know the same, provided that the Indenture
Trustee advises such recipient of the confidential nature of the information
being disclosed or (iii) any other disclosure authorized by the Transaction
Documents, the Depositor, the Seller or the Servicer. No Person entitled to
receive copies of such reports or tapes or lists of Noteholders or
Certificateholders shall use the information therein for the purpose of
soliciting the customers of the Seller or for any other purpose except as set
forth in this Agreement.
Section 5.04 Other Receipts. To the extent that the Indenture Trustee
receives any amounts on behalf of the Trust that are not otherwise part of the
Investor Interest Amounts, the Principal Collections or Insured Amounts, the
Indenture Trustee shall distribute such amounts to the Servicer on the following
Payment Date.
Section 5.05 Payment Account. The Indenture Trustee shall establish a
separate non-interest bearing trust account (the "Payment Account") designated
"Deutsche Bank National Trust Company, as Indenture Trustee, in trust for the
registered holders of the IndyMac Asset-Backed Notes, Series 2006-H1." The
Payment Account shall be an Eligible Account. The Indenture Trustee shall
deposit any amounts representing payments on and any collections in respect of
the Mortgage Loans received by it immediately following receipt thereof to the
Payment Account including, without limitation, all amounts (i) withdrawn by the
Servicer from the Collection Account pursuant to Section 3.03 herein for deposit
to the Payment Account and (ii) drawn under the Policy in respect of Insured
Amounts.
Section 5.06 Reserve Account
(a) The Indenture Trustee shall establish and maintain an account (the
"Reserve Account") entitled "Reserve Account, Deutsche Bank National Trust
Company, as Indenture Trustee, in trust for the benefit of the Holders of the
IndyMac Home Equity Mortgage
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Loan Asset-Backed Trust, Series 2006-H1 Asset-Backed Notes" The Reserve Account
shall be an Eligible Account.
(b) If the existing Reserve Account ceases to be an Eligible Account,
the Indenture Trustee shall establish a new Reserve Account that is an Eligible
Account within 10 Business Days and transfer all funds and investment property
on deposit in such existing Reserve Account into such new Reserve Account. The
Reserve Account shall relate solely to the Notes and the Certificates and funds
therein shall be held separate and apart from and shall not be commingled with
any other monies including, without limitation, other monies of the Indenture
Trustee held under this Agreement. The Indenture Trustee shall make withdrawals
from the Reserve Account only for the following purposes:
(i) to pay such amounts required to be paid pursuant to Section
2.01(b) of this Agreement; and
(ii) to withdraw amounts deposited in the Reserve Account in error.
(c) [Reserve].
Section 5.07 The Certificate Account
(a) The Administrator, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Owner Trustee on behalf of the
Certificateholders an account (the "Certificate Account") entitled "Certificate
Account, Deutsche Bank National Trust Company, as Administrator, in trust for
the holders of IndyMac Home Equity Mortgage Loan-Asset Backed Trust Series
2006-H1, Certificates."
(b) On each Payment Date, the Indenture Trustee shall withdraw from the
Payment Account all amounts required to be deposited in the Certificate Account
pursuant to Section 5.01 and remit such amount to the Owner Trustee or the
Administrator for deposit into the Certificate Account. On each Payment Date,
the Owner Trustee or the Administrator shall distribute all amounts on deposit
in the Certificate Account to the Certificateholders in respect of the
Certificates as provided in the Trust Agreement. On the Payment Date on which
the Note Principal Amount is reduced to zero, the Administrator shall distribute
all amounts remaining on deposit in the Certificate Account to the
Certificateholders in respect of the Certificates in order to clear and
terminate the Certificate Account in connection with the termination of this
Agreement.
(c) All distributions made on the Certificates shall be made by wire
transfer of immediately available funds to the account of such
Certificateholders. The final distribution on the Certificates will be made in
like manner, but only upon presentment and surrender of such Certificates at the
location specified in the notice to the Certificateholders of such final
distribution.
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Section 5.08 [Reserved].
Section 5.09 Rapid Amortization Event. The occurrence of any one of the
following events (each, a "Rapid Amortization Event"):
(a) default in the payment of any interest on any Note when the same
becomes due and payable or the failure to pay any installment of principal on
any class of Notes in accordance with Section 5.01 and such default continues
for a period of five Business Days, or a failure to pay the entire principal of
any Note when the same becomes due and payable under the Indenture or on the
Final Scheduled Payment Date.
(b) failure on the part of the Issuer, the Depositor, the Seller or the
Servicer, as the case may be, to observe or perform in any material respect the
material covenants or agreements of the Issuer, the Servicer or the Seller, as
the case may be, set forth in the Mortgage Loan Purchase Agreement, this
Agreement, the Indenture or the related Transfer Agreement as the case may be,
which failure materially and adversely affects the Noteholders or the Insurer
and which continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Issuer, the Servicer, or the Seller, as the case may be, by
the Indenture Trustee, or to the Issuer, the Servicer, or the Seller, as the
case may be, and the Indenture Trustee by the Insurer or Holders of Notes
evidencing more than 50% of the Outstanding Amount of the Controlling Class
Notes;
(c) the trust becomes subject to regulation by the SEC as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;
(d) any draw on the Policy; or
(e) the rights and obligations of the Servicer under this Agreement are
terminated or an Event of Servicing Termination pursuant to this Agreement has
occurred.
In the case of any event described in clauses (a), (b), (d) and (e) above,
a Rapid Amortization Event will be deemed to have occurred only if, after the
applicable grace period, if any, described in this Agreement, the Insurer, or if
any Insurer Default has occurred and is continuing, the Indenture Trustee or
Holders holding Notes evidencing more than 50% of the Outstanding Amount of the
Controlling Class Notes, by written notice to the Issuer, the Insurer, the
Seller, and the Servicer (and to the Indenture Trustee, if given by the
Noteholders, Certificateholders or the Insurer) declare that a Rapid
Amortization Event has occurred as of the date of such notice.
If a Rapid Amortization Event occurs due to the occurrence of (c) above, a
Rapid Amortization Event will automatically occur.
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Following the occurrence of a Rapid Amortization Event, if so directed by
the Insurer, so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing and no Insurer Default has occurred and is continuing, the
Indenture Trustee or its designated agent will and with the consent of the
Insurer may, sell, dispose of or otherwise liquidate the Collateral with respect
to the Mortgage Loans in a commercially reasonable manner and on commercially
reasonable terms. With respect to the Notes, the net proceeds of such sale will
be paid (i) first, pro rata to the Indenture Trustee the Indenture Trustee
Expense Amount (without regard the caps included in the definition of Indenture
Trustee Expense Amount) and to the Owner Trustee any unpaid fees due and owing
to it, (ii) second, to the Holders of the Class A Notes, insofar as may be
necessary to reduce the Note Principal Balance of such Class, together with all
accrued and unpaid interest due thereon, to zero, (iii) third, to reimburse the
Insurer to the extent of unreimbursed draws under the Policy and other amounts
owing to the Insurer, (iv) fourth, to the Holders of the Class M1 and Class M2
Notes sequentially in that order, pro rata within each Class based on Note
Principal Balances, insofar as may be necessary to reduce the Note Principal
Balance of each such Class, together with all accrued and unpaid interest due
thereon, to zero, (v) fifth, pro rata to the Indenture Trustee and the Owner
Trustee, any unreimbursed expenses due and owing to them, including, with
respect to the Indenture Trustee, all unreimbursed expenses incurred by the
Indenture Trustee in connection with such Rapid Amortization Event and sale of
the Collateral and (vi) sixth, to the Residual Certificateholders, any remaining
amounts.
In addition to the consequences of a Rapid Amortization Event discussed
above, if the Seller, the Depositor or the Servicer or any other their
respective affiliates voluntarily files a bankruptcy petition or goes into
liquidation or any person is appointed a receiver or bankruptcy trustee of such
entity, on the day of any such filing or appointment with respect to (i) the
Seller, or any of its Subsidiaries or Affiliates, no further Additional Balances
will be transferred to the Issuer and the Seller will promptly give notice of
any such filing or appointment to the Indenture Trustee, (ii) the Servicer or
any of its Subsidiaries or Affiliates, no further Additional Balances relating
to Mortgage Loans serviced by such Servicer will be transferred to the Issuer
and such Servicer will promptly give notice to the Indenture Trustee and the
Insurer (so long as the Class A Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) of any such filing or appointment and (iii) the Depositor or
any of its Subsidiaries or Affiliates, the Depositor will promptly give notice
of any such filing or appointment to the Indenture Trustee. Within 15 days, the
Indenture Trustee notify the Holders of the Notes of the occurrence of such
event.
Upon the occurrence of a Rapid Amortization Event, the Servicer shall only
receive principal funds upon the transfer of Additional Balances to the Trust
from the Reserve Account, funded by the purchase of such Additional Balances by
the Holder of the Class L Certificate.
Section 5.10 Indenture Trustee Fees and Indemnification Expenses. The
Indenture Trustee shall be entitled to receive the Indenture Trustee Fee on each
Payment Date. The Indenture Trustee also shall be entitled to receive payment of
all expenses and indemnities due to it pursuant to Section 10.03.
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ARTICLE VI.
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor. The
Seller, the Depositor and the Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Seller, the Depositor or Servicer, as the case may be, herein.
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Seller, the Servicer or the Depositor. Any corporation into which the
Seller, the Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller, the Servicer or the Depositor shall be a party, or any corporation
succeeding to the business of a Seller, the Servicer or the Depositor shall be
the successor of the Seller, the Servicer or the Depositor, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor Servicer shall satisfy
all the requirements of Section 7.02 with respect to the qualifications of a
successor Servicer, and such merger, conversion or consolidation could not be
reasonably expected to result in a Material Adverse Change with respect to the
Servicer, unless approved by the Insurer (which approval shall not be
unreasonably withheld).
Section 6.03 Limitation on Liability of the Seller, the Depositor, the
Servicer and Others. None of the Seller, the Depositor or the Servicer nor any
of the directors or officers or employees or agents of the Seller, the Depositor
or the Servicer shall be under any liability to the Trust, the Noteholders or
the Certificateholders for any action taken or for refraining from the taking of
any action by the Seller, the Depositor or the Servicer in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller, the Depositor or the Servicer or any
such Person against any liability which would otherwise be imposed by reason of
its willful misfeasance, bad faith or gross negligence in the performance of
duties of the Seller, the Depositor or the Servicer or by reason of its reckless
disregard of its obligations and duties of the Seller, the Depositor or the
Servicer hereunder; provided, further, that this provision shall not be
construed to entitle the Seller, the Depositor or the Servicer to indemnity in
the event that amounts advanced by the Seller, the Depositor or the Servicer to
retire any senior lien exceed Net Recoveries realized with respect to the
related Mortgage Loan. The Seller, the Depositor or the Servicer and any
director or officer or employee or agent of the Seller, the Depositor or the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller, the Depositor or the Servicer and any director or officer or
employee or agent of the Seller, the Depositor or the Servicer shall be
indemnified by the Trust and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Notes or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or gross negligence in
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the performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder; and such amounts shall be payable only
pursuant to Section 5.01. None of the Seller, the Depositor or the Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to their respective duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, the
Seller, the Depositor or the Servicer may with the consent of the Insurer (which
consent shall not be unreasonably withheld) undertake any such action which it
may deem necessary or desirable in respect of this Agreement, and the rights and
duties of the parties hereto and the interests of the Class A Noteholders
hereunder. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
of the Trust and the Servicer shall be entitled to be reimbursed therefor only
pursuant to Section 5.01. The Servicer's right to indemnity or reimbursement
pursuant to this Section 6.03 shall survive any resignation or termination of
the Servicer pursuant to Section 6.04 or 7.01 below with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).
Section 6.04 Servicer Not to Resign. Subject to the provisions of Section
6.02 above, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer in writing and such proposed
successor servicer is reasonably acceptable to the Indenture Trustee; (b) each
Rating Agency shall have delivered a letter to the Indenture Trustee prior to
the appointment of the successor servicer stating that the proposed appointment
of such successor servicer as Servicer hereunder will not result in the
reduction or withdrawal of the then current rating of the Notes without regard
to the Policy; and (c) such proposed successor servicer is reasonably acceptable
to the Insurer, as evidenced by a letter to the Indenture Trustee; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Indenture Trustee
shall have assumed the Servicer's responsibilities and obligations hereunder or
the Indenture Trustee shall have designated a successor servicer in accordance
with Section 7.02 below. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02
below as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee and the Insurer.
Section 6.05 Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01 herein. Such
delegation shall not relieve the Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 6.04 above. The Servicer shall provide
the Insurer and the Indenture Trustee with written notice prior to the
delegation of any of its duties to any Person other than any of the
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Servicer's Affiliates or their respective successors and assigns (provided that
the Servicer may retain agents and contractors in accordance with Acceptable
Servicing Practices), and the Insurer shall have consented to the appointment of
any Subservicer to the extent required by Section 3.01 hereof.
Section 6.06 Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust and the Indenture Trustee and its
officers, directors, agents and employees from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of the Servicer's
willful misfeasance, bad faith or gross negligence in the performance of its
activities in servicing or administering the Mortgage Loans pursuant to this
Agreement, including, but not limited to, any judgment, award, settlement,
reasonable fees of, counsel of its selection and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim related to the Servicer's misfeasance, bad faith or gross
negligence. Any such indemnification shall not be payable from the assets of the
Trust. The provisions of this indemnity shall run directly to and be enforceable
by an injured party subject to the limitations hereof. The provisions of this
Section 6.06 shall survive termination of the Agreement or the earlier of the
resignation or removal of the Indenture Trustee.
ARTICLE VII.
SERVICING TERMINATION
Section 7.01 Events of Servicing Termination.
If any one of the following events (each, an "Events of Servicing
Termination") shall occur and be continuing:
(i) Any failure by the Servicer to furnish to the Indenture
Trustee the Mortgage Loan data sufficient to prepare the reports described
in Sections 3.19 or 5.03 which continues unremedied for a period of one
(1) Business Day after the date upon which written notice of such failure
shall have been given to such Servicer by the Indenture Trustee or to such
Servicer and the Indenture Trustee by the Insurer (so long as the Class A
Notes are Outstanding or any Reimbursement Amounts remain due and owing to
the Insurer and no Insurer Default has occurred and is continuing) or by
Holders of not less than 25% of the Note Principal Amount of the
Controlling Class Notes; or
(ii) Any 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 contained in this Agreement 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 Servicer by the Indenture Trustee or to the Servicer and the
Indenture Trustee by the Controlling Party; or
(iii) [Reserved]; or
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(iv) The Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities, voluntary liquidation or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(v) The Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(vi) The Servicer shall be dissolved, or shall dispose of all or
substantially all of its assets, or consolidate with or merge into another
entity or shall permit another entity to consolidate or merge into it,
such that the resulting entity does not meet the criteria for a successor
servicer as specified herein; or
(vii) If a representation or warranty set forth in Section 2.03
hereof shall prove to be incorrect as of the time made in any respect that
materially and adversely affects the interests of the Securityholders or
the Insurer, and the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated or
cured within 30 days after the date on which written notice of such
incorrect representation or warranty shall have been given to the Servicer
by the Indenture Trustee, or to the Servicer and the Indenture Trustee by
the Controlling Party; or
(viii) A sale or pledge of any of the rights of the Servicer
hereunder or an assignment of this Agreement by the Servicer or a
delegation of the rights or duties of the Servicer hereunder shall have
occurred in any manner not otherwise permitted hereunder and without the
prior written consent of the Controlling Party; or
(ix) [Reserved]; or
(x) After receipt of notice from the Indenture Trustee, any
failure of the Servicer to remit to the Indenture Trustee any payment
required to be made to the Indenture Trustee for the benefit of
Noteholders and the Certificateholders or to the Insurer under the terms
of this Agreement on any Deposit Date which failure continues unremedied
for a period of one Business Day after the date upon which notice of such
failure shall have been given to the Servicer by the Indenture Trustee or
the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer and no Insurer
Default has occurred and is continuing).
If an Event of Servicing Termination described in clauses (i) through (ix)
of this Section 7.01 shall occur, then, in each and every case, subject to
applicable law, so long as any such Event of Servicing Termination shall not
have been remedied within any period of time prescribed by this Section 7.01,
the Indenture Trustee, by notice in writing to the Servicer may, with the
consent of the Insurer (so long as the Insurer is the Controlling Party) and
shall, if so directed by the Controlling Party, terminate all of the rights and
obligations of the Servicer hereunder and in and to the Mortgage Loans and the
proceeds thereof. If an Event of Servicing
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Termination described in clause (x) of this Section 7.01 shall occur, then, in
each and every case, subject to applicable law, so long as such Event of
Servicing Termination shall not have been remedied within the time period
prescribed by clause (x) of this Section 7.01, the Indenture Trustee with, so
long as the Class A Notes are Outstanding or any Reimbursement Amounts remain
due and owing to the Insurer and no Insurer Default has occurred and is
continuing, the consent of the Insurer, by notice in writing to the Servicer,
shall promptly terminate all of the rights and obligations of the Servicer
hereunder and in and to the Mortgage Loans and the proceeds thereof. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer, and only in its capacity as Servicer under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall pass to and be vested in
the Indenture Trustee pursuant to and under the terms of this Agreement; and the
Indenture Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the defaulting 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. The defaulting Servicer
agrees to cooperate with the Indenture Trustee in effecting the termination of
the defaulting Servicer's responsibilities and rights hereunder as Servicer
including, without limitation, notifying the Servicers of the assignment of the
master servicing function and providing the Indenture Trustee or its designee
all documents and records in electronic or other form reasonably requested by it
to enable the Indenture Trustee or its designee to assume the defaulting
Servicer's functions hereunder and the transfer to the Indenture Trustee for
administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Servicer in the Collection Account maintained
by such defaulting Servicer and any other account or fund maintained with
respect to the Securities or thereafter received with respect to the Mortgage
Loans. The Servicer being terminated shall bear all costs of a master servicing
transfer, including but not limited to those of the Indenture Trustee reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, and costs of amending the
Agreement, if necessary.
Notwithstanding any termination of the Servicer hereunder, the Servicer
shall be entitled to receive, on a first in-first out basis, out of any late
collection of a Monthly Payment on a Mortgage Loan that was due prior to the
notice terminating the Servicer's rights and obligations as the Servicer
hereunder and received after such notice, that portion of the Servicing Fee
thereof or any unreimbursed Servicing Advance made by the terminated Servicer
relating to such Mortgage Loan.
In addition, upon the occurrence of any Trigger Event, as provided in the
Insurance and Indemnity Agreement, and upon the direction of the Insurer in
connection therewith, the Indenture Trustee shall terminate the rights and
responsibilities of the Servicer hereunder and shall appoint a successor
Servicer in accordance with the provisions of Section 7.02.
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Section 7.02 Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or resigns pursuant to 6.04 herein, the Indenture
Trustee or a previously agreed upon successor Servicer shall 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 be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof. As compensation therefor, the
Indenture Trustee shall be entitled to such compensation as the Servicer would
have been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act as
successor Servicer, or (ii) if the Indenture Trustee is legally unable so to
act, the Indenture Trustee shall appoint or petition a court of competent
jurisdiction to appoint, or the Insurer can direct the Indenture Trustee to
appoint or petition a court of competent jurisdiction for the appointment of,
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$50,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided that any such successor Servicer shall be acceptable to the
Insurer, as evidenced by the Insurer's prior written consent (which consent
shall not be unreasonably withheld); and provided, further, that the appointment
of any such successor Servicer will not result in the qualification, reduction
or withdrawal of the ratings assigned to the Notes by the Rating Agencies.
Pending appointment of a successor to the Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. Notwithstanding anything
herein to the contrary, in no event shall the Indenture Trustee be held liable
for any Servicing Fee or for any differential in the amount necessary to induce
any successor servicer to act as successor servicer under this Agreement and the
transactions set forth or provided for therein. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.09 herein (or such lesser compensation as the Indenture Trustee and
such successor may agree). The appointment of a successor Servicer shall not
affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer to pay any deductible under
any insurance policy obtained and maintained pursuant to Section 3.05 herein or
to indemnify the Trust and the Indenture Trustee pursuant to Section 6.06), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement. The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of the Trust, and (ii)
maintain in force an insurance policy or policies of insurance covering errors
and omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer maintained as of the date hereof, as the same may have
been increased from time to time. No successor servicer shall have the right to
retain and commingle payments on, and
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collections in respect of, the Mortgage Loans with its own funds pursuant to
Section 3.02(d) unless (i) consented to in writing by the Insurer and (ii) such
commingling will not result in a downgrade, qualification or withdrawal of the
then current ratings of the Notes, without regard to the Policy, as evidenced in
writing by each Rating Agency.
Section 7.03 Waiver of Defaults. While the Class A Notes are outstanding,
the Insurer or the Majority Securityholders with the consent of the Insurer
(which consent shall not be unreasonably withheld) may by written notice to the
Indenture Trustee, on behalf of such Class A Noteholders, waive any events
permitting removal of the Servicer as servicer pursuant to this Article VII,
provided, however, that the Insurer and the Majority Securityholders may not
waive a default in making a required payment on a Note without the consent of
100% of the Holders of such Notes. Upon any waiver of a past default, such
default shall cease to exist and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Indenture Trustee to the Rating
Agencies.
Once the Class A Notes are no longer outstanding, the Majority
Securityholders may by written notice to the Indenture Trustee, on behalf of all
Noteholders of such Class, waive any events permitting removal of the Servicer
as servicer pursuant to this Article VII. Upon any waiver of a past default,
such default shall cease to exist and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Indenture Trustee to the Rating
Agencies.
Section 7.04 Notification to Noteholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04 above, the Indenture Trustee shall give prompt written notice
thereof to the Noteholders at their respective addresses appearing in the Note
Register, the Insurer and each Rating Agency.
ARTICLE VIII.
TERMINATION
Section 8.01 Termination.
(a) The respective obligations and responsibilities of the Seller, the
Servicer, the Depositor and the Indenture Trustee created hereby (other than the
obligation of the Indenture Trustee to make certain payments to the Noteholders
and distributions to the Certificateholders after the Final Scheduled Payment
Date, the indemnity obligations of the Servicer and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Indenture Trustee of the later of (A) payment in full of all
amounts owing to the Insurer unless the Insurer shall otherwise consent and (B)
the earliest of (i) the final payment or
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other liquidation of the last Mortgage Loan remaining in the Trust; (ii) the
optional purchase by the Servicer of the Mortgage Loans as described below and
(iii) the Final Scheduled Payment Date.
(b) The Servicer may, at its option, terminate this Agreement, with the
consent of the Insurer if such termination will cause a draw on the Policy, on
or after the Payment Date on which the aggregate Note Principal Amount is less
than or equal to 10% of the aggregate Original Note Principal Amount by
purchasing, on the next succeeding Payment Date, all of the outstanding Mortgage
Loans and REO Properties at a price equal to the lesser of (i) the Optional
Redemption Price and (ii) the fair market value of the Mortgage Loans; provided
that the amount paid must be sufficient (x) to pay the Optional Redemption Price
and (y) to pay all amounts due on the Notes (including all accrued and unpaid
Class A Interest Payment Amounts, Class M-1 Interest Payment Amounts, Class M-2
Interest Payment Amounts, and the full Note Principal Balance of each
outstanding Note), and all amounts owed to the Insurer.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Payment Account all amounts then on deposit in
the Collection Account (less amounts permitted to be withdrawn by the Servicer
pursuant to Section 3.03), which deposit shall be deemed to have occurred
immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the Payment
Account on the Determination Date before such Payment Date of the Optional
Redemption Price.
(c) Notice of any termination, specifying the Payment Date (which shall be
a date that would otherwise be a Payment Date) upon which the Noteholders may
surrender their Notes to the Indenture Trustee for payment of the final payment
and cancellation, shall be given promptly by the Indenture Trustee (upon receipt
of written directions from the Servicer, if the Servicer is exercising its right
to purchase the Mortgage Loans, given not later than the first day of the month
preceding the month of such final payment) to the Insurer and to the Servicer by
letter to such parties not earlier than the 15th day and not later than the 28th
day of the month next preceding the month of such final payment specifying (i)
the Payment Date upon which final payment on the Notes will be made upon
presentation and surrender of the Notes at the office or agency of the Indenture
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Notes at the office or agency of the Indenture Trustee therein specified.
(d) Upon presentation and surrender of the Notes and the Certificates, the
Indenture Trustee shall cause to be paid to the Holders of the Notes and the
Certificates on the Payment Date for such final payment, in proportion to the
Percentage Interests and to the extent that funds are available for such
purpose, an amount equal to the amount required to be paid to the Noteholders
and the Certificateholders in the order of priority specified in and otherwise
pursuant to Section 5.01 for such Payment Date. On the final Payment Date prior
to having made the payments called for above, the Indenture Trustee shall, based
upon the information set forth in the Servicing Certificate and the Statement to
Noteholders for such Payment Date,
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withdraw from the Payment Account and remit to the Insurer the lesser of (x) the
amount available for payment on such final Payment Date, net of any portion
thereof necessary to pay the Noteholders pursuant to Section 5.01(a) and any
amounts owing to the Indenture Trustee in respect of the Indenture Trustee Fee
and (y) the unpaid amounts due and owing to the Insurer pursuant to the
Insurance Agreement.
(e) In the event that all of the Noteholders and the Certificateholders
shall not surrender their Notes or Certificates for final payment and
cancellation on or before such final Payment Date, the Indenture Trustee shall
promptly following such date cause all funds in the Payment Account not paid or
distributed in final payment to such Noteholder or Certificateholders to be
withdrawn therefrom and credited to the remaining Noteholders or
Certificateholders by depositing such funds in a separate non-interest bearing
trust account (which funds shall be held uninvested) for the benefit of such
Noteholders or Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Indenture Trustee (in
any other case) shall give a second written notice to the remaining Noteholders
or Certificateholders to surrender their Notes or Certificates for cancellation
and receive the final payment with respect thereto.
(f) Upon payment of all amounts owed under the Policy and cancellation of
the Class A Notes, the Indenture Trustee shall provide the Insurer notice of
cancellation of the Class A Notes and surrender the Policy to the Insurer.
ARTICLE IX.
[RESERVED]
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ARTICLE X.
THE INDENTURE TRUSTEE
Section 10.01 Indenture Trustee Not Liable for the Notes or Mortgage
Loans. The recitals contained herein and in the Notes shall be taken as the
statements of the Servicer and the Seller, as the case may be, and the Indenture
Trustee assumes no responsibility for their correctness. The Indenture Trustee
makes no representations as to the validity or sufficiency of this Agreement or
of the Notes or of any Mortgage Loan or related document, other than with
respect to the Indenture Trustee's execution and authentication of the Notes.
The Indenture Trustee shall not be accountable for the use or application by the
Servicer of any funds paid to the Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Servicer.
Except as provided in Section 2.01(c) and 2.01(j), the Indenture Trustee
shall have no responsibility for filing or recording any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder (unless the Indenture Trustee shall have become the successor
Servicer).
The Indenture Trustee executes the Notes not in its individual capacity
but solely as Indenture Trustee of the Trust created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Indenture Trustee on behalf of the Trust in the Notes is made and intended not
as a personal undertaking or agreement by the Indenture Trustee but is made and
intended for the purpose of binding only the Trust.
Notwithstanding anything to the contrary herein, in connection with its
activities provided for in this Agreement, the Indenture Trustee shall be
entitled to the same rights, protections, immunities and indemnities afforded to
it under the terms of the Indenture.
Section 10.02 Indenture Trustee May Own Notes. The Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of any
Class of Notes and may transact business with the Seller, the Servicer and their
affiliates, with the same rights as it would have if it were not the Indenture
Trustee.
Section 10.03 Indenture Trustee's Fees and Expenses.
(a) Subject to the side letter, dated March 31, 2006, among the Indenture
Trustee, the Seller and the Servicer, the Indenture Trustee Fee shall be paid to
the Indenture Trustee, as compensation for its activities hereunder, pursuant to
Section 5.01. The Indenture Trustee and any director, officer, employee or agent
of the Indenture Trustee shall be indemnified by the Seller and held harmless
against any loss, liability or expense (including reasonable attorney's fees and
expenses) incurred in connection with any claim or legal action relating to (a)
this Agreement or the Insurance and Indemnity Agreement, (b) the Notes, or (c)
the performance of
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any of the Indenture Trustee's duties hereunder, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of any of the Indenture Trustee's duties hereunder or incurred
by reason of any action of the Indenture Trustee taken at the direction of the
Noteholders. Such indemnity shall survive the termination of this Agreement or
the resignation or removal of the Indenture Trustee hereunder. Without limiting
the foregoing, the Seller covenants and agrees, and except for any such expense,
disbursement or advance as may arise from the Indenture Trustee's negligence,
bad faith or willful misconduct, to pay or reimburse the Indenture Trustee, for
all reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee in accordance with any of the provisions of this Agreement
with respect to: (A) the reasonable compensation and the expenses and
disbursements of its counsel not associated with the closing of the issuance of
the Notes, (B) the reasonable compensation, expenses and disbursements of any
accountant, engineer or appraiser that is not regularly employed by the
Indenture Trustee, to the extent that the Indenture Trustee must engage such
persons to perform acts or services hereunder, (C) printing and engraving
expenses in connection with preparing any Definitive Notes and (D) any other
reasonable expenses incurred other than in the ordinary course of its business
by the Indenture Trustee in connection with its duties hereunder. Except as
otherwise provided herein, the Indenture Trustee shall not be entitled to
payment or reimbursement for any routine ongoing expenses incurred by the
Indenture Trustee in the ordinary course of its duties as Indenture Trustee
hereunder or for any other expenses.
Section 10.04 Determination of LIBOR. On each LIBOR Determination Date and
with respect to the applicable Note Rate, the Indenture Trustee shall determine
LIBOR for the Interest Period and inform the Servicer of such rate.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment
(a) This Agreement may be amended from time to time by the Depositor, the
Issuer, the Servicer, the Indenture Trustee and the Holder of the Certificates,
without notice to or the consent of any of the Holders of the Notes but, so long
as the Class A Notes are Outstanding or any Reimbursement Amounts remain due and
owing to the Insurer with the consent of the Insurer, (i) to cure any ambiguity,
(ii) to cause the provisions herein to conform to or be consistent with or in
furtherance of the statements made with respect to the Securities, the Issuer or
this Agreement in any Prospectus or Offering Document, or to correct or
supplement any provision herein which may be inconsistent with any other
provisions herein or in any other Operative Agreement, (iii) to make any other
provisions with respect to matters or questions arising under this Agreement or
(iv) to add, delete, or amend any provisions to the extent necessary or
desirable to comply with any requirements imposed by the Code, ERISA and their
related regulations. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel (which shall be an expense
of the party requesting such amendment and shall not be an expense of the
Trust), adversely affect the tax status of the REMICs created by the Trust
Agreement, nor shall such amendment adversely affect in any
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material respect the interests of any Holder or the Insurer. Prior to entering
into any amendment without the consent of Holders pursuant to this paragraph,
the Indenture Trustee may require an Opinion of Counsel (at the expense of the
party requesting such amendment) to the effect that such amendment is permitted
under this paragraph. Any such amendment shall be deemed not to adversely affect
in any material respect any Holder and the opinion to such effect will not be
required to be given, if the Indenture Trustee receives written confirmation
from each Rating Agency that such amendment will not cause such Rating Agency to
reduce the then current rating assigned to the Notes without taking into account
the Policy.
(b) This Agreement may also be amended from time to time by the Depositor,
the Issuer, the Servicer and the Indenture Trustee with the consent of the
Holders of not less than 66-2/3% of the Note Principal Amount of each Class of
Notes, the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer) and of the Holders of
not less than 66-2/3% of the Class Principal Balance of the Certificates 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; provided, however, that no such amendment shall be made unless the
Indenture Trustee receives an Opinion of Counsel (which shall be an expense of
the party requesting such amendment and shall not be an expense of the Trust),
to the effect that such amendment will now adversely affect the tax status of
the REMICs created by the Trust Agreement; provided, further, that no such
amendment may (i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Class of Securities,
without the consent of the Holders of such Class or (ii) reduce the aforesaid
percentages of Note Principal Amount of Notes or Class Principal Balance of
Certificates, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Note Principal Amount of the
Notes and 100% of the Class Principal Balance of the Certificates affected
thereby. For purposes of this paragraph, references to "Holder" or "Holders"
shall be deemed to include, in the case of Book-Entry Notes, the related Note
Owners.
(c) Promptly after the execution of any such amendment, the Indenture
Trustee shall furnish written notification of the substance of such amendment to
each Holder, the Insurer (so long as the Class A Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer and no Insurer Default
has occurred and is continuing), the Depositor and to each Rating Agency.
(d) It shall not be necessary for the consent of Holders under this
Section 11.01 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 Holders shall be subject to such reasonable regulations as
the Indenture Trustee may prescribe.
Section 11.02 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the Mortgaged Properties are situated, and
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in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Servicer's expense on direction of the
Indenture Trustee acting at the direction of the Majority Securityholders, but
only when accompanied by an opinion of counsel delivered by counsel to the
Majority Securityholders to the effect that such recordation materially and
beneficially affects the interests of the Class A Noteholders or is necessary
for the administration or servicing of the Mortgage Loans.
Section 11.03 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 11.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Section 11.05 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by overnight mail, certified mail or registered mail,
postage prepaid, to: (i) in the case of the Seller, the Depositor and the
Servicer, c/o IndyMac Bank, F.S.B., 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000, Attention: Treasurer, (ii) in the case of the Indenture Trustee or the
Trust, at the Corporate Trust Office, (iii) in the case of the Insurer,
Financial Guaranty Insurance Company, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Surveillance, IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H1, (iv) in the case of Xxxxx'x, 00 Xxxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Residential Mortgage
Monitoring, (v) in the case of Standard & Poor's, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, (vi) in the case of the Noteholders, as set forth in the Note
Register, and (vii) in the case of the Certificateholders, as set forth in the
Certificate Register. Any such notices shall be deemed to be effective with
respect to any party hereto upon the receipt of such notice by such party,
except that notices to the Noteholders and the Certificateholders shall be
effective upon mailing or personal delivery.
Section 11.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of this
Agreement.
Section 11.07 No Partnership. Nothing herein contained shall be deemed or
construed to create any partnership or joint venture between the parties hereto
and the services of the Servicer shall be rendered as an independent contractor.
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Section 11.08 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.
Section 11.09 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Seller, the Depositor, the
Trust, the Indenture Trustee, the Noteholders and the Certificateholders and
their respective successors and permitted assigns. The Insurer is an express
third party beneficiary of this Agreement.
Section 11.10 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 11.11 Reports to Rating Agencies. The Indenture Trustee shall
provide to each Rating Agency, upon request, copies of statements, reports and
notices, to the extent received or prepared by the Servicer hereunder, as
follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Mortgage
Loans;
(iii) notice of any termination, replacement, succession, merger or
consolidation of either the Servicer or the Trust;
(iv) notice of final payment on any Class of Note;
(v) notice of any Event of Servicing Termination;
(vi) copies of the annual independent auditor's report delivered
pursuant to Section 3.11 herein, and copies of any compliance reports
delivered by the Servicer hereunder pursuant to Section 3.10 herein; and
(vii) via access to the Indenture Trustee's website, copies of any
Statement to Noteholders pursuant to Section 5.03 herein.
Section 11.12 Inconsistencies Among Transaction Documents. In the event
certain provisions of a Transaction Document conflict with the provisions of
this Sale and Servicing Agreement, the parties hereto agree that the provisions
of this Sale and Servicing Agreement shall be controlling.
Section 11.13 Rights of the Insurer to Exercise Rights of Class A
Noteholders. By accepting its Class A Note, each Class A Noteholder agrees that
unless an Insurer Default exists,
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the Insurer is an express third party beneficiary of this Agreement and shall
have the right to exercise all rights of the Class A Noteholders as specified
under this Agreement as if it were a party hereto without any further consent of
the Class A Noteholders. Any right conferred to the Insurer hereunder shall be
suspended and shall run to the benefit of the Class A Noteholders during any
period in which there exists an Insurer Default.
Section 11.14 Enforceability Rights of the Indenture Trustee. All rights
conferred and remedies made available to the Indenture Trustee under this
Agreement may be exercised and enforced by the Controlling Party.
Section 11.15 Matters Regarding the Trust. The Trust's power and authority
to effect transactions shall be limited to such transactions specifically
provided for in this Agreement or the Transaction Documents.
Section 11.16 Reports to Insurer. The Seller, the Servicer and the
Indenture Trustee, as applicable, shall provide copies to the Insurer of all
statements, reports and notices delivered under this agreement to any other
party hereto, any Rating Agency or any Noteholder.
Section 11.17 Matters Regarding the Indenture Trustee. It is expressly
understood and agreed by the parties that (a) this Agreement is executed and
delivered by Deutsche Bank National Trust Company, not individually or
personally, but solely as Indenture Trustee, in the exercise of the powers and
authority conferred and vested in it, pursuant to the Trust Agreement, (b) each
of the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as personal representations, undertakings and
agreements by Deutsche Bank National Trust Company but is made and intended for
the purpose for binding only the Trust, (c) nothing herein contained shall be
construed as creating any liability on Deutsche Bank National Trust Company,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any person claiming by, through or under the parties
hereto, and (d) under no circumstances shall Deutsche Bank National Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement or any other related documents.
Section 11.18 Limitation of Owner Trustee Liability. It is expressly
understood and agreed by the parties that (a) this document is executed and
delivered by Wilmington Trust Company, not individually or personally, but
solely as Owner Trustee, in the exercise of the powers and authority conferred
and vested in it, pursuant to the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
person claiming by, through or under the parties hereto, and (d) under no
circumstances shall Wilmington Trust
101
Company be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement or any other related documents.
102
IN WITNESS WHEREOF, the following have caused their names to be signed by
their respective officers thereunto duly authorized, as of the day and year
first above written, to this Sale and Servicing Agreement.
INDYMAC ABS, INC.
as Depositor
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Senior Vice President,
Secondary Marketing
DEUTSCHE BANK NATIONAL TRUST
COMPANY, not in its individual capacity,
but solely as Indenture Trustee
By: /s/ Xxx Xxxxxxxx
-------------------------------------
Name: Xxx Xxxxxxxx
Title: Authorized Signer
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
INDYMAC BANK F.S.B.,
as Servicer and Seller
By: /s/ Xxxx Xxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxx
Title: Senior Vice President,
Secondary Marketing
INDYMAC HOME EQUITY MORTGAGE
LOAN ASSET-BACKED TRUST, SERIES
2006-H1,
as the Trust
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: /s/ W. Xxxxx Xxxxxxxxxx
-------------------------------------
Name: W. Xxxxx Xxxxxxxxxx
Title: Vice President
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
BEFORE ME, on March [ ], 2006, the undersigned authority, a Notary Public,
on this day personally appeared ____________________, known to me to be the
person and officer whose name is subscribed t the foregoing instrument and
acknowledged to me that the same was the act of the said IndyMac ABS Inc., as
Depositor, and that he executed the same as the act of such corporation for the
purposes and consideration therein expressed, and in the capacity therein
stated.
______________________________
Notary Public, State of_______
STATE OF CALIFORNIA )
)
COUNTY OF ORANGE )
BEFORE ME, on March [ ], 2006, the undersigned authority, a Notary Public,
on this day personally appeared ____________________, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said Deutsche Bank National
Trust Company, as Indenture Trustee of IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H1, and that he executed the same as the act of
such national banking association for the purposes and consideration therein
expressed, and in the capacity therein stated.
______________________________
Notary Public, State of_______
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
BEFORE ME, on March [ ], 2006, the undersigned authority, a Notary Public,
on this day personally appeared ____________________, known to me to be a person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said IndyMac Bank F.S.B., as
a Seller and the Servicer, and that he executed the same as the act of such
federal savings bank for the purpose and consideration therein expressed, and in
the capacity therein stated.
______________________________
Notary Public, State of_______
STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BEFORE ME, on March [ ], 2006, the undersigned authority, a Notary Public,
on this day personally appeared ____________________, known to me to be a person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said IndyMac ABS, Inc., as
Depositor, and that he executed the same as the act of such corporation for the
purpose and consideration therein expressed, and in the capacity therein stated.
______________________________
Notary Public, State of_______
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[ON FILE WITH INDENTURE TRUSTEE]
A-1
EXHIBIT B
LIST OF SERVICING OFFICERS
To: Deutsche Bank National Trust Company
AUTHORIZED SERVICING OFFICER CERTIFICATE
Listed below are those individuals authorized to provide Deutsche Bank National
Trust Company with written instructions relating to the IndyMac Home Equity
Mortgage Loan Asset-Backed Trust, Series 2006-H1 transaction. Deutsche Bank
National Trust Company is Indenture Trustee for this transaction.
Name Title Specimen Signature
---- ----- ------------------
Xxxx Xxxxx ____________________________ ____________________________
Xxxx Xxxxxxxx ____________________________ ____________________________
Xxxxxx Xxxx ____________________________ ____________________________
Xxxxxxx Xxxxx ____________________________ ____________________________
Xxxxxx Xxxxxxxx ____________________________ ____________________________
By: ___________________________________
Name:
B-1
Title:
Date:
B-2
EXHIBIT C
FORM OF ANNUAL OFFICER'S CERTIFICATE
INDYMAC BANK, F.S.B.
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST, SERIES
2006-H1
The undersigned, a duly authorized representative of IndyMac Bank, F.S.B.
("IndyMac Bank"), pursuant to the Sale and Servicing Agreement dated as of March
1, 2006 (the "Agreement"), among IndyMac ABS, Inc., a Delaware corporation, as
depositor, IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H1
(the "Trust"), IndyMac Bank, F.S.B., a federally chartered bank, as seller and
servicer (in such capacity, the "Seller" and "Servicer"), and Deutsche Bank
National Trust Company, a national banking association, as Indenture Trustee on
behalf of the Class A Noteholders (in such capacity, the "Indenture Trustee"),
does hereby certify that:
IndyMac Bank is, as of the date hereof, the Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective meanings as set
forth in the Agreement.
1. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to
the Indenture Trustee.
2. A review of the activities of the Servicer during the twelve months
[or such shorter period in the year after the Closing Date] ended
[DATE], and of its performance under the Agreement, was conducted
under my supervision.
3. Based on such review, the Servicer has, to the best of my knowledge,
performed in all material respects its obligations under the
Agreement throughout the twelve months [or such shorter period in
the year after the Closing Date] ended [DATE], and no default in the
performance of such obligations has occurred or is continuing except
as set forth in paragraph 5 below.
4. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Agreement
known to me to have been made by the Servicer during the twelve
months [or such shorter period in the year
after the Closing Date] ended [DATE], which sets forth in detail (i)
the nature of each such default, (ii) the action taken by the
Servicer, if any, to remedy each such default and (iii) the current
status of each such default.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this ____
day of __________ 200_.
INDYMAC BANK, F.S.B.
as Servicer
By: ________________________
[Name]:
[Title]:
EXHIBIT D
FORM OF ADVANCE NOTICE
_________________
Date
[Addressed to Holder of the Class L Certificates]
In connection with that certain Sale and Servicing Agreement dated as of
March 1, 2006 by and among IndyMac ABS, Inc., as Depositor, Deutsche Bank
National Trust Company, as Indenture Trustee, IndyMac Bank, F.S.B, as Seller and
Servicer, and IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H1, as Issuer (the "Sale and Servicing Agreement"), the undersigned
Servicer hereby requests that you make an advance to the Trust in the amount of
$___________ (such amount to be deposited into the Reserve Account no later than
[date [[two]] Business Days prior to next Payment Date] in accordance with
Section 2.01(b) of the Sale and Servicing Agreement), in respect of the
following Draw[s]:
Loan no.:
Date of Draw:
Amount of Draw:
Loan no.:
Date of Draw:
Amount of Draw:
Total amount of Draws:
Amount of total covered by Principal Collections:
Q-1
Capitalized terms used herein shall have the meanings ascribed to them in
the Transfer and Servicing Agreement.
____________________________
[Name of Servicer]
By: ________________________
Name:
Title:
cc: Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
EXHIBIT E
FORM OF MORTGAGE NOTE
[ON FILE WITH SERVICER]
E-1
EXHIBIT F
FORM OF MORTGAGE
[ON FILE WITH SERVICER]
F-1
EXHIBIT G
SPECIMEN OF THE POLICY
G-1
EXHIBIT H
FORM OF LOST CERTIFICATE AFFIDAVIT
AFFIDAVIT OF LOST CERTIFICATE
STATE OF )
) ss.:
COUNTY OF )
(name) , (address) , being duly sworn,
deposes and says:
1. that he is a __________________________ of assignor
2. that (assignor) is the owner and holder of a (type of
mortgage) loan in the present principal amount of ______ securing the
premises known as (premises);
3. (a) that (assignor), after having conducted a diligent
investigation in its records and files, has been unable to locate the
following original certificate and believes that said original certificate
has been lost, misfiled, misplaced or destroyed due to a clerical error:
a certificate in the original sum of _________________________
made by ___________, to ________________, under date of ________________;
(b) this affidavit is being delivered simultaneously with a
copy of the original certificate listed above;
4. that said certificate and the related mortgage have not been
paid off, satisfied, assigned, transferred, encumbered, endorsed, pledged,
hypothecated, or otherwise disposed of;
5. that no other person, firm, corporation or other entity has
any right, title, interest or claim in said certificate except (assignor);
H-1
6. that it is the intention and understanding of (assignor) to
the right, title and interest in the said assign certificate and mortgage
to _________;
7. that (assignor) covenants and agrees (a) promptly to deliver
to (assignee) the original certificate if it is subsequently found, and
(b) to indemnify and hold harmless (assignee) and its successors and
assigns from and against any and all costs, expenses and monetary losses
arising as a result of (assignor's) failure to deliver said original
certificate to (assignee);
8. that this Affidavit is made to induce _____________________ to
accept an assignment of the certificate and mortgage described herein.
_________________________
Name:
Title:
Sworn to before me this
____ day of ____________, __________
H-2
EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
Deutsche Bank National Trust Company
0000 X. Xx Xxxxxx Xxxxx
Xxxxx Xxx, XX 00000
Attention:
Re: IndyMac Residential Asset-Backed Notes, Series 2006-H1
Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee under the Sale and Servicing Agreement dated as of March 1,
2006, among IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H1, IndyMac ABS, Inc., as Depositor, IndyMac Bank, F.S.B., as Seller and
Servicer, and you, as Indenture Trustee (the "Sale and Servicing Agreement"), we
hereby request a release of the Mortgage File held by you as Indenture Trustee
with respect to the following described Mortgage Loan for the reason indicated
below.
Loan No.:
Reason for requesting file:
______ 1. Mortgage Loan paid in full. (The Servicer hereby certifies
that all amounts received in connection with the payment in
full of the Mortgage Loan which are required to be deposited
in the Collection Account pursuant to Section 3.02 of the Sale
and Servicing Agreement have been so deposited).
______ 2. The Mortgage Loan is being foreclosed.
______ 3. The Mortgage Loan is being re financed by another depository
institution. (The Servicer hereby certifies that all amounts
received in connection with the payment in full of the
Mortgage Loan which are required to be deposited in the
Collection Account pursuant to Section 3.02 of the Sale and
Servicing Agreement have been so deposited).
I-1
_____ 4. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Sale and Servicing
Agreement and will promptly be returned to the Indenture Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage Loan has been
liquidated.
Capitalized terms used herein shall have the meanings ascribed to them in
the Sale and Servicing Agreement.
[ ]
By: ___________________________
Name:
Title: Servicing Officer
I-2
EXHIBIT J
FORM OF INITIAL CERTIFICATION
[Date]
[Insurer]
[Depositor]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement among IndyMac Home Equity
Mortgage Loan Asset-Backed Trust, Series 2006-H1, IndyMac ABS,
Inc., as depositor, IndyMac Bank, F.S.B., as seller and
servicer, and Deutsche Bank National Trust Company, as
Indenture Trustee (the "Indenture Trustee")
Gentlemen:
In accordance with Section 2.01(e) of the above-captioned Sale
and Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned,
as Indenture Trustee, hereby certifies that, as to each Mortgage Loan listed in
each Mortgage Loan Schedule (other than any Mortgage Loan listed in the attached
schedule), it has received:
(A) the original Mortgage Note, endorsed in blank, or
a copy of such original Mortgage Note with an accompanying
Lost Certificate Affidavit; and
(B) the original Assignment of Mortgage, from the
Seller either in blank or to "Deutsche Bank National Trust
Company, as Indenture Trustee for IndyMac Home Equity Mortgage
Loan Asset-Backed Trust, Series 2006-H1", which assignment
shall be in form and substance acceptable for recording.
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and relate to
such Mortgage Loan.
The undersigned has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Sale and
J-1
Servicing Agreement. The undersigned makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any of
the documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Sale and Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
J-2
EXHIBIT K
FORM OF FINAL CERTIFICATION
[Date]
[Insurer]
[Depositor]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement among IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H1, IndyMac ABS, Inc., as depositor,
IndyMac Bank, F.S.B., as seller and servicer, and Deutsche Bank
National Trust Company, as Indenture Trustee (the "Indenture
Trustee")
Gentlemen:
In accordance with Section 2.01(g) of the above-captioned Sale and
Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned, as
Indenture Trustee, hereby certifies that as to each Mortgage Loan listed in each
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attached exception report) it has received:
(A) the original Mortgage Note, endorsed in blank, or a copy
of such original Mortgage Note with an accompanying Lost Certificate
Affidavit;
(B) the original Assignment of Mortgage, from the Seller
either in blank or to "Deutsche Bank National Trust Company, as
Indenture Trustee for IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H1", which assignment shall be in form and
substance acceptable for recording;
(C) the original Mortgage, with evidence of recording
thereon, provided that if the original Mortgage has been delivered
for recording to the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located but has not
yet been returned to the Seller by such recording office, the Seller
shall deliver to the Indenture Trustee a certified true copy of
K-1
such original Mortgage so certified by or on behalf of such Seller,
together with a certificate by or on behalf of such Seller
certifying that such original Mortgage has been so delivered to such
recording office; in all such instances, such Seller shall deliver
or cause to be delivered the original recorded Mortgage to the
Indenture Trustee promptly upon receipt of the original recorded
Mortgage;
(D) [reserved];
(E) intervening assignments, if any, with evidence of
recording thereon, provided that if such intervening assignment has
been delivered for recording to the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by such
recording office, the Seller shall deliver to the Indenture Trustee
a certified true copy of such intervening assignment so certified by
or on behalf of such Seller, together with a certificate by or on
behalf of such Seller certifying that such intervening assignment
has been so delivered to such recording office; in all such
instances, such Seller shall deliver or cause to be delivered the
original intervening assignment to the Indenture Trustee promptly
upon receipt of the original intervening assignment; and
(F) with respect to any Subsequent Mortgage Loans, originals
of all assumption and modification agreements, if any.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) with respect to HELOCs, the information set forth in the
definition of "Mortgage Loan Schedule" in Article I of the Sale and Servicing
Agreement other than items (i), (iv), (v), (vi), (viii), (ix), (x), (xi) and
(xii) accurately reflects information set forth in the related Mortgage Files.
The undersigned has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Sale and Servicing Agreement. The undersigned makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any of
the documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Notwithstanding anything herein to the contrary, the undersigned has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.
K-2
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Sale and Servicing Agreement.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
K-3
EXHIBIT L
FORM OF CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K
Re: IndyMac ABS Inc.
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H1
I, [identify the certifying individual], certify that:
1. I have reviewed this annual report on Form 10-K and all
reports on Form 10-D required to be filed in respect of the period covered by
this report on Form 10-K of Home Equity Mortgage Loan Asset-Backed Trust, Series
INABS 2006-H1 (the "Exchange Act Periodic Reports");
2. Based on my knowledge, the Exchange Act Periodic Reports,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act Periodic Reports;
4. Based on my knowledge and the servicer compliance statement(s)
required in this report under Item 1123 of Regulation AB and except as disclosed
in the Exchange Act Periodic Reports, the servicer(s) [has/have] fulfilled
[its/their] obligations under the servicing agreement(s) in all material
respects; and;
5. All of the reports on assessment of compliance with servicing
criteria for asset-backed securities and their related attestation reports on
assessment of compliance with servicing criteria for asset-backed securities
required to be included in this report in accordance with Item 1122 of
Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as an
exhibit to this report, except as otherwise disclosed in this report. Any
material instances of noncompliance described in such reports have been
disclosed in this report on Form 10-K.
In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties: Deutsche Bank
National Trust Company.
L-1
Date:
---------------
INDYMAC ABS, INC.,
as Depositor
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
L-2
EXHIBIT M
INDENTURE TRUSTEE'S OFFICER'S CERTIFICATE
I, ____________________, a duly elected and acting officer of
Deutsche Bank National Trust Company (the "Indenture Trustee") hereby certify as
follows:
Reference is hereby made to the Sale and Servicing Agreement dated
as of March 1, 2006 (the "Sale and Servicing Agreement") by and among IndyMac
Bank, F.S.B., as seller and servicer, IndyMac ABS, Inc., as depositor and
Deutsche Bank National Trust Company, as indenture trustee and supplemental
interest trustee, pursuant to which was created the IndyMac Home Equity Mortgage
Loan Asset-Backed Trust, Series INABS 2006-H1 (the "Trust"). Capitalized terms
used herein but not defined shall have the meanings assigned to them in the Sale
and Servicing Agreement.
1. I am an authorized officer of the Indenture Trustee and I have
reviewed this annual report on Form 10-K and all reports on Form 10-D required
to be filed in respect of the period covered by this report on Form 10-K of
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series INABS 2006-H1 (the
"Exchange Act Periodic Reports");
2. For purposes of this certificate, "Relevant Information" means
the information in the report on assessment of the Indenture Trustee's
compliance with the servicing criteria set forth in Item 1122(d) of Reg AB (the
"Servicing Assessment"), the registered public accounting firm's attestation
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Reg AB ( the "Attestation Report") applicable to the
Indenture Trustee and the Monthly Statements (excluding information provided, or
based on information provided, by the Servicer or any servicer) and those items
in Exhibit S attached to the Sale and Servicing Agreement which indicate the
4.03 statement or the Indenture Trustee as the responsible party during the
Relevant Year. Based on my knowledge, the Relevant Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to
M-1
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this annual report; and
3. Based on my knowledge, the distribution information required
to be provided by the Indenture Trustee under the Sale and Servicing Agreement
is included in the Monthly Statements.
4. I am responsible for reviewing the activities performed by the
Indenture Trustee, as servicer under the Sale and Servicing Agreement during the
Relevant Year. Based upon the review required by the Sale and Servicing
Agreement and except as disclosed in the Servicing Assessment or Attestation
Report, to the best of my knowledge, the Indenture Trustee has fulfilled its
obligations under the Sale and Servicing Agreement throughout the Relevant Year.
Relevant Year shall mean 200__.
DATED as of _____________, 200____.
By: _________________________________
Name: _______________________________
Title: ____________________________
M-2
EXHIBIT N
FORM OF WITHDRAWAL CERTIFICATE
INDYMAC BANK, F.S.B.
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST, SERIES 2006-H1
The undersigned, a duly authorized representative of IndyMac Bank, F.S.B.
("IndyMac"), pursuant Section 5.06 of the Sale and Servicing Agreement dated as
of March 1, 2006 (the "Agreement"), among IndyMac ABS, Inc., a Delaware
corporation, as depositor, IndyMac Bank, F.S.B., a federally chartered savings
bank, as seller and servicer, and Deutsche Bank National Trust Company, a
national banking association, as Indenture Trustee on behalf of the Class A
Noteholders, does hereby certify its withdrawal of $ ______________ from the
Reinvestment Account for the sole purpose of purchasing the Mortgage Loans set
forth on Exhibit A attached hereto.
Capitalized terms used in this Certificate have their respective meanings
as set forth in the Agreement.
IN WITNESS WHEREOF, IndyMac has caused this Withdrawal Certificate to be
duly executed.
Dated:
---------------
By: INDYMAC BANK, F.S.B., as Seller
---------------------------------
Name:
Title:
N-1
EXHIBIT O
ORIGINATORS' APPRAISAL MATRIX
O-1
EXHIBIT P
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
Key:
X - obligation
Where there are multiple checks for criteria the attesting party will
identify in their management assertion that they are attesting only to the
portion of the distribution chain they are responsible for in the related
transaction agreements.
--------------------------------------------------------------------------------------------------------
Reg AB Reference Servicing Criteria Servicer Trustee Notes
-------------------------------------------------------------------------------------------------------
Policies and procedures are instituted X X-1 1 - attest
to monitor any performance or other to knowledge
triggers and events of default in but not to
accordance with the transaction process
1122(d)(1)(i) agreements.
-------------------------------------------------------------------------------------------------------
If any material servicing activities X
are outsourced to third parties,
policies and procedures are instituted
to monitor the third party's
performance and compliance with such
1122(d)(1)(ii) servicing activities.
-------------------------------------------------------------------------------------------------------
Any requirements in the transaction NA
agreements to maintain a back-up
servicer for the Pool Assets are
1122(d)(1)(iii) maintained.
-------------------------------------------------------------------------------------------------------
A fidelity bond and errors and X
omissions policy is in effect on the
1122(d)(1)(iv) party participating in the
-------------------------------------------------------------------------------------------------------
P-1
-------------------------------------------------------------------------------------------------------
servicing function throughout the
reporting period in the amount of
coverage required by and otherwise in
accordance with the terms of the
transaction agreements.
-------------------------------------------------------------------------------------------------------
Cash Collection and Administration
-------------------------------------------------------------------------------------------------------
Payments on pool assets are deposited X
into the appropriate custodial bank
accounts and related bank clearing
accounts no more than two business
days following receipt, or such other
number of days specified in the
1122(d)(2)(i) transaction agreements.
-------------------------------------------------------------------------------------------------------
Disbursements made via wire transfer X
on behalf of an obligor or to an
investor are made only by authorized
1122(d)(2)(ii) personnel.
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Advances of funds or guarantees X X
regarding collections, cash flows or
distributions, and any interest or
other fees charged for such advances,
are made, reviewed and approved as
specified in the transaction
1122(d)(2)(iii) agreements.
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The related accounts for the X
transaction, such as cash reserve
accounts or accounts established as a
form of over collateralization, are
1122(d)(2)(iv) separately
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maintained (e.g., with respect to
commingling of cash) as set
forth in the transaction agreements.
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Each custodial account is maintained X X
at a federally insured depository
institution as set forth in the
transaction agreements. For purposes
of this criterion, "federally insured
depository institution" with respect
to a foreign financial institution
means a foreign financial institution
that meets the requirements of Rule
13k-1(b)(1) of the Securities Exchange
1122(d)(2)(v) Act.
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Unissued checks are safeguarded so as
1122(d)(2)(vi) to prevent unauthorized access.
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Reconciliations are prepared on a X
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and
related bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30
calendar days after the bank statement
cutoff date, or such other number of
days specified in the transaction
agreements; (C) reviewed and approved
by someone other than the person who
prepared the reconciliation; and (D)
contain explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days of
1122(d)(2)(vii) their original identification, or such
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other number of days specified in the
transaction agreements.
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Investor Remittances and Reporting
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Reports to investors, including those X
to be filed with the Commission, are
maintained in accordance with the
transaction agreements and applicable
Commission requirements. Specifically,
such reports (A) are prepared in
accordance with timeframes and other
terms set forth in the transaction
agreements; (B) provide information
calculated in accordance with the
terms specified in the transaction
agreements; (C) are filed with the
Commission as required by its rules
and regulations; and (D) agree with
investors' or the Indenture Trustee's
records as to the total unpaid
principal balance and number of Pool
1122(d)(3)(i) Assets serviced by the Servicer.
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Amounts due to investors are allocated X
and remitted in accordance with
timeframes, distribution priority and
other terms set forth in the
1122(d)(3)(ii) transaction agreements.
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Disbursements made to an investor are X
posted within two business days to the
Servicer's investor records, or such
other number of days specified in the
1122(d)(3)(iii) transaction agreements.
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Amounts remitted to investors per the X
investor reports agree with cancelled
checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements.
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Pool Asset Administration
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Collateral or security on pool assets
is maintained as required by the
transaction agreements or related pool
1l22(d)(4)(i) asset documents.
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Pool assets and related documents are
safeguarded as required by the
1122(d)(4)(ii) transaction agreements.
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Any additions, removals or X
substitutions to the asset pool are
made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
1122(d)(4)(iii) agreements.
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Payments on pool assets, including any
payoffs, made in accordance with the
related pool asset documents are
posted to the Servicer's obligor
records maintained no more than two
business days after receipt, or such
other number of days specified in the
transaction agreements, and allocated
to principal, interest or other items
(e.g., escrow) in accordance with the
1122(d)(4)(iv) related pool asset documents.
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The Servicer's records regarding the
pool assets agree with the Servicer's
records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
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Changes with respect to the terms or
status of an obligor's pool assets
(e.g., loan modifications or
re-agings) are made, reviewed and
approved by authorized personnel in
accordance with the transaction
agreements and related pool asset
1122(d)(4)(vi) documents.
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Loss mitigation or recovery actions
(e.g., forbearance plans,
modifications and deeds in lieu of
foreclosure, foreclosures and
repossessions, as applicable) are
1122(d)(4)(vii) initiated, conducted and
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concluded in accordance with the
timeframes or other requirements
established by the transaction
agreements.
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Records documenting collection efforts
are maintained during the period a
pool asset is delinquent in accordance
with the transaction agreements. Such
records are maintained on at least a
monthly basis, or such other period
specified in the transaction
agreements, and describe the entity's
activities in monitoring delinquent
pool assets including, for example,
phone calls, letters and payment
rescheduling plans in cases where
delinquency is deemed temporary (e.g.,
1122(d)(4)(viii) illness or unemployment).
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Adjustments to interest rates or rates
of return for pool assets with
variable rates are computed based on
1122(d)(4)(ix) the related pool asset documents.
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Regarding any funds held in trust for
an obligor (such as escrow accounts):
(A) such funds are analyzed, in
accordance with the obligor's pool
asset documents, on at least an annual
basis, or such other period specified
in the transaction agreements; (B)
interest on such funds is paid, or
credited, to obligors in accordance
with applicable pool asset documents
and state laws; and (C) such funds are
1122(d)(4)(x) returned to the obligor within 30
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calendar days of full repayment of the
related pool assets, or such other
number of days specified in the
transaction agreements.
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Payments made on behalf of an obligor
(such as tax or insurance payments)
are made on or before the related
penalty or expiration dates, as
indicated on the appropriate bills or
notices for such payments, provided
that such support has been received by
the servicer at least 30 calendar days
prior to these dates, or such other
number of days specified in the
1122(d)(4)(xi) transaction agreements.
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Any late payment penalties in
connection with any payment to be made
on behalf of an obligor are paid from
the Servicer's funds and not charged
to the obligor, unless the late
payment was due to the obligor's error
1122(d)(4)(xii) or omission.
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Disbursements made on behalf of an
obligor are posted within two business
days to the obligor's records
maintained by the servicer, or such
1122(d)(4)(xiii) other number of days specified in the
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transaction agreements.
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Delinquencies, charge-offs and X
uncollectible accounts are recognized
and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
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Any external enhancement or other X
support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
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