NOMURA HOME EQUITY LOAN, INC.,
Depositor
NOMURA CREDIT & CAPITAL, INC.,
Seller
[NAME OF SERVICER]
Servicer
and
[NAME OF TRUSTEE],
Trustee
____________________
FORM OF POOLING AND SERVICING AGREEMENT
Dated as of _______, _____
________________________________________
NOMURA HOME EQUITY LOAN TRUST
ASSET BACKED PASS-THROUGH CERTIFICATES, SERIES ____-____
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1.01. Defined Terms.............................................................................
Section 1.02. Allocation of Certain Interest Shortfalls.................................................
ARTICLE II CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Trust Fund..................................................................
Section 2.02. Acceptance of the Mortgage Loans..........................................................
Section 2.03. Representations, Warranties and Covenants of the Servicer and the Seller..................
Section 2.04. Representations and Warranties of the Depositor...........................................
Section 2.05. Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases...........
Section 2.06. Issuance of the REMIC I Regular Interests and the Class R-1 Interest......................
Section 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC II by the Trustee........
Section 2.08. Conveyance of the REMIC II Regular Interests; Acceptance of REMIC III by the Trustee......
Section 2.09. Issuance of Class R Certificates..........................................................
Section 2.10. Establishment of Trust....................................................................
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01. The Servicer to act as Servicer of the Mortgage Loans.....................................
Section 3.02. Due-on-Sale Clauses; Assumption Agreements................................................
Section 3.03. Subservicers..............................................................................
Section 3.04. Documents, Records and Funds in Possession of the Servicer To Be Held for Trustee.........
Section 3.05. Maintenance of Hazard Insurance...........................................................
Section 3.06. Presentment of Claims and Collection of Proceeds..........................................
Section 3.07. Maintenance of Insurance Policies.........................................................
Section 3.08. Reserved..................................................................................
Section 3.09. Realization Upon Defaulted Mortgage Loans; Determination of Excess Liquidation
Proceeds and Realized Losses; Repurchases of Certain Mortgage Loans.......................
Section 3.10. Servicing Compensation....................................................................
Section 3.11. REO Property..............................................................................
Section 3.12. Liquidation Reports.......................................................................
Section 3.13. Annual Certificate as to Compliance.......................................................
Section 3.14. Annual Independent Certified Public Accountants' Servicing Report.........................
Section 3.15. Books and Records.........................................................................
Section 3.16. The Trustee...............................................................................
Section 3.17. REMIC-Related Covenants...................................................................
Section 3.18. Reimbursement of Costs and Expenses.......................................................
Section 3.19. Release of Mortgage Files.................................................................
Section 3.20. Documents, Records and Funds in Possession of the Servicer to be held for Trustee.........
Section 3.21. Possession of Certain Insurance Policies and Documents....................................
Section 3.22. SEC Filings...............................................................................
Section 3.23. UCC.......................................................................................
Section 3.24. Optional Purchase of Defaulted Mortgage Loans.............................................
Section 3.25. Enforcing Obligations of the Servicer.....................................................
ARTICLE IV ACCOUNTS
Section 4.01. Collection of Mortgage Loan Payments; Custodial Account...................................
Section 4.02. Permitted Withdrawals From the Custodial Account..........................................
Section 4.03. Reports to Trustee........................................................................
Section 4.04. Collection of Taxes; Assessments and Similar Items; Escrow Accounts.......................
Section 4.05. Adjustments to Mortgage Rates and Scheduled Payments......................................
Section 4.06. Distribution Account......................................................................
Section 4.07. Permitted Withdrawals and Transfers from the Distribution Account.........................
Section 4.08. Duties of the Credit Risk Manager; Termination............................................
Section 4.09. Limitation Upon Liability of the Credit Risk Manager......................................
ARTICLE V ADVANCES AND DISTRIBUTIONS
Section 5.01. Advances; Advance Facility................................................................
Section 5.02. Compensating Interest Payments............................................................
Section 5.03. REMIC Distributions.......................................................................
Section 5.04. Distributions.............................................................................
Section 5.05. Allocation of Realized Losses.............................................................
Section 5.06. Monthly Statements to Certificateholders..................................................
Section 5.07. REMIC Designations and REMIC I Allocations................................................
Section 5.08. REMIC II Allocations......................................................................
Section 5.09. Class P Certificate Account...............................................................
Section 5.10. Net WAC Reserve Fund......................................................................
ARTICLE VI THE CERTIFICATES
Section 6.01. The Certificates..........................................................................
Section 6.02. Certificate Register; Registration of Transfer and Exchange of Certificates...............
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.........................................
Section 6.04. Persons Deemed Owners.....................................................................
Section 6.05. Access to List of Certificateholders' Names and Addresses.................................
Section 6.06. Book-Entry Certificates...................................................................
Section 6.07. Notices to Depository.....................................................................
Section 6.08. Definitive Certificates...................................................................
Section 6.09. Maintenance of Office or Agency...........................................................
ARTICLE VII THE DEPOSITOR AND the Servicer
Section 7.01. Liabilities of the Depositor and the Servicer. Each of the Depositor and the
Servicer shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein.....................................
Section 7.02. Merger or Consolidation of the Depositor or the Servicer..................................
Section 7.03. Indemnification of Depositor and the Servicer.............................................
Section 7.04. Limitations on Liability of the Depositor, the Servicer and Others. Subject to the
obligation of the Depositor and the Servicer to indemnify the Indemnified
Persons pursuant to Section 7.03:.........................................................
Section 7.05. The Servicer Not to Resign................................................................
Section 7.06. Termination of the Servicer Without Cause; Appointment of Special Servicer................
ARTICLE VIII DEFAULT; TERMINATION OF SERVICER
Section 8.01. Servicer Default..........................................................................
Section 8.02. Trustee to Act; Appointment of Successor..................................................
Section 8.03. Notification to Certificateholders........................................................
Section 8.04. Waiver of Servicer Defaults...............................................................
ARTICLE IX CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee.........................................................................
Section 9.02. Certain Matters Affecting the Trustee.....................................................
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.....................................
Section 9.04. Trustee May Own Certificates..............................................................
Section 9.05. Trustee's Compensation and Expenses; Indemnification......................................
Section 9.06. Eligibility Requirements for Trustee......................................................
Section 9.07. Insurance.................................................................................
Section 9.08. Resignation and Removal of Trustee........................................................
Section 9.09. Successor Trustee.........................................................................
Section 9.10. Merger or Consolidation of Trustee........................................................
Section 9.11. Appointment of Co-Trustee or Separate Trustee.............................................
Section 9.12. Tax Matters...............................................................................
ARTICLE X TERMINATION
Section 10.01. Termination upon Liquidation or Repurchase of all Mortgage Loans..........................
Section 10.02. Final Distribution on the Certificates....................................................
Section 10.03. Additional Termination Requirements.......................................................
ARTICLE XI MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.................................................................................
Section 11.02. Recordation of Agreement; Counterparts....................................................
Section 11.03. Governing Law.............................................................................
Section 11.04. Intention of Parties......................................................................
Section 11.05. Notices...................................................................................
Section 11.06. Severability of Provisions................................................................
Section 11.07. Assignment................................................................................
Section 11.08. Limitation on Rights of Certificateholders................................................
Section 11.09. Certificates Nonassessable and Fully Paid.................................................
Section 11.10. Third Party Beneficiary...................................................................
ARTICLE XII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. Rights of the Certificate Insurer to Exercise Rights of Insured Certificateholders........
Section 12.02. Claims Upon the Policy; Insurance Account.................................................
Section 12.03. Effect of Payments by the Insurer; Subrogation............................................
Section 12.04. Notices and Information to the Certificate Insurer........................................
Section 12.05. Trustee to Hold Policy....................................................................
Section 12.06. Payment of Insurer Premium................................................................
EXHIBITS
Exhibit A-1 Form of Class A-[1][2][3][4][5A][5B][6] Certificates
Exhibit A-2 Form of Class A-IO Certificates
Exhibit A-3 Form of Class M-[1][2][3] Certificates
Exhibit A-4 Form of Class C Certificates
Exhibit A-5 Form of Class P Certificates
Exhibit A-6 Form of Class R Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C Reserved
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A Investment Letter
Exhibit H Reserved
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
Exhibit K Prepayment Charge Schedule
Exhibit L Form of Servicer's Certification
Exhibit M Form of Trustee's Certification
Exhibit N Appendix E of the Standard & Poor's Glossary For File
Format For LEVELS(R) Version 5.6 Revised
Exhibit O Specimen of the Policy
POOLING AND SERVICING AGREEMENT, dated as of ____________, among NOMURA
HOME EQUITY LOAN, INC., a Delaware corporation, as depositor (the "Depositor"),
NOMURA CREDIT & CAPITAL, INC., a Delaware corporation, as seller (in such
capacity, the "Seller"), [NAME OF SERVICER], as servicer (the "Servicer") and
[NAME OF TRUSTEE], not in its individual capacity, but solely as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates.
REMIC I
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets as set forth in the definition of REMIC I (and exclusive of the
Cap Contract and the Net WAC Reserve Fund) subject to this Agreement as a real
estate mortgage investment conduit (a "REMIC") for federal income tax purposes,
and such segregated pool of assets will be designated as "REMIC I." The Class
R-1 Interest will represent the sole class of "residual interests" in REMIC I
for purposes of the REMIC Provisions (as defined herein) under federal income
tax law. The following table irrevocably sets forth the designation, the
Uncertificated REMIC I Pass-Through Rate, the Initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Regular Interests. None of the REMIC I Regular Interests will be certificated.
` Initial Uncertificated Uncertificated REMIC I Assumed Final
Designation Principal Balance Pass-Through Rate Maturity Date(1)
--------------------------------------------------------------------------------
LTI-1 $ Variable(2)
LTI-IO-A $ Variable(2)
LTI-IO-B $ Variable(2)
LTI-IO-C $ Variable(2)
LTI-IO-D $ Variable(2)
LTI-IO-E $ Variable(2)
LTI-IO-F $ Variable(2)
LTI-IO-G $ Variable(2)
LTI-IO-H $ Variable(2)
LTI-P $ N/A
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates that represents one or more of the "regular interests" in
REMIC I.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
REMIC II
--------
As provided herein, the Trustee will elect to treat the segregated pool
of assets consisting of the REMIC I Regular Interests as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC II". The Class R-2 Interest will be the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions. The following table
irrevocably sets forth the designation, the Uncertificated REMIC II Pass-Through
Rate, the Initial Uncertificated Principal Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC II Regular Interests (as defined herein).
None of the REMIC II Regular Interests will be certificated.
` ` Uncertificated `
` Initial Uncertificated REMIC II Assumed Final
Designation Principal Balance Pass-Through Rate Maturity Date(1)
LTII-AA $ Variable(2)
LTII-A1 $ Variable(2)
LTII-A2 $ Variable(2)
LTII-A3 $ Variable(2)
LTII-A4 $ Variable(2)
LTII-A5A $ Variable(2)
LTII-A5B $ Variable(2)
LTII-A6 $ Variable(2)
LTII-M1 $ Variable(2)
LTII-M2 $ Variable(2)
LTII-M3 $ Variable(2)
LTII-ZZ $ Variable(2)
LTII-IO-A N/A(3) ___%(4)
LTII-IO-B N/A(5) ___%(6)
LTII-P $100.00 Variable(2)
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC II
Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC
II Pass-Through Rate" herein. (3) REMIC II Regular Interest LTII-IO-A
will not have an Uncertificated Principal Balance, but will accrue
interest on its Uncertificated Notional Amount, as defined herein.
(4) REMIC II Regular Interest LTII-IO-A will accrue interest at a rate of
(i) for the first twelve Distribution Dates, 1.00% and (ii) thereafter,
0.00%.
(5) REMIC II Regular Interest LTII-IO-B will not have an Uncertificated
Principal Balance, but will accrue interest on its Uncertificated
Notional Amount, as defined herein.
(6) REMIC II Regular Interest LTII-IO-B will accrue interest at a rate of
(i) for the first twenty-four Distribution Dates, ___% and (ii)
thereafter, 0.00%.
REMIC III
---------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III". The Class R-3 Interest will represent the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions.
The following table irrevocably sets forth the Class designation, Pass-Through
Rate and Initial Certificate Principal Balance for each Class of Certificates
that represents one or more of the "regular interests" in REMIC III created
hereunder:
Class Initial Certificate ` Assumed Final
Designation Principal Balance Pass-Through Rate Maturity Date(1)
--------------------------------------------------------------------------------
Class A-1 $ Class A-1 Pass-Through Rate
Class A-2 $ Class A-2 Pass-Through Rate
Class A-3 $ Class A-3 Pass-Through Rate
Class A-4 $ Class A-4 Pass-Through Rate
Class A-5A $ Class A-5A Pass-Through Rate
Class A-5B $ Class A-5B Pass-Through Rate
Class A-6 $ Class A-6 Pass-Through Rate
Class A-IO N/A(2) Class A-IO Pass-Through Rate
Class M-1 $ Class M-1 Pass-Through Rate
Class M-2 $ Class M-2 Pass-Through Rate
Class M-3 $ Class M-3 Pass-Through Rate
Class C $(3) Class C Pass-Through Rate
Class P $ N/A(4)
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates.
(2) The Class A-IO Certificates will accrue interest at the Class A-IO
Pass-Through Rate on the Certificate Notional Balance of the Class A-IO
Certificates calculated in accordance with the definition of
"Certificate Notional Balance" herein. The Class A-IO Certificates will
not be entitled to distributions in respect of principal. For federal
income tax purposes, the Class A-IO Certificates will not have a
Notional Amount, but will be entitled to 100% of amounts distributed on
REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest
LTII-IO-B.
(3) The Class C Certificates will not accrue interest on their Certificate
Principal Balance, but will accrue interest at the Class C Pass-Through
Rate on the Certificate Notional Balance of the Class C Certificates
outstanding from time to time which shall equal the aggregate of the
Uncertificated Principal Balances of the REMIC II Regular Interests
(other than REMIC II Regular Interest LTII-IO-A, REMIC II Regular
Interest LTII-IO-B and REMIC II Regular Interest LTII-P). The Class C
Certificates will not accrue interest on their Certificate Principal
Balance.
(4) The Class P Certificates are not entitled to distributions in respect
of interest.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Seller and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS.
In addition to those terms defined in Section 1.02, whenever used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
ACCOUNT: Either the Distribution Account or any Custodial Account.
ACCRUAL PERIOD: With respect to the Certificates (other than the Class
A-1, Class P and Class R Certificates) and any Distribution Date, the calendar
month immediately preceding the calendar month in which such Distribution Date
occurs. With respect to the Class A-1 Certificates and any Distribution Date,
the period from and including the 25th day of the calendar month preceding the
calendar month in which such Distribution Date occurs (or with respect to the
first Accrual Period, the Closing Date) to and including the 24th day of the
calendar month in which such Distribution Date occurs. All calculations of
interest on the Certificates (other than the Class A-1, Class P and Class R
Certificates) will be based on a 360-day year consisting of twelve 30-day
months. All calculations of interest on the Class A-1 Certificates will be made
based on a 360-day year and the actual number of days elapsed in the related
Accrual Period.
ADJUSTABLE RATE MORTGAGE LOAN: Each of the Mortgage Loans identified on
the Mortgage Loan Schedule as having a Mortgage Rate that is subject to
adjustment.
ADJUSTMENT DATE: With respect to each Adjustable Rate Mortgage Loan,
the first day of the month in which the Mortgage Rate of such Mortgage Loan
changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-Off Date as to each Adjustable Rate Mortgage Loan is set forth
in the Mortgage Loan Schedule.
ADVANCE: An advance of delinquent payments of principal or interest in
respect of a Mortgage Loan required to be made by the Servicer pursuant to
Section 5.01 or by the Trustee in its capacity as Successor Servicer pursuant to
Section 5.01.
ADVANCE FACILITY: As defined in Section 5.01(b)(i).
ADVANCE FACILITY NOTICE: As defined in Section 5.01(b)(ii).
ADVANCE FINANCING PERSON: As defined in Section 5.01(b)(i).
ADVANCE REIMBURSEMENT AMOUNT: As defined in Section 5.01(b)(ii).
AGREEMENT: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution Date, the
aggregate amount held in the Servicer's Custodial Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
APPRAISED VALUE: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised value of the
Mortgaged Property based upon the appraisal made by a fee appraiser at the time
of the origination of the Mortgage Loan, and (y) the sales price of the
Mortgaged Property at the time of such origination.
AUTHORIZED SERVICER REPRESENTATIVE: Any officer of the Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and facsimile signature appear on a list of servicing
officers furnished to the Trustee by the Servicer on the Closing Date pursuant
to this Agreement, as such list may from time to time be amended.
AVAILABLE DISTRIBUTION AMOUNT: The sum of the Interest Remittance
Amount and Principal Funds with respect to the Mortgage Loans, exclusive of
amounts pursuant to Section 5.09.
BANKRUPTCY CODE: Title 11 of the United States Code.
BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 6.06). As of the Closing
Date, each Class of Publicly Offered Certificates constitutes a Class of
Book-Entry Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in The City of New York, New York, the State
of ___________, the State of ___________, the city in which any Corporate Trust
Office of the Trustee or the Certificate Insurer is located or the State in
which the Servicer's servicing operations are located are authorized or
obligated by law or executive order to be closed.
CAP CONTRACT: The cap contract between the Trustee and the Cap
Provider, for the benefit of the Holders of the Class A-1 Certificates.
CAP PROVIDER: [Name of Cap Provider], or any successor thereto.
CERTIFICATE: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-6.
CERTIFICATE INSURER: [Name of Certificate Insurer] or its successors in
interest.
CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
CERTIFICATE NOTIONAL BALANCE: With respect to the Class A-IO
Certificates and any Distribution Date, the lesser of (a)(i) $__________, for
each Distribution Date from the Distribution Date in ____________ to and
including the Distribution Date in ___________, (ii) $___________, for each
Distribution Date from the Distribution Date in ___________ to and including the
Distribution Date in _____________, (iii) $____________, for each Distribution
Date from the Distribution Date in ____________ to and including the
Distribution Date in ______________, (iv) $____________, for the Distribution
Date in ___________ and the Distribution Date in ____________, (v)
$____________, for each Distribution Date from and including the Distribution
Date in ___________ to and including the Distribution Date in ___________, (vi)
$__________ for the Distribution Date in ___________ and the Distribution Date
in ____________, (vii) $____________ for the Distribution Date in _____________
and the Distribution Date in ____________, (viii) $____________ for the
Distribution Date in __________________ and (ix) $0, for each Distribution Date
thereafter and (b) the aggregate Stated Principal Balance of the Mortgage Loans.
For United States federal income tax purposes, the Class A-IO Certificates will
not have a Certificate Notional Balance, but will be entitled to 100% of amounts
distributed on REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest
LTII-IO-B. With respect to the Class C Certificates, immediately prior to any
Distribution Date, the aggregate of the Uncertificated Principal Balances of the
REMIC II Regular Interests (other than REMIC II Regular Interest LTII-IO-A,
REMIC II Regular Interest LTII-IO-B and REMIC II Regular Interest LTII-P).
CERTIFICATE PRINCIPAL BALANCE: As to any Certificate (other than any
Class A-IO, Class C or Class R Certificate) and as of any Distribution Date, the
Initial Certificate Principal Balance of such Certificate plus any Subsequent
Recoveries added to the Certificate Principal Balance of such Certificate
pursuant to Section 5.05(f) less the sum of (i) all amounts distributed with
respect to such Certificate in reduction of the Certificate Principal Balance
thereof on previous Distribution Dates pursuant to Section 5.04, and (ii) with
respect to the Mezzanine Certificates, any reductions in the Certificate
Principal Balance of such Certificate deemed to have occurred in connection with
the allocations of Realized Losses, if any; provided, however, that solely for
purposes of determining the Certificate Insurer's rights as subrogee to the
Holders of the Insured Certificates, the Certificate Principal Balance of any
Insured Certificate shall be deemed not to be reduced by any principal amounts
paid to the Holder thereof from Insurance Payments, unless such amounts have
been reimbursed to the Certificate Insurer pursuant to paragraph 2 of clause
Third of Section 5.01(a). References herein to the Certificate Principal Balance
of a Class of Certificates shall mean the Certificate Principal Balances of all
Certificates in such Class.
CERTIFICATE REGISTER: The register maintained pursuant to Section 6.02.
CERTIFICATEHOLDER OR HOLDER: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
CLASS: All Certificates bearing the same Class designation as set forth
in Section 6.01.
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-1 PASS-THROUGH RATE: With respect to any Distribution Date,
One-Month LIBOR plus ____% per annum, subject to a cap equal to the Net WAC Rate
Cap for such Distribution Date.
CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-2 PASS-THROUGH RATE: With respect to any Distribution Date,
____% per annum, subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date.
CLASS A-3 CERTIFICATE: Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-3 PASS-THROUGH RATE: With respect to any Distribution Date,
____% per annum, subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date.
CLASS A-4 CERTIFICATE: Any Certificate designated as a "Class A-4
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-4 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-4 PASS-THROUGH RATE: With respect to any Distribution Date,
_____% per annum, subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date.
CLASS A-5A CERTIFICATE: Any Certificate designated as a "Class A-5A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-5A Certificates as set forth herein and evidencing a Regular
Interest in REMIC III.
CLASS A-5A PASS-THROUGH RATE: Shall mean (i) with respect to any
Distribution Date which occurs on or prior to the Optional Termination Date,
_____% per annum and (ii) with respect to each Distribution Date which occurs
thereafter, _____% per annum, in each case, subject to a cap equal to the Net
WAC Rate Cap for such Distribution Date.
CLASS A-5B CERTIFICATE: Any Certificate designated as a "Class A-5B
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-5B Certificates as set forth herein and evidencing a Regular
Interest in REMIC III.
CLASS A-5B PASS-THROUGH RATE: Shall mean (i) with respect to each
Distribution Date which occurs on or prior to the Optional Termination Date,
______% per annum and (ii) with respect to each Distribution Date which occurs
thereafter, _______% per annum, in each case subject to a cap equal to the Net
WAC Rate Cap for such Distribution Date.
CLASS A-6 CERTIFICATE: Any Certificate designated as a "Class A-6
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-6 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS A-6 LOCKOUT PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, an amount equal to the lesser of (i) the Senior Principal
Distribution Amount for such Distribution Date and (ii) the Class A-6 Lockout
Distribution Percentage for such Distribution Date multiplied by the product of
(x) a fraction, the numerator of which is the Certificate Principal Balance of
the Class A-6 Certificates and the denominator of which is the aggregate
Certificate Principal Balance of all of the Senior Certificates, in each case
immediately prior to such Distribution Date and (y) the Senior Principal
Distribution Amount for such Distribution Date.
CLASS A-6 LOCKOUT DISTRIBUTION PERCENTAGE: With respect to each
Distribution Date, the applicable percentage set forth below:
CLASS A-6
LOCKOUT
DISTRIBUTION
DISTRIBUTION DATES PERCENTAGE
------------------ ----------
CLASS A-6 PASS-THROUGH RATE: Shall mean (i) with respect to each
Distribution Date which occurs on or prior to the Optional Termination Date,
____% per annum and (ii) with respect to each Distribution Date which occurs
thereafter, ____% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class A-IO
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-IO Certificates as set forth herein and evidencing a Regular
Interest in REMIC III.
CLASS A-IO PASS-THROUGH RATE: Shall mean (i) for the first twelve
Distribution Dates, ____% per annum, subject to a cap equal to the weighted
average of the Net Mortgage Rates on the Mortgage Loans, (ii) for the next
twelve Distribution Dates, ____% per annum, subject to a cap equal to the
weighted average of the Net Mortgage Rates on the Mortgage Loans and (iii) for
any Distribution Date thereafter, 0.00%. For federal income tax purposes,
however, the Class A-IO Certificates will not have a Class A-IO Pass-Through
Rate, and the Interest Distribution Amount for the Class A-IO Certificates and
any Distribution Date will be deemed to be 100% of the amount distributed on
REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B for
such Distribution Date.
CLASS C CERTIFICATE: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class C Certificates herein and evidencing a Regular Interest in REMIC III.
CLASS C DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
sum of (i) the Excess Cap Payment, (ii) the Interest Distribution Amount for the
Class C Certificates for such Distribution Date and (iii) any
Overcollateralization Reduction Amount for such Distribution Date remaining
after payments pursuant to items 1 though 7 of clause THIRD of Section 5.04;
provided, however that on and after the Distribution Date on which the
Certificate Principal Balance of the Certificates has been reduced to zero, the
Class C Distribution Amount shall include the Overcollateralization Amount.
CLASS C PASS-THROUGH RATE: On any Distribution Date, a per annum rate
equal to the percentage equivalent of a fraction, the numerator of which is the
sum of the amounts calculated pursuant to clauses (A) through (L) below, and the
denominator of which is the aggregate of the Uncertificated Principal Balances
of the REMIC II Regular Interests (other than REMIC II Regular Interest
LTII-IO-A, REMIC II Regular Interest LTII-IO-B and REMIC II Regular Interest
LTII-P). For purposes of calculating the Pass-Through Rate for the Class C
Certificates, the numerator is equal to the sum of the following components:
(A) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-AA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-AA;
(B) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A1;
(C) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A2;
(D) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A3;
(E) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A4;
(F) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A5A minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular
Interest LTII-A5A;
(G) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A5B minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A5B;
(H) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-A6 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-A6;
(I) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-M1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M1;
(J) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-M2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M2;
(K) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-M3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-M3; and
(L) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LTII-ZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-ZZ.
CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS M-1 PASS-THROUGH RATE: Shall mean (i) with respect to each
Distribution Date which occurs on or prior to the Optional Termination Date,
____% per annum and (ii) with respect to each Distribution Date which occurs
thereafter, ____% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date which occurs (i) prior to the Stepdown Date or on or after the
Stepdown Date if a Trigger Event is in effect for that Distribution Date, the
Principal Distribution Amount for that Distribution Date remaining after
distribution of the Senior Principal Distribution Amount or (ii) on or after the
Stepdown Date if a Trigger Event is not in effect for that Distribution Date,
the lesser of:
o the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Senior Principal
Distribution Amount; and
o the excess, if any, of (A) the aggregate Certificate Principal
Balance of the Class M-1 Certificates immediately prior to
that Distribution Date over (B) the positive difference
between (i) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the
related Prepayment Period) and (ii) the sum of (x) the
aggregate Certificate Principal Balance of the Senior
Certificates (after taking into account the payment of the
Senior Principal Distribution Amount for such Distribution
Date) and (y) the product of (a) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses
incurred during the related Prepayment Period) and (b) the sum
of ____% and the Required Overcollateralization Percentage.
CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS M-2 PASS-THROUGH RATE: Shall mean (i) with respect to each
Distribution Date which occurs on or prior to the Optional Termination Date,
____% per annum and (ii) with respect to each Distribution Date which occurs
thereafter, ____% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date which occurs (i) prior to the Stepdown Date or on or after the
Stepdown Date if a Trigger Event is in effect for that Distribution Date, the
Principal Distribution Amount for that Distribution Date remaining after
distribution of the Senior Principal Distribution Amount and the Class M-1
Principal Distribution Amount or (ii) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
o the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Senior Principal
Distribution Amount and the Class M-1 Principal Distribution
Amount; and
o the excess, if any, of (A) the aggregate Certificate Principal
Balance of the Class M-2 Certificates immediately prior to
that Distribution Date over (B) the positive difference
between (i) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the
related Prepayment Period) and (ii) the sum of (x) the
aggregate Certificate Principal Balance of the Senior
Certificates and the Class M-1 Certificates (after taking into
account the payment of the Senior Principal Distribution
Amount and the Class M-1 Principal Distribution Amount for
such Distribution Date) and (y) the product of (a) the
aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period)
and (b) the sum of ____% and the Required
Overcollateralization Percentage.
CLASS M-3 CERTIFICATE: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS M-3 PASS-THROUGH RATE: Shall mean (i) with respect to each
Distribution Date which occurs on or prior to the Optional Termination Date,
____% per annum and (ii) with respect to each Distribution Date which occurs
thereafter, ____% per annum, in each case subject to a cap equal to the Net WAC
Rate Cap for such Distribution Date.
CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date which occurs (i) prior to the Stepdown Date or on or after the
Stepdown Date if a Trigger Event is in effect for that Distribution Date, the
Principal Distribution Amount for that Distribution Date remaining after
distribution of the Senior Principal Distribution Amount, the Class M-1
Principal Distribution Amount and the Class M-2 Principal Distribution Amount or
(ii) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
o the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Senior Principal
Distribution Amount, the Class M-1 Principal Distribution
Amount and the Class M-2 Principal Distribution Amount; and
o the excess, if any, of (A) the aggregate Certificate Principal
Balance of the Class M-3 Certificates immediately prior to
that Distribution Date over (B) the positive difference
between (i) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the
related Prepayment Period) and (ii) the sum of (x) the
aggregate Certificate Principal Balance of the Senior
Certificates, the Class M-1 Certificates and the Class M-2
Certificates (after taking into account the payment of the
Senior Principal Distribution Amount, the Class M-1 Principal
Distribution Amount and the Class M-2 Principal Distribution
Amount for such Distribution Date) and (y) the product of (a)
the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period (after reduction
for Realized Losses incurred during the related Prepayment
Period) and (b) the Required Overcollateralization Percentage.
CLASS P CERTIFICATE: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class P Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.
CLASS P CERTIFICATE ACCOUNT: The Eligible Account established and
maintained by the Trustee pursuant to Section 5.09.
CLASS R CERTIFICATE: Any Certificate designated a "Class R Certificate"
on the face thereof, in substantially the form set forth in Exhibit A-6 hereto,
evidencing the Class R-1 Interest, Class R-2 Interest and Class R-3 Interest.
CLASS R-1 INTEREST: The uncertificated residual interest in REMIC I.
CLASS R-2 INTEREST: The uncertificated residual interest in REMIC II.
CLASS R-3 INTEREST: The uncertificated residual interest in REMIC III.
CLOSING DATE: November 30, 2004.
CODE: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COMPENSATING INTEREST: An amount to be deposited in the Distribution
Account by the Servicer to offset a Prepayment Interest Shortfall on a Mortgage
Loan subject to this Agreement; provided, however that the amount of
Compensating Interest required to be paid in respect of any Mortgage Loan shall
not exceed the Servicing Fee payable to the Servicer.
CORPORATE TRUST OFFICE: The designated office of the Trustee where at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement for purposes of transfer and exchange and of presentment and surrender
of the Certificates and for payment thereof is located at [Address], Attention:
Nomura Home Equity Loan, Inc., Home Equity Loan Trust, Series ____-____, and for
all other purposes is located at [Address] Attention: Nomura Home Equity Loan,
Inc., Home Equity Loan Trust, Series ____-____ or at such other address as the
Trustee may designate from time to time.
CORRESPONDING CERTIFICATE: With respect to:
(i) REMIC II Regular Interest LTII-A1, the Class A-1 Certificates,
(ii) REMIC II Regular Interest LTII-A2, the Class A-2 Certificates;
(iii) REMIC II Regular Interest LTII-A3, the Class A-3 Certificates;
(iv) REMIC II Regular Interest LTII-A4, the Class A-4 Certificates;
(v) REMIC II Regular Interest LTII-A5A, the Class A-5A Certificates;
(vi) REMIC II Regular Interest LTII-A5B, the Class A-5B Certificates;
(vii) REMIC II Regular Interest LTII-A6, the Class A-6 Certificates;
(viii) REMIC II Regular Interest LTII-M1, the Class M-1 Certificates;
(ix) REMIC II Regular Interest LTII-M2, the Class M-2 Certificates;
(x) REMIC II Regular Interest LTII-M3, the Class M-3 Certificates; and
(xi) REMIC II Regular Interest LTII-P, the Class P Certificates.
CREDIT ENHANCEMENT PERCENTAGE: With respect to any Distribution Date
and any Class of Publicly Offered Certificates, the percentage obtained by
dividing (x) the sum of (i) the aggregate Certificate Principal Balance of the
Class or Classes of Publicly Offered Certificates subordinate thereto and (ii)
the Overcollateralization Amount by (y) the aggregate Stated Principal Balance
of the Mortgage Loans, calculated after taking into account distributions of
principal on the Mortgage Loans and distribution of the Principal Distribution
Amount to the holders of the Certificates then entitled to distributions of
principal on such Distribution Date.
CREDIT RISK MANAGEMENT AGREEMENT: The agreement between the Credit Risk
Manager and the Servicer, dated as of _____________.
CREDIT RISK MANAGEMENT FEE: As to each Mortgage Loan and any
Distribution Date, an amount equal to 1/12th of the Credit Risk Management Fee
Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the
last day of the related Due Period. The Credit Risk Management Fee shall be
payable to the Credit Risk Manager and/or the Seller pursuant to Section
4.07(a)(vii) and 4.08(b).
CREDIT RISK MANAGEMENT FEE RATE: _____% per annum.
CREDIT RISK MANAGER: The Murrayhill Company, a Colorado corporation.
CUSTODIAL ACCOUNT: Each account established and maintained by the
Servicer with respect to receipts on the Mortgage Loans and related REO Property
in accordance with Section 4.01.
CUSTODIAL AGREEMENT: The Custodial Agreement dated as of _____________
among the Custodian, the Servicer and the Trustee.
CUSTODIAN: [Name of Custodian], a national banking association.
CUT-OFF DATE: ____________.
CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments received prior to the Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date, whether or
not received, but without giving effect to any installments of principal
received in respect of Due Dates after the Cut-off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan that became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any other reduction that results in a permanent forgiveness of principal.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court that is final and non-appealable
in a proceeding under the Bankruptcy Code.
DEFINITIVE CERTIFICATES: As defined in Section 6.06.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
DENOMINATION: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Certificate Principal Balance of this
Certificate".
DEPOSITOR: Nomura Home Equity Loan, Inc., a Delaware corporation, or
its successor in interest.
DEPOSITORY: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
DEPOSITORY AGREEMENT: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
I.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
DISTRIBUTION ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee
for the benefit of the Certificateholders and designated "[Name of Trustee], in
trust for registered holders of Nomura Home Equity Loan, Inc., Asset Backed
Pass-Through Certificates, Series ____-____". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
DISTRIBUTION DATE: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in _____________.
DUE DATE: As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.
DUE PERIOD: For any Distribution Date, the period from the second day
of the calendar month preceding the calendar month in which such Distribution
Date occurs through the close of business on the first day of the calendar month
in which such Distribution Date occurs.
ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which are rated by each Rating Agency in one of its two highest long-term and
its highest short-term rating categories respectively, at the time any amounts
are held on deposit therein, or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC (to
the limits established by the FDIC) and the uninsured deposits in which accounts
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered
to the Trustee and to each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a segregated, non-interest bearing trust
account or accounts maintained with the corporate trust department of a federal
or state chartered depository institution or trust company having capital and
surplus of not less than $50,000,000, acting in its fiduciary capacity or (iv)
any other account acceptable to the Rating Agencies as evidenced in writing by
the Rating Agencies. Eligible Accounts may bear interest, and may include, if
otherwise qualified under this definition, accounts maintained with the Trustee.
ESCROW ACCOUNT: Shall mean an account maintained by the Servicer
pursuant to Section 4.04. The Escrow Account shall be an Eligible Account.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA RESTRICTED CERTIFICATE: Each of the Class C, Class P and Residual
Certificates.
EXCESS CAP PAYMENT: With respect to any Distribution Date, the excess,
if any, of (1) the cap payments made by the Cap Provider under the Cap Contract
with respect to the Class A-1 Certificates over (2) the amount of the unpaid Net
WAC Rate Carryover Amounts attributable to the Class A-1 Certificates for such
Distribution Date.
EXCESS LIQUIDATION PROCEEDS: To the extent not required by law to be
paid to the related Mortgagor, the excess, if any, of any Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal Balance of such
Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.
EXEMPTION: Prohibited Transaction Exemption 93-32, as amended from time
to time.
EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the lesser of (x) the Net Monthly Excess Cashflow for such Distribution
Date and (y) the Overcollateralization Increase Amount for such Distribution
Date.
XXXXXX XXX: Xxxxxx Xxx (formerly, Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FINAL RECOVERY DETERMINATION: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller, the Depositor or the Terminator pursuant to or as contemplated by
Section 2.03(c) or Section 10.01), a determination made by the Servicer pursuant
to this Agreement 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.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended.
XXXXXXX MAC: Federal Home Loan Mortgage Corporation, or any successor
thereto.
GROSS MARGIN: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
GUARANTEED DISTRIBUTION: Shall mean, with respect to the Class A-4,
Class A-5A and Class A-6 Certificates as of any Distribution Date, the
distribution to be made to the holders of the Class A-4, Class A-5A and any
Class A-6 Certificates in an aggregate amount equal to the sum of, (i) any
shortfalls in amounts available to pay interest for the related Interest Accrual
Period on the Certificate Principal Balance of the Class A-4, Class A-5A and
Class A-6 Certificates at the related Pass-Through Rate, net of (a) any
Prepayment Interest Shortfalls allocated to the Class A-4, Class A-5A and Class
A-6 Certificates, and (b) any interest shortfalls resulting from the application
of the Relief Act allocated to the Class X- 0, Class A-5A or Class A-6
Certificates and (ii) the Certificate Principal Balance of the Class A-4, Class
A-5A and Class A-6 Certificates to the extent unpaid on the applicable last
scheduled Distribution Date. A Guaranteed Distribution will not include any Net
WAC Rate Carryover Amounts.
INDEMNIFIED PERSONS: The Trustee, the Servicer (including any successor
servicer), the Custodian, the Trust Fund and their officers, directors, agents
and employees and, with respect to the Trustee, any separate co-trustee and its
officers, directors, agents and employees.
INDEX: As of any Adjustment Date, the index applicable to the
determination of the Mortgage Rate on each Adjustable Rate Mortgage Loan which
will generally be based on Six-Month LIBOR, One-Year LIBOR or One-Year CMT.
INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date.
INSURANCE ACCOUNT: The account established pursuant to Section 12.02(b)
hereof.
INSURANCE PAYMENT: Any payment made by the Certificate Insurer with
respect to any Insured Certificates under the Policy.
INSURANCE POLICY: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any Insurance Policies.
INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the servicing standard set forth in Section 3.01
hereof, other than any amount included in such Insurance Proceeds in respect of
Insured Expenses.
INSURED CERTIFICATES: The Class A-4, Class A-5A and Class A-6
Certificates.
INSURED EXPENSES: Expenses covered by any Insurance Policy with respect
to the Mortgage Loans.
INSURER DEFAULT: The existence and continuance of any failure by the
Certificate Insurer to make a payment required under the Policy in accordance
with its terms.
INSURER PREMIUM: With respect to the Insured Certificates, the premium
payable to the Certificate Insurer on each Distribution Date in an amount equal
to one-twelfth of the product of the Insurer Premium Rate and the aggregate
Certificate Principal Balance of the Insured Certificates immediately prior to
such Distribution Date.
INSURER PREMIUM RATE: The per annum rate specified in the Policy.
INTEREST CARRY FORWARD AMOUNT: With respect to any Class of
Certificates (other than the Class P Certificates and Class R Certificates) and
any Distribution Date, the amount, if any, by which the Interest Distribution
Amount for that Class of Certificates for the immediately preceding Distribution
Date exceeded the actual amount distributed on such Class in respect of interest
on the immediately preceding Distribution Date, together with any Interest Carry
Forward Amount with respect to such Class remaining unpaid from the previous
Distribution Date.
INTEREST DETERMINATION DATE: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.
INTEREST DISTRIBUTION AMOUNT: With respect to any Class of Certificates
(other than the Class P Certificates and Class R Certificates) and any
Distribution Date, an amount equal to the interest accrued during the related
Accrual Period at the applicable Pass-Through Rate on the Certificate Principal
Balance (or Certificate Notional Balance) of such Certificate immediately prior
to such Distribution Date less such Certificate's share of any Net Interest
Shortfall and the interest portion of any Realized Losses on the Mortgage Loans
allocated to such Certificate pursuant to Section 1.02. The Interest
Distribution Amount with respect to each class of Certificates (other than the
Class A-1 Certificates) is calculated on the basis of a 360-day year consisting
of twelve 30-day months. The Interest Distribution Amount with respect to the
Class A-1 Certificates is calculated on the basis of a 360-day year and the
actual number of days elapsed in the related Accrual Period. No Interest
Distribution Amount will be payable with respect to any Class of Certificates
after the Distribution Date on which the outstanding Certificate Principal
Balance of such Certificate has been reduced to zero.
INTEREST REMITTANCE AMOUNT: With respect to any Distribution Date, that
portion of the Available Distribution Amount for such Distribution Date
generally equal to (i) the sum, without duplication, of (a) all scheduled
interest during the related Due Period with respect to the Mortgage Loans less
the Servicing Fee, the Credit Risk Management Fee and the fee payable to any
provider of lender-paid mortgage insurance, if any, (b) all Advances relating to
interest with respect to the Mortgage Loans made on or prior to the related
Remittance Date, (c) all Compensating Interest with respect to the Mortgage
Loans and required to be remitted by the Servicer pursuant to this Agreement
with respect to such Distribution Date, (d) Liquidation Proceeds and Subsequent
Recoveries with respect to the Mortgage Loans collected during the related
Prepayment Period (to the extent such Liquidation Proceeds and Subsequent
Recoveries relate to interest), (e) all amounts relating to interest with
respect to each Mortgage Loan repurchased by the Seller pursuant to Sections
2.02 and 2.03 and (f) all amounts in respect of interest paid by the Terminator
pursuant to Section 10.01 to the extent remitted by the Servicer to the
Distribution Account pursuant to this Agreement minus (ii) all amounts required
to be reimbursed pursuant to Sections 4.02, 4.04, 4.06, 4.07 and 9.05 or as
otherwise set forth in this Agreement.
INTEREST SHORTFALL: With respect to any Distribution Date, the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans resulting from (a) Principal Prepayments
in full received during the related Prepayment Period, (b) partial Principal
Prepayments received during the related Prepayment Period to the extent applied
prior to the Due Date in the month of the Distribution Date and (c) interest
payments on certain of the Mortgage Loans being limited pursuant to the
provisions of the Relief Act.
LAST SCHEDULED DISTRIBUTION DATE: With respect to the Certificates
(other than the Class A-IO Certificates), the Distribution Date in ___________
and with respect to the Class A-IO Certificates, the Distribution Date in
_____________.
LATE PAYMENT RATE: With respect to the Insured Certificates, as defined
in the Policy.
LATEST POSSIBLE MATURITY DATE: The Distribution Date following the
final scheduled maturity date of the Mortgage Loan in the Trust Fund having the
latest scheduled maturity date as of the Cut-off Date. For purposes of the
Treasury Regulations under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I, REMIC II and REMIC III
shall be the Latest Possible Maturity Date.
LIBOR BUSINESS DAY: Shall mean a day on which banks are open for
dealing in foreign currency and exchange in London.
LIQUIDATED LOAN: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified in the related Prepayment
Period that it has received all amounts it expects to receive in connection with
such liquidation.
LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or in connection
with any condemnation or partial release of a Mortgaged Property and any other
proceeds received with respect to an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees and Servicing Advances and all expenses of
liquidation, including property protection expenses and foreclosure and sale
costs, including court and reasonable attorneys fees.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the Mortgage Loan and
the denominator of which is the Appraised Value of the related Mortgaged
Property.
MAJORITY CLASS C CERTIFICATEHOLDER: The Holder of a 50.01% or greater
Percentage Interest in the Class C Certificates.
MARKER RATE: With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC II Pass-Through Rates for REMIC II Regular Interest
LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3,
REMIC II Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II
Regular Interest LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular
Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II Regular Interest
LTII-M3 and REMIC II Regular Interest LTII-ZZ, with the rate on REMIC II Regular
Interest LTII-A1 subject to a cap equal to the lesser of (x) One-Month LIBOR
plus ____% per annum and (y) the Net WAC Rate Cap for the purpose of this
calculation; with the rate on REMIC II Regular Interest LTII-A2 subject to a cap
equal to the lesser of (x) ____% per annum and (y) the Net WAC Rate Cap for the
purpose of this calculation; with the rate on REMIC II Regular Interest LTII-A3
subject to a cap equal to the lesser of (x) ____% per annum and (y) the Net WAC
Rate Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LTII-A4 subject to a cap equal to the lesser of (x) ____% per annum and
(y) the Net WAC Rate Cap for the purpose of this calculation; with the rate on
REMIC II Regular Interest LTII-A5A subject to a cap equal to the lesser of (A)
in the case of any Distribution Date up to and including the Optional
Termination Date, the lesser of (x) ____% per annum and (y) the Net WAC Rate Cap
and (B) in the case of any Distribution Date after the Optional Termination
Date, the lesser of (x) ____% per annum and (y) the Net WAC Rate Cap for the
purpose of this calculation; with the rate on REMIC II Regular Interest LTII-A5B
subject to a cap equal to (A) in the case of any Distribution Date up to and
including the Optional Termination Date, the lesser of (x) ____% per annum and
(y) the Net WAC Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) ____% per annum and (y) the Net WAC
Rate Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LTII-A6 subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) ____%
per annum and (y) the Net WAC Rate Cap and (B) in the case of any Distribution
Date after the Optional Termination Date, the lesser of (x) ____% per annum and
(y) the Net WAC Rate Cap for the purpose of this calculation; with the rate on
REMIC II Regular Interest LTII-M1 subject to a cap equal to (A) in the case of
any Distribution Date up to and including the Optional Termination Date, the
lesser of (x) ____% per annum and (y) the Net WAC Rate Cap and (B) in the case
of any Distribution Date after the Optional Termination Date, the lesser of (x)
____% per annum and (y) the Net WAC Rate Cap for the purpose of this
calculation; with the rate on REMIC II Regular Interest LTII-M2 subject to a cap
equal to (A) in the case of any Distribution Date up to and including the
Optional Termination Date, the lesser of (x) ____% per annum and (y) the Net WAC
Rate Cap and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) _____% per annum and (y) the Net WAC Rate
Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LTII-M3 subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x)
______% per annum and (y) the Net WAC Rate Cap and (B) in the case of any
Distribution Date after the Optional Termination Date, the lesser of (x) _____%
per annum and (y) the Net WAC Rate Cap for the purpose of this calculation; and
with the rate on REMIC II Regular Interest LTII-ZZ subject to a cap of zero for
the purpose of this calculation; provided, however, that for this purpose, the
calculation of the Uncertificated REMIC II Pass-Through Rate and the related cap
with respect to REMIC II Regular Interest LTII-A1 shall be multiplied by a
fraction, the numerator of which is the actual number of days in the Accrual
Period and the denominator of which is 30.
MAXIMUM MORTGAGE INTEREST RATE: With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) SYSTEM: The system of recording transfers of Mortgages
electronically maintained by MERS.
MEZZANINE CERTIFICATES: Shall mean, collectively, the Class M-1, Class
M-2 and Class M-3 Certificates.
MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.
MINIMUM MORTGAGE INTEREST RATE: With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.
MOM LOAN: Any Mortgage Loan as to which MERS is acting as the mortgagee
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.
MONTHLY STATEMENT: The statement delivered to the Certificateholders
pursuant to Section 5.06.
MOODY'S: Xxxxx'x Investors Service, Inc. or its successor in interest.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest in an estate in fee simple in
real property securing a Mortgage Note.
MORTGAGE FILE: The Mortgage Loan Documents pertaining to a particular
Mortgage Loan.
MORTGAGE LOAN DOCUMENTS: As defined in Section 2.01.
MORTGAGE LOANS: Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions hereof, as from time to time are held as
a part of the Trust Fund (including any REO Property), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of ________________, between the Seller, as seller and the Depositor,
as purchaser.
MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set forth in
Section 10.01, to be paid in connection with the purchase of the Mortgage Loans
pursuant to Section 10.01.
MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from time to
time amended by the Servicer to reflect the deletion of Deleted Mortgage Loans
and the addition of Replacement Mortgage Loans pursuant to the provisions of
this Agreement) transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, the initial Mortgage Loan Schedule being
attached hereto as Exhibit B-1, setting forth the following information with
respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgage Rate in effect as of the Cut-off Date;
(iii) the Servicing Fee Rate;
(iv) the Net Mortgage Rate in effect as of the Cut-off
Date;
(v) the maturity date;
(vi) the original principal balance; (vii) the Cut-off
Date Principal Balance;
(viii) the original term;
(ix) the remaining term;
(x) the property type;
(xi) with respect to each MOM Loan, the related MIN;
(xii) the Servicer;
(xiii) a code indicating whether the Mortgage Loan is
subject to a Prepayment Charge, the term of such
Prepayment Charge and the amount of such Prepayment
Charge;
(xiv) with respect to each Adjustable Rate Mortgage Loan,
the Maximum Mortgage Interest Rate under the terms of
the Mortgage Note;
(xv) with respect to each Adjustable Rate Mortgage Loan,
the Minimum Mortgage Interest Rate under the terms of
the Mortgage Note;
(xvi) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Rate Cap;
(xvii) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date immediately following the
Cut-off Date; and
(xviii) with respect to each Adjustable Rate Mortgage Loan,
the Index.
Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans.
MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note,
which rate with respect to each Adjustable Rate Mortgage Loan (A) as of any date
of determination until the first Adjustment Date following the Cut-off Date
shall be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate
in effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Mortgage Loan on
any Adjustment Date shall never be more than the lesser of (i) the sum of the
Mortgage Rate in effect immediately prior to the Adjustment Date plus the
related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage
Interest Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect immediately prior to the Adjustment Date less the Periodic Rate Cap,
if any, and (ii) the related Minimum Mortgage Interest Rate. With respect to
each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.
MORTGAGOR: The obligors on a Mortgage Note.
NET INTEREST SHORTFALLS: Shall mean Interest Shortfalls net of payments
by the Servicer in respect of Compensating Interest.
NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution Date, the
sum of (a) any Overcollateralization Reduction Amount and (b) the excess of (x)
the Available Distribution Amount for such Distribution Date over (y) the sum
for such Distribution Date of (A) the aggregate amount of Senior Interest
Distribution Amounts payable to the Senior Certificates and the Interest
Distribution Amounts payable to the Mezzanine Certificates, (B) the Principal
Remittance Amount and (C) the Insurer Premium payable to the Certificate
Insurer.
NET MORTGAGE RATE: As to each Mortgage Loan, and at any time, the per
annum rate equal to the related Mortgage Rate less the sum of (i) the Servicing
Fee Rate, (ii) the Credit Risk Management Fee Rate and (iii) the rate at which
the fee payable to any provider of lender-paid mortgage insurance is calculated,
if applicable.
NET WAC RATE CAP: With respect to the Senior Certificates (other than
the Class A-IO Certificates) and the Mezzanine Certificates, (i) from and
including the Distribution Date in ___________ through and including the
Distribution Date in __________, (a) the weighted average of the Net Mortgage
Rates of the Mortgage Loans, weighted based on their Stated Principal Balances
as of the first day of the calendar month preceding the month in which the
Distribution Date occurs minus ___% per annum and, with respect to the Insured
Certificates, minus the Insurer Premium Rate times (b) a fraction, the numerator
of which is the Certificate Notional Balance of the Class A-IO Certificates and
the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans as of the first day of the calendar month preceding the month in
which the Distribution Date occurs, (ii) from and including the Distribution
Date in ___________ through and including the Distribution Date in ___________,
(a) the weighted average of the Net Mortgage Rates of the Mortgage Loans,
weighted based on their Stated Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs minus
____% per annum and, with respect to the Insured Certificates, minus the Insurer
Premium Rate times (b) a fraction, the numerator of which is the Certificate
Notional Balance of the Class A-IO Certificates and the denominator of which is
the aggregate Stated Principal Balance of the Mortgage Loans as of the first day
of the calendar month preceding the month in which the Distribution Date occurs
and (iii) thereafter, the weighted average of the Net Mortgage Rates of the
Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs minus, with respect to the Insured Certificates, the Insurer Premium
Rate; provided that the Net WAC Rate Cap with respect to the Class A-1
Certificates shall be multiplied by a fraction, the numerator of which is 30 and
the denominator of which is the actual number of days in the Accrual Period.
For federal income tax purposes, the Net WAC Rate Cap, with respect to
any Distribution Date, shall be expressed as the weighted average of the
Uncertificated REMIC II Pass-Through Rates on each REMIC II Regular Interest
(other than REMIC II Regular Interest LTII-IO-A and REMIC II Regular Interest
LTII-IO-B) weighted on the basis of the Uncertificated Principal Balance of the
REMIC II Regular Interests and, with respect to the Insured Certificates, minus
the Insurer Premium Rate.
NET WAC RATE CARRYOVER AMOUNT: With respect the Senior Certificates
(other than the Class A-IO Certificates) and the Mezzanine Certificates and any
Distribution Date on which the related Pass-Through Rate is reduced by the Net
WAC Rate Cap, an amount equal to the sum of (i) the excess of (x) the amount of
interest such Class would have been entitled to receive on such Distribution
Date if the Pass-Through Rate applicable to such Class would not have been
reduced by the Net WAC Rate Cap on such Distribution Date over (y) the amount of
interest paid on such Distribution Date plus (ii) the related Net WAC Rate
Carryover Amount for the previous Distribution Date not previously distributed.
NET WAC RESERVE FUND: Shall mean the segregated non-interest bearing
trust account created and maintained by the Trustee pursuant to Section 5.10
hereof.
NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a Book-Entry
Certificate.
NONRECOVERABLE ADVANCE: Any portion of an Advance or Servicing Advance
previously made or proposed to be made by the Servicer pursuant to this
Agreement or the Trustee as Successor Servicer, that, in the good faith judgment
of the Servicer or the Trustee as Successor Servicer, will not or, in the case
of a proposed Advance or Servicing Advance, would not, be ultimately recoverable
by it from the related Mortgagor, related Liquidation Proceeds, Insurance
Proceeds or otherwise.
OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor or the
Trustee (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (ii), if provided for
in this Agreement, signed by a Authorized Servicer Representative, as the case
may be, and delivered to the Depositor, the Seller and/or the Trustee, as the
case may be, as required by this Agreement.
ONE-MONTH LIBOR: With respect to any Accrual Period (other than the
first Accrual Period), the rate determined by the Trustee on the related
Interest Determination Date on the basis of the rate for U.S. dollar deposits
for one month that appears on Telerate Screen Page 3750 as of 11:00 a.m. (London
time) on such Interest Determination Date. If such rate does not appear on such
page (or such other page as may replace that page on that service, or if such
service is no longer offered, such other service for displaying One-Month LIBOR
or comparable rates as may be reasonably selected by the Trustee), One-Month
LIBOR for the applicable Accrual Period will be the Reference Bank Rate. If no
such quotations can be obtained by the Trustee and no Reference Bank Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to the preceding
Accrual Period. The establishment of One-Month LIBOR on each Interest
Determination Date by the Trustee and the Trustee's calculation of the rate of
interest applicable to the Class A-1 Certificates for the related Accrual Period
shall, in the absence of manifest error, be final and binding. With respect to
the first Accrual period, One-Month LIBOR shall equal ____% per annum.
ONE-YEAR CMT: The weekly average yield on United States Treasury
Securities adjusted to a constant maturity of one year, as published in the
Federal Reserve Statistical Release H.15(519) as most recently announced as of a
date 45 days prior to such Adjustment Date.
ONE-YEAR LIBOR: The per annum rate equal to the average of interbank
offered rates for one-year U.S. dollar-denominated deposits in the London market
based on quotations of major banks as published in The Wall Street Journal and
are most recently available as of the time specified in the related Mortgage
Note.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Seller, the Depositor or the Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 2.05, 7.05 or
11.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Seller, Depositor and the
Servicer, (ii) not have any direct financial interest in the Seller, Depositor
or the Servicer or in any affiliate of either, and (iii) not be connected with
the Seller, Depositor or the Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
OPTIONAL TERMINATION: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans and any REO
Property pursuant to the last sentence of Section 10.01.
OPTIONAL TERMINATION DATE: The first Distribution Date on which the
Trust Fund may be terminated at the option of the Terminator as described in
Section 10.01.
OTS: The Office of Thrift Supervision or any successor thereto.
OUTSTANDING: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
OUTSTANDING MORTGAGE LOAN: As of any date of determination, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the subject
of a Principal Prepayment in full, and that did not become a Liquidated Loan,
prior to the end of the related Prepayment Period.
OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution Date,
the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans as of the last day of the related Due Period over (b) the
aggregate Certificate Principal Balance of the Senior Certificates and the
Mezzanine Certificates on such Distribution Date (after taking into account the
payment of 100% of the Principal Remittance Amount on such Distribution Date).
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the Required Overcollateralization Amount over
(b) the Overcollateralization Amount on such Distribution Date.
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the excess, if any, of (i) the Overcollateralization
Amount for such Distribution Date over (ii) the Required Overcollateralization
Amount for such Distribution Date.
OWNERSHIP INTEREST: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
PASS-THROUGH RATE: With respect to each Class of Certificates, the
applicable Pass-Through Rate for each Class as set forth in the Preliminary
Statement.
PERCENTAGE INTEREST: With respect to any Certificate of a specified
Class, the Percentage Interest set forth on the face thereof or the percentage
obtained by dividing the Denomination of such Certificate by the aggregate of
the Denominations of all Certificates of such Class.
PERIODIC RATE CAP: With respect the Adjustment Date for an Adjustable
Rate Mortgage Loan, the fixed percentage set forth in the related Mortgage Note,
which is the maximum amount by which the Mortgage Rate for such Mortgage Loan
may increase or decrease (without regard to the Maximum Mortgage Interest Rate
or the Minimum Mortgage Interest Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.
PERMITTED INVESTMENTS: At any time, any one or more of the following
obligations and securities:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency thereof, provided such obligations are unconditionally
backed by the full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency;
(v) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities (including the Trustee in its
commercial banking capacity), provided that the commercial paper and/or
long term unsecured debt obligations of such depository institution or
trust company are then rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency for such
securities, or such lower ratings as will not result in the downgrading
or withdrawal of the rating then assigned to the Certificates by any
Rating Agency, as evidenced by a signed writing delivered by each
Rating Agency;
(vi) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates by any such Rating Agency, as evidenced by a signed
writing delivered by each Rating Agency;
(viii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the
two highest long term ratings of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency;
(x) units of money market funds registered under the
Investment Company Act of 1940 including funds managed or advised by
the Trustee or an affiliate thereof having a rating by S&P of AAAm-G,
AAA-m, or AA-m, and if rated by Xxxxx'x, rated Aaa, Aa1 or Aa2;
(xi) short term investment funds sponsored by any trust
company or banking association incorporated under the laws of the
United States or any state thereof (including any such fund managed or
advised by the Trustee or any affiliate thereof) which on the date of
acquisition has been rated by each Rating Agency in their respective
highest applicable rating category or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each Rating Agency, as evidenced by a signed
writing delivered by each Rating Agency; and
(xii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency;
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
PERMITTED TRANSFEREE: Any person other than (i) the United States, any
State or political subdivision thereof, any possession of the United States or
any agency or instrumentality of any of the foregoing, (ii) a foreign
government, International Organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) or other entity (treated as a corporation
or a partnership for federal income tax purposes), created or organized in or
under the laws of the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trustor and (vi) any other Person based upon an Opinion of Counsel (which
shall not be an expense of the Trustee) that states that the Transfer of an
Ownership Interest in a Residual Certificate to such Person may cause REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificates are Outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of Xxxxxxx Mac, a majority of its board of directors is not
selected by such government unit.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
POLICY: The Certificate Guaranty Insurance Policy No. AB0824BE issued
by the Certificate Insurer in respect of the Insured Certificates, including any
endorsements thereto, a copy of which is attached hereto as Exhibit O.
PREPAYMENT ASSUMPTION: The assumed rate of prepayment, as described in
the Prospectus Supplement relating to each Class of Publicly Offered
Certificates.
PREPAYMENT CHARGE: With respect to any Principal Prepayment, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note (other than any Servicer Prepayment Charge Payment Amount).
PREPAYMENT CHARGE SCHEDULE: As of any date, the list of Mortgage Loans
providing for a Prepayment Charge included in the Trust Fund on such date,
attached hereto as Exhibit K (including the prepayment charge summary attached
thereto). The Depositor shall deliver or cause the delivery of the Prepayment
Charge Schedule to the Servicer on the Closing Date. The Prepayment Charge
Schedule shall set forth the following information with respect to each
Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Stated Principal Balance of the related
Mortgage Loan; and
(vi) the Stated Principal Balance of the related Mortgage Loan
as of the Cut-off Date.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the related Prepayment Period, (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03,
3.26 or 10.01 hereof), the amount, if any, by which (i) one month's interest at
the applicable Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan immediately prior to such prepayment exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment less the
sum of (a) the related Servicing Fee, (b) the Credit Risk Management Fee and (c)
the fee payable to any provider of lender-paid mortgage insurance, if any.
PREPAYMENT PERIOD: For any Distribution Date, the calendar month
preceding the month in which the related Distribution Date occurs.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Distribution Date,
the sum of (i) Principal Funds, plus (ii) the Extra Principal Distribution
Amount for such Distribution Date MINUS (iii) the amount of any
Overcollateralization Reduction Amount for such Distribution Date. In no event
will the Principal Distribution Amount with respect to any Distribution Date be
(x) less than zero or (y) greater than the then outstanding aggregate
Certificate Principal Balance of the Publicly Offered Certificates.
PRINCIPAL FUNDS: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal collected during the related
Due Period, (b) all Advances relating to principal made on or prior to the
Remittance Date or, with respect to the Trustee on the Distribution Date, (c)
Principal Prepayments exclusive of prepayment charges or penalties collected
during the related Prepayment Period, (iii) the Stated Principal Balance of each
Mortgage Loan that was repurchased by the Seller pursuant to Sections 2.02, 2.03
and 3.26, (d) the aggregate of all Substitution Adjustment Amounts for the
related Determination Date in connection with the substitution of Mortgage Loans
pursuant to Section 2.03(b), (e) amounts in respect of principal paid by the
Terminator pursuant to Section 10.01, (f) all Liquidation Proceeds and
Subsequent Recoveries collected during the related Prepayment Period (to the
extent such Liquidation Proceeds and Subsequent Recoveries relate to principal),
in each case to the extent remitted by the Servicer to the Distribution Account
pursuant to this Agreement and (g) all Subsequent Recoveries minus (ii) all
amounts required to be reimbursed pursuant to Sections 4.02, 4.05, 4.07, 5.08
and 9.05 or as otherwise set forth in this Agreement to the extent not
reimbursed from the Interest Remittance Amount.
PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 3.26 and 10.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
PRINCIPAL REMITTANCE AMOUNT: With respect to any Distribution Date, the
sum of the Principal Funds for such Distribution Date net of any amounts payable
or reimbursable therefrom to the Servicer, the Trustee, the Custodian or the
Credit Risk Manager.
PRIVATE CERTIFICATE: Each of the Class C, Class P and Class R
Certificates.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated
_________________ relating to the offering of the Publicly Offered Certificates.
PUBLICLY OFFERED CERTIFICATES: The Senior Certificates and the
Mezzanine Certificates.
PUD: A planned unit development.
PURCHASE PRICE: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof and as
confirmed by an Officer's Certificate from the Seller to the Trustee, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, plus any portion of
the Servicing Fee, Servicing Advances and Advances payable to the Servicer of
the Mortgage Loan plus (iii) any costs and damages of the Trust Fund in
connection with any violation by such Mortgage Loan of any abusive or predatory
lending law, including any expenses incurred by the Trustee with respect to such
Mortgage Loan prior to the purchase thereof.
RATING AGENCY: Each of S&P and Xxxxx'x. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
REALIZED LOSS: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero) equal to
(i) the Stated Principal Balance of such Mortgage Loan as of the commencement of
the calendar month in which the Final Recovery Determination was made, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (iii) the proceeds, if
any, received in respect of such Mortgage Loan during the calendar month in
which such Final Recovery Determination was made, net of amounts that are
payable therefrom to the Servicer pursuant to this Agreement.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
Stated Principal Balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (iii) the aggregate of
all unreimbursed Advances and Servicing Advances.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.
In addition, to the extent the Servicer receives Subsequent Recoveries
with respect to any Mortgage Loan, the amount of the Realized Loss with respect
to that Mortgage Loan will be reduced to the extent such Subsequent Recoveries
are applied to reduce the Certificate Principal Balance of any Class of
Certificates on any Distribution Date.
RECORD DATE: With respect to the Certificates (other than the Class A-1
Certificates) and any Distribution Date, the close of business on the last
Business Day of the month preceding the month in which such Distribution Date
occurs. With respect to the Class A-1 Certificates and any Distribution Date, so
long as the Class A-1 Certificates are Book-Entry Certificates, the Business Day
preceding such Distribution Date, and otherwise, the close of business on the
last Business Day of the month preceding the month in which such Distribution
Date occurs.
REFERENCE BANKS: Shall mean leading banks selected by the Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) which have been
designated as such by the Trustee and (iii) which are not controlling,
controlled by, or under common control with, the Depositor, the Seller or the
Servicer.
REFERENCE BANK RATE: With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of
0.03125%, of the offered rates for United States dollar deposits for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on
the related Interest Determination Date to prime banks in the London interbank
market for a period of one month in an amount approximately equal to the
aggregate Certificate Principal Balance of the Class A-1 Certificates for such
Accrual Period, provided that at least two such Reference Banks provide such
rate. If fewer than two offered rates appear, the Reference Bank Rate will be
the arithmetic mean, rounded upwards, if necessary, to the nearest whole
multiple of 0.03125%, of the rates quoted by one or more major banks in New York
City, selected by the Trustee, as of 11:00 a.m., New York City time, on such
date for loans in United States dollars to leading European banks for a period
of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the Class A-1 Certificates for such Accrual Period.
REGULAR CERTIFICATE: Any Certificate other than a Residual Certificate.
REIMBURSEMENT AMOUNT: The aggregate of any payments made with respect
to the Class A-4, Class A-5A and Class A-6 Certificates by the Certificate
Insurer under the Policy to the extent not previously reimbursed, plus interest
on that amount at the Late Payment Rate set forth in the Policy.
RELIEF ACT: The Servicemembers Civil Relief Act of 2003, as amended
from time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.
REMIC I: The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made, consisting of (i) the Mortgage Loans and
all interest accruing and principal due with respect thereto after the Cut-off
Date to the extent not applied in computing the Cut-off Date Principal Balance
thereof and all Prepayment Charges; (ii) the Mortgage Files, (iii) the Custodial
Account (other than any amounts representing any Servicer Prepayment Charge
Payment Amount), the Distribution Account, the Class P Certificate Account and
such assets that are deposited therein from time to time, together with any and
all income, proceeds and payments with respect thereto; (iv) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (v) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loans; (vi) the rights under the Mortgage
Loan Purchase Agreement, and (vii) all proceeds of the foregoing, including
proceeds of conversion, voluntary or involuntary, of any of the foregoing into
cash or other liquid property. Notwithstanding the foregoing, however, REMIC I
specifically excludes all payments and other collections of principal and
interest due on the Mortgage Loans on or before the Cut-off Date and all
Prepayment Charges payable in connection with Principal Prepayments made before
the Cut-off Date, the Net WAC Reserve Fund and the Cap Contract.
REMIC I REGULAR INTEREST LTI-1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-1 shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-A: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-A shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-B: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-B shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-C: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-C shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-D: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-D shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-E: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-E shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-F: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-F shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-G: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-G shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-IO-H: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-IO-H shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTEREST LTI-P: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I. REMIC I Regular Interest LTI-P shall accrue
interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC I REGULAR INTERESTS: REMIC I Regular Interest LTI-1, REMIC I
Regular Interest LTI-IO-A, REMIC I Regular Interest LTI-IO-B, REMIC I Regular
Interest LTI-IO-C, REMIC I Regular Interest LTI-IO-D, REMIC I Regular Interest
LTI-IOE, REMIC I Regular Interest LTI-IO-F, REMIC I Regular Interest LTI-IO-G,
REMIC I Regular Interest LTI-IO-H and REMIC I Regular Interest LTI-X.
XXXXX XX: The segregated pool of assets consisting of all of the REMIC
I Regular Interests conveyed in trust to the Trustee, for the benefit of REMIC
III, as holder of the REMIC II Regular Interests, and the Class R-2 Interest
pursuant to Section 2.07, and all amounts deposited therein, with respect to
which a separate REMIC election is to be made.
REMIC II INTEREST LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC II Remittance Rate for REMIC II Regular Interest
II-LTAA minus the Marker Rate, divided by (b) 12.
REMIC II OVERCOLLATERALIZATION AMOUNT: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC II Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC II Regular Interest LTII-A1, REMIC II Regular
Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular Interest
LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II Regular Interest LTII-A5B,
REMIC II Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1, REMIC II
Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular
Interest LTII-P, in each case as of such date of determination.
REMIC II PRINCIPAL LOSS ALLOCATION AMOUNT: With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Principal Balances of REMIC II Regular Interest
LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3,
REMIC II Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II
Regular Interest LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular
Interest LTII-M1, REMIC II Regular Interest LTII-M2 and REMIC II Regular
Interest LTII-M3 and the denominator of which is the aggregate of the
Uncertificated Principal Balances of REMIC II Regular Interest LTII-A1, REMIC II
Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular
Interest LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II Regular Interest
LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1,
REMIC II Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC
II Regular Interest LTII-ZZ.
REMIC II REGULAR INTERESTS: REMIC II Regular Interest LTII-AA, REMIC II
Regular Interest LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular
Interest LTII-A3, REMIC II Regular Interest LTII-A4, REMIC II Regular Interest
LTII-A5A, REMIC II Regular Interest LTII-A5B, REMIC II Regular Interest LTII-A6,
REMIC II Regular Interest LTII-M1, REMIC II Regular Interest LTII-M2, REMIC II
Regular Interest LTII-M3, REMIC II Regular Interest LTII-IO-A, REMIC II Regular
Interest LTII-IO-B, REMIC II Regular Interest LTII-ZZ and REMIC II Regular
Interest LTII-X.
XXXXX XX REGULAR INTEREST LTII-AA: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-AA shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A4: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A4 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-A5A: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest LTII-A5A
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LTII-A5B: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest LTII-A5B
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LTII-A6: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-A6 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-IO-A: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
LTII-IO-A shall accrue interest as provided herein and shall not be entitled to
distributions of principal.
REMIC II REGULAR INTEREST LTII-IO-B: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
LTII-IO-B shall accrue interest as provided herein and shall not be entitled to
distributions of principal.
REMIC II REGULAR INTEREST LTII-M1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-M2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-M3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-M3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-P: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-P shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-ZZ: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest LTII-ZZ shall accrue
interest at the related Uncertificated REMIC II Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
REMIC II REGULAR INTEREST LTII-ZZ MAXIMUM INTEREST DEFERRAL AMOUNT:
With respect to any Distribution Date, the excess of (i) accrued interest at the
Uncertificated REMIC II Pass-Through Rate applicable to REMIC II Regular
Interest LTII-ZZ for such Distribution Date on a balance equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-ZZ minus the
REMIC II Overcollateralization Amount, in each case for such Distribution Date,
over (ii) Uncertificated Accrued Interest on REMIC II Regular Interest LTII-A1,
REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II
Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II Regular
Interest LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular Interest
LTII-M1, REMIC II Regular Interest LTII-M2 and REMIC II Regular Interest LTII-M3
for such Distribution Date, with the rate on each such REMIC II Regular Interest
subject to a cap equal to the related Pass-Through Rate.
REMIC II REQUIRED OVERCOLLATERALIZATION AMOUNT: 1% of the Required
Overcollateralization Amount.
REMIC III: The segregated pool of assets consisting of all of the REMIC
II Regular Interests conveyed in trust to the Trustee, for the benefit of the
REMIC III Certificateholders pursuant to Section 2.09, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.
REMIC III CERTIFICATE: Any Regular Certificate or Class R Certificate.
REMIC III CERTIFICATEHOLDER: The Holder of any REMIC III Certificate.
REMIC OPINION: Shall mean an Opinion of Counsel to the effect that the
proposed action will not have an adverse affect on any REMIC created hereunder.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMIC REGULAR INTEREST: A REMIC I Regular Interest, REMIC II Regular
Interest or a Regular Certificate.
REMITTANCE DATE: Shall mean the _____ day of the month and if such day
is not a Business Day, the immediately succeeding Business Day.
REO PROPERTY: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a request for release in
accordance with the terms of the Custodial Agreement, (i) have a Stated
Principal Balance, after deduction of the principal portion of the Scheduled
Payment due in the month of substitution, not in excess of, and not less than
90% of, the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a
fixed Mortgage Rate not less than or more than 1% per annum higher than the
Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or higher credit
quality characteristics than that of the Deleted Mortgage Loan; (iv) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have a
remaining term to maturity no greater than (and not more than one year less
than) that of the Deleted Mortgage Loan; (vi) not permit conversion of the
Mortgage Rate from a fixed rate to a variable rate; (vii) be secured by a first
lien on the related Mortgaged Property; (viii) constitute the same occupancy
type as the Deleted Mortgage Loan or be owner occupied; and (ix) comply with
each representation and warranty set forth in the Mortgage Loan Purchase
Agreement.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
REQUIRED OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date prior to the Stepdown Date, ____% of the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date, and with respect to any Distribution Date
thereafter, the greater of (i) ____% of the Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period to the
extent received or advanced, unscheduled collections of principal received
during the related Prepayment Period and after reduction for Realized Losses
incurred during the related Prepayment Period) and (ii) ____% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.
REQUIRED OVERCOLLATERALIZATION PERCENTAGE: With respect to any
Distribution Date, a percentage equal to (a) the Required Overcollateralization
Amount divided by (b) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period).
RESIDUAL CERTIFICATES: Any one of the Class R Certificates.
RESPONSIBLE OFFICER: With respect to the Trustee, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
Officer, any other officer customarily performing functions similar to those
performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee having direct responsibility over this
Agreement and customarily performing functions similar to those performed by any
one of the designated officers, as to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
or its successor in interest.
SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
SECURITIES ACT: The Securities Act of 1933, as amended.
SELLER: Nomura Credit & Capital, Inc., a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
SENIOR CERTIFICATES: The Class A-1, Class A-2, Class A-3, Class A4,
Class A-5A Class X-0X, Xxxxx X-0 and Class A-IO Certificates.
SENIOR INTEREST DISTRIBUTION AMOUNT: With respect to any Distribution
Date and any Class of Senior Certificates will be equal to the Interest
Distribution Amount for such Distribution Date for such Class and the Interest
Carry Forward Amount, if any, for such Distribution Date for such Class.
SENIOR PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date which occurs (i) prior to the Stepdown Date or on or after the Stepdown
Date if a Trigger Event is in effect, the Principal Distribution Amount or (ii)
on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
o the Principal Distribution Amount for that Distribution Date;
and
o the excess, if any, of (A) the aggregate Certificate Principal
Balance of the Senior Certificates immediately prior to that
Distribution Date over (B) the positive difference between (i)
the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period (after reduction
for Realized Losses incurred during the related Prepayment
Period) and (ii) the product of (x) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses
incurred during the related Prepayment Period) and (y) the sum
of ____% and the Required Overcollateralization Percentage.
SERVICER: Shall mean [Name of Servicer] or any successor thereto
appointed hereunder in connection with the servicing and administration of the
Mortgage Loans.
SERVICER DEFAULT: As defined in Section 8.01.
SERVICER PREPAYMENT CHARGE PAYMENT AMOUNT: The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.01.
SERVICER'S ASSIGNEE: As defined in Section 5.01(b)(ii).
SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by the Servicer of its servicing obligations hereunder, including,
but not limited to, the cost of (i) the preservation, restoration, inspection,
valuation and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, and including any expenses
incurred in relation to any such proceedings that result from the Mortgage Loan
being registered in the MERS(R) System, (iii) the management and liquidation of
any REO Property (including, without limitation, realtor's commissions), (iv)
compliance with any obligations under Section 3.07 hereof to cause insurance to
be maintained and (v) payment of taxes.
SERVICING FEE: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the last day of the related Due
Period or, in the event of any payment of interest that accompanies a Principal
Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee Rate on the
same Stated Principal Balance of such Mortgage Loan used to calculate the
payment of interest on such Mortgage Loan.
SERVICING FEE RATE: 0.25% per annum.
SIX-MONTH LIBOR: The per annum rate equal to the average of the
interbank offered rates for six month United States dollar deposits in the
London market as published in The Wall Street Journal and are most recently
available as of the date specified in the related Mortgage Note.
STARTUP DAY: The Startup Day for each REMIC formed hereunder shall be
the Closing Date.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property and any Distribution Date, the Cut-off Date Principal Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
with respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date (and irrespective of any delinquency in their payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan received prior to
or during the related Prepayment Period, and all Liquidation Proceeds to the
extent applied by the Servicer as recoveries of principal in accordance with
Section 3.09 of this Agreement with respect to such Mortgage Loan, that were
received by the Servicer as of the close of business on the last day of the
Prepayment Period related to such Distribution Date and (iii) any Realized
Losses on such Mortgage Loan incurred during the related Prepayment Period. The
Stated Principal Balance of a Liquidated Loan equals zero.
STEPDOWN DATE: The earlier to occur of (1) the Distribution Date on
which the aggregate Certificate Principal Balance of the Senior Certificates has
been reduced to zero and (2) the later to occur of (x) the Distribution Date in
_________ and (y) the first Distribution Date on which the Credit Enhancement
Percentage of the Senior Certificates (calculated for this purpose only after
taking into account distributions of principal on the Mortgage Loans, but prior
to any distribution of the Principal Distribution Amount to the holders of the
Certificates then entitled to distributions of principal on the Distribution
Date) is greater than or equal to approximately _____%.
SUBSEQUENT RECOVERIES: Shall mean all amounts in respect of principal
received by the Servicer on a Mortgage Loan for which a Realized Loss was
previously incurred.
SUBSERVICING AGREEMENT: Any agreement entered into between the Servicer
and a subservicer with respect to the subservicing of any Mortgage Loan subject
to this Agreement by such subservicer.
SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03(d).
SUCCESSOR SERVICER: The Trustee or any successor to the Servicer
appointed pursuant to Section 8.02 of this Agreement after the occurrence of a
Servicer Default or upon the resignation of the Servicer pursuant to this
Agreement.
TAX MATTERS PERSON: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC. The Trustee, or any successor thereto or assignee thereof
shall serve as tax administrator hereunder and as agent for the related Tax
Matters Person.
TRANSFER AFFIDAVIT: As defined in Section 6.02(c).
TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
TRIGGER EVENT: With respect to any Distribution Date, a Trigger Event
is in effect if (x) the percentage obtained by dividing (i) the aggregate Stated
Principal Balance of Mortgage Loans delinquent 60 days or more (including
Mortgage Loans in foreclosure or discharged in bankruptcy or any REO Property)
by (ii) the aggregate Stated Principal Balance of the Mortgage Loans, in each
case, as of the last day of the previous calendar month, exceeds ____% of the
Credit Enhancement Percentage of the Senior Certificates for the prior
Distribution Date, or (y) the aggregate amount of Realized Losses incurred since
the Cut-off Date through the last day of the related Due Period divided by the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
exceeds the applicable percentages set forth below with respect to such
Distribution Date:
DISTRIBUTION DATE PERCENTAGE
----------------- ----------
TRUST FUND: Collectively, the assets of REMIC I, REMIC II, REMIC III,
the Net WAC Reserve Fund and the Cap Contract.
TRUSTEE: [Name of Trustee], a [national banking association], not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
UNCERTIFICATED ACCRUED INTEREST: With respect to each Uncertificated
REMIC Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass-Through Rate on the Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable, of such
REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Prepayment Interest Shortfalls and shortfalls resulting from
application of the Relief Act (allocated to such REMIC Regular Interests as set
forth in Sections 1.02 and 5.07).
UNCERTIFICATED NOTIONAL AMOUNT: With respect to REMIC II Regular
Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B and (i) each
Distribution Date from and including the 1st Distribution to and including the
6th Distribution Date, the aggregate Uncertificated Principal Balances of REMIC
I Regular Interest LTI-IO-A through REMIC I Regular Interest LTI-IO-H, (ii) each
Distribution Date from and including the 7th Distribution to and including the
10th Distribution Date, the aggregate Uncertificated Principal Balances of REMIC
I Regular Interest LTI-IO-B through REMIC I Regular Interest LTI-IO-H, (iii)
each Distribution Date from and including the 11th Distribution Date to and
including the 13th Distribution Date, the aggregate Uncertificated Principal
Balances of REMIC I Regular Interest LTI-IO-C through REMIC I Regular Interest
LTI-IO-H, (iv) each Distribution Date from and including the 14th Distribution
Date to and including the 15th Distribution Date, the aggregate Uncertificated
Principal Balances of REMIC I Regular Interest LTI-IO-D through REMIC I Regular
Interest LTI-IO-H, (v) each Distribution Date from and including the 16th
Distribution to and including the 19th Distribution Date, the aggregate
Uncertificated Principal Balances of REMIC I Regular Interest LTI-IO-E through
REMIC I Regular Interest LTI-IO-H, (vi) each Distribution Date from and
including the 20th Distribution to and including the 21st Distribution Date, the
aggregate Uncertificated Principal Balances of REMIC I Regular Interest LTI-IO-F
through REMIC I Regular Interest LTI-IO-H, (vii) each Distribution Date from and
including the 22nd Distribution to and including the 23rd Distribution Date, the
aggregate Uncertificated Principal Balances of REMIC I Regular Interest LTI-IO-G
and REMIC I Regular Interest LTI-IO-H, and (viii) the 24th Distribution Date,
the aggregate Uncertificated Principal Balance of REMIC I Regular Interest
LTI-IO-H, and (ix) each Distribution Date thereafter, $0.
UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC Regular
Interest (other than REMIC II Regular Interest LTII-IO-A and REMIC II Regular
Interest LTII-IO-B), the principal amount of such REMIC Regular Interest
outstanding as of any date of determination. As of the Closing Date, the
Uncertificated Principal Balance of each REMIC Regular Interest (other than
REMIC I Regular Interest LTII-IO-A and REMIC II Regular Interest LTII-IO-B)
shall equal the amount set forth in the Preliminary Statement hereto as its
initial Uncertificated Principal Balance. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC Regular Interest shall be reduced
by all distributions of principal made on such REMIC Regular Interest on such
Distribution Date pursuant to Sections 5.07 and 5.08 and, if and to the extent
necessary and appropriate, shall be further reduced on such Distribution Date by
Realized Losses as provided in Sections 5.07 and 5.08. The Uncertificated
Principal Balance of each REMIC Regular Interest shall never be less than zero.
REMIC I Regular Interest LTII-IO will not have an Uncertificated Principal
Balance.
UNCERTIFICATED REMIC I PASS-THROUGH RATE: A per annum rate equal to the
average of the Net Mortgage Rates of the Mortgage Loans as of the first day of
the related Due Period, weighted on the basis of the Stated Principal Balances
as of the first day of the related Due Period.
UNCERTIFICATED REMIC II PASS-THROUGH RATE: With respect to REMIC II
Regular Interest LTII-AA, REMIC II Regular Interest LTII-A1, REMIC II Regular
Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular Interest
LTII-A-4, REMIC II Regular Interest LTII-A5A, REMIC II Regular Interest
LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1,
REMIC II Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC
II Regular Interest LTII-ZZ, a per annum rate (but not less than zero) equal to
the weighted average of: (x) with respect to REMIC I Regular Interest LTI-1, the
Uncertificated REMIC I Pass-Through Rate for such REMIC I Regular Interest for
each such Distribution Date, and (y) with respect to REMIC I Regular Interest
LTI-IO-A through REMIC I Regular Interest LTI-IO-H for each Distribution Date
listed below, the weighted average of the rates listed below for each such REMIC
I Regular Interest listed below, weighted on the basis of the Uncertificated
Principal Balance of each such REMIC I Regular Interest:
-----------------------------------------------------------------------------------------------------------
DISTRIBUTION DATE REMIC I REGULAR INTERESTS RATE
-----------------------------------------------------------------------------------------------------------
1 LTI-IO-A through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
2 LTI-IO-A through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
3 LTI-IO-A through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
4 LTI-IO-A through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
5 LTI-IO-A through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
6 LTI-IO-A through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
7 LTI-IO-B through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
8 LTI-IO-B through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
9 LTI-IO-B through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
10 LTI-IO-B through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
11 LTI-IO-C through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A and LTI-IO-B Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
12 LTI-IO-C through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A and LTI-IO-B Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
13 LTI-IO-C through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A and LTI-IO-B Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
14 LTI-IO-D through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-C Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
15 LTI-IO-D through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-C Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
16 LTI-IO-E through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-D Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
17 LTI-IO-B5 through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-D Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
18 LTI-IO-E through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-D Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
19 LTI-IO-F through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-E Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
20 LTI-IO-F through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-E Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
21 LTI-IO-F through LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-E Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
22 LTI-IO-G and LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-F Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
23 LTI-IO-G and LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-F Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
24 LTI-IO-H (a) Uncertificated REMIC I Pass-Through Rate over (b)
____%
-----------------------------------------------------------------------------------------------------------
LTI-IO-A through LTI-IO-G Uncertificated REMIC I Pass-Through Rate
-----------------------------------------------------------------------------------------------------------
25 and thereafter LTI-IO-A through LTI-IO-H Uncertificated REMIC I Pass-Through Rate
With respect to REMIC II Regular Interest LTII-IO-A, (i) for the first twelve
distribution dates, 1.00% and (ii) thereafter, 0.00%. With respect to REMIC II
Regular Interest LTII-IO-B, (i) for the first twenty-four distribution dates,
____% and (ii) thereafter, 0.00%.
UNCERTIFICATED REMIC REGULAR INTEREST: The REMIC I Regular Interests
and the REMIC II Regular Interests.
VOTING RIGHTS: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions
hereunder. Voting Rights shall be allocated (i) 93% to the Certificates (other
than the Class A-IO, Class C, Class P and the Residual Certificates), (ii) 3% to
the Class C Certificates, (iii) 1% to the Class P Certificates, (iv) 1% to the
Class R Certificates and (v) 2% to the Class A-IO Certificates until the
Distribution Date in _______________ and thereafter such percentage of voting
rights shall be allocated to the remaining Classes of Publicly Offered
Certificates with the allocation among the Certificates other than the Class
A-IO, Class C, Class P and Class R Certificates to be in proportion to the
Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes. Voting Rights will be allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests.
Section 1.02. ALLOCATION OF CERTAIN INTEREST SHORTFALLS.
For purposes of calculating the amount of the Interest Distribution
Amount for the Senior Certificates, Mezzanine Certificates and Class C
Certificates for any Distribution Date, (1) the aggregate amount of any Net
Interest Shortfalls in respect of the Mortgage Loans for any Distribution Date
shall first reduce the Interest Distribution Amount payable to the Class M-3
Certificates, second, reduce the Interest Distribution Amount payable to the
Class M-2 Certificates, third, reduce the Interest Distribution Amount payable
to the Class M-1 Certificates and fourth, reduce the Interest Distribution
Amount payable to the Senior Certificates, on a PRO rata basis based on, and to
the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance or Notional
Amount, as applicable of each such Certificate and (2) the aggregate amount of
any Realized Losses allocated to the Mezzanine Certificates and Net WAC Rate
Carryover Amount paid to the Senior Certificates (other than the Class A-IO
Certificates) and the Mezzanine Certificates incurred for any Distribution Date
shall be allocated to the Class C Certificates based on, and to the extent of,
one month's interest at the then applicable Pass-Through Rate on the Certificate
Principal Balance thereof on any Distribution Date.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Net Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, to REMIC I
Regular Interest LTI-1 and REMIC I Regular Interest LTI-P, to the extent of one
month's interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate on the Uncertificated Principal Balance of each such REMIC I
Regular Interest; and then, to REMIC I Regular Interest LTI-IO-A, REMIC I
Regular Interest LTI-IO-B, REMIC I Regular Interest LTI-IO-C, REMIC I Regular
Interest LTI-IO-D, REMIC I Regular Interest LTI-IO-E, REMIC I Regular Interest
LTI-IO-F, REMIC I Regular Interest LTI-IO-G and REMIC I Regular Interest
LTI-IO-H, in each case to the extent of one month's interest at the then
applicable respective Uncertificated REMIC I Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC I Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC II Regular Interests for any Distribution Date, the
aggregate amount of any Net Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated among REMIC II
Regular Interest LTII-AA, REMIC II Regular Interest LTII-A1, REMIC II Regular
Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular Interest
LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II Regular Interest LTII-A5B,
REMIC II Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1, REMIC II
Regular Interest LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular
Interest LTII-ZZ, pro rata based on, and to the extent of, one month's interest
at the then applicable respective Uncertificated REMIC II Pass-Through Rate on
the respective Uncertificated Principal Balance of each such REMIC II Regular
Interest.
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01. CONVEYANCE OF TRUST FUND.
The Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest of
the Seller in and to the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the use and benefit of the Certificateholders, without recourse, all the
right, title and interest of the Depositor in and to the Trust Fund.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Trustee all of its rights and interest under
the Mortgage Loan Purchase Agreement. The Trustee hereby accepts such
assignment, and shall be entitled to exercise all rights of the Depositor under
the Mortgage Loan Purchase Agreement as if, for such purpose, it were the
Depositor. The foregoing sale, transfer, assignment, set-over, deposit and
conveyance does not and is not intended to result in creation or assumption by
the Trustee of any obligation of the Depositor, the Seller or any other Person
in connection with the Mortgage Loans or any other agreement or instrument
relating thereto except as specifically set forth herein.
In connection with such sale, the Depositor does hereby deliver to, and
deposit with the Custodian pursuant to the Custodial Agreement the documents
with respect to each Mortgage Loan as described under Section 2 of the Custodial
Agreement (the "Mortgage Loan Documents"). In connection with such delivery and
as further described in the Custodial Agreement, the Custodian will be required
to review such Mortgage Loan Documents and deliver to the Trustee, the
Depositor, the Servicers and the Seller certifications (in the forms attached to
the Custodial Agreement) with respect to such review with exceptions noted
thereon. In addition, under the Custodial Agreement the Depositor will be
required to cure certain defects with respect to the Mortgage Loan Documents for
the related Mortgage Loans after the delivery thereof by the Depositor to the
Custodian as more particularly set forth therein.
Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Mortgage Files and
preparation and delivery of the certifications shall be performed by the
Custodian pursuant to the terms and conditions of the Custodial Agreement.
The Depositor shall deliver or cause to be delivered to the Servicers
copies of all trailing documents required to be included in the related Mortgage
File at the same time the originals or certified copies thereof are delivered to
the Custodian, such documents including the mortgagee policy of title insurance
and any Mortgage Loan Documents upon return from the recording office. The
Servicers shall not be responsible for any custodian fees or other costs
incurred in obtaining such documents and the Depositor shall cause the Servicers
to be reimbursed for any such costs the Servicers may incur in connection with
performing its obligations under this Agreement.
Section 2.02. ACCEPTANCE OF THE MORTGAGE LOANS.
(a) Based on the initial trust receipt received by it from the
Custodian pursuant to the Custodial Agreement, the Trustee acknowledges receipt,
subject to the provisions of Section 2.01 hereof and Section 2 of the Custodial
Agreement, of the Mortgage Loan Documents and all other assets included in the
definition of "REMIC I" under clauses (i), (ii) (iii), (v) and (vi) (to the
extent of amounts deposited into the Distribution Account) and declares that it
holds (or the Custodian on its behalf holds) and will hold such documents and
the other documents delivered to it constituting a Mortgage Loan Document, and
that it holds (or the Custodian on its behalf holds) or will hold all such
assets and such other assets included in the definition of "REMIC I" in trust
for the exclusive use and benefit of all present and future Certificateholders.
(b) In conducting the review of the Mortgage Files in accordance with
the Custodial Agreement, the Custodian on the Trustee's behalf will ascertain
whether all required documents have been executed and received and whether those
documents relate to the Mortgage Loans identified in Exhibit B to this
Agreement, as supplemented. If the Custodian finds any document constituting
part of the Mortgage File not to have been executed or received, or to be
unrelated to the Mortgage Loans identified in Exhibit B, the Seller shall
correct or cure any such defect or, if prior to the end of the second
anniversary of the Closing Date, the Seller may substitute for the related
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee an Opinion of Counsel to the effect that
such defect does not materially or adversely affect the interests of the
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if the Seller fails to correct or cure the
defect or deliver such opinion within such period, the Seller will, subject to
Section 2.03, within 90 days from the notification of the Trustee purchase such
Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee, or intervening assignments thereof with
evidence of recording thereon because such documents have been submitted for
recording and have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after the
Closing Date.
(c) No later than 180 days after the Closing Date, the Custodian on the
Trustee's behalf will review, for the benefit of the Certificateholders, the
Mortgage Files and will execute and deliver or cause to be executed and
delivered to the Seller and the Trustee, a final trust receipt substantially in
the form annexed to the Custodial Agreement. In conducting such review, the
Custodian on the Trustee's behalf and in accordance with the terms of the
Custodial Agreement will ascertain whether each document required to be recorded
has been returned from the recording office with evidence of recording thereon
and the Custodian on the Trustee's behalf has received either an original or a
copy thereof, as required in the Custodial Agreement. If the Custodian finds
that any document with respect to a Mortgage Loan has not been received, or is
unrelated to the Mortgage Loans identified in Exhibit B or appears to be
defective on its face, the Custodian shall note such defect in the exception
report attached the final trust receipt issued pursuant to the Custodial
Agreement and the Seller shall correct or cure any such defect or, if prior to
the end of the second anniversary of the Closing Date, the Seller may substitute
for the related Mortgage Loan a Replacement Mortgage Loan, which substitution
shall be accomplished in the manner and subject to the conditions set forth in
Section 2.03 or shall deliver to the Trustee an Opinion of Counsel to the effect
that such defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if the Seller is unable within such period to
correct or cure such defect, or to substitute the related Mortgage Loan with a
Replacement Mortgage Loan or to deliver such opinion, the Seller shall, subject
to Section 2.03, within 90 days from the notification of the Trustee, purchase
such Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee or intervening assignments thereof with
evidence of recording thereon, because such documents have not been returned by
the applicable jurisdiction, the Seller shall not be required to purchase such
Mortgage Loan, if the Seller delivers such documents promptly upon receipt, but
in no event later than 360 days after the Closing Date.
(d) In the event that a Mortgage Loan is purchased by the Seller in
accordance with subsections 2.02(a) or (b) above or Section 2.03, the Seller
shall remit the applicable Purchase Price to the Trustee for deposit in the
Distribution Account and shall provide written notice to the Trustee detailing
the components of the Purchase Price, signed by an authorized officer. Upon
deposit of the Purchase Price in the Distribution Account and upon receipt of a
request for release (in the form attached to the Custodial Agreement) with
respect to such Mortgage Loan, the Custodian, on behalf of the Trustee, will
release to the Seller the related Mortgage File and the Trustee shall execute
and deliver all instruments of transfer or assignment, without recourse,
furnished to it by the Seller, as are necessary to vest in the Seller title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which the deposit into the Distribution Account was
made. The Trustee shall promptly notify the Rating Agencies of such repurchase.
The obligation of the Seller to cure, repurchase or substitute for any Mortgage
Loan as to which a defect in a constituent document exists shall be the sole
remedies respecting such defect available to the Certificateholders or to the
Trustee on their behalf. The Seller shall promptly reimburse the Trustee for any
expenses incurred by the Trustee in respect of enforcing the remedies for such
breach.
(e) The Seller shall deliver to the Custodian the Mortgage Note and
other documents constituting the Mortgage File with respect to any Replacement
Mortgage Loan, which the Custodian will review as provided in the Custodial
Agreement, provided, that the Closing Date referred to therein shall instead be
the date of delivery of the Mortgage File with respect to each Replacement
Mortgage Loan.
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER
AND THE SELLER.
(a) The Servicer hereby represents and warrants to, and covenants with,
the Seller, the Depositor, the Certificate Insurer and the Trustee as follows,
as of the Closing Date:
(i) It is duly organized and is validly existing and
in good standing under the laws of the [State][Commonwealth]
of____________________ and is duly authorized and qualified to transact
any and all business contemplated by this Agreement to be conducted by
it in any state in which a Mortgaged Property relating to a Mortgage
Loan is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with the
doing business laws of any such state, to the extent necessary to
ensure its ability to service the Mortgage Loans in accordance with the
terms of this Agreement and to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(ii) It has the full corporate power and authority to
service each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on
its part the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought and further subject to
public policy with respect to indemnity and contribution under
applicable securities law.
(iii) The execution and delivery of this Agreement by
it, the servicing of the Mortgage Loans by it under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in its ordinary course of business and will not (A) result in a
material breach of any term or provision of its charter or by-laws or
(B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which it is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to it of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it; and it is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair its ability to perform
or meet any of its obligations under this Agreement.
(iv) It is an approved servicer of conventional
mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac and is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act.
(v) No litigation is pending or, to the best of its
knowledge, threatened in writing, against it that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or its ability to service the Mortgage Loans or to perform
any of its other obligations under this Agreement in accordance with
the terms hereof.
(vi) No consent, approval, authorization or order of
any court or governmental agency or body is required for its execution,
delivery and performance of, or compliance with, this Agreement or the
consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, it has obtained
the same.
(vii) The Servicer has accurately and fully reported,
and will continue to accurately and fully report its borrower credit
files to each of the credit repositories in a timely manner materially
in accordance with the Fair Credit Reporting Act and its implementing
legislation.
(viii) The Servicer is a member of MERS in good
standing, and will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of Mortgage Loans
that are registered with MERS.
(ix) The Servicer will not waive any Prepayment
Charge with respect to Mortgage Loan unless it is waived in accordance
with the standard set forth in Section 3.01.
If the covenant of the Servicer set forth in Section 2.03(a)(ix) above is
breached by the Servicer, the Servicer will pay the amount of such waived
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by depositing such amount into the Custodial Account within 90 days of the
earlier of discovery by the Servicer or receipt of notice by the Servicer of
such breach. Notwithstanding the foregoing, or anything to the contrary
contained in this Agreement, the Servicer shall have no liability for a waiver
of any Prepayment Charge in the event that the Servicer's determination to make
such a waiver was made by the Servicer in reliance on information properly
received by the Servicer from any Person in accordance with the terms of this
Agreement.
(b) The Seller hereby represents and warrants to and covenants
with, the Depositor, the Servicer, the Certificate Insurer and the Trustee as
follows, as of the Closing Date:
(i) The Seller is duly organized, validly existing
and in good standing under the laws of the State of Delaware and is
duly authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Seller in any
state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state,
to the extent necessary to ensure its ability to enforce each Mortgage
Loan, to sell the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and
authority to sell each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary corporate
action on the part of the Seller the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms,
except that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and further subject to public policy
with respect to indemnity and contribution under applicable securities
law.
(iii) The execution and delivery of this Agreement by
the Seller, the sale of the Mortgage Loans by the Seller under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Seller and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Seller or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which the Seller is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair the Seller's ability to perform or meet any of its obligations
under this Agreement.
(iv) The Seller is an approved seller of conventional
mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac and is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act.
(v) No litigation is pending or, to the best of the
Seller's knowledge, threatened, against the Seller that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Seller to sell
the Mortgage Loans or to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution,
delivery and performance by the Seller of, or compliance by the Seller
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Seller has obtained the same.
(vii) The representations and warranties set forth in
Section 8 of the Mortgage Loan Purchase Agreement are true and correct
as of the Closing Date.
(viii) No Mortgage Loan is subject to the Home
Ownership and Equity Protection Act of 1994 or any comparable law and
no Mortgage Loan is classified and/or defined as a "high cost",
"covered", "high risk home" or "predatory" loan under any other state,
federal or local law or regulation or ordinance (or a similarly
classified loan using different terminology under a law imposing
heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or
fees).
(ix) No loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in Appendix E of the Standard &
Poor's Glossary For File Format For LEVELS(R) Version 5.6 Revised
(attached hereto as Exhibit N) and no mortgage loan originated on or
after October 1, 2002 through March 6, 2003 is governed by the Georgia
Fair Lending Act.
(x) Any and all requirements of any federal, state or
local law including, without limitation, usury, truth in lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity, fair housing, predatory, abusive lending or disclosure
laws applicable to the origination and servicing of the Mortgage Loans
have been complied with in all material respects.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(b)(viii), (ix) and (x) and
Section 8 of the Mortgage Loan Purchase Agreement that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt written notice thereof to the other
parties. The Seller hereby covenants with respect to the representations and
warranties set forth in Section 2.03(b)(viii), (ix) and (x) and Section 8 of the
Mortgage Loan Purchase Agreement, that within 90 days of the discovery of a
breach of any representation or warranty set forth therein that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
it shall cure such breach in all material respects and, if such breach is not so
cured, (i) prior to the second anniversary of the Closing Date, remove such
Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and substitute in
its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set
forth below; provided that any such substitution pursuant to (i) above or
repurchase pursuant to (ii) above shall not be effected prior to the delivery to
the Trustee of an Opinion of Counsel if required by Section 2.05 and any such
substitution pursuant to (i) above shall not be effected prior to the additional
delivery to the Custodian of a request for release in accordance with the
Custodial Agreement. The Seller shall promptly reimburse the Trustee for any
expenses reasonably incurred by the Trustee in respect of enforcing the remedies
for such breach. To enable the Servicer to amend the Mortgage Loan Schedule, the
Seller shall, unless it cures such breach in a timely fashion pursuant to this
Section 2.03, promptly notify the Trustee whether it intends either to
repurchase, or to substitute for, the Mortgage Loan affected by such breach.
With respect to the representations and warranties in Section 8 of the Mortgage
Loan Purchase Agreement that are made to the best of the Seller's knowledge, if
it is discovered by any of the Depositor, the Seller or the Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation or warranty, the Seller shall nevertheless be required to
cure, substitute for or repurchase the affected Mortgage Loan in accordance with
the foregoing.
With respect to any Replacement Mortgage Loan or Loans, the Seller
shall deliver to the Custodian for the benefit of the Certificateholders such
documents and agreements as are required by Section 2 of the Custodial
Agreement. No substitution will be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Replacement Mortgage Loans in the Due Period related to the Distribution Date on
which such proceeds are to be distributed shall not be part of the Trust Fund
and will be retained by the Seller. For the month of substitution, distributions
to Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for the related Due Period and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Servicer shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Replacement Mortgage Loan or Loans and shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Replacement Mortgage Loan or Loans 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 Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 8 of the
Mortgage Loan Purchase Agreement with respect to such Mortgage Loan. Upon any
such substitution and the deposit into the Distribution Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph and receipt by the Custodian of a request
for release for such Mortgage Loan in accordance with the Custodial Agreement,
the Custodian on behalf of the Trustee shall release to the Seller the Mortgage
File relating to such Deleted Mortgage Loan and held for the benefit of the
Certificateholders and the Trustee shall execute and deliver at the Seller's
direction such instruments of transfer or assignment as have been prepared by
the Seller, in each case without recourse, as shall be necessary to vest in the
Seller, or its respective designee, title to the Trustee's interest in any
Deleted Mortgage Loan substituted for pursuant to this Section 2.03. Neither the
Trustee nor the Custodian shall have any further responsibility with regard to
such Mortgage File.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Trustee will determine the
amount (if any) by which the aggregate principal balance of all the Replacement
Mortgage Loans as of the date of substitution is less than the Stated Principal
Balance (after application of the principal portion of the Scheduled Payment due
in the month of substitution) of such Deleted Mortgage Loan. An amount equal to
the aggregate of such deficiencies, described in the preceding sentence for any
Distribution Date (such amount, the "Substitution Adjustment Amount") shall be
deposited into the Distribution Account, by the Seller delivering such
Replacement Mortgage Loan on or before the Determination Date for the
Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited into the Distribution Account
maintained by the Trustee, on or before the Determination Date for the
Distribution Date in the month following the month during which the Seller
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of an Opinion of Counsel if required
by Section 2.05 and the receipt of a request for release pursuant to the
Custodial Agreement, the Custodian, on behalf of the Trustee shall release the
related Mortgage File held for the benefit of the Certificateholders to the
Seller, and the Trustee shall execute and deliver at such Person's direction the
related instruments of transfer or assignment prepared by the Seller, in each
case without recourse, as shall be necessary to transfer title from the Trustee
for the benefit of the Certificateholders and transfer the Trustee's interest to
the Seller to any Mortgage Loan purchased pursuant to this Section 2.03. It is
understood and agreed that the obligation under this Agreement of the Seller to
cure, repurchase or replace any Mortgage Loan as to which a breach has occurred
and is continuing shall constitute the sole remedies against the Seller
respecting such breach available to Certificateholders, the Depositor or the
Trustee.
(d) The representations and warranties set forth in Section 2.03 shall
survive delivery of the respective Mortgage Loans and Mortgage Files to the
Trustee or the Custodian for the benefit of the Certificateholders.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to, and covenants, with
the Servicer, the Seller, the Certificate Insurer and the Trustee as follows, as
of the date hereof and as of the Closing Date:
(i) The Depositor is duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has full power and authority (corporate and other)
necessary to own or hold its properties and to conduct its business as
now conducted by it and to enter into and perform its obligations under
this Agreement.
(ii) The Depositor has the full corporate power and
authority to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement and has
duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Depositor, enforceable against the Depositor
in accordance with its terms, subject, as to enforceability, to (i)
bankruptcy, insolvency, moratorium receivership and other similar laws
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought and further subject to
public policy with respect to indemnity and contribution under
applicable securities law.
(iii) The execution and delivery of this Agreement by
the Depositor, the consummation of the transactions contemplated by
this Agreement, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of the Depositor and will
not (A) result in a material breach of any term or provision of the
charter or by-laws of the Depositor or (B) materially conflict with,
result in a material breach, violation or acceleration of, or result in
a material default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a material violation of any statute, order or
regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution,
delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as of the
Closing Date, following the transfer of the Mortgage Loans to it by the Seller,
the Depositor had good title to the Mortgage Loans and the related Mortgage
Notes were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee or the Custodian for the benefit of the Certificateholders. Upon
discovery by the Depositor, the Servicer, the Certificate Insurer or the Trustee
of a breach of such representations and warranties, the party discovering such
breach shall give prompt written notice to the others and to each Rating Agency.
Section 2.05. DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS AND REPURCHASES.
(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee, to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of REMIC I, REMIC II or REMIC III or contributions after the Closing Date, as
defined in sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificates are outstanding. Any Mortgage Loan as to which
repurchase or substitution was delayed pursuant to this paragraph shall be
repurchased or the substitution therefor shall occur (subject to compliance with
Sections 2.02 or 2.03) upon the earlier of (a) the occurrence of a default or
imminent default with respect to such Mortgage Loan and (b) receipt by the
Trustee of an Opinion of Counsel to the effect that such repurchase or
substitution, as applicable, will not result in the events described in clause
(i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor or the Seller that any Mortgage
Loan does not constitute a "qualified mortgage" within the meaning of section
860G(a)(3) of the Code, the party discovering such fact shall promptly (and in
any event within 5 Business Days of discovery) give written notice thereof to
the other parties and the Trustee. In connection therewith, the Seller, at the
its option, shall either (i) substitute, if the conditions in Section 2.03(c)
with respect to substitutions are satisfied, a Replacement Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty contained in Section 2.03. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty contained in Section
2.03.
Section 2.06. ISSUANCE OF THE REMIC I REGULAR INTERESTS AND THE CLASS
R-1 INTEREST.
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to the Custodian on its behalf of the Mortgage Files, subject to
the provisions of Section 2.01 and Section 2.02, together with the assignment to
it of all other assets included in REMIC I, the receipt of which is hereby
acknowledged. The interests evidenced by the Class R-1 Interest, together with
the REMIC I Regular Interests, constitute the entire beneficial ownership
interest in REMIC I. The rights of the Holders of the Class R-1 Interest and
REMIC I (as holder of the REMIC I Regular Interests) to receive distributions
from the proceeds of REMIC I in respect of the Class R-1 Interest and the REMIC
I Regular Interests, respectively, and all ownership interests evidenced or
constituted by the Class R-1 Interest and the REMIC I Regular Interests, shall
be as set forth in this Agreement.
Section 2.07. CONVEYANCE OF THE REMIC I REGULAR INTERESTS; ACCEPTANCE
OF REMIC II BY THE TRUSTEE.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests for the benefit of the Class R-2 Interest and
REMIC II (as holder of the REMIC I Regular Interests). The Trustee acknowledges
receipt of the REMIC I Regular Interests and declares that it holds and will
hold the same in trust for the exclusive use and benefit of all present and
future Holders of the Class R-2 Interest and REMIC II (as holder of the REMIC I
Regular Interests). The rights of the Holders of the Class R-2 Interest and
REMIC II (as holder of the REMIC I Regular Interests) to receive distributions
from the proceeds of REMIC II in respect of the Class R-2 Interest and REMIC II
Regular Interests, respectively, and all ownership interests evidenced or
constituted by the Class R-2 Interest and the REMIC II Regular Interests, shall
be as set forth in this Agreement.
Section 2.08. CONVEYANCE OF THE REMIC II REGULAR INTERESTS; ACCEPTANCE
OF REMIC III BY THE TRUSTEE.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee,
without recourse all the right, title and interest of the Depositor in and to
the REMIC II Regular Interests for the benefit of the Class R-3 Interest and
REMIC III (as holder of the REMIC II Regular Interests). The Trustee
acknowledges receipt of the REMIC II Regular Interests and declares that it
holds and will hold the same in trust for the exclusive use and benefit of all
present and future Holders of the Class R-3 Interest and REMIC III (as holder of
the REMIC II Regular Interests). The rights of the Holder of the Class R-3
Interest and REMIC III (as holder of the REMIC II Regular Interests) to receive
distributions from the proceeds of REMIC III in respect of the Class R-3
Interest and REMIC III Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-3 Interest and the REMIC III
Regular Interests, shall be as set forth in this Agreement. The Class R-3
Interest and the REMIC III Regular Interests shall constitute the entire
beneficial ownership interest in REMIC III.
Section 2.09. ISSUANCE OF CLASS R CERTIFICATES.
The Trustee acknowledges the assignment to it of the REMIC I Regular
Interests and the REMIC II Regular Interests and, concurrently therewith and in
exchange therefor, pursuant to the written request of the Depositor executed by
an officer of the Depositor, the Trustee has executed, authenticated and
delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations. The Class R Certificates evidence ownership in the
Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest.
Section 2.10. ESTABLISHMENT OF TRUST.
The Depositor does hereby establish, pursuant to the further provisions
of this Agreement and the laws of the State of New York, an express trust to be
known, for convenience, as "Nomura Home Equity Loan, Inc., Home Equity Loan
Trust, Series ____-____" and does hereby appoint [Name of Trustee], as Trustee
in accordance with the provisions of this Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01. THE SERVICER TO ACT AS SERVICER OF THE MORTGAGE LOANS.
The Servicer shall service and administer the Mortgage Loans on behalf
of the Trust and in the best interest of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the Mortgage Loans and to the
extent consistent with such terms and in accordance with and exercising the same
care in performing those practices that the Servicer customarily employs and
exercises in servicing and administering mortgage loans for its own account
(including, compliance with all applicable federal, state and local laws).
To the extent consistent with the foregoing, the Servicer shall seek
the timely and complete recovery of principal and interest on the Mortgage Notes
related to the Mortgage Loans and shall waive a Prepayment Charge only under the
following circumstances: (i) such waiver is standard and customary in servicing
similar mortgage loans and (ii) either (A) such waiver is related to a default
or reasonably foreseeable default and would, in the reasonable judgment of the
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related Mortgage Loan and, if such waiver is made
in connection with a refinancing of the related Mortgage Loan, such refinancing
is related to a default or a reasonably foreseeable default or (B) such waiver
is made in connection with a refinancing of the related Mortgage Loan unrelated
to a default or a reasonably foreseeable default where (x) the related Mortgagor
has stated to the Servicer an intention to refinance the related Mortgage Loan
and (y) the Servicer has concluded in its reasonable judgment that the waiver of
such Prepayment Charge would induce such Mortgagor to refinance with the
Servicer or (iii) the Servicer reasonably believes such Prepayment Charge is
unenforceable in accordance with applicable law or the collection of such
related Prepayment Charge would otherwise violate applicable law. If a
Prepayment Charge is waived as permitted by meeting both of the standards
described in clauses (i) and (ii)(B) above, then the Servicer is required to pay
the amount of such waived Prepayment Charge (the "Servicer Prepayment Charge
Payment Amount"), for the benefit of the Holders of the Class P Certificates, by
depositing such amount into the Custodial Account within 90 days of notice or
discovery of such waiver meeting the standard set forth in both clauses (i) and
(ii)(B) above; provided, however, that the Servicer shall not waive more than 5%
of the Prepayment Charges (by number of Prepayment Charges) set forth on the
Prepayment Charge Schedule in accordance with clauses (i) and (ii)(B) above.
Notwithstanding any other provisions of this Agreement, any payments made by the
Servicer in respect of any waived Prepayment Charges pursuant to clauses (i) and
(ii)(B) above and the preceding sentence shall be deemed to be paid outside of
the Trust Fund.
Subject only to the above-described applicable servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall have full power and authority,
acting alone and/or through subservicers as provided in Section 3.03, to do or
cause to be done any and all things that it may deem necessary or desirable in
connection with such servicing and administration, including but not limited to,
the power and authority, subject to the terms hereof (i) to execute and deliver,
on behalf of the Certificateholders and the Trustee, customary consents or
waivers and other instruments and documents, (ii) to consent to transfers of any
related Mortgaged Property and assumptions of the Mortgage Notes and related
Mortgages (but only in the manner provided herein), (iii) to collect any
Insurance Proceeds and other Liquidation Proceeds, and (iv) subject to Section
3.09, to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan.
Without limiting the generality of the foregoing, the Servicer, in its
own name or in the name of the Trust, the Depositor or the Trustee, is hereby
authorized and empowered by the Trust, the Depositor and the Trustee, when the
Servicer believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments, with respect
to the Mortgage Loans, and with respect to the related Mortgaged Properties held
for the benefit of the Certificateholders. The Servicer shall prepare and
deliver to the Depositor and/or the Trustee such documents requiring execution
and delivery by any or all of them as are necessary or appropriate to enable the
Servicer to service and administer the Mortgage Loans. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer. In addition, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer any special or
limited powers of attorney agreeable to the Trustee and its counsel for each
county in which a Mortgaged Property is located and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder, provided such limited powers of attorney or other documents
shall be prepared by the Servicer and submitted to the Trustee for review prior
to execution.
In accordance with the standards of the first paragraph of this Section
3.01, the Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties relating to the Mortgage Loans in order to preserve the lien on the
Mortgaged Property, which advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 4.04, and
further as provided in Section 4.02. All costs incurred by the Servicer, if any,
in effecting the payments of such taxes and assessments on the related Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balance under the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
Section 3.02. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 3.02, when any
Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Servicer shall to the extent that it has
knowledge of such conveyance, enforce any due-on-sale clause contained in any
Mortgage Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Servicer shall not be required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.02(b), to
take or enter into an assumption and modification agreement from or with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
related Mortgage Loan shall continue to be covered (if so covered before the
Servicer enters such agreement) by the applicable Required Insurance Policies.
The Servicer, subject to Section 3.02(b), is also authorized with the prior
approval of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
3.02(a) by reason of any transfer or assumption that the Servicer reasonably
believes it is restricted by law from preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.02(a), in any case in which a Mortgaged
Property related to a Mortgage Loan has been conveyed to a Person by a
Mortgagor, and such Person is to enter into an assumption agreement or
modification agreement or supplement to the Mortgage Note or Mortgage that
requires the signature of the Trustee, or if an instrument of release signed by
the Trustee is required releasing the Mortgagor from liability on the related
Mortgage Loan, the Servicer shall prepare and deliver or cause to be prepared
and delivered to the Trustee for signature and shall direct, in writing, the
Trustee to execute the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person. In connection with any such
assumption, no material term of the Mortgage Note (including, but not limited
to, the Mortgage Rate, the amount of the Scheduled Payment and any other term
affecting the amount or timing of payment on the related Mortgage Loan) may be
changed. In addition, the substitute Mortgagor and the Mortgaged Property must
be acceptable to the Servicer in accordance with the servicing standard set
forth in Section 3.01. The Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Custodian the original of such substitution or assumption agreement, which in
the case of the original shall be added to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. Any fee
collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.
Section 3.03. SUBSERVICERS.
The Servicer shall perform all of its servicing responsibilities
hereunder or may cause a subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Servicer of a subservicer
shall not release the Servicer from any of its obligations hereunder with
respect to the related Mortgage Loans. The Servicer shall pay all fees of each
of its subservicers from its own funds, and a subservicer's fee shall not exceed
the Servicing Fee payable to the Servicer hereunder.
At the cost and expense of the Servicer, without any right of
reimbursement from its Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer; provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Servicer, at its option, from electing to service the related Mortgage Loans
itself. In the event that the Servicer's responsibilities and duties under this
Agreement are terminated pursuant to Section 8.03, the Servicer shall at its own
cost and expense terminate the rights and responsibilities of each subservicer
with respect to the Mortgage Loans effective as of the date of the Servicer's
termination. The Servicer shall pay all fees, expenses or penalties necessary in
order to terminate the rights and responsibilities of each subservicer from the
Servicer's own funds without reimbursement from the Trust Fund.
Notwithstanding the foregoing, the Servicer shall not be relieved of
its obligations hereunder with respect to the Mortgage Loans and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into an agreement with a subservicer for indemnification of
the Servicer by the subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving a subservicer shall be deemed to be
between such subservicer and the Servicer alone, and the Trustee shall not have
any obligations, duties or liabilities with respect to such subservicer
including any obligation, duty or liability of the Trustee to pay such
subservicer's fees and expenses or any differential in the amount of the
servicing fee paid hereunder and the amount necessary to induce any successor
servicer to act as successor servicer under this Agreement and the transactions
provided for in this Agreement. For purposes of remittances to the Trustee
pursuant to this Agreement, the Servicer shall be deemed to have received a
payment on a Mortgage Loan when a subservicer has received such payment.
Section 3.04. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE
SERVICER TO BE HELD FOR TRUSTEE.
Notwithstanding any other provisions of this Agreement, the Servicer
shall transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Mortgage Loan coming into the possession of the
Servicer from time to time and shall account fully to the Trustee for any funds
received by the Servicer or that otherwise are collected by the Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any such Mortgage Loan.
All Mortgage Files and funds collected or held by, or under the control of, the
Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Custodial Account maintained by the
Servicer, shall be held by the Servicer for and on behalf of the Trustee and
shall be and remain the sole and exclusive property of the Trustee, subject to
the applicable provisions of this Agreement. The Servicer also agrees that it
shall not create, incur or subject any Mortgage File or any funds that are
deposited in the Custodial Account maintained by the Servicer, the Distribution
Account or in any Escrow Account, or any funds that otherwise are or may become
due or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of set
off against any Mortgage File or any funds collected on, or in connection with,
a Mortgage Loan, except, however, that the Servicer shall be entitled to set off
against and deduct from any such funds any amounts that are properly due and
payable to the Servicer under this Agreement.
Section 3.05. MAINTENANCE OF HAZARD INSURANCE.
(a) The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance with extended coverage on the Mortgaged Property in an amount
which is at least equal to the lesser of (i) the Stated Principal Balance of
such Mortgage Loan and (ii) the amount necessary to fully compensate for any
damage or loss to the improvements that are a part of such property on a
replacement cost basis, in each case in an amount not less than such amount as
is necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. The Servicer shall also cause to be maintained
hazard insurance with extended coverage on each REO Property related to a
Mortgage Loan in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements which are a part of such REO
Property and (ii) the Stated Principal Balance of the related Mortgage Loan at
the time it became an REO Property. The Servicer will comply in the performance
of this Agreement with all reasonable rules and requirements of each insurer
under any such hazard policies. Any amounts collected by the Servicer under any
such policies (other than amounts to be applied to the restoration or repair of
the property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note and in accordance with the servicing
standard set forth in Section 3.01) shall be deposited in the Custodial Account
maintained by the Servicer, subject to withdrawal pursuant to Section 4.02. Any
cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
Stated Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If the Mortgaged
Property or REO Property relating to a Mortgage Loan is at any time in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards and flood insurance has been made available, the
Servicer shall cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the Stated Principal Balance of the related Mortgage Loan and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under the
national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of B:VI or better in
Best's Key Rating Guide (or such other rating that is comparable to such rating)
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.05, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.05, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Custodial Account maintained by the
Servicer from its own funds the amount not otherwise payable under the blanket
policy because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Trustee and Certificateholders, claims
under any such blanket policy in a timely fashion in accordance with the terms
of such policy.
(b) The Servicer shall keep in force during the term of this Agreement
a policy or policies of insurance covering errors and omissions for failure in
the performance of the Servicer's obligations under this Agreement, which policy
or policies shall be in such form and amount that would meet the requirements of
Xxxxxx Xxx or Xxxxxxx Mac if it were the purchaser of the related Mortgage
Loans, unless the Servicer has obtained a waiver of such requirements from
Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall provide the Trustee, upon request,
with copies of such insurance policies and fidelity bond. the Servicer shall
also maintain a fidelity bond in the form and amount that would meet the
requirements of Xxxxxx Mae or Xxxxxxx Mac, unless the Servicer has obtained a
waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall
be deemed to have complied with this provision if an Affiliate of the Servicer
has such errors and omissions and fidelity bond coverage and, by the terms of
such insurance policy or fidelity bond, the coverage afforded thereunder extends
to the Servicer. Any such errors and omissions policy and fidelity bond shall by
its terms not be cancelable without thirty days' prior written notice to the
Trustee. The Servicer shall also cause its subservicers to maintain a policy of
insurance covering errors and omissions and a fidelity bond which would meet
such requirements.
Section 3.06. PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The Servicer shall prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such Insurance
Policies. Any proceeds disbursed to the Servicer in respect of such Insurance
Policies shall, within two Business Days of its receipt, be deposited in the
Custodial Account maintained by the Servicer upon receipt, except that any
amounts realized that are to be applied to the repair or restoration of the
related Mortgaged Property as a condition precedent to the presentation of
claims on the related Mortgage Loan to the insurer under any applicable
Insurance Policy need not be so deposited (or remitted).
Section 3.07. MAINTENANCE OF INSURANCE POLICIES.
The Servicer shall not take any action that would result in noncoverage
under any applicable Insurance Policy of any loss which, but for the actions of
the Servicer would have been covered thereunder. The Servicer shall use its best
efforts to keep in force and effect (to the extent that the related Mortgage
Loan requires the Mortgagor to maintain such insurance), any applicable
Insurance Policy. The Servicer shall not cancel or refuse to renew any Insurance
Policy that is in effect at the date of the initial issuance of the Mortgage
Note and is required to be kept in force hereunder.
Section 3.08. RESERVED.
Section 3.09. REALIZATION UPON DEFAULTED MORTGAGE LOANS; DETERMINATION
OF EXCESS LIQUIDATION PROCEEDS AND REALIZED LOSSES; REPURCHASES OF CERTAIN
MORTGAGE LOANS.
(a) The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided that
the Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account maintained by the Servicer
pursuant to Section 4.02). If the Servicer reasonably believes that Liquidation
Proceeds with respect to any such Mortgage Loan would not be increased as a
result of such foreclosure or other action, such Mortgage Loan will be
charged-off and will become a Liquidated Loan. The Servicer will give notice of
any such charge-off to the Trustee. The Servicer shall be responsible for all
other costs and expenses incurred by it in any such proceedings; provided that
such costs and expenses shall be Servicing Advances and that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 4.02. If the Servicer has
knowledge that a Mortgaged Property that the Servicer is contemplating acquiring
in foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer shall, prior to acquiring the Mortgaged Property,
consider such risks and only take action in accordance with its established
environmental review procedures.
With respect to any REO Property related to a Mortgage Loan, the deed
or certificate of sale shall be taken in the name of the Trustee for the benefit
of the Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Servicer shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity hereunder. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property. The Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO Property
at such times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Custodial Account maintained by
the Servicer no later than the close of business on each Determination Date. The
Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 6050H, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
three years after its acquisition by the Trust Fund or, at the expense of the
Trust Fund, request from the Internal Revenue Service more than 60 days prior to
the day on which such three-year period would otherwise expire, an extension of
the three-year grace period. The Trustee shall be supplied with an Opinion of
Counsel (such opinion not to be an expense of the Trustee or the Trust Fund) to
the effect that the holding by the Trust Fund of such Mortgaged Property
subsequent to such three-year period will not result in the imposition of taxes
on "prohibited transactions" of REMIC I, REMIC II or REMIC III as defined in
section 860F of the Code or cause either REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such Mortgaged Property (subject
to any conditions contained in such Opinion of Counsel). Notwithstanding any
other provision of this Agreement, no Mortgaged Property acquired by the Trust
Fund shall be rented (or allowed to continue to be rented) or otherwise used for
the production of income by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the Code or (ii) subject any of REMIC I, REMIC II or REMIC III to the imposition
of any federal, state or local income taxes on the income earned from such
Mortgaged Property under section 860G(c) of the Code or otherwise, unless the
Servicer has agreed to indemnify and hold harmless the Trust Fund with respect
to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the defaulted Mortgage Loans (with
interest accruing as though such Mortgage Loans were still current) and all such
income shall be deemed, for all purposes in the Agreement, to be payments on
account of principal and interest on the related Mortgage Notes and shall be
deposited into the related Custodial Account. To the extent the income received
during a Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Custodial Account maintained by the Servicer on the next succeeding
Determination Date following receipt thereof for distribution on the related
Distribution Date, except that any Excess Liquidation Proceeds shall be retained
by the Servicer as additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, shall be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 4.02 or this Section 3.09; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section 4.02
or this Section 3.09; third, to accrued and unpaid interest (to the extent no
Advance has been made for such amount) on the Mortgage Loan or related REO
Property, at the Net Mortgage Rate to the first day of the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal
of the Mortgage Loan.
(b) On each Determination Date, the Servicer shall determine
the respective aggregate amounts of Excess Liquidation Proceeds and Realized
Losses, if any, with respect to any Mortgage Loan for the related Prepayment
Period.
(c) The Servicer has no intent to foreclose on any Mortgage
Loan based on the delinquency characteristics as of the Closing Date; provided,
however, that the foregoing does not prevent the Servicer from initiating
foreclosure proceedings on any date hereafter if the facts and circumstances of
such Mortgage Loans including delinquency characteristics in the Servicer's
discretion so warrant such action.
Section 3.10. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from its Custodial Account out of each payment of
interest on each Mortgage Loan included in the Trust Fund an amount equal to the
Servicing Fee. In addition, the Servicer shall be entitled to recover unpaid
Servicing Fees out of Liquidation Proceeds, Insurance Proceeds or condemnation
proceeds to the extent permitted by Section 4.02.
Additional servicing compensation with respect to Mortgage Loans in the
form of any Excess Liquidation Proceeds, assumption fees, late payment charges,
insufficient funds charges and ancillary income to the extent such fees or
charges are received by the Servicer, all income and gain net of any losses
realized from Permitted Investments with respect to funds in or credited to the
Custodial Account maintained by the Servicer shall be retained by the Servicer
to the extent not required to be deposited in the related Custodial Account
pursuant to Section 4.02. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of any premiums for hazard insurance, as required by Section 3.05 and
maintenance of the other forms of insurance coverage required by Section 3.07)
and shall not be entitled to reimbursement therefor except as specifically
provided in Section 4.02.
Section 3.11. REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Servicer shall sell any REO Property as expeditiously as
possible and in accordance with the provisions of this Agreement. Pursuant to
its efforts to sell such REO Property, the Servicer shall protect and conserve
such REO Property in the manner and to the extent required herein, in accordance
with the REMIC Provisions.
(b) The Servicer shall deposit all funds collected and
received in connection with the operation of any REO Property into the Custodial
Account maintained by the Servicer.
(c) The Servicer, upon the final disposition of any REO
Property, shall be entitled to reimbursement for any related unreimbursed
Advances, unreimbursed Servicing Advances or Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Advances or Servicing Fees as well as any
unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to
final disposition, out of any net rental income or other net amounts derived
from such REO Property.
Section 3.12. LIQUIDATION REPORTS.
Upon the foreclosure of any Mortgaged Property or the acquisition
thereof by the Trust Fund pursuant to a deed-in-lieu of foreclosure, the
Servicer shall submit a liquidation report to the Trustee containing such
information as shall be mutually acceptable to the Servicer and the Trustee with
respect to such Mortgaged Property.
Section 3.13. ANNUAL CERTIFICATE AS TO COMPLIANCE.
(a) The Servicer shall deliver to the Depositor, the
Certificate Insurer and the Trustee not later than March 15th of each year
commencing in ____ (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), a certificate of a Authorized Servicer
Representative stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding calendar year and of performance
under this Agreement has been made under such officers' supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof except for such defaults as such officer in its good faith judgment
believe to be immaterial.
(b) (i) The Servicer shall deliver to the Depositor, the
Certificate Insurer and the Trustee, on or before March 15th of each year
commencing in ____, a certification containing the information set forth in
Exhibit L. Such certification shall be signed by the senior officer in charge of
servicing of the Servicer. In addition, the Servicer shall provide such other
information with respect to the Mortgage Loans and the servicing and
administration thereof within the control of the Servicer which shall be
required to enable the Depositor and the Trustee to comply with the reporting
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act").
(ii) The Servicer shall indemnify and hold harmless
the Depositor, the Certificate Insurer, the Trustee and their respective
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses to the extent arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.13(b), or a breach in any of
the representations in the certification delivered pursuant to clause (b)(i)
above, or the Servicer's gross negligence, bad faith or willful misconduct in
connection therewith. If the indemnification provided for herein is unavailable
to the Depositor, the Certificate Insurer and the Trustee as a result of a court
of law or other administrative or regulatory body with authority holding such
indemnification void on the basis of public policy or similar reason or
insufficient to hold harmless the Depositor, the Certificate Insurer or the
Trustee, then the Servicer agrees that it shall contribute to the amount paid or
payable by the Depositor, the Certificate Insurer and the Trustee as a result of
the losses, claims, damages or liabilities of the Depositor or the Trustee in
such proportion as is appropriate to reflect the relative fault of the Trustee
or the Depositor on the one hand and the Servicer on the other in connection
with a breach of the Servicer's obligations under this Section 3.13(b) or the
Servicer's gross negligence, bad faith or willful misconduct in connection
therewith or a breach of any of the representations in the certification
delivered pursuant to clause (b)(i) above with respect to the matters covered by
this Section 3.13(b)(ii).
Section 3.14. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
SERVICING REPORT.
Not later than March 15th of each year, commencing in ____, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the servicing of residential mortgage loans during the most recently
completed fiscal or calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those subservicers. Promptly upon receipt of such report, the Servicer shall
furnish a copy of such report to the Depositor, the Certificate Insurer, the
Trustee and each Rating Agency. Copies of such statement shall be provided by
the Trustee to any Certificateholder upon request at the Servicer's expense,
provided that such statement is delivered by the Servicer to the Trustee.
Section 3.15. BOOKS AND RECORDS.
The Servicer shall be responsible for maintaining, and shall maintain,
a complete set of books and records for the Mortgage Loans which shall be
appropriately identified in the Servicer's computer system to clearly reflect
the ownership of the Mortgage Loans by the Trust. In particular, the Servicer
shall maintain in its possession, available for inspection by the Trustee and
the Certificate Insurer and shall deliver to the Trustee or the Certificate
Insurer upon reasonable prior request and during normal business hours, evidence
of compliance with all federal, state and local laws, rules and regulations. To
the extent that original documents are not required for purposes of realization
of Liquidation Proceeds or Insurance Proceeds, documents maintained by the
Servicer may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including, but not limited to, optical
imagery techniques so long as the Servicer complies with the requirements of
Accepted Servicing Practices.
The Servicer shall maintain with respect to each Mortgage Loan and
shall upon reasonable prior request and during normal business hours make
available for inspection by the Trustee and the Certificate Insurer the related
servicing file during the time such Mortgage Loan is subject to this Agreement
and thereafter in accordance with applicable law.
Section 3.16. THE TRUSTEE.
The Trustee shall furnish the Servicer with any powers of attorney and
other documents prepared and submitted by the Servicer to the Trustee in a form
as mutually agreed upon and necessary or appropriate to enable the Servicer to
service and administer the Mortgage Loans and REO Properties.
The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, the Certificate Insurer,
the FDIC, and the supervisory agents and examiners of the FDIC, such access
being afforded only upon reasonable prior written request and during normal
business hours at the office of the Trustee; provided, however, that, unless
otherwise required by law, the Trustee shall not be required to provide access
to such records and documentation if the provision thereof would violate the
legal right to privacy of any Mortgagor. The Trustee shall allow representatives
of the above entities to photocopy any of the records and documentation and
shall provide equipment for that purpose at a charge that covers the Trustee's
actual costs.
The Trustee shall execute and deliver as directed in writing by the
Servicer any court pleadings, requests for trustee's sale or other documents
necessary or desirable to (i) the foreclosure or trustee's sale with respect to
a Mortgaged Property; (ii) any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or Security Instrument; (iii) obtain a
deficiency judgment against the Mortgagor; or (iv) enforce any other rights or
remedies provided by the Mortgage Note or Security Instrument or otherwise
available at law or equity.
Section 3.17. REMIC-RELATED COVENANTS.
For as long as each REMIC shall exist, the Trustee shall act in
accordance herewith to treat each REMIC as a REMIC, and the Trustee shall comply
with any directions of the Seller or the Servicer regarding such treatment. In
particular, the Trustee shall not (a) knowingly sell or permit the sale of all
or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, accept any contribution to any REMIC after the
Startup Day without receipt of a REMIC Opinion.
Section 3.18. REIMBURSEMENT OF COSTS AND EXPENSES.
(a) To the extent that the costs and expenses of the Trustee
related to any termination of the Servicer, appointment of a Successor Servicer
or the transfer and assumption of servicing by the Trustee with respect to this
Agreement (including, without limitation, (i) all legal costs and expenses and
all due diligence costs and expenses associated with an evaluation of the
potential termination of the Servicer as a result of an event of default by such
Person and (ii) all costs and expenses associated with the complete transfer of
servicing, including all servicing files and all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Successor Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the successor servicer to service the
Mortgage Loans in accordance with this Agreement) are not fully and timely
reimbursed by the Servicer, the Trustee shall be entitled to reimbursement of
such costs and expenses from the Distribution Account.
(b) If the Trustee acts as a Successor Servicer to the
Servicer, it will not assume liability for the representations and warranties of
the predecessor Servicer contained herein.
Section 3.19. RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full has
been escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Servicer will promptly
furnish to the Trustee and the Custodian, on behalf of the Trustee, two copies
of a request for release substantially in the form attached to the Custodial
Agreement signed by a Authorized Servicer Representative or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Authorized Servicer Representative (which certification shall
include a statement to the effect that all amounts received in connection with
such payment that are required to be deposited in the Custodial Account
maintained by the Servicer pursuant to Article V have been or will be so
deposited) and shall request that the Custodian, on behalf of the Trustee,
deliver to the Servicer the related Mortgage File. Within five (5) Business Days
of receipt of such certification and request, the Custodian, on behalf of the
Trustee, shall release the related Mortgage File to the Servicer and the Trustee
and Custodian shall have no further responsibility with regard to such Mortgage
File. Upon any such payment in full, the Servicer is authorized, to give, as
agent for the Trustee, as the mortgagee under the Mortgage that secured the
related Mortgage Loan, an instrument of satisfaction (or assignment of mortgage
without recourse) regarding the Mortgaged Property subject to the Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Custodial Account maintained by the Servicer.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with this Agreement, the
Trustee shall execute such documents as shall be prepared and furnished to the
Trustee by the Servicer (in form reasonably acceptable to the Trustee) and as
are necessary to the prosecution of any such proceedings. The Custodian, on
behalf of the Trustee, shall, upon the written request of the Servicer, and
delivery to the Custodian, on behalf of the Trustee, of two copies of a request
for release signed by a Authorized Servicer Representative substantially in the
form attached to the Custodial Agreement (or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Authorized Servicer Representative), release the related Mortgage File held in
its possession or control to the Servicer. Such request for release shall
obligate the Servicer to return the Mortgage File to the Custodian on behalf of
the Trustee, when the need therefor by such Person no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Authorized Servicer Representative similar to that hereinabove specified,
the Mortgage File shall be released by the Custodian, on behalf of the Trustee,
to the Servicer.
Section 3.20. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF THE
SERVICER TO BE HELD FOR TRUSTEE.
(a) The Servicer (to the extent required by this Agreement)
shall transmit to the Trustee or to Custodian such documents and instruments
coming into the possession of such Person from time to time as are required by
the terms hereof to be delivered to the Trustee or the Custodian. Any funds
received by the Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Servicer as Liquidation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan shall be held for the benefit of the Trustee and
the Certificateholders subject to the right of the Servicer to retain its
Servicing Fee and other amounts as provided in this Agreement.
Section 3.21. POSSESSION OF CERTAIN INSURANCE POLICIES AND DOCUMENTS.
The Servicer shall retain possession and custody of the originals (to
the extent available) of any Insurance Policies, or certificate of insurance if
applicable, and any certificates of renewal as to the foregoing as may be issued
from time to time as contemplated by this Agreement. Until all amounts
distributable in respect of the Certificates have been distributed in full, the
Trustee (or the Custodian, as directed by the Trustee) shall retain possession
and custody of each Mortgage File in accordance with and subject to the terms
and conditions of this Agreement.
Section 3.22. SEC FILINGS.
(a) The Depositor shall prepare and file or caused to be
prepared and filed the initial Form 8-K. Within 15 days after each Distribution
Date, the Trustee shall, in accordance with industry standards, file with the
Commission via the Electronic Data Gathering and Retrieval System ("XXXXX"), a
Form 8-K with a copy of the statement to be furnished by the Trustee to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, _______, the Trustee shall, in accordance with industry standards,
file a Form 15 Suspension Notice with respect to the Trust Fund. Prior to March
30, _____ and annually thereafter, if required, the Trustee shall, subject to
subsection (d) below, file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust Fund. Such Form 10K shall be signed by the
Depositor and shall include, to the extent available, as exhibits (i) each
Servicer's annual statement of compliance described under Section 3.13 hereof
(ii) each Servicer's accountants report described under Section 3.14 and (iii)
the Form 10-K certification signed by the Depositor. If items (i), (ii) and
(iii) in the preceding sentence are not timely delivered, the Trustee shall file
an amended Form 10-K including such documents as exhibits reasonably promptly
after they are delivered to the Trustee. The Depositor shall execute and the
Trustee shall file each Form 8-K and the Form 15. The Depositor agrees to
promptly furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement and the Mortgage Loans as the Trustee reasonably deems appropriate to
prepare and file a Form 8-K and the Form 15 with the Commission. The Trustee
will reasonably cooperate with the Depositor in connection with any additional
filings with respect to the Trust Fund as the Depositor deems necessary under
the Exchange Act. Copies of all reports filed by the Trustee under the Exchange
Act shall be sent to the Depositor.
(b) In connection with the filing of any 10-K hereunder, the
Trustee shall sign a certification (in the form attached hereto as Exhibit M)
for the benefit of the Depositor regarding certain aspects of the Form 10-K
certification signed by the Depositor, provided, however, that the Trustee shall
not be required to undertake an analysis of any accountant's report attached as
an exhibit to the Form 10-K.
(c) (i) The Trustee shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach of the Trustee's obligations under this Section 3.22 or the
Trustee's gross negligence, bad faith or willful misconduct in connection
therewith.
(ii) The Depositor shall indemnify and hold harmless
the Trustee 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 a breach of the
obligations of the Depositor under this Section 3.22 or the Depositor's
negligence, bad faith or willful misconduct in connection therewith.
(iii) If the indemnification provided for herein is
unavailable or insufficient to
hold harmless the Depositor or the Trustee, as applicable, then the other party,
in connection with a breach of its respective obligations under this Section
3.22 or its respective gross negligence, bad faith or willful misconduct in
connection therewith, agrees that it shall contribute to the amount paid or
payable by the other party as a result of the losses, claims, damages or
liabilities of the other party in such proportion as is appropriate to reflect
the relative fault and the relative benefit of the Depositor on the one hand and
the Trustee on the other.
(d) Nothing shall be construed from the foregoing subsections
(a), (b) and (c) to require the Trustee or any officer, director or Affiliate
thereof to sign any Form 10-K or any certification contained therein.
Furthermore, the inability of the Trustee to file a Form 10-K as a result of the
lack of required information as set forth in Section 3.22(a) or required
signatures on such Form 10-K or any certification contained therein shall not be
regarded as a breach by the Trustee of any obligation under this Agreement.
(e) Notwithstanding the provisions of Section 11.01, this
Section 3.22 may be amended without the consent of the Certificateholders.
Section 3.23. UCC.
The Seller agrees to execute and file continuation statements for any
Uniform Commercial Code financing statements which the Seller has informed the
Trustee were filed on the Closing Date in connection with the Trust. The Seller
shall file any financing statements or amendments and continuation statements
thereto required by any change in the Uniform Commercial Code.
Section 3.24. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
With respect to any Mortgage Loan which is delinquent in payment by 91
days or more or is an REO Property, the Seller shall have the right to purchase
such Mortgage Loan or REO Property from the Trust at a price equal to the
Purchase Price.
If at any time the Seller remits to the Trustee a payment for deposit
in the Distribution Account covering the amount of the Purchase Price for such a
Mortgage Loan, then the Trustee shall execute the assignment of such Mortgage
Loan at the request of the Seller without recourse, representation or warranty
to the Seller which shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan, and all security and documents relative thereto.
Such assignment shall be an assignment outright and not for security. The Seller
will thereupon own such Mortgage, and all such security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.
Section 3.25. ENFORCING OBLIGATIONS OF THE SERVICER.
(a) Notwithstanding anything in this Agreement or the Credit
Risk Management Agreements to the contrary, the Trustee shall not have any duty
or obligation to enforce the Credit Risk Management Agreement or to supervise,
monitor or oversee the activities of the Credit Risk Manager or the Servicer
under the Credit Risk Management Agreement or this Agreement with respect to any
action taken or not taken by the Servicer pursuant to a recommendation of the
Credit Risk Manager or otherwise in connection with obligations of the Servicer
under the Credit Risk Management Agreement. To the extent that the costs and
expenses of the Trustee related to any termination of the Servicer, appointment
of a Successor Servicer or the transfer and assumption of servicing by the
Trustee with respect to this Agreement (including, without limitation, (i) all
legal costs and expenses and all due diligence costs and expenses associated
with an evaluation of the potential termination of the Servicer as a result of
an event of default by such Person and (ii) all costs and expenses associated
with the complete transfer of servicing, including all servicing files and all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the Successor Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
servicer to service the related Mortgage Loans in accordance with this
Agreement) are not fully and timely reimbursed by the Servicer, the Trustee
shall be entitled to reimbursement of such costs and expenses from the
Distribution Account.
(b) If the Trustee acts as a Successor Servicer to the
Servicer, it will not assume liability for the representations and warranties of
the predecessor Servicer contained in this Agreement.
ARTICLE IV
ACCOUNTS
Section 4.01. COLLECTION OF MORTGAGE LOAN PAYMENTS; CUSTODIAL ACCOUNT.
(a) The Servicer shall make reasonable efforts in accordance
with Accepted Servicing Practices to collect all payments called for
under the terms and provisions of the Mortgage Loans to the extent such
procedures shall be consistent with this Agreement and the terms and
provisions of any related Required Insurance Policy. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late
payment charge and (ii) extend the due dates for payments due on a
Mortgage Note for a Mortgage Loan for a period not greater than 180
days; provided, however no such extension shall be materially adverse
to the Certificateholders. In the event of any such arrangement, the
Servicer shall make Advances on the Mortgage Loan during the scheduled
period in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangements, and
shall be entitled to reimbursement therefor in accordance with Section
5.01. The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or
other instrument pursuant to which such payment is required is
prohibited by applicable law. In addition, if (x) a Mortgage Loan is in
default or default is imminent or (y) the Servicer delivers to the
Trustee a REMIC Opinion, the Servicer may, (A) amend the related
Mortgage Note to reduce the Mortgage Rate applicable thereto, provided
that such reduced Mortgage Rate shall in no event be lower than ____%
with respect to any Mortgage Loan and (B) amend any Mortgage Note for a
Mortgage Loan to extend the maturity thereof.
(b) The Servicer shall establish and maintain a segregated
Custodial Account (which shall at all times be an Eligible Account)
with a depository institution in the name of the Servicer for the
benefit of the Trustee on behalf of the Certificateholders and
designated "[Name of Trustee], as trustee for registered holders of
Nomura Home Equity Loan, Inc., Asset Backed Pass-Through Certificates,
Series ____-____." On behalf of the Trust Fund, the Servicer shall
deposit or cause to be deposited in the clearing account in which it
customarily deposits payments and collection on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis
and in no event more than one Business Day after the Servicer's receipt
thereof, and shall thereafter deposit in the Custodial Account, in no
event more than two Business Days after the Servicer's receipt thereof,
except as otherwise specifically provided herein, the following
payments and collections remitted by subservicers or received by it in
respect of the Mortgage Loans subsequent to the Cut-off Date (other
than in respect of principal and interest due on the Mortgage Loans on
or before the Cut-off Date) and the following amounts required to be
deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments and Subsequent Recoveries, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.10;
(iii) all Liquidation Proceeds, Insurance Proceeds and
condemnation proceeds with respect to the Mortgage Loans, other than
proceeds to be applied to the restoration or repair of the related
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Servicer
pursuant to Section 4.01(c) in connection with any losses on Permitted
Investments;
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.05;
(vi) any amounts paid by an Advance Financing Person in
respect of Advances or Servicing Advances;
(vii) any Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans
and any Servicer Prepayment Charge Payment Amounts; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for deposit by the Servicer into
the Custodial Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges or assumption fees, if collected, need not be deposited by the
Servicer. In the event that the Servicer shall deposit any amount not required
to be deposited and not otherwise subject to withdrawal pursuant to Section
4.02, it may at any time withdraw or direct the institution maintaining its
Custodial Account, to withdraw such amount from such Custodial Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the institution
maintaining its Custodial Account, that describes the amounts deposited in error
in such Custodial Account. The Servicer shall maintain adequate records with
respect to all withdrawals made pursuant to this Section. All funds deposited in
the Servicer's Custodial Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 4.02.
(c) The institution that maintains the Custodial Account with
respect to the Mortgage Loans, or other authorized entity shall invest the funds
in such Custodial Account, in the manner directed by the Servicer, in Permitted
Investments which shall mature not later than the next succeeding Remittance
Date and shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Trustee, for the benefit
of the Certificateholders. All income and gain net of any losses realized from
any such investment shall be for the benefit of the Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. The amount
of any losses incurred in the Servicer's Custodial Account in respect of any
such investments shall be deposited by the Servicer into such Custodial Account,
out of its own funds.
(d) The Servicer shall give at least 30 days advance notice to
the Trustee, the Seller, each Rating Agency and the Depositor of any proposed
change of location of the Custodial Account relating to the Mortgage Loans prior
to any change thereof.
Section 4.02. PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT.
(a) The Servicer may from time to time make withdrawals from
the Custodial Account relating to the Mortgage Loans for the following
purposes:
(i) to pay itself (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.10, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest
payment was made, and, as additional servicing compensation, those
other amounts set forth in Section 3.10;
(ii) to reimburse the Servicer or an Advance Financing Person
for (A) any unreimbursed Advances to the extent of amounts received
which represent late recoveries of payments of principal and/or
interest (net of the related Servicing Fees), Liquidation Proceeds and
Insurance Proceeds on the Mortgage Loans with respect to which such
Advances were made in accordance with the provisions of Section 5.01;
and (B) any unreimbursed Advances with respect to the final liquidation
of a Mortgage Loan that are Nonrecoverable Advances, but only to the
extent that late recoveries of payments of principal and/or interest,
Liquidation Proceeds and Insurance Proceeds received with respect to
such Mortgage Loan are insufficient to reimburse the Servicer or an
Advance Financing Person for such unreimbursed Advances or (C) subject
to Section 4.02(b), any unreimbursed Advances to the extent of Amounts
Held For Future Distribution funds held in the Custodial Account
relating to the Mortgage Loans that were not included in the Available
Distribution Amount for the preceding Distribution Date;
(iii) to reimburse the Servicer or an Advance Financing Person
for any Nonrecoverable Advances;
(iv) to reimburse the Servicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Servicer any unpaid Servicing Fees and to
reimburse it or any Advance Financing Person for any unreimbursed
Servicing Advances, provided, however, that the Servicer's or such
Advance Financing Person's right to reimbursement for Servicing
Advances pursuant to this subclause (v) with respect to any Mortgage
Loan shall be limited to amounts received on particular Mortgage
Loan(s) (including, for this purpose, late recoveries of payments of
principal and/or interest, Liquidation Proceeds, Insurance Proceeds,
condemnation proceeds and purchase and repurchase proceeds) that
represent late recoveries of the payments for which such Servicing
Advances were made;
(vi) to pay to the Seller or the Depositor with respect to
each Mortgage Loan or property acquired in respect thereof that has
been purchased pursuant to Section 2.02, 2.03 or 3.24, all amounts
received thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(vii) to pay any expenses recoverable by the Servicer pursuant
to Section 7.04;
(viii) to withdraw any amount deposited in the Custodial
Account relating to the Mortgage Loans and not required to be deposited
therein; and
(ix) to clear and terminate the Custodial Account relating to
the Mortgage Loans upon termination of this Agreement pursuant to
Section 10.01 hereof.
In addition, no later than 3:00 p.m. Eastern time on the Remittance
Date, the Servicer shall withdraw from the related Custodial Account and remit
to the Trustee (a) all amounts deposited in the related Custodial Account as of
the close of business on the last day of the related Due Period (net of charges
against or withdrawals from the related Custodial Account pursuant to this
Section 4.02), plus (b) all Advances, if any, which the Servicer is obligated to
make pursuant to Section 5.01, minus (c) any amounts attributable to Principal
Prepayments, Liquidation Proceeds, Insurance Proceeds or condemnation proceeds
received after the applicable Prepayment Period, which amounts shall be remitted
on the following Remittance Date, together with any Compensating Interest
required to be deposited in the related Custodial Account in connection with
such Principal Prepayment in accordance with Section 5.02, and minus (d) any
amounts attributable to Scheduled Payments collected but due on a Due Date or
Due Dates subsequent to the first day of the month in which such Remittance Date
occurs, which amounts shall be remitted on the Remittance Date next succeeding
the Due Date related to such Scheduled Payment.
With respect to any remittance received by the Trustee after the
Business Day on which such payment was due, the Trustee shall send written
notice thereof to the Servicer. The Servicer shall pay to the Trustee interest
on any such late payment by the Servicer at an annual rate equal to Prime Rate
(as defined in The Wall Street Journal) plus one percentage point, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to the Trustee on the date such late payment is
made and shall cover the period commencing with the day following the Business
Day on which such payment was due and ending with the Business Day on which such
payment is made, both inclusive. The payment by the Servicer of any such
interest, or the failure of the Trustee to notify the Servicer of such interest,
shall not be deemed an extension of time for payment or a waiver of any Servicer
Default by the Servicer.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to subclauses (i), (ii), (iv), (v) and (vi)
above. Prior to making any withdrawal from the Custodial Account relating to the
Mortgage Loans pursuant to subclause (iii), the Servicer shall deliver to the
Trustee an Officer's Certificate of a Authorized Servicer Representative
indicating the amount of any previous Advance or Servicing Advance determined by
the Servicer to be a Nonrecoverable Advance and identifying the related Mortgage
Loan(s), and their respective portions of such Nonrecoverable Advance.
(b) Notwithstanding the foregoing, any Amounts Held For Future
Distribution withdrawn by the Servicer as permitted in Section 4.02(a)(ii) in
reimbursement of Advances previously made by the Servicer shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the related Custodial Account, no later than the close of business on any future
Remittance Date on which the funds on deposit in the related Custodial Account
shall be less than the amount required to be remitted to the Trust on such
Remittance Date; provided, however that if the rating of the Servicer (including
any Successor Servicer) is less than "BBB", the Servicer shall be required to
replace such funds by deposit to the Distribution Account, no later than the
close of business on the Remittance Date immediately following the Due Period or
Prepayment Period for which such amounts relate.
Section 4.03. REPORTS TO TRUSTEE.
On or before the tenth calendar day of each month, the Servicer shall
furnish to the Trustee electronically in a format reasonably acceptable to the
Trustee loan accounting reports in the investor's assigned loan number order to
document the payment activity on each Mortgage Loan on an individual mortgage
loan basis. With respect to each month, such loan accounting reports shall
contain the following and any other information reasonably requested by the
Trustee to prepare the Monthly Statements; provided that such information
requested by the Trustee is reasonably available to the Servicer and, provided
further, that the Servicer shall have no obligation to provide such additional
reports or other information unless the Servicer can do so with no more than
nominal additional expense:
(i) With respect to each Scheduled Payment (on both an actual
and scheduled basis with respect to mortgage loan balances and on an
actual basis with respect to paid-through dates), the amount of such
remittance allocable to principal (including a separate breakdown of
any Principal Prepayment, including the amount of any Prepayment
Interest Shortfall);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to scheduled interest;
(iii) the amount of any Prepayment Charges collected by the
Servicer;
(iv) the amount of servicing compensation received by the
Servicer during the prior calendar month;
(v) the aggregate Stated Principal Balance of the Mortgage
Loans;
(vi) the aggregate amount of Advances made by the Servicer
pursuant to Section 5.01;
(vii) the aggregate of any expenses reimbursed to the Servicer
during the prior calendar month pursuant to Section 4.02; and
(viii) the number and aggregate outstanding principal balances
of Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days,
(3) 90 days or more; (b) as to which foreclosure has commenced; and (c)
as to which REO Property has been acquired.
Section 4.04. COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS;
ESCROW ACCOUNTS.
To the extent required by the Mortgage Note related to a Mortgage Loan,
the Servicer shall establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the Mortgagors.
Nothing herein shall require the Servicer to compel a Mortgagor to establish an
Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made with respect to
each Mortgage Loan pursuant to Section 3.01 (with respect to taxes and
assessments and insurance premiums) and Section 3.05 (with respect to hazard
insurance), to refund to any Mortgagors any sums as may be determined to be
overages, to pay interest, if required by law or the terms of the related
Mortgage or Mortgage Note, to such Mortgagors on balances in the Escrow Account,
to remove amounts deposited in error or to clear and terminate the Escrow
Account at the termination of this Agreement in accordance with Section 10.01
thereof. The Escrow Account shall not be a part of the Trust Fund.
Section 4.05. ADJUSTMENTS TO MORTGAGE RATES AND SCHEDULED PAYMENTS.
On each applicable Adjustment Date, the Mortgage Rate with respect to
each Adjustable Rate Mortgage Loan shall be adjusted, in compliance with the
requirements of the related Mortgage and Mortgage Note, to equal the sum of the
related Index plus the Gross Margin (rounded in accordance with the related
Mortgage Note) subject to the applicable Periodic Rate Cap, Maximum Mortgage
Interest Rate and Minimum Mortgage Interest Rate, as set forth in the Mortgage
Note. The Servicer shall execute and deliver the notices required by each
Mortgage and Mortgage Note, applicable laws and regulations regarding interest
rate adjustments. The Servicer shall also provide timely notification to the
Trustee of all applicable data and information regarding such interest rate
adjustments and the Servicer's methods of implementing such interest rate
adjustments. Upon the discovery by the Servicer or the Trustee that the Servicer
has failed to adjust a Mortgage Rate or a Scheduled Payment pursuant to the
terms of the related Mortgage Note and Mortgage, the Servicer shall immediately
deposit in the Custodial Account from its own funds the amount of any interest
loss caused thereby without reimbursement therefor.
Section 4.06. DISTRIBUTION ACCOUNT.
(a) The Trustee shall establish and maintain in the name of
the Trustee, for the benefit of the Certificateholders, the Distribution Account
as a segregated non-interest bearing trust account or accounts. The Trustee will
deposit in the Distribution Account as identified by the Trustee and as received
by the Trustee, the following amounts:
(i) All payments and recoveries in respect of
principal on the Mortgage Loans,
including, without limitation, Principal Prepayments, Subsequent Recoveries,
Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and all payments
and recoveries in respect of interest on the Mortgage Loans withdrawn by the
Servicer from the Custodial Account and remitted by Servicer to the Trustee;
(ii) Any Advance and any Compensating Interest
Payments;
(iii) Any Prepayment Charges collected by the
Servicer in connection with the Principal Prepayment of any of the Mortgage
Loans (including any Servicer Prepayment Charge Payment Amounts);
(iv) Any Insurance Proceeds or Liquidation Proceeds
received by or on behalf of the
Trustee or which were not deposited in the Custodial Account;
(v) The Repurchase Price with respect to any Mortgage
Loans purchased by the
Seller or Section 2.02 or 2.03, any amounts which are to be treated pursuant to
Section 2.04 of this Agreement as the payment of such a Repurchase Price, the
Repurchase Price with respect to any Mortgage Loans purchased by the Depositor
pursuant to Section 3.26, and all proceeds of any Mortgage Loans or property
acquired with respect thereto repurchased by the Terminator pursuant to Section
10.01;
(vi) Any amounts required to be deposited with
respect to losses on investments of
deposits in an Account; and
(vii) Any other amounts received by or on behalf of
the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement (including
amounts paid under the Policy in accordance with Section 12.02(b) hereof).
(b) All amounts deposited to the Distribution Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement. The requirements for crediting the Distribution Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges or assumption,
tax service, statement account or payoff, substitution, satisfaction, release
and other like fees and charges, need not be credited by the Servicer to the
Distribution Account.
(c) The amount at any time credited to the Distribution
Account may be invested by the Trustee in Permitted Investments. All such
investment income shall be for the benefit of the Trustee, and any losses
incurred shall be deposited by the Trustee in the Distribution Account
immediately as realized.
Section 4.07. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT.
(a) The Trustee will, from time to time make or cause to be
made such withdrawals or transfers from the Distribution Account pursuant to
this Agreement for the following purposes:
(i) to pay to the Trustee any expenses recoverable by
the Trustee pursuant to this
Agreement.
(ii) to reimburse the Trustee as Successor Servicer
or the Servicer for any Advance
or Servicing Advance of its own funds, the right of the Trustee as Successor
Servicer or the Servicer to reimbursement pursuant to this subclause (ii) being
limited to amounts received on a particular Mortgage Loan (including, for this
purpose, the Purchase Price therefor, Insurance Proceeds, Liquidation Proceeds
and condemnation proceeds) which represent late payments or recoveries of the
principal of or interest on such Mortgage Loan respecting which such Advance or
Servicing Advance was made;
(iii) to reimburse the Trustee or the Servicer from
Insurance Proceeds or
Liquidation Proceeds relating to a particular Mortgage Loan for amounts expended
by the Trustee as Successor Servicer or the Servicer in good faith in connection
with the restoration of the related Mortgaged Property which was damaged by an
uninsured cause or in connection with the liquidation of such Mortgage Loan;
(iv) to reimburse the Trustee as Successor Servicer
or the Servicer from Insurance
Proceeds relating to a particular Mortgage Loan for insured expenses incurred
with respect to such Mortgage Loan and to reimburse the Trustee as Successor
Servicer or the Servicer from Liquidation Proceeds from a particular Mortgage
Loan for Liquidation Expenses incurred with respect to such Mortgage Loan;
(v) to reimburse the Trustee as Successor Servicer or
the Servicer for advances of
funds pursuant to this Agreement and the right to reimbursement pursuant to this
subclause being limited to amounts received on the related Mortgage Loan
(including, for this purpose, the Purchase Price therefor, Insurance Proceeds,
Liquidation Proceeds and condemnation proceeds) which represent late recoveries
of the payments for which such advances were made;
(vi) to reimburse the Trustee as Successor Servicer
or the Servicer for any Advance
or advance, after a Realized Loss has been allocated with respect to the related
Mortgage Loan if the Advance or advance has not been reimbursed pursuant to
clauses (ii) and (v);
(vii) to pay the Credit Risk Management Fee to the
Credit Risk Manager; provided,
however, that upon the termination of the Credit Risk Manager pursuant to
Section 4.08(b) hereof, the amount of the Credit Risk Management Fee (or any
portion thereof) previously payable to the Credit Risk Manager as described
herein shall be paid to the Holder of the Class CE Certificate;
(viii) to reimburse the Trustee for expenses, costs
and liabilities incurred by and
reimbursable to it pursuant to this Agreement (including the expenses of the
Trustee in connection with a tax audit in connection with the performance of its
obligations pursuant to Section 9.12);
(ix) to pay to the Trust Fund, as additional
servicing compensation, any Excess
Liquidation Proceeds to the extent not retained by the Servicer;
(x) to reimburse or pay the Servicer any such amounts
as are due thereto under this Agreement and have not been retained by or paid to
the Servicer, to the extent provided herein or therein;
(xi) to reimburse the Trustee for expenses incurred
in the transfer of servicing responsibilities of the terminated Servicer after
the occurrence and continuance of a Servicer Default to the extent not paid by
the terminated Servicer;
(xii) to reimburse the Custodian for expenses, costs
and liabilities incurred or reimbursable to it pursuant to this Agreement or the
Custodial Agreement;
(xiii) to remove amounts deposited in error; and
(xiv) to clear and terminate the Distribution Account
pursuant to Section 10.01.
(b) The Trustee shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (ii) through
(v), inclusive, and (vii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Trustee
without being deposited in the Distribution Account under Section 4.07.
(c) On each Distribution Date, the Trustee shall distribute
the Available Distribution Amount in the Distribution Account to the holders of
the Certificates in accordance with Section 5.04.
Section 4.08. DUTIES OF THE CREDIT RISK MANAGER; TERMINATION.
(a) The Depositor appoints The Murrayhill Company as Credit
Risk Manager. For and on behalf of the Depositor, the Credit Risk Manager will
provide reports and recommendations concerning the Mortgage Loans that are past
due, as to which there has been commencement of foreclosure, as to which there
has been forbearance in exercise of remedies which are in default, as to which a
Mortgagor is the subject of bankruptcy, receivership, or an arrangement of
creditors, or as to which have become REO Properties. Such reports and
recommendations will be based upon information provided to the Credit Risk
Manager pursuant to the Credit Risk Management Agreement and the Credit Risk
Manager shall look solely to the Servicer for all information and data
(including loss and delinquency information and data) and loan level information
and data relating to the servicing of the related Mortgage Loans. If the Credit
Risk Manager is no longer able to perform its duties hereunder, the Credit Risk
Manager may be terminated by the Depositor at the direction of
Certificateholders evidencing not less than 66 2/3% of the Voting Rights. The
Depositor may, at its option, cause the appointment of a successor Credit Risk
Manager. Upon any termination of the Credit Risk Manager or the appointment of a
successor Credit Risk Manager, the Depositor shall give written notice thereof
to the Servicers, the Trustee, each Rating Agency, the Certificate Insurer and
the Credit Risk Manager. Notwithstanding the foregoing, the termination of the
Credit Risk Manager pursuant to this Section 4.08(a) shall not become effective
until the appointment of a successor Credit Risk Manager.
(b) Within six months of the Closing Date, the Seller may, at
its option, terminate the Credit Risk Manager if, in its reasonable judgment,
(i) the value of the servicing rights with respect to the Mortgage Loans is
adversely affected as a result of the presence of the Credit Risk Manager or
(ii) the presence of the Credit Risk Manager impairs the ability of the Seller
to transfer the servicing rights with respect to the Mortgage Loans as permitted
by this Agreement. Upon the termination of the Credit Risk Manager, the Seller
may, at its option, cause the Depositor to appoint a successor Credit Risk
Manager. Notice of such termination shall be provided by the Seller to the
Rating Agencies, the Trustee, the Depositor, the Servicer, the Certificate
Insurer and the Credit Risk Manager. Upon the appointment of a successor Credit
Risk Manager, the Depositor shall provide written notice thereof to each Rating
Agency, the Trustee, the Certificate Insurer, the Servicers and the Credit Risk
Manager.
If the Credit Risk Manager is terminated pursuant to this
Section 4.08(b), the Credit Risk Manager shall only be entitled to a fee equal
to ____% with respect to each Mortgage Loan for the one year period following
such termination. After the expiration of such one year period, the Credit Risk
Manager shall not be entitled to the Credit Risk Management Fee or any portion
thereof with respect to any Mortgage Loan. The exess of the Credit Risk
Management Fee with respect to each Mortgage Loan over the amount payable to the
Credit Risk Manager as described in this paragraph shall be paid to the Holder
of the Class CE Certificate pursuant to Section 4.07(a)(vii).
Section 4.09. LIMITATION UPON LIABILITY OF THE CREDIT RISK MANAGER.
Neither the Credit Risk Manager, nor any of the directors, officers,
employees or agents of the Credit Risk Manager, shall be under any liability to
the Trustee, the Certificateholders or the Depositor for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, in reliance upon information provided by the Servicer under the
Credit Risk Management Agreement or of errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance, bad faith or gross negligence in its performance of its duties
under this Agreement or the Credit Risk Management Agreement. The Credit Risk
Manager and any director, officer, employee or agent of the Credit Risk Manager
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, and may
rely in good faith upon the accuracy of information furnished by the Servicer
pursuant to the Credit Risk Management Agreement in the performance of its
duties thereunder and hereunder.
ARTICLE V
ADVANCES AND DISTRIBUTIONS
Section 5.01. ADVANCES; ADVANCE FACILITY.
(a) The Servicer shall make an Advance with respect to any
Mortgage Loan and deposit such Advance in the Distribution Account no later than
3:00 p.m. Eastern time on the Remittance Date in immediately available funds.
The Servicer shall be obligated to make any such Advance only to the extent that
such advance would not be a Nonrecoverable Advance. If the Servicer shall have
determined that it has made a Nonrecoverable Advance or that a proposed Advance
or a lesser portion of such Advance would constitute a Nonrecoverable Advance,
the Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, each Rating Agency, the Certificate
Insurer and the Trustee an Officer's Certificate setting forth the basis for
such determination.
In lieu of making all or a portion of such Advance from its
own funds, the Servicer may (i) cause to be made an appropriate entry in its
records relating to the Custodial Account that any Amounts Held for Future
Distribution has been used by the Servicer in discharge of its obligation to
make any such Advance and (ii) transfer such funds from the related Custodial
Account to the Distribution Account. Any funds so applied and transferred shall
be replaced by the Servicer by deposit in the Distribution Account, no later
than the close of business on any future Remittance Date on which the funds on
deposit in the related Custodial Account shall be less than the amount required
to be remitted to the Trustee on such Remittance Date; provided, however that if
the rating of the Servicer (including any Successor Servicer) is less than
"BBB", the Servicer shall be required to replace such funds by deposit to the
Distribution Account, no later than the close of business on the Remittance Date
immediately following the Due Period or Prepayment Period for which such amounts
relate.
The Servicer shall be entitled to be reimbursed from the
Custodial Account for all Advances of its own funds made pursuant to this
Section as provided in Section 4.02. The obligation to make Advances with
respect to any Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the related Mortgaged Property or related REO Property has been
liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 5.01.
Subject to and in accordance with the provisions of Article
VIII hereof, in the event that the Servicer fails to make such Advance, then the
Trustee, as Successor Servicer, shall be obligated to make such Advance only to
the extent such Advance, if made, would not constitute a Nonrecoverable Advance,
subject to the provisions of Sections 5.01 and 8.02.
(b)(i) The Servicer is hereby authorized to enter into a
financing or other facility (any such arrangement, an "Advance Facility"), the
documentation for which complies with Section 5.01(b)(v) below, under which (1)
the Servicer assigns or pledges its rights under this Agreement to be reimbursed
for any or all Advances and/or Servicing Advances to (i) a Person, which may be
a special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any of
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any the Servicer Mortgagor for the purpose of
collecting any payment that may be due with respect to any related Mortgage Loan
or enforcing any covenant of such Mortgagor under the related Mortgage Loan
documents.
(ii) If the Servicer enters into an Advance Facility, the
Servicer and the related Advance Financing Person shall deliver to the Trustee
at the address set forth in Section 11.05 hereof no later than the Remittance
Date immediately following the effective date of such Advance Facility a written
notice (an "Advance Facility Notice"), stating (a) the identity of the Advance
Financing Person and (b) the identity of the Person ("Servicer's Assignee") that
will, subject to Section 5.01(b)(iii) hereof, have the right to make withdrawals
from the Custodial Account pursuant to Section 4.02 hereof to reimburse
previously unreimbursed Advances and/or Servicing Advances ("Advance
Reimbursement Amounts"). Advance Reimbursement Amounts (i) shall consist solely
of amounts in respect of Advances and/or Servicing Advances for which the
Servicer would be permitted to reimburse itself in accordance with Section 4.02
hereof, assuming the Servicer had made the related Advance(s) and/or Servicing
Advance(s) and (ii) shall not consist of amounts payable to a successor Servicer
in accordance with Section 4.02 hereof to the extent permitted under Section
5.01(b)(v) below.
(iii) Notwithstanding the existence of an Advance Facility,
the Servicer, on behalf of the Advance Financing Person and Servicer's Assignee,
shall be entitled to receive reimbursements of Advances and/or Servicing
Advances in accordance with Section 4.02 hereof, which entitlement may be
terminated by the Advance Financing Person pursuant to a written notice to the
Trustee in the manner set forth in Section 11.05 hereof. Upon receipt of such
written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and Servicer's Assignee
shall immediately have the right to receive from the Custodial Account all
Advance Reimbursement Amounts. Notwithstanding the foregoing, and for the
avoidance of doubt, (i) the Servicer and/or Servicer's Assignee shall only be
entitled to reimbursement of Advance Reimbursement Amounts hereunder from
withdrawals from the Custodial Account pursuant to Section 4.02 of this
Agreement and shall not otherwise be entitled to make withdrawals or receive
amounts that shall be deposited in the Distribution Account pursuant to Section
4.06 hereof, and (ii) none of the Trustee or the Certificateholders shall have
any right to, or otherwise be entitled to, receive any Advance Reimbursement
Amounts to which the Servicer or Servicer's Assignee, as applicable, shall be
entitled pursuant to Section 4.02 hereof. An Advance Facility may be terminated
by the joint written direction of the Servicer and the related Advance Financing
Person. Written notice of such termination shall be delivered to the Trustee in
the manner set forth in Section 11.05 hereof. None of the Depositor or the
Trustee shall, as a result of the existence of any Advance Facility, have any
additional duty or liability with respect to the calculation or payment of any
Advance Reimbursement Amount, nor, as a result of the existence of any Advance
Facility, shall the Depositor or the Trustee have any additional responsibility
to track or monitor the administration of the Advance Facility or the payment of
Advance Reimbursement Amounts to Servicer's Assignee. The Servicer shall
indemnify the Depositor, the Trustee, any successor Servicer and the Trust Fund
for any claim, loss, liability or damage resulting from any claim by the related
Advancing Financing Person, except to the extent that such claim, loss,
liability or damage resulted from or arose out of gross negligence, recklessness
or willful misconduct on the part of the Depositor, the Trustee or any successor
Servicer, as the case may be, or failure by the successor Servicer or the
Trustee, as the case may be, to remit funds as required by this Agreement or the
commission of an act or omission to act by the successor Servicer or the
Trustee, as the case may be, and the passage of any applicable cure or grace
period, such that an Event of Default under this Agreement occurs or such entity
is subject to termination for cause under this Agreement. The Servicer shall
maintain and provide to any successor Servicer and, upon request, the Trustee a
detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Financing Person. The successor
Servicer shall be entitled to rely on any such information provided by the
Servicer, and the successor Servicer shall not be liable for any errors in such
information.
(iv) An Advance Financing Person who receives an assignment or
pledge of rights to receive Advance Reimbursement Amounts and/or whose
obligations are limited to the funding of Advances and/or Servicing Advances
pursuant to an Advance Facility shall not be required to meet the criteria for
qualification as the Servicer.
(v) As between the Servicer and its Advance Financing Person,
on the one hand, and a successor Servicer and its Advance Financing Person, if
any, on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis
with respect to each Mortgage Loan as to which an Advance and/or Servicing
Advance shall have been made and be outstanding shall be allocated on a
"first-in, first out" basis. In the event Servicer's Assignee shall have
received some or all of an Advance Reimbursement Amount related to Advances
and/or Servicing Advances that were made by a Person other than the Servicer or
its related Advance Financing Person in error, then Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.
(vi) For purposes of any Officer's Certificate of the Servicer
delivered pursuant to Section 5.01(a), any Nonrecoverable Advance referred to
therein may have been made by the Servicer. In making its determination that any
Advance or Servicing Advance theretofore made has become a Nonrecoverable
Advance, the Servicer shall apply the same criteria in making such determination
regardless of whether such Advance or Servicing Advance shall have been made by
the Servicer.
(vii) Any amendment to this Section 5.01(b) or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 5.01(b),
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor and the Servicer without the consent
of any Certificateholder, provided such amendment complies with Section 11.01
hereof. All reasonable costs and expenses (including attorneys' fees) of each
party hereto of any such amendment shall be borne solely by the Servicer. The
parties hereto hereby acknowledge and agree that: (a) the Advances and/or
Servicing Advances financed by and/or pledged to an Advance Financing Person
under any Advance Facility are obligations owed to the Servicer payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of Advances and/or Servicing Advances only to the extent provided herein, and
the Trustee and the Trust are not, as a result of the existence of any Advance
Facility, obligated or liable to repay any Advances and/or Servicing Advances
financed by the Advance Financing Person; (b) the Servicer will be responsible
for remitting to the Advance Financing Person the applicable amounts collected
by it as reimbursement for Advances and/or Servicing Advances funded by the
Advance Financing Person, subject to the provisions of this Agreement; and (c)
the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and any Advance
Financing Person.
Section 5.02. COMPENSATING INTEREST PAYMENTS.
In the event that there is a Prepayment Interest Shortfall arising from
a voluntary Principal Prepayment in part or in full by the Mortgagor with
respect to any Mortgage Loan, the Servicer shall, to the extent of the Servicing
Fee for such Distribution Date, deposit into the Distribution Account, as a
reduction of and to the extent of, the Servicing Fee for such Distribution Date,
no later than the close of business on the Remittance Date immediately preceding
such Distribution Date, an amount equal to the Prepayment Interest Shortfall;
and in case of such deposit, the Servicer shall not be entitled to any recovery
or reimbursement from the Depositor, the Trustee, the Seller, the Trust Fund,
the Certificate Insurer or the Certificateholders.
Section 5.03. REMIC DISTRIBUTIONS.
On each Distribution Date the Trustee, shall be deemed to
allocate distributions to the REMIC I Regular Interests and the REMIC II Regular
Interests in accordance with Section 5.07 hereof.
Section 5.04. DISTRIBUTIONS.
(a) On each Distribution Date, the Available Distribution
Amount for such Distribution Date shall be withdrawn by the Trustee to the
extent of funds on deposit in the Distribution Account and distributed as
directed in accordance with the Remittance Report for such Distribution Date, in
the following order of priority:
FIRST, to pay the Insurer Premium to the Certificate Insurer and
interest on the Certificates in the following order of priority:
1. to the Certificate Insurer, the Insurer Premium;
2. FIRST, to the extent of the Interest Remittance Amount
remaining after payment of the Insurer Premium, to the
holders of the Senior Certificates on a pro rata basis,
based on the entitlement of each such Class, the Senior
Interest Distribution Amount for each such Class and for
such Distribution Date, then, SECOND, to the extent of
the remaining Available Distribution Amount, to the
holders of the Senior Certificates, the Senior Interest
Distribution Amount not previously distributed in FIRST
above, to each such Class and for such Distribution
Date, in each case, on a pro rata basis, based on the
entitlement of each such Class;
3. to the extent of the Interest Remittance Amount
remaining after payment of the Insurer Premium and
distribution of the Senior Interest Distribution Amount
to the holders of the Senior Certificates, to the
holders of the Class M-1 Certificates, the Interest
Distribution Amount for such Class for such Distribution
Date;
4. to the extent of the Interest Remittance Amount
remaining after payment of the Insurer Premium,
distribution of the Senior Interest Distribution Amount
to the holders of the Senior Certificates and the
Interest Distribution Amount to holders of the Class M-1
Certificates, to the holders of the Class M-2
Certificates, the Interest Distribution Amount for such
Class for such Distribution Date; and
5. to the extent of the Interest Remittance Amount
remaining after payment of the Insurer Premium,
distribution of the Senior Interest Distribution Amount
to the holders of the Senior Certificates, the Interest
Distribution Amount to the holders of the Class M-1
Certificates and the Interest Distribution Amount to the
holders of the Class M-2 Certificates, to the holders of
the Class M-3 Certificates, the Interest Distribution
Amount for such Class for such Distribution Date.
SECOND, to pay principal on the Certificates (other than the Class A-IO
Certificates), to the extent of the Principal Distribution Amount for each
Distribution Date, in the following amount and order of priority:
1. The Senior Principal Distribution Amount for such
Distribution Date will be distributed to the Senior
Certificates (other than the Class A-IO Certificates)
as follows:
FIRST, to the Class A-6 Certificates, in an amount up
to the Class A-6 Lockout Principal Distribution
Amount for such Distribution Date, until the
Certificate Principal Balance thereof has been
reduced to zero; and
SECOND, any remaining Senior Principal Distribution
Amount after the distribution described in clause
first above, sequentially:
o to the Class A-1 Certificates, until the
Certificate Principal Balance thereof has been
reduced to zero;
o to the Class A-2 Certificates, until the
Certificate Principal Balance thereof has been
reduced to zero;
o to the Class A-3 Certificates, until the
Certificate Principal Balance thereof has been
reduced to zero;
o to the Class A-4 Certificates, until the
Certificate Principal Balance thereof has been
reduced to zero;
o to the Class A-5A Certificates and the Class A-5B
Certificates, concurrently on a pro rata basis,
based on the Certificate Principal Balance of
each such Class, until the Certificate Principal
Balance of each such Class has been reduced to
zero; and
o to the Class A-6 Certificates, until the
Certificate Principal Balance thereof has been
reduced to zero.
provided, however, on any Distribution Date after the Certificate
Principal Balances of the Mezzanine Certificates have been reduced to
zero, distributions of principal to the Class A Certificates will be
allocated among such Class A Certificates concurrently on a pro rata
basis, based on the Certificate Principal Balances thereof.
2. To the extent of any Principal Distribution Amount
remaining after distribution of the Senior Principal
Distribution Amount to the holders of the Senior
Certificates (other than the Class A-IO Certificates)
on such Distribution Date, to the Class M-1
Certificates, in an amount equal to the Class M-1
Principal Distribution Amount for such Distribution
Date, until the Certificate Principal Balance thereof
has been reduced to zero.
3. To the extent of any Principal Distribution Amount
remaining after distribution of the Senior Principal
Distribution Amount to the holders of the Senior
Certificates (other than the Class A-IO Certificates)
on such Distribution Date and the distribution of the
Class M-1 Principal Distribution Amount to the
holders of the Class M-1 Certificates on such
Distribution Date, to the Class M-2 Certificates, in
an amount equal to the Class M-2 Principal
Distribution Amount for such Distribution Date, until
the Certificate Principal Balance thereof has been
reduced to zero.
4. To the extent of any Principal Distribution Amount
remaining after distribution of the Senior Principal
Distribution Amount to the holders of the Senior
Certificates (other than the Class A-IO Certificates)
on such Distribution Date, the distribution of the
Class M-1 Principal Distribution Amount to the Class
M-1 Certificates on such Distribution Date and the
distribution of the Class M-2 Principal Distribution
Amount to the holders of the Class M-2 Certificates
on such Distribution Date, to the Class M-3
Certificates in an amount equal to the Class M-3
Principal Distribution Amount for such Distribution
Date, until the Certificate Principal Balance thereof
has been reduced to zero.
THIRD, after the payment of interest and principal to the Certificates
as described in clauses FIRST and SECOND above, any Net Monthly Excess Cashflow
for such Distribution Date will be distributed as follows:
1. To the holders of the Publicly Offered Certificates
(other than the Class A-IO Certificates) in an amount
equal to any Extra Principal Distribution Amount for
such Distribution Date, payable to such holders as
part of the Principal Distribution Amount in
accordance with clause SECOND above;
2. To the Certificate Insurer, any Reimbursement Amount;
3. To the holders of the Class M-1 Certificates, then to
the holders of the Class M-2 Certificates and then to
the holders of the Class M-3 Certificates, the
related Interest Carry Forward Amount on such
Distribution Date;
4. To the Net WAC Reserve Fund, in respect of the Senior
Certificates (other than the Class A-IO
Certificates), an amount equal to (i) with respect to
the Senior Certificates (other than the Class A-IO
Certificates and Class A-1 Certificates), the sum of
the related Net WAC Rate Carryover Amounts, if any,
for each such Class for such Distribution Date or any
prior Distribution Dates and (ii) with respect to the
Class A-1 Certificates, the amount by which the sum
of the Net WAC Rate Carryover Amounts with respect to
the Class A-1 Certificates exceeds the amount
received by the Trustee with respect to the Cap
Contract for such Distribution Date or any prior
Distribution Date;
5. To the Net WAC Reserve Fund, in respect of the Class
M-1 Certificates, the Net WAC Rate Carryover Amount
for such Class for such Distribution Date or any
prior Distribution Dates to the extent unpaid;
6. To the Net WAC Reserve Fund, in respect of the Class
M-2 Certificates, the Net WAC Rate Carryover Amount
for such Class for such Distribution Date or any
prior Distribution Dates to the extent unpaid;
7. To the Net WAC Reserve Fund, in respect of the Class
M-3 Certificates, the Net WAC Rate Carryover Amount
for such Class for such Distribution Date or any
prior Distribution Dates to the extent unpaid;
8. To the holders of the Class C Certificates, the Class
C Distribution Amount; and
9. To the Holders of the Class R Certificates, in
respect of the Class R-3 Interest, any remaining
amounts.
On each Distribution Date, the Trustee, after paying the Insurer
Premium to the Certificate Insurer and making the required distributions of
interest and principal to the Certificates as described in clauses FIRST and
SECOND above and after the distribution of the Net Monthly Excess Cashflow as
described in clause THIRD above, will withdraw from the Net WAC Reserve Fund the
amounts on deposit therein and distribute such amounts to the Senior
Certificates (other than the Class A-IO Certificates) and the Mezzanine
Certificates in respect of any Net WAC Rate Carryover Amounts due to each such
Class in the following manner and order of priority: first, concurrently to the
Senior Certificates, other than the Class A-IO Certificates, on a pro rata
basis, based on the entitlement of each such Class, the related Net WAC Rate
Carryover Amount for such Distribution Date for each such Class; second, to the
Class M-1 Certificates, the related Net WAC Rate Carryover Amount (after taking
into account payments made pursuant to the Cap Contract with respect to the
Class A-1 Certificates) for such Distribution Date for such Class; third, to the
Class M-2 Certificates, the related Net WAC Rate Carryover Amount for such
Distribution Date for such Class; and fourth, to the Class M-3 Certificates, the
related Net WAC Rate Carryover Amount for such Distribution Date for such Class.
(b) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period and deposited in the Distribution Account will be withdrawn
from the Distribution Account and distributed by the Trustee in accordance with
the Remittance Report to the Class P Certificates and shall not be available for
distribution to the holders of any other Class of Certificates. The payment of
such Prepayment Charges shall not reduce the Certificate Principal Balance of
the Class P Certificates.
(c) Subject to Section 10.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least 5 Business Days prior to the related Record
Date and (ii) such Holder shall hold Regular Certificates with aggregate
principal denominations of not less than $1,000,000 or evidencing a Percentage
Interest aggregating 10% or more with respect to such Class or, if not, by check
mailed by first class mail to such Certificateholder at the address of such
holder appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 10.02 hereof respecting the final distribution, distributions
with respect to Certificates registered in the name of a Depository shall be
made to such Depository in immediately available funds.
(d) On each Distribution Date, the Trustee shall prepare the
Monthly Statement to Certificateholders for the related Distribution Date (the
"Monthly Statement").
Section 5.05. ALLOCATION OF REALIZED LOSSES.
(a) On or prior to each Determination Date, the Trustee shall
determine the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month.
(b) The interest portion of Realized Losses shall be allocated
to the Certificates as described in Section 1.02 hereof.
(c) The principal portion of all Realized Losses on the
Mortgage Loans allocated to any REMIC I Regular Interest pursuant to Section
5.05 (d) shall be allocated on each Distribution Date as follows: first, in
reduction of the Net Monthly Excess Cashflow; second, to the Class C
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and
fifth, to the Class M-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero. All such Realized Losses to be allocated to
the Certificate Principal Balances of all Classes on any Distribution Date shall
be so allocated after the actual distributions to be made on such date as
provided above. All references above to the Certificate Principal Balance of any
Class of Certificates shall be to the Certificate Principal Balance of such
Class immediately prior to the relevant Distribution Date, before reduction
thereof by any Realized Losses, in each case to be allocated to such Class of
Certificates, on such Distribution Date.
Any allocation of the principal portion of Realized Losses to
a Mezzanine Certificate on any Distribution Date shall be made by reducing the
Certificate Principal Balance thereof by the amount so allocated; any allocation
of Realized Losses to a Class C Certificates shall be made by reducing the
amount otherwise payable in respect thereof pursuant to Section 5.04(a) clause
THIRD. No allocations of any Realized Losses shall be made to the Certificate
Principal Balances of the Senior Certificates or Class P Certificates.
All such Realized Losses and all other losses allocated to a
Class of Certificates hereunder will be allocated among the Certificates of such
Class in proportion to the Percentage Interests evidenced thereby.
(d) The principal portion of all Realized Losses on the
Mortgage Loans shall be allocated on each Distribution Date first, to REMIC I
Regular Interest LTI-1 and REMIC I Regular Interest LTI-P, until the
Uncertificated Principal Balances have been reduced to zero and then to REMIC I
Regular Interest LTI-IO-A, REMIC I Regular Interest LTI-IO-B, REMIC I Regular
Interest LTI-IO-C, REMIC I Regular Interest LTI-IO-D, REMIC I Regular Interest
LTI-IO-E, REMIC I Regular Interest LTI-IO-F, REMIC I Regular Interest LTI-IO-G
and REMIC I Regular Interest LTI-IO-H, until the Uncertificated Principal
Balances have been reduced to zero.
(e) All Realized Losses on the REMIC I Regular Interests shall
be allocated on each Distribution Date to the following REMIC II Regular
Interests in the specified percentages, as follows: first, to Uncertificated
Accrued Interest payable to the REMIC II Regular Interest LTII-AA and REMIC II
Regular Interest LTII-ZZ up to an aggregate amount equal to the REMIC II
Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Principal Balances of the REMIC II Regular Interest LTII-AA and
REMIC II Regular Interest LTII-ZZ up to an aggregate amount equal to the REMIC
II Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Principal Balances of REMIC II Regular Interest LTII-AA, REMIC II
Regular Interest LTII-M3 and REMIC II Regular Interest LTII-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M3 has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LTII-AA, REMIC II Regular
Interest LTII-M2 and REMIC II Regular Interest LTII-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LTII-AA, REMIC II Regular
Interest LTII-M1 and REMIC II Regular Interest LTII-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LTII-M1 has been reduced to zero.
(f) Notwithstanding anything to the contrary contained herein,
if on any Distribution Date the Trustee discovers, based solely on the reports
delivered by the Servicer under this Agreement that any Subsequent Recoveries
have been collected by the Servicer with respect to a Mortgage Loan, the amount
of such Subsequent Recoveries will be applied to increase the Certificate
Principal Balance of the Class of Mezzanine Certificates with the highest
payment priority to which Realized Losses have been allocated, but not by more
than the amount of Realized Losses previously allocated to that Class of
Mezzanine Certificates pursuant to this Section 5.05. The amount of any
remaining Subsequent Recoveries will be applied to sequentially increase the
Certificate Principal Balance of the Mezzanine Certificates, beginning with the
Class of Mezzanine Certificates with the next highest payment priority, up to
the amount of such Realized Losses previously allocated to such Class of
Certificates pursuant to this Section 5.05. Holders of such Certificates will
not be entitled to any payment in respect of current interest on the amount of
such increases for any Accrual Period preceding the Distribution Date on which
such increase occurs. Any such increases shall be applied to the Certificate
Principal Balance of each Mezzanine Certificate of such Class in accordance with
its respective Percentage Interest.
Section 5.06. MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
(a) Not later than each Distribution Date, the Trustee shall
prepare and make available to each Holder of Certificates and the Depositor via
its website a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein, (B) the aggregate
of all scheduled payments of principal included therein, (C) the Extra
Principal Distribution Amount (if any) and (D) the amount of Prepayment
Charges distributed to the Class P Certificates;
(ii) the amount of such distribution to Holders of each Class
allocable to interest;
(iii) the Certificate Principal Balance or Certificate
Notional Balance of each Class after giving effect (i) to all
distributions allocable to principal on such Distribution Date and (ii)
the allocation of any Realized Losses for such Distribution Date;
(iv) the aggregate of the Stated Principal Balances of all of
the Mortgage Loans for the following Distribution Date;
(v) the amount of the Servicing Fees paid to or retained by
the Servicer for the related Due Period;
(vi) the Pass-Through Rate for each Class of Certificates with
respect to the current Accrual Period and, if applicable, whether such
Pass-Through Rate was limited by the Net WAC Rate Cap;
(vii) the cumulative amount of Realized Losses to date and, in
addition, if the Certificate Principal Balances of the Mezzanine
Certificates have all been reduced to zero, the cumulative amount of
any Realized Losses that have not been allocated to any Certificates;
(viii) the number and aggregate principal amounts of Mortgage
Loans in (A) Delinquent (exclusive of Mortgage Loans in foreclosure and
bankruptcy) (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, (B) in foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90
days and (3) 91 or more days and (C) in bankruptcy and delinquent (1)
31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in each case
as of the close of business on the last day of the calendar month
preceding such Distribution Date;
(ix) with respect to any Mortgage Loans that were liquidated
during the preceding calendar month, the loan number and the aggregate
of the Stated Principal Balances of, and Realized Losses on, such
Mortgage Loans as of the close of business on the Determination Date
preceding such Distribution Date;
(x) the total number and principal balance of any real estate
owned or REO Properties as of the close of business on the
Determination Date preceding such Distribution Date;
(xi) the three month rolling average of the percent equivalent
of a fraction, the numerator of which is the aggregate stated Principal
Balance of the Mortgage Loans that are 60 days or more delinquent or
are in bankruptcy or foreclosure or are REO Properties, and the
denominator of which is the aggregate Stated Principal Balance of all
of the Mortgage Loans as of the last day of such Distribution Date;
(xii) the Realized Losses during the related Prepayment Period
and the cumulative Realized Losses through the end of the preceding
month;
(xiii) the Net WAC Rate Carryover Amount for each Class of
Certificates and the amount on deposit in the Net WAC Reserve Fund;
(xiv) the amount of any Guaranteed Distribution paid on such
Distribution Date, the amount of any Reimbursement Amount paid to the
Certificate Insurer on such Distribution Date pursuant to paragraph 2
of clause THIRD of Section 5.04(a) and the amount of any Reimbursement
Amount remaining after giving effect to any such payments to the
Certificate Insurer; and
(xv) amounts payable in respect of the Cap Contract.
The Trustee may make the foregoing monthly statement (and, at
its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via the Trustee's
internet website. The Trustee's internet website shall initially be located at
"___________". Assistance in using the website can be obtained by calling the
Trustee's customer service desk at (___) ___-____. Parties that are unable to
use the above distribution options are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Trustee may change the way monthly statements are distributed in order
to make such distributions more convenient or more accessible to the above
parties.
(b) The Trustee's responsibility for making the above
information available to the Certificateholders is limited to the availability,
timeliness and accuracy of the information provided by the Servicers. The
Trustee will make available a copy of each statement provided pursuant to this
Section 5.06 to each Rating Agency and the Certificate Insurer.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished upon request to each
Person who at any time during the calendar year was a Certificateholder, a
statement containing the information set forth in clauses (a)(i) and (a)(ii) of
this Section 5.06 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Residual Certificates the applicable Form
1066 and each applicable Form 1066Q and shall respond promptly to written
requests made not more frequently than quarterly by any Holder of a Residual
Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created hereunder and to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of a
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv)
above shall be provided by the Depositor pursuant to Section 9.12.
Section 5.07. REMIC DESIGNATIONS AND REMIC I ALLOCATIONS.
(a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III and shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The REMIC I Regular Interests shall constitute the assets of
REMIC II. The REMIC II Regular Interests shall constitute the assets of REMIC
III.
(b) On each Distribution Date, the Available Distribution
Amount, in the following order of priority and in accordance with the Remittance
Report, shall be distributed by REMIC I to REMIC II on account of the REMIC I
Regular Interests or withdrawn from the Distribution Account and distributed to
the Holders of the Class R Certificates, as the case may be:
(i) first, to the Holders of REMIC I Regular Interest
LTI-IO-A, REMIC I Regular Interest LTI-IO-B, REMIC I Regular Interest LTI-IO-C,
REMIC I Regular Interest LTI-IO-D, REMIC I Regular Interest LTI-IO-E, REMIC I
Regular Interest LTI-IO-F, REMIC I Regular Interest LTI-IO-G and REMIC I Regular
Interest LTI-IO-H in an amount equal to (A) the Uncertificated Accrued Interest
for such Distribution Date, plus (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates and second, to the Holders of REMIC I
Regular Interest LTI-1, in an amount equal to (A) the Uncertificated Accrued
Interest for such Distribution Date, plus (B) any amounts in respect thereof
remaining unpaid from previous Distribution Dates;
(ii) to the Holders of the REMIC I Regular Interest LTI-P, on
the Distribution Date in ______________ or any Distribution Date thereafter
until $100 has been distributed pursuant to this clause;
(iii) on each Distribution Date, the remainder of the
Available Distribution Amount for such Distribution Date after the distributions
made pursuant to clause (i) and clause (ii) above, first, to the Holders of
REMIC I Regular Interest LTI-1 until the Uncertificated Principal Balance of
such REMIC I Regular Interest is reduced to zero, and second, to the Holders of
REMIC I Regular Interest LTI-IO-A, REMIC I Regular Interest LTI-IO-B, REMIC I
Regular Interest LTI-IO-C, REMIC I Regular Interest LTI-IO-D, REMIC I Regular
Interest LTI-IO-E, REMIC I Regular Interest LTI-IO-F, REMIC I Regular Interest
LTI-IO-G and REMIC I Regular Interest LTI-IO-H, sequentially, until the
Uncertificated Principal Balance of each such REMIC I Regular Interest is
reduced to zero; and
(iv) to the Holders of the Class R Certificates, any amounts
remaining after the distributions pursuant to clauses (i) through (iii) above.
On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC I to the Holders of REMIC I Regular Interest
LTI-P. The payment of the foregoing amounts to the Holders of REMIC I Regular
Interest LTI-P shall not reduce the Uncertificated Principal Balance thereof.
Section 5.08. REMIC II ALLOCATIONS.
(a) On each Distribution Date, the Available Distribution
Amount, in the following order of priority and in accordance with the Remittance
Report, shall be distributed by REMIC II to REMIC III on account of the REMIC II
Regular Interests or withdrawn from the Distribution Account and distributed to
the Holders of the Class R Certificates, as the case may be:
(i) first, to the Holders of REMIC II Regular Interest
LTII-IO-A and REMIC II Regular Interest LTII-IO-B, in an amount equal to (A) the
Uncertificated Accrued Interest for such REMIC II Regular Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates and then to Holders of REMIC II Regular Interest
LTII-AA, REMIC Regular Interest LTII-A1, REMIC II Regular Interest LTII-A2,
REMIC II Regular Interest LTII-A3, REMIC II Regular Interest LTII-A4, REMIC II
Regular Interest LTII-A5A, REMIC II Regular Interest LTII-A5B, REMIC II Regular
Interest LTII-A6, REMIC II Regular Interest LTII-M1, REMIC II Regular Interest
LTII-M2, REMIC II Regular Interest LTII-M3 and REMIC II Regular Interest
LTII-ZZ, pro rata, in an amount equal to (A) the Uncertificated Accrued Interest
for each such REMIC II Regular Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution Dates.
Amounts payable as Uncertificated Accrued Interest in respect of REMIC II
Regular Interest LTII-ZZ shall be reduced and deferred when the REMIC II
Overcollateralization Amount is less than the REMIC II Required
Overcollateralization Amount, by the lesser of (x) the amount of such difference
and (y) the REMIC II Regular Interest LTII-ZZ Maximum Interest Deferral Amount
and such amount will be payable to the Holders of REMIC Regular Interest
LTII-A1, REMIC II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3,
REMIC II Regular Interest LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II
Regular Interest LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular
Interest LTII-M1, REMIC II Regular Interest LTII-M2 and REMIC II Regular
Interest LTII-M3 in the same proportion as the Overcollateralization Increase
Amount is allocated to the Corresponding Certificates and the Uncertificated
Principal Balance of REMIC II Regular Interest LTII-ZZ shall be increased by
such amount;
(ii) second, to the Holders of REMIC II Regular Interests, in
an amount equal to the remainder of the Available Distribution Amount for such
Distribution Date after the distributions made pursuant to clause (i) above,
allocated as follows:
(a) 98.00% of such remainder (other than amounts payable under
clause (c) below) to the Holders of REMIC II Regular Interest LTII-AA and REMIC
II Regular Interest LTII-P, until the Uncertificated Principal Balance of such
REMIC II Regular Interest is reduced to zero, provided, however, that the
Uncertificated Principal Balance of REMIC II Regular Interest LTII-P shall not
be reduced until the Distribution Date in _____________ or any Distribution Date
thereafter, at which point such amount shall be distributed to REMIC II Regular
Interest LTII-P, until $100 has been distributed pursuant to this clause;
(b) 2.00% of such remainder (other than amounts payable under
clause (c) below, first, to the Holders of REMIC Regular Interest LTII-A1, REMIC
II Regular Interest LTII-A2, REMIC II Regular Interest LTII-A3, REMIC II Regular
Interest LTII-A4, REMIC II Regular Interest LTII-A5A, REMIC II Regular Interest
LTII-A5B, REMIC II Regular Interest LTII-A6, REMIC II Regular Interest LTII-M1,
REMIC II Regular Interest LTII-M2 and REMIC II Regular Interest LTII-M3, 1.00%,
in the same proportion as principal payments are allocated to the Corresponding
Certificates, until the Uncertificated Principal Balances of such REMIC II
Regular Interests are reduced to zero and second, to the Holders of REMIC II
Regular Interest LTII-ZZ until the Uncertificated Principal Balance of such
REMIC II Regular Interest is reduced to zero; then
(c) any remaining amount to the Holders of the Class R
Certificates; and
(iii) third, to REMIC II Regular Interest LTII-P, 100% of the
amount paid in respect of REMIC I Regular Interest LTI-P;
provided, however, that (i) 98.00% and (ii) 2.00% of any
principal payments that are attributable to an Overcollateralization Reduction
Amount shall be allocated to Holders of (i) REMIC II Regular Interest LTII-AA
and REMIC II Regular Interest LTII-P, in that order and (ii) REMIC II Regular
Interest LTII-ZZ, respectively; provided that REMIC II Regular Interest LTII-P
shall not be reduced until the Distribution Date in ___________, at which point
such amount shall be distributed to REMIC II Regular Interest LTII-P, until $100
has been distributed pursuant to this clause.
Section 5.09. CLASS P CERTIFICATE ACCOUNT.
The Trustee shall establish and maintain with itself a separate,
segregated trust account titled "Nomura Home Equity Loan, Inc., Home Equity Loan
Trust ____-____ Class P Certificate Account". On the Closing Date, the Depositor
will deposit, or cause to be deposited in the Class P Certificate Account
$100.00. The amount on deposit in the Class P Certificate Account shall be held
uninvested. On the ____________ Distribution Date, the Trustee shall withdraw
the amount on deposit in the Class P Certificate Account and remit such amount
to the Holders of the Class P Certificates, in reduction of the Certificate
Principal Balance thereof.
Section 5.10. NET WAC RESERVE FUND.
(a) The Trustee shall establish a Net WAC Reserve Fund on
behalf of the holders of the Publicly Offered Certificates (other than the Class
A-IO Certificates). The Net WAC Reserve Fund must be an Eligible Account. The
Net WAC Reserve Fund shall be entitled "Net WAC Reserve Fund, [Name of Trustee]
as Trustee for the benefit of holders of Nomura Home Equity Loan, Inc., Asset
Backed Pass-Through Certificates, Series ____-____, Class A-1, Class X-0, Xxxxx
X-0, Class A-4, Class A-5A, Class X-0X, Xxxxx X-0, Class M-1, Class M-2 and
Class M-3". Any payments received by the Trustee under the Cap Contract shall be
deposited into the Net WAC Reserve Fund for the benefit of the Class A-1
Certificates; provided that the amount of any Excess Cap Payments shall be held
for the benefit of the Class C Certificates and payable as part of the Class C
Distribution Amount for the related Distribution Date. On the Closing Date, the
Depositor will deposit, or cause to be deposited, into the Net WAC Reserve Fund
$______. On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to any Class of Certificates, the Trustee shall deposit the
amounts pursuant to paragraphs 3, 4, 5, 6 and 7 of clause THIRD of Section
5.04(a) into the Net WAC Reserve Fund and the Trustee has been directed by the
Class C Certificateholder to distribute such amounts to the Holders of the
Publicly Offered Certificates (other than the Class A-IO Certificates) in the
amounts and priorities set forth in clause THIRD of Section 5.04(a).
(b) The Net WAC Reserve Fund is an "outside reserve fund"
within the meaning of Treasury Regulation ss.1.860G-2(h) and shall be an asset
of the Trust Fund but not an asset of any REMIC. The Trustee on behalf of the
Trust shall be the nominal owner of the Net WAC Reserve Fund. The Class C
Certificateholders shall be the beneficial owners of the Net WAC Reserve Fund,
subject to the power of the Trustee to transfer amounts under Section 5.04(a).
Amounts in the Net WAC Reserve Fund shall be held either uninvested in a trust
or deposit account of the Trustee with no liability for interest or other
compensation thereof or, at the written direction of the Majority Class C
Certificateholder, be invested in Permitted Investments that mature no later
than the Business Day prior to the next succeeding Distribution Date. All net
income and gain from such investments shall be distributed to the Majority Class
C Certificateholder, not as a distribution in respect of any interest in any
REMIC, on such Distribution Date. All amounts earned on amounts on deposit in
the Net WAC Reserve Fund shall be taxable to the Majority Class C
Certificateholder. Any losses on such investments shall be deposited in the Net
WAC Reserve Fund by the Majority Class C Certificateholder out of its own funds
immediately as realized. In the event that the Majority Class C
Certificateholder shall fail to provide investment instructions to the Trustee,
the amounts on deposit in the Net WAC Reserve Fund shall be held uninvested.
(c) For federal tax return and information reporting, the
value of the right of the holder of the Class A-1 Certificates to receive
payments from the Net WAC Reserve Fund shall be $________ and the amount
allocated to the right of the holders of the Publicly Offered Certificates
(other than the Class A-1 Certificates and the Class A-IO Certificates) to
receive payments from the Net WAC Reserve Fund in respect of any Net WAC Rate
Carryover Amount shall be zero.
ARTICLE VI
THE CERTIFICATES
Section 6.01. THE CERTIFICATES.
The Certificates shall be substantially in the forms attached hereto as
Exhibits A-1 through A-6. The Certificates shall be issuable in registered form,
in the minimum dollar denominations, integral dollar multiples in excess thereof
(except that one Certificate of each Class may be issued in a different amount
which must be in excess of the applicable minimum dollar denomination) and
aggregate dollar denominations as set forth in the following table:
` ` INTEGRAL ORIGINAL `
` ` MULTIPLE CERTIFICATE `
` MINIMUM IN EXCESS PRINCIPAL `
CLASS DENOMINATION OF MINIMUM BALANCE PASS-THROUGH RATE
--------------------------------------------------------------------------------
A-1 $25,000 $1 $ Class A-1 Pass-Through Rate
A-2 $25,000 $1 $ Class A-2 Pass-Through Rate
A-3 $25,000 $1 $ Class A-3 Pass-Through Rate
A-4 $25,000 $1 $ Class A-4 Pass-Through Rate
A-5A $25,000 $1 $ Class A-5A Pass-Through Rate
A-5B $25,000 $1 $ Class A-5B Pass-Through Rate
A-6 $25,000 $1 $ Class A-6 Pass-Through Rate
A-IO $25,000 $1 N/A Class A-IO Pass-Through Rate
M-1 $25,000 $1 $ Class M-1 Pass-Through Rate
M-2 $25,000 $1 $ Class M-2 Pass-Through Rate
M-3 $25,000 $1 $ Class M-3 Pass-Through Rate
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer upon the written order of the
Depositor. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such authentication and delivery. No Certificate shall be entitled
to any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Certificate the countersignature of the Trustee by manual
signature, and such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
countersigned and delivered hereunder. All Certificates shall be dated the date
of their countersignature. On the Closing Date, the Trustee shall authenticate
the Certificates to be issued at the written direction of the Depositor, or any
affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 6.02. CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 6.09, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c) below
and to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of Transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of Transfer of
any Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for
any registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Trustee in writing the facts surrounding the Transfer in substantially
the forms set forth in Exhibit E (the "Transferor Certificate") and (x) deliver
a letter in substantially the form of either Exhibit F (the "Investment Letter")
or Exhibit G (the "Rule 144A Letter") or (y) there shall be delivered to the
Trustee an Opinion of Counsel, at the expense of the transferor, that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor, the Seller, the
Trustee or the Trust Fund. The Depositor shall provide to any Holder of a
Private Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee shall cooperate with
the Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
Transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Seller against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or using
the assets of any such plan, or (ii) in the case of any such ERISA Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or a plan subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee for the benefit of the Trustee, the Depositor and
the Servicers and on which they may rely to the effect that the purchase and
holding of such ERISA Restricted Certificate is permissible under applicable
law, will not result in any prohibited transactions under ERISA or Section 4975
of the Code and will not subject the Trustee, the Depositor or any Servicer to
any obligation in addition to those expressly undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Depositor
or any Servicer. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code other than in compliance with the foregoing shall be
void and of no effect; provided that the restriction set forth in this sentence
shall not be applicable if there has been delivered to the Trustee an Opinion of
Counsel meeting the requirements of clause (ii) of the first sentence of this
paragraph. The Trustee shall not be under any liability to any Person for any
registration of transfer of any ERISA Restricted Certificate that is in fact not
permitted by this Section 6.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on such ERISA Restricted Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Holder of such Certificate that is not such a plan
or Person acting on behalf of a plan.
Each beneficial owner of a Class M-1, Class M-2 or Class M-3
Certificate or any interest therein shall be deemed to have represented, by
virtue of its acquisition or holding of that certificate or interest therein,
that either (i) it is not a Plan or investing with "Plan Assets", (ii) it has
acquired and is holding such certificate in reliance on the Exemption, and that
it understands that there are certain conditions to the availability of the
Exemption, including that the certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by S&P or Xxxxx'x, and the
certificate is so rated or (iii) (1) it is an insurance company, (2) the source
of funds used to acquire or hold the certificate or interest therein is an
"insurance company general account," as such term is defined in Prohibited
Transaction Class Exemption ("PTCE") 95-60 and (3) the conditions in Sections I
and III of PTCE 95-60 have been satisfied.
(c) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
D.
(iii) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Residual Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer of
a Residual Certificate and (C) not to Transfer its Ownership Interest
in a Residual Certificate or to cause the Transfer of an Ownership
Interest in a Residual Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Residual Certificate in violation of the
provisions of this Section 6.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Residual Certificate that is in fact
not permitted by Section 6.02(b) and this Section 6.02(c) or for making
any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of
the related Transfer Affidavit. The Trustee shall be entitled but not
obligated to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or,
at such subsequent time as it became other than a Permitted Transferee,
all payments made on such Residual Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 6.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the Seller to
the effect that the elimination of such restrictions will not cause REMIC I,
REMIC II and/or REMIC III, as applicable, to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any ownership Interest in a Residual Certificate hereby
consents to any amendment of this Agreement that, based on an Opinion of Counsel
furnished to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Residual Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Residual
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and
opinions referred to above in this Section 6.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor or the Seller.
Section 6.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 6.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 6.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time. All Certificates
surrendered to the Trustee under the terms of this Section 6.03 shall be
canceled and destroyed by the Trustee in accordance with its standard procedures
without liability on its part.
Section 6.04. PERSONS DEEMED OWNERS.
The Trustee, the Certificate Insurer and any of their agents may treat
the person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Trustee, the
Certificate Insurer nor any of their agents shall be affected by any notice to
the contrary.
Section 6.05. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor shall request such information in writing from the Trustee, then the
Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor or such Certificateholders at such recipients' expense the
most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 6.06. BOOK-ENTRY CERTIFICATES.
The Regular Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Book- Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. Such Certificates shall initially be registered on the Certificate
Register in the name of the Depository or its nominee, and no Certificate Owner
of such Certificates will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in Section
6.08. Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Certificate Owners of such Certificates
pursuant to Section 6.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor and the Trustee may deal with the Depository
and the Depository Participants for all purposes (including the making of
distributions) as the authorized representative of the respective Certificate
Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
(g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
Section 6.07. NOTICES TO DEPOSITORY.
Whenever any notice or other communication is required to be given to
Certificateholders of a Class with respect to which Book-Entry Certificates have
been issued, unless and until Definitive Certificates shall have been issued to
the related Certificate Owners, the Trustee shall give all such notices and
communications to the Depository.
Section 6.08. DEFINITIVE CERTIFICATES.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depositor or the Depository advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to applicable Certificate Owners requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall countersign and deliver such Definitive Certificates. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
Section 6.09. MAINTENANCE OF OFFICE OR AGENCY.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies at ________________________________,
Attention: Nomura Home Equity Loan, Inc., Series ____-____ where Certificates
may be surrendered for registration of transfer or exchange. The Trustee will
give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.
ARTICLE VII
THE DEPOSITOR AND THE SERVICER
Section 7.01. LIABILITIES OF THE DEPOSITOR AND THE SERVICER. Each of
the Depositor and the Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by it
herein.
Section 7.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER.
(a) Each of the Depositor and the Servicer will keep in full
force and effect its rights and franchises as a corporation under the laws of
the state of its incorporation, and will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its duties under this Agreement.
(b) Any Person into which the Depositor or the Servicer may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or the Servicer shall be a party, or any
Person succeeding to the business of the Depositor or the Servicer shall be the
successor of the Depositor or the Servicer hereunder, without the execution or
filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 7.03. INDEMNIFICATION OF DEPOSITOR AND THE SERVICER.
(a) The Depositor agrees to indemnify the Indemnified Persons
for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement or the Certificates (i) related to the
Depositor's failure to perform its duties in compliance with this Agreement
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) or (ii) incurred by reason of the Depositor's
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. This indemnity shall survive the resignation and the termination of
this Agreement.
(b) The Servicer agrees to indemnify the Indemnified Persons
for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to the Servicer's gross negligence in the performance of its
duties under this Agreement or failure to service the Mortgage Loans in material
compliance with the terms of this Agreement and for a material breach of any
representation, warranty or covenant of the Servicer contained herein. The
Servicer shall immediately notify the Trustee if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, assume (with the
consent of the Trustee and with counsel reasonably satisfactory to the Trustee)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly appeal or pay, discharge and satisfy any
judgment or decree which may be entered against it or any Indemnified Person in
respect of such claim but failure to so notify the Servicer shall not limit its
obligations hereunder. The Servicer agrees that it will not enter into any
settlement of any such claim without the consent of the Indemnified Persons
unless such settlement includes an unconditional release of such Indemnified
Persons from all liability that is the subject matter of such claim. The
provisions of this Section 7.03(b) shall survive termination of this Agreement.
Section 7.04. LIMITATIONS ON LIABILITY OF THE DEPOSITOR, THE SERVICER
AND OTHERS. Subject to the obligation of the Depositor and the Servicer to
indemnify the Indemnified Persons pursuant to Section 7.03:
(a) Neither the Depositor, the Servicer nor any of the
directors, officers, employees or agents of the Depositor and the Servicer shall
be under any liability to the Indemnified Persons, the Trust Fund or the
Certificateholders for taking any action or for refraining from taking any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Servicer or any such Person against any breach of warranties or representations
made herein or any liability which would otherwise be imposed by reason of such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder.
(b) The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor and the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
(c) The Depositor, the Servicer, the Trustee and any director,
officer, employee or agent of the Depositor, the Servicer, the Trustee or the
Custodian shall be indemnified by the Trust Fund and held harmless thereby
against any loss, liability or either expense (including reasonable legal fees
and disbursements of counsel) incurred on their part that may be sustained in
connection with, arising out of, or related to, any claim or legal action
(including any pending or threatened claim or legal action) relating to this
Agreement or the Certificates, other than with respect to the Servicer, (i) such
loss, liability or expense related to the Servicer's failure to perform its
duties in compliance with this Agreement (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) or (ii) any
such loss, liability or expense incurred by reason of the Servicer's willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder.
(d) Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties under this Agreement and that in its opinion may
involve it in any expense or liability; provided, however, the Trustee may in
its discretion, undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Trustee shall be entitled to be reimbursed therefor out of the Distribution
Account as provided by Section 4.05. Nothing in this Subsection 7.04(d) shall
affect the Trustee's obligation to take such actions as are necessary to ensure
the servicing and administration of the Mortgage Loans pursuant to this
Agreement.
(e) In taking or recommending any course of action pursuant to
this Agreement, unless specifically required to do so pursuant to this
Agreement, the Trustee shall not be required to investigate or make
recommendations concerning potential liabilities which the Trust might incur as
a result of such course of action by reason of the condition of the Mortgaged
Properties.
(f) The Trustee shall not be liable for any acts or omissions
of the Servicer or the Depositor.
Section 7.05. THE SERVICER NOT TO RESIGN.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the determination that its duties hereunder are no
longer permissible under applicable law or the performance of such duties are no
longer possible in order to comply with applicable law and such incapacity or
impossibility cannot be cured by the Servicer. Any determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee which Opinion of Counsel shall be in form and
substance acceptable to the Trustee. No appointment of a successor to the
Servicer shall be effective hereunder unless (a) the Rating Agencies have
confirmed in writing that such appointment will not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates, (b) such successor shall have represented that it is meets the
eligibility criteria set forth in Section 8.02 and (c) such successor has agreed
to assume the obligations of the Servicer hereunder to the extent of the
Mortgage Loans. The Servicer shall provide a copy of the written confirmation of
the Rating Agencies and the agreement executed by such successor to the Trustee.
No such resignation shall become effective until a Qualified Successor or the
Trustee shall have assumed the Servicer's responsibilities and obligations
hereunder. The Servicer shall notify the Trustee and the Rating Agencies of its
resignation.
Section 7.06. TERMINATION OF THE SERVICER WITHOUT CAUSE; APPOINTMENT OF
SPECIAL SERVICER.
(a) The Seller may, at its option, terminate the servicing
responsibilities of the Servicer as Servicer hereunder with respect to the
Mortgage Loans without cause. No such termination shall become effective unless
and until a successor to the Servicer shall have been appointed to service and
administer the Mortgage Loans pursuant to the terms and conditions of this
Agreement. No appointment shall be effective unless (i) such successor to the
Servicer meets the eligibility criteria contained in Section 8.02, (ii) the
Trustee shall have consented to such appointment, (iii) the Rating Agencies have
confirmed in writing that such appointment will not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates, (iv) such successor has agreed to assume the obligations of the
Servicer hereunder to the extent of the Mortgage Loans and (v) all amounts
reimbursable to the Servicer pursuant to the terms of this Agreement shall have
been paid to the Servicer by the successor appointed pursuant to the terms of
this Section 7.06 or by the Seller including without limitation, all
unreimbursed Advances and Servicing Advances made by the Servicer and all
out-of-pocket expenses of the Servicer incurred in connection with the transfer
of servicing to such successor. The Seller shall provide a copy of the written
confirmation of the Rating Agencies and the agreement executed by such successor
to the Trustee and the Certificate Insurer.
(b) In addition, the Seller may, at its option, appoint a
special servicer with respect to certain of the Mortgage Loans. The Seller and
the Servicer shall negotiate in good faith with any proposed special servicer
with respect to the duties and obligations of such special servicer with respect
to any such Mortgage Loan. Any subservicing agreement shall contain terms and
provisions acceptable to the Trustee and shall obligate the special servicer to
subservice such Mortgage Loans in accordance with Accepted Servicing Practices.
The fee payable to the special servicer for the performance of such duties and
obligations will be paid from the Servicing Fee collected by the Servicer with
respect to each such Mortgage Loan and will be remitted to such special servicer
by the Servicer.
ARTICLE VIII
DEFAULT; TERMINATION OF SERVICER
Section 8.01. SERVICER DEFAULT.
In case one or more of the following events of default by the Servicer
(each, a "Servicer Default") shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Trustee any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of three Business Days; or
(ii) failure on the part of the Servicer to duly observe or
perform in any material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement, the breach of which has a
material adverse effect and which continue unremedied for a period of sixty days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or to the
Servicer and the Trustee by the holders of Certificates evidencing not less than
25% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(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 attempts to assign its right to servicing
compensation hereunder or the Servicer attempts to sell or otherwise dispose of
all or substantially all of its property or assets or to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder
or any portion thereof except, in each case as otherwise permitted herein; or
(vii) the Servicer ceases to be qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Servicer's ability
to perform its obligations hereunder;
then, and in each and every such case, so long as a Servicer Default
shall not have been remedied, the Trustee, by notice in writing to the Servicer
shall with respect to a payment default by the Servicer pursuant to Section
8.01(i) of this Agreement and, upon the occurrence and continuance of any other
Servicer Default, may, and, at the written direction of Certificateholders
evidencing not less than 25% of the Voting Rights shall, in addition to whatever
rights the Trustee on behalf of the Certificateholders may have under Section
7.03 and at law or equity to damages, including injunctive relief and specific
performance, 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 with respect to a default by the
Servicer. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement whether with respect to
the related Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee. Upon written request from the Trustee, the Servicer shall prepare,
execute and deliver, any and all documents and other instruments, place in the
Trustee's possession all Mortgage Files relating to the Mortgage Loans, and 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 related Mortgage Loans and related documents,
or otherwise, at the Servicer's sole expense. The Servicer shall cooperate with
the Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder including, without limitation, the transfer to such successor
for administration by it of all cash amounts which shall at the time be credited
by the defaulting Servicer to its Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans or any related REO
Property (provided, however, that the defaulting Servicer shall continue to be
entitled to receive all amounts accrued or owing to it under this Agreement on
or prior to the date of such termination, whether in respect of Advances,
Servicing Advances, accrued and unpaid Servicing Fees or otherwise, and shall
continue to be entitled to the benefits of Section 7.04, notwithstanding any
such termination, with respect to events occurring prior to such termination).
The Trustee shall not have knowledge of a Servicer Default unless a Responsible
Officer of the Trustee has actual knowledge or unless written notice of any
Servicer Default is received by the Trustee at its Corporate Trust Office and
such notice references the Certificates, the Trust Fund or this Agreement.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of termination
pursuant to Section 8.01 the Trustee shall become the successor to the Servicer
with respect to the transactions set forth or provided for herein and after a
transition period (not to exceed 90 days), shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof and applicable law including the obligation
to make Advances pursuant to Article VI hereof, except as otherwise provided
herein; provided, however, that the Trustee's obligation to make Advances in its
capacity as Successor Servicer shall not be subject to such 90 day transition
period and the Trustee in such capacity will make any Advance required to be
made by the terminated Servicer on the Distribution Date on which the terminated
Servicer was required to make such Advance. Effective on the date of such notice
of termination, as compensation therefor, the Trustee shall be entitled to all
fees, costs and expenses relating to the Mortgage Loans that the terminated
Servicer would have been entitled to if it had continued to act hereunder
provided, however, that the Trustee shall not be (i) liable for any acts or
omissions of the terminated Servicer, (ii) obligated to make Advances if it is
prohibited from doing so under applicable law or determines that such Advance,
if made, would constitute a Nonrecoverable Advance, (iii) responsible for
expenses of the terminated Servicer pursuant to Section 2.03 or (iv) obligated
to deposit losses on any Permitted Investment directed by the terminated
Servicer. Notwithstanding the foregoing, the Trustee may, if it shall be
unwilling to so act, or shall, if it is prohibited by applicable law from making
Advances pursuant to Article VI of this Agreement or if it is otherwise unable
to so act, appoint, or petition a court of competent jurisdiction to appoint,
any established mortgage loan servicing institution the appointment of which
does not adversely affect the then current rating of the Certificates by each
Rating Agency as the successor to the Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Any Successor Servicer shall (i) be an institution that is a Xxxxxx
Xxx and Xxxxxxx Mac approved seller/servicer in good standing, that has a net
worth of at least $15,000,000 and (ii) be willing to act as successor servicer
of any Mortgage Loans under this Agreement and shall have executed and delivered
to the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the terminated Servicer
(other than any liabilities of the terminated Servicer hereof incurred prior to
termination of the Servicer under Section 8.01), with like effect as if
originally named as a party to this Agreement provided that each Rating Agency
shall have acknowledged in writing that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. If the Trustee assumes
the duties and responsibilities of the terminated Servicer in accordance with
this Section 8.02, the Trustee shall not resign as servicer until a Successor
Servicer has been appointed and has accepted such appointment. Pending
appointment of a successor to the terminated Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 4.04 hereof, act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on related Mortgage Loans or
otherwise as it and such successor shall agree; provided that no such
compensation shall be in excess of that permitted the terminated Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement as shall be necessary to effectuate any such succession.
Neither the Trustee nor any other Successor Servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
The costs and expenses of the Trustee in connection with the
termination of the Servicer, appointment of a Successor Servicer and, if
applicable, any transfer of servicing, including, without limitation, all costs
and expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee or the Successor Servicer to service the related
Mortgage Loans properly and effectively, to the extent not paid by the
terminated Servicer as may be required herein shall be payable to the Trustee
from the Distribution Account pursuant to Section 4.07. Any successor to the
terminated Servicer as successor servicer under this Agreement shall give notice
to the applicable Mortgagors of such change of servicer and shall, during the
term of its service as successor servicer maintain in force the policy or
policies that the terminated Servicer is required to maintain pursuant to
Section 3.04.
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of or appointment of a successor to
the Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Servicer
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each such Servicer Default hereunder known to the Trustee, unless such default
shall have been cured or waived.
Section 8.04. WAIVER OF SERVICER DEFAULTS.
The Trustee may waive only by written notice from Certificateholders
evidencing 66-2/3 of the Voting Rights (unless such default materially and
adversely affects all Certificateholders, in which case the written direction
shall be from all of the Certificateholders) any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Servicer
Default 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 thereon except to the extent
expressly so waived in writing.
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01. DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of a Servicer
Default, and after the curing or waiver of all Servicer Defaults, which
may have occurred undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement as duties of the
Trustee. If a Servicer Default has occurred and has not been cured or
waived, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and the same degree of care and skill in their
exercise, as a prudent person would exercise under the circumstances in
the conduct of such Person's own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are
specifically required to be furnished to the Trustee pursuant to any
provision of this Agreement, the Trustee shall examine them to
determine whether they are in the form required by this Agreement;
provided, however, that the Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by the Servicers.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from
funds in the Distribution Account as provided in Sections 5.04 and
10.01 based the applicable Remittance Report.
(d) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful
misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Default and after
the curing or waiver of all Servicer Defaults which may have occurred
with respect to the Trustee, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this Agreement,
the Trustee shall not be liable except for the performance of its
duties and obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be liable in its individual
capacity for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee unless it shall be
proved that the Trustee was grossly negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith and
believed by it to be authorized or within the rights or powers
conferred upon it by this Agreement or in accordance with the
directions of the Holders of Certificates evidencing not less than 25%
of the aggregate Voting Rights of the Certificates, if such action or
non-action relates to the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any
trust or other power conferred upon the Trustee under this Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Servicer Default
unless a Responsible Officer of the Trustee shall have actual knowledge
thereof. In the absence of such notice, the Trustee may conclusively
assume there is no such default or Servicer Default;
(v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of Trustee
unless it is determined by a court of competent jurisdiction that the
Trustee's gross negligence or willful misconduct was the primary cause
of such insufficiency (except to the extent that the Trustee is obligor
and has defaulted thereon);
(vi) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special,
indirect, punitive or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action and whether or not any such damages
were foreseeable or contemplated; and
(vii) None of the Seller, the Depositor or the Trustee shall
be responsible for the acts or omissions of the other, it being
understood that this Agreement shall not be construed to render them
partners, joint venturers or agents of one another.
The Trustee shall not be required to expend or risk its own funds or otherwise
incur liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the terminated Servicer hereunder.
(e) All funds received by the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement will be
promptly so deposited by the Trustee.
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 9.01:
(i) The Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting in reliance on any
resolution or certificate of the Seller, the Depositor or any Servicer,
any certificates of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection with respect to any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel:
(iii) The Trustee shall not be under any obligation to
exercise any of the trusts or powers vested in it by this Agreement,
other than its obligation to give notices pursuant to this Agreement,
or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of a Servicer Default of which a Responsible
Officer of the Trustee has actual knowledge (which has not been cured
or waived), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise, as a prudent person would exercise under the circumstances in
the conduct of his own affairs;
(iv) The Trustee shall not be liable in its individual
capacity for any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Agreement;
(v) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing to do so by Holders of Certificates evidencing not less than
25% of the aggregate Voting Rights of the Certificates and provided
that the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement. The Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the
Certificateholders requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or through
Affiliates, nominees, custodians, agents or attorneys. The Trustee
shall not be liable or responsible for the misconduct or negligence of
any of the Trustee's agents or attorneys or paying agent appointed
hereunder by the Trustee with due care;
(vii) Should the Trustee deem the nature of any action
required on its part to be unclear, the Trustee may require prior to
such action that it be provided by the Depositor with reasonable
further instructions; the right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Trustee shall not be accountable for other than its
gross negligence or willful misconduct in the performance of any such
act;
(viii) The Trustee shall not be required to give any bond or
surety with respect to the execution of the trust created hereby or the
powers granted hereunder;
(ix) The Trustee shall not have any duty to conduct any
affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Mortgage Loan by any Person pursuant to
this Agreement, or the eligibility of any Mortgage Loan for purposes of
this Agreement;
(x) The Trustee shall have no duty hereunder with respect to
any complaint, claim, demand, notice or other document it may receive
or which may be alleged to have been delivered or served upon it by the
parties as a consequence of the assignment of any Mortgage Loan
hereunder; provided, however that the Trustee shall promptly remit to
the Servicer upon receipt any such complaint, claim, demand, notice or
other document (i) which is delivered to the Trustee at is Corporate
Trust Office, (ii) of which a Responsible Officer has actual knowledge
or (iii) which contains information sufficient to permit the Trustee to
make a determination that the real property to which such document
relates is a Mortgaged Property; and
(xi) The Trustee is hereby directed by the Depositor to
execute the Cap Contract on behalf of the Trust Fund in the form
presented to it by the Depositor and shall have no responsibility for
the contents of the Cap Contract, including, without limitation, the
representations and warranties contained therein. Any funds payable by
the Trustee under the Cap Contract at closing shall be paid by the
Depositor. Notwithstanding anything to the contrary contained herein or
in the Cap Contract, the Trustee shall not be required to make any
payments to the counterparty under the Cap Contract.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
signature and authentication of the Trustee on the Certificates) shall be taken
as the statements of the Depositor, and the Trustee shall not have any
responsibility for their correctness. The Trustee does not make any
representation as to the validity or sufficiency of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan except as expressly provided in Sections 2.02 and 2.06. The
Trustee's signature and authentication (or authentication of its agent) on the
Certificates shall be solely in its capacity as Trustee and shall not constitute
the Certificates an obligation of the Trustee in any other capacity. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor with respect to the Mortgage
Loans. The Trustee shall not be responsible for the legality or validity of this
Agreement or any document or instrument relating to this Agreement, the validity
of the execution of this Agreement or of any supplement hereto or instrument of
further assurance, or the validity, priority, perfection or sufficiency of the
security for the Certificates issued hereunder or intended to be issued
hereunder. The Trustee shall not at any time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
the Cap Contract, the Custodial Agreement, the Policy or any Mortgage or any
Mortgage Loan, or the perfection and priority of any Mortgage or the maintenance
of any such perfection and priority, or for or with respect to the sufficiency
of the Trust Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. The Trustee shall not have any
responsibility for filing 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 or to record this Agreement.
Section 9.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual capacity or in any capacity other than as
Trustee hereunder may become the owner or pledgee of any Certificates with the
same rights it would have if it were not the Trustee and may otherwise deal with
the parties hereto.
Section 9.05. TRUSTEE'S COMPENSATION AND EXPENSES; INDEMNIFICATION.
(a) As compensation for the performance of its obligations
under this Agreement, the Trustee shall be entitled to all income and gain
realized from any investment of funds in the Distribution Account.
In addition, the Trustee will be entitled to recover from the
Distribution Account pursuant to Section 4.07 all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee in
connection with the performance of its duties and obligations hereunder or under
any related documents, any Servicer Default, any breach of this Agreement or any
claim or legal action (including any pending or threatened claim or legal
action) incurred or made by the Trustee in the administration of the trusts
hereunder (including the reasonable compensation, expenses and disbursements of
its counsel) except any such expense, disbursement or advance as may arise from
its gross negligence or intentional misconduct. If funds in the Distribution
Account are insufficient therefor, the Trustee shall recover such expenses from
the Seller. Such compensation and reimbursement obligation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust. The rights of the Trustee under this Section 9.05 shall survive the
termination of this Agreement and the resignation or removal of the Trustee.
(b) The Trustee and its directors, officers, agents and
employees shall be indemnified and held harmless by the Trust Fund against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorney's fees, that may be imposed on,
incurred by or asserted against it or them in any way directly or indirectly
relating to or arising out of the transactions contemplated by this Agreement or
any other agreement entered into in connection herewith, including, but not
limited to, the Mortgage Loan Purchase Agreement assigned to the Trust pursuant
to this Agreement, the Custodial Agreement, the Cap Contract or the Policy or
any action taken or not taken by it or them hereunder or in connection herewith
except to the extent caused by the Trustee's gross negligence or willful
misconduct. The indemnification provided for under this Section 9.05 shall
survive the termination of this Agreement and the resignation or removal of the
Trustee.
The Trustee and its directors, officers, agents and employees
shall be indemnified and held harmless by the Trust Fund from and against any
and all claims, demands, losses, penalties, liabilities, costs, damages,
injuries and expenses, including, without limitation, reasonable attorneys' fees
and expenses, suffered or sustained by the Trustee, either directly or
indirectly, relating to or arising out of any environmental law or regulation of
the United States or any state thereof, including, without limitation, any
judgment, award, settlement, reasonable attorneys' fees and expenses and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee and any successor Trustee shall during the entire duration
of this Agreement be a state bank or trust company or a national banking
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "BBB" or higher by Fitch Ratings with respect to their long-term
rating and rated "A-1" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee other than pursuant to Section 9.10,
rated in one of the two highest long-term debt categories of, or otherwise
acceptable to, each of the Rating Agencies. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06 the combined capital and surplus of such corporation shall be
deemed to be its total equity capital (combined capital and surplus) as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 9.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.08.
Section 9.07. INSURANCE.
The Trustee, at its own expense, shall, or shall cause a custodian to,
at all times maintain and keep in full force and effect such insurance in
amounts, with standard coverage and subject to deductibles, as are customary for
insurance typically maintained by banks which act as custodians but, in any
event not less than that required by Xxxxxx Mae. Evidence of such insurance
shall be furnished to any Certificateholder upon reasonable written request.
Section 9.08. RESIGNATION AND REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the Trust
hereby created by giving written notice thereof to the Depositor and the Seller,
with a copy to the Rating Agencies. Upon receiving such notice of resignation,
the Depositor shall promptly appoint a successor trustee by written instrument,
in triplicate, one copy of which instrument shall be delivered to the resigning
trustee and the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation or removal, the resigning or removed Trustee may petition
any court of competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 hereof and shall fail to resign after
written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor may remove the
Trustee and appoint a successor trustee by written instrument, in multiple
copies, a copy of which instrument shall be delivered to the Trustee and the
successor trustee.
The Holders evidencing at least 51% of the Voting Rights of each Class
of Certificates may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in multiple copies, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered by the successor trustee to the Trustee so
removed and the successor trustee so appointed. Notice of any removal of the
Trustee shall be given to each Rating Agency by the Trustee or successor
trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.08 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 10.09 hereof.
Section 9.09. SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 9.08 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein.
No successor trustee shall accept appointment as provided in this
Section 9.09 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 9.07 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 9.09, the successor trustee shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates. If the successor trustee
fails to mail such notice within ten days after acceptance of appointment, the
Depositor shall cause such notice to be mailed at the expense of the Trust Fund.
Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation, state bank or national banking association into which
the Trustee may be merged or converted or with which it may be consolidated or
any corporation, state bank or national banking association resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation, state bank or national banking association succeeding to
substantially all of the corporate trust business of the Trustee or shall be the
successor of the Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 9.06 without the execution or filing of
any paper or further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Trustee shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 9.11, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.06 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.09.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee as
Successor Servicer under this Agreement to advance funds on behalf of
the terminated Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether a Trustee hereunder or as a Successor Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor. The Trust Fund shall pay associated fees and expenses.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co- trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.12. TAX MATTERS.
It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that each REMIC formed hereunder
qualifies as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of the Trust Fund. The Trustee, as
agent on behalf of the Trust Fund, shall do or refrain from doing, as
applicable, the following: (a) the Trustee shall prepare and file, or cause to
be prepared and filed, in a timely manner, U.S. Real Estate Mortgage Investment
Conduit Income Tax Returns (Form 1066 or any successor form adopted by the
Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with respect to each
such REMIC containing such information and at the times and in the manner as may
be required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
the Trustee shall apply for an employer identification number with the Internal
Revenue Service via a Form SS-4 or other comparable method for each REMIC that
is or becomes a taxable entity, and within thirty days of the Closing Date,
furnish or cause to be furnished to the Internal Revenue Service, on Forms 8811
or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for the Trust Fund; (c) the Trustee
shall make or cause to be made elections, on behalf of each REMIC formed
hereunder to be treated as a REMIC on the federal tax return of such REMIC for
its first taxable year (and, if necessary, under applicable state law); (d) the
Trustee shall prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) the Trustee shall provide information necessary for the
computation of tax imposed on the transfer of a Residual Certificate to a Person
that is not a Permitted Transferee, or an agent (including a broker, nominee or
other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) the
Trustee shall, to the extent under its control, conduct the affairs of the Trust
Fund at all times that any Certificates are outstanding so as to maintain the
status of each REMIC formed hereunder as a REMIC under the REMIC Provisions; (g)
the Trustee shall not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any REMIC
formed hereunder; (h) the Trustee shall pay, from the sources specified in the
last paragraph of this Section 9.12, the amount of any federal, state and local
taxes, including prohibited transaction taxes as described below, imposed on any
REMIC formed hereunder prior to the termination of the Trust Fund when and as
the same shall be due and payable (but such obligation shall not prevent the
Trustee or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (i) the Trustee shall sign or cause to be signed federal, state or
local income tax or information returns or any other document prepared by the
Trustee pursuant to this Section 9.12 requiring a signature thereon by the
Trustee; (j) the Trustee shall maintain records relating to each REMIC formed
hereunder including but not limited to the income, expenses, assets and
liabilities of each such REMIC and adjusted basis of the Trust Fund property
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statements or information; (k) the
Trustee shall, for federal income tax purposes, maintain books and records with
respect to the REMICs on a calendar year and on an accrual basis; (l) the
Trustee shall not enter into any arrangement not otherwise provided for in this
Agreement by which the REMICs will receive a fee or other compensation for
services nor permit the REMICs to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code; and (m) as and when
necessary and appropriate, the Trustee shall represent the Trust Fund in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC formed hereunder, enter into settlement agreements
with any governmental taxing agency, extend any statute of limitations relating
to any tax item of the Trust Fund, and otherwise act on behalf of each REMIC
formed hereunder in relation to any tax matter involving any such REMIC.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of
any of REMIC I, REMIC II or REMIC III as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the Trust Fund as defined
in Section 860G(c) of the Code, on any contribution to any of REMIC I, REMIC II
or REMIC III after the startup day pursuant to Section 860G(d) of the Code, or
any other tax is imposed, including, without limitation, any federal, state or
local tax or minimum tax imposed upon any of REMIC I, REMIC II or REMIC III, and
is not paid as otherwise provided for herein, such tax shall be paid by (i) the
Trustee, if any such other tax arises out of or results from a breach by the
Trustee of any of its obligations under this Section, (ii) any party hereto
(other than the Trustee) to the extent any such other tax arises out of or
results from a breach by such other party of any of its obligations under this
Agreement or (iii) in all other cases, or in the event that any liable party
hereto fails to honor its obligations under the preceding clauses (i) or (ii),
any such tax will be paid first with amounts otherwise to be distributed to the
Class R Certificateholders, and second with amounts otherwise to be distributed
to all other Certificateholders in the following order of priority: first, to
the Class M-3 Certificates, second, to the Class M-2 Certificates, third, to the
Class M-1 Certificates, and fourth, to the Senior Certificates (pro rata based
on the amounts to be distributed). Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Holder of any
Certificates, the Trustee is hereby authorized to retain on any Distribution
Date, from the Holders of the Class R Certificates (and, if necessary, second,
from the Holders of the other Certificates in the priority specified in the
preceding sentence), funds otherwise distributable to such Holders in an amount
sufficient to pay such tax. The Trustee shall include in its Remittance Report
instructions as to distributions to such parties taking into account the
priorities described in the second preceding sentence. The Trustee agrees to
promptly notify in writing the party liable for any such tax of the amount
thereof and the due date for the payment thereof. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of this Agreement, (2)
for any losses other than arising out of a grossly negligent performance by the
Trustee of its duties and obligations set forth herein, and (3) for any special
or consequential damages to Certificateholders (in addition to payment of
principal and interest on the Certificates).
ARTICLE X
TERMINATION
Section 10.01. TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
MORTGAGE LOANS.
Subject to Section 10.03, the obligations and responsibilities of the
Depositor, the Seller and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase by the Majority Class
C Certificateholder or, if the Majority Class C Certificateholder fails to
exercise such optional termination right, [Name of Trustee] (either the Majority
Class C Certificateholder or [Name of Trustee], the "Terminator") of all of the
Mortgage Loans (and REO Properties) remaining in the Trust Fund at a price (the
"Mortgage Loan Purchase Price") equal to the sum of (i) 100% of the Stated
Principal Balance of each Mortgage Loan (other than in respect of REO Property),
(ii) accrued interest thereon at the applicable Mortgage Rate to, but not
including, the first day of the month of such purchase, (iii) the appraised
value of any REO Property in the Trust Fund (up to the Stated Principal Balance
of the related Mortgage Loan), such appraisal to be conducted by an appraiser
mutually agreed upon by the Depositor and the Trustee, (iv) unreimbursed costs
of the Servicers or the Trustee, including unreimbursed servicing advances and
the principal portion of any unreimbursed Advances, made on the Mortgage Loans
prior to the exercise of such repurchase right, (v) any unreimbursed costs and
expenses of the Trustee payable pursuant to Section 9.05 and (vi) any amounts
due the Certificate Insurer in respect of unpaid Insurer Premiums and
Reimbursement Amounts and (b) the later of (i) the maturity or other liquidation
(or any Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (ii) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement, as applicable. In no event shall the trusts created hereby
continue beyond the earlier of (i) the expiration of 21 years from the death of
the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador
of the United States to the Court of St. Xxxxx, living on the date hereof and
(ii) the Latest Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties pursuant
to clause (a) in the preceding paragraph shall be exercisable on or after the
Distribution Date in which the Stated Principal Balance of all of the Mortgage
Loans in the Trust Fund, at the time of any such repurchase, is less than or
equal to ten percent of the aggregate Cut-off Date Principal Balance of all of
the Mortgage Loans; provided that if such repurchase would cause a draw on the
Policy or result in amounts owed to the Certificate Insurer remaining unpaid,
the Certificate Insurer must provide written consent to such repurchase.
Section 10.02. FINAL DISTRIBUTION ON THE CERTIFICATES.
If on any Determination Date, (i) the Trustee determines based on the
reports delivered by the Servicer under this Agreement that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Distribution Account, the Trustee shall to send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders
within five (5) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the related Certificates at the office of the
Trustee set forth herein. If the Terminator elects to terminate the Trust Fund
pursuant to Section 10.01, at least 20 days prior to the date notice is to be
mailed to the Certificateholders, the Terminator shall notify the Trustee of the
date the Terminator intends to terminate the Trust Fund. The Terminator shall
remit the Mortgage Loan Purchase Price to the Trustee on the Business Day prior
to the Distribution Date for such Optional Termination by the Terminator.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and no later than the 15th day of the month immediately preceding the month
of such final distribution. Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the amount of such final distribution, (c) the location of the office or agency
at which such presentation and surrender must be made and (d) that the Record
Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such notice
to each Rating Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Terminator shall deposit in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Custodian of a request for release therefor, the Custodian, on
behalf of the Trustee, shall promptly release to the Terminator, as applicable
the Mortgage Files for the Mortgage Loans and any documents necessary to
transfer any REO Property.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Distribution Account in the order and
priority set forth in Section 5.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within two years after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto and the Trustee shall release such funds upon written
direction.
Section 10.03. ADDITIONAL TERMINATION REQUIREMENTS.
(a) Upon exercise by the Terminator of its purchase option as
provided in Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Terminator, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 11.03
will not (i) result in the imposition of taxes on "prohibited transactions" of a
REMIC, or (ii) cause any REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(1) The Terminator shall establish a 90-day liquidation period
and notify the Trustee thereof, and the Trustee shall in turn specify the first
day of such period in a statement attached to the tax return for each of REMIC
I, REMIC II and REMIC III pursuant to Treasury Regulation Section 1.860F-1. The
Terminator shall satisfy all the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Terminator;
(2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Terminator shall
sell all of the assets of REMIC I, REMIC II and REMIC III for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Holders of the Residual Certificates all cash on hand (other
than cash retained to meet claims), and REMIC I shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Terminator to specify the 90-day liquidation period
for REMIC I, REMIC II and REMIC III, which authorization shall be binding upon
all successor Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt
and sign such a plan of complete liquidation upon the written request of the
Terminator, and the receipt of the Opinion of Counsel referred to in Section
10.03(a)(1) and to take such other action in connection therewith as may be
reasonably requested by the Terminator.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. AMENDMENT.
This Agreement may be amended from time to time by parties hereto,
without the consent of any of the Certificateholders to cure any ambiguity, to
correct or supplement any provisions herein, to change the manner in which the
Distribution Account maintained by the Trustee or the Custodial Account
maintained by the Servicer is maintained or to make such other provisions with
respect to matters or questions arising under this Agreement as shall not be
inconsistent with any other provisions herein if such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder; provided that any such amendment shall be
deemed not to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates.
Notwithstanding the foregoing, without the consent of the
Certificateholders but, for so long as the Insured Certificates are outstanding
or any amounts are owed to the Certificate Insurer, with the consent of the
Certificate Insurer, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of each of REMIC I, REMIC II and REMIC III as a REMIC under the Code or to avoid
or minimize the risk of the imposition of any tax on any of REMIC I, REMIC II or
REMIC III pursuant to the Code that would be a claim against any of REMIC I,
REMIC II or REMIC III at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or appropriate to maintain such qualification or
to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the parties
hereto and the Holders of each Class of Certificates affected thereby evidencing
over 50% of the Voting Rights of such Class or Classes and, for so long as the
Insured Certificates are outstanding or any amounts are owed to the Certificate
Insurer, with the consent of the Certificate Insurer for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) cause
any of REMIC I, REMIC II or REMIC III to cease to qualify as a REMIC or (iii)
reduce the aforesaid percentages of Certificates of each Class the Holders of
which are required to consent to any such amendment without the consent of the
Holders of all Certificates of such Class then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not (other than an amendment
pursuant to clause (ii) of, and in accordance with, the preceding paragraph)
cause the imposition of any tax on REMIC I, REMIC II or REMIC III or the
Certificateholders or cause REMIC I, REMIC II or REMIC III to cease to qualify
as a REMIC at any time that any Certificates are outstanding. Further, nothing
in this Agreement shall require the Trustee to enter into an amendment without
receiving an Opinion of Counsel, satisfactory to the Trustee that (i) such
amendment is permitted and is not prohibited by this Agreement and (ii) that all
requirements for amending this Agreement (including any consent of the
applicable Certificateholders) have been complied with.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, this Agreement 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 in any other appropriate public recording
office or elsewhere. The Seller or the Depositor shall effect such recordation
at the Trust's expense upon the request in writing of a Certificateholder, but
only if such direction is accompanied by an Opinion of Counsel (provided at the
expense of the Certificateholder requesting recordation) to the effect that such
recordation would materially and beneficially affect the interests of the
Certificateholders or is required by law.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
Section 11.04. INTENTION OF PARTIES.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the Seller
to the Depositor, and by the Depositor to the Trust Fund be, and be construed
as, an absolute sale thereof to the Depositor or the Trust Fund, as applicable.
It is, further, not the intention of the parties that such conveyance be deemed
a pledge thereof by the Seller to the Depositor, or by the Depositor to the
Trust Fund. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Seller or the Depositor,
as applicable, or if for any other reason this Agreement is held or deemed to
create a security interest in such assets, then (i) this Agreement shall be
deemed to be a security agreement within the meaning of the Uniform Commercial
Code of the State of New York and (ii) each conveyance provided for in this
Agreement shall be deemed to be an assignment and a grant by the Seller or the
Depositor, as applicable, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.
Section 11.05. NOTICES.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of
which it has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Servicer of Default that has not
been cured;
(iii) The resignation or termination of the Servicer or the
Trustee and the appointment of any successor; and
(iv) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(i) Each annual statement as to compliance described in
Section 3.16; and
(ii) Each annual independent public accountants' servicing
report described in Section 4.17.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at or mailed
by registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed to (i) in the
case of the Depositor, Nomura Home Equity Loan, Inc., 2 World Xxxxxxxxx Xxxxxx,
Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000 Attention: Nomura Home Equity Loan, Inc.,
Home Equity Loan Trust, Series ____-____; (ii) in the case of the Seller, Nomura
Credit & Capital, Inc., 2 World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx
00000, Attention: Nomura Home Equity Loan, Inc., Home Equity Loan Trust, Series
____-____ or such other address as may be hereafter furnished to the other
parties hereto by the Seller in writing; (iii) in the case of the Servicer,
[Name of Servicer], [Address], Attention: ______________; (iv) in the case of
the Trustee, at each Corporate Trust Office or such other address as the Trustee
may hereafter furnish to the other parties hereto; (v) in the case of the
Certificate Insurer, [Name of Certificate Insurer], [Address], Attention:
Consumer Asset-Backed Securities Group or such other address as the Certificate
Insurer may provide to the other parties hereto, and (vi) in the case of the
Rating Agencies, (x) Standard & Poor's, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Mortgage Surveillance Group and (y) Xxxxx'x Investors
Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Home
Equity Monitoring. Any notice delivered to the Seller or the Trustee under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register; any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 11.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 7.02, this Agreement may not be assigned by the
Seller or the Depositor.
Section 11.08. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee, a written notice
of a Servicer Default and of the continuance thereof, as hereinbefore provided,
the Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee,
hereunder and shall have offered to the Trustee such indemnity satisfactory to
it as it may require against the costs, expenses, and liabilities to be incurred
therein or thereby, and the Trustee or for 60 days after its receipt of such
notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 11.08, each and every Certificateholder or the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.09. CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
Section 11.10. THIRD PARTY BENEFICIARY.
The parties hereto agree that the Certificate Insurer is intended to be
and shall have all rights of a third-party beneficiary of this Agreement.
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. RIGHTS OF THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF
INSURED CERTIFICATEHOLDERS.
By accepting its Certificate, each Holder of an Insured Certificate
agrees that unless an Insurer Default exists, the Certificate Insurer shall have
the right to exercise all consent, voting, direction and other control rights of
the Holders of Insured Certificates under this Agreement without any further
consent of the Holders of the Insured Certificates.
Section 12.02. CLAIMS UPON THE POLICY; INSURANCE ACCOUNT.
(a) If, on the Business Day next succeeding the Remittance
Date, the Trustee determines that the funds that will be on deposit in the
Distribution Account, to the extent distributable to the Holders of the Insured
Certificates pursuant to Section 5.04 are insufficient to pay the related
Guaranteed Distribution for such Distribution Date, the Trustee shall give
notice by telephone or telecopy of the aggregate amount of such deficiency,
confirmed in writing in the form set forth as Exhibit A to the endorsement of
the Policy, to the Certificate Insurer at or before 12:00 noon, New York City
time, on the Business Day prior to such Distribution Date. If, subsequent to
such notice, and prior to payment by the Certificate Insurer pursuant to such
notice, additional amounts are deposited in the Distribution Account, the
Trustee shall reasonably promptly notify the Certificate Insurer and withdraw
the notice or reduce the amount claimed, as appropriate.
(b) The Trustee shall establish a separate special purpose
trust account for the benefit of Holders of the Insured Certificates and the
Certificate Insurer referred to herein as the "Insurance Account" over which
Trustee shall have exclusive control and sole right of withdrawal. The Trustee
shall deposit any amount paid to it under the Policy in the Insurance Account
and distribute such amount only for purposes of payment to Holders of Insured
Certificates of the Guaranteed Distribution for which a claim was made. Such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Servicers, the Trustee, the Custodian or the Trust Fund. Amounts paid under the
Policy shall be transferred to the Distribution Account in accordance with the
next succeeding paragraph and disbursed by the Trustee to Holders of Insured
Certificates in accordance with Section 5.04 or Section 10.01, as applicable. It
shall not be necessary for such payments to be made by checks or wire transfers
separate from the checks or wire transfers used to pay the Guaranteed
Distribution with other funds available to make such payment. However, the
amount of any payment of principal of or interest on the Insured Certificates to
be paid from funds transferred from the Insurance Account shall be noted as
provided in paragraph (c) below and in the statement to be furnished to Holders
of the Certificates pursuant to Section 5.06. Funds held in the Insurance
Account shall not be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a result of
any claim under the Policy, to the extent required to make the Guaranteed
Distribution on such Distribution Date, shall be withdrawn by the Trustee from
the Insurance Account and deposited in the Distribution Account and applied by
the Trustee, together with the other funds to be distributed to the Insured
Certificateholders pursuant to Section 5.04, directly to the payment in full of
the Guaranteed Distribution due on the Insured Certificates. Any funds remaining
in the Insurance Account on the first Business Day following a Distribution Date
shall be remitted by the Trustee to the Certificate Insurer, pursuant to the
written instructions of the Certificate Insurer, by the end of such Business
Day.
(c) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid into the Insurance Account in respect
of any Insured Certificate from moneys received by the Trustee under the Policy.
The Certificate Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon two Business Days' prior
written notice to the Trustee.
Section 12.03. EFFECT OF PAYMENTS BY THE INSURER; SUBROGATION.
Anything herein to the contrary notwithstanding, for purposes of this
Section 12.03, any payment with respect to principal of or interest on the
Insured Certificates which is made with monies received pursuant to the terms of
the Policy shall not be considered payment of the Insured Certificates from the
Trust Fund. The Trustee acknowledges, and each Holder by its acceptance of an
Insured Certificate agrees, that without the need for any further action on the
part of the Certificate Insurer or the Trustee, to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Insured Certificates to the Holders of such Certificates, the
Certificate Insurer will be fully subrogated to, and each Holder of an Insured
Certificate and the Trustee hereby delegate and assign to the Certificate
Insurer, to the fullest extent permitted by law, the rights of such Holders to
receive such principal and interest from the Trust Fund; provided that the
Certificate Insurer shall be paid such amounts only from the sources and in the
manner explicitly provided for herein.
The Trustee shall cooperate in all respects with any reasonable request
by the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders as otherwise set forth herein.
Section 12.04. NOTICES AND INFORMATION TO THE CERTIFICATE INSURER.
(a) All notices, statements, reports, certificates or opinions
required by this Agreement to be sent or made available to any other party
hereto or to the Certificateholders shall also be sent or made available to the
Certificate Insurer.
(b) The Trustee shall designate a Person who shall be
available to the Certificate Insurer to provide reasonable access to information
regarding the Loans.
Section 12.05. TRUSTEE TO HOLD POLICY.
The Trustee will hold the Policy in trust as agent for the Insured
Certificateholders for the purpose of making claims thereon and distributing the
proceeds thereof. Neither the Policy, nor the amounts paid on the Policy will
constitute part of the Trust Fund or assets of any REMIC created by this
Agreement. Each Holder of an Insured Certificate, by accepting its Certificate,
appoints the Trustee as attorney-in-fact for the purpose of making claims on the
Policy. The Trustee shall surrender the Policy to the Certificate Insurer for
cancellation upon the expiration of the term of the Policy as provided in the
Policy following the retirement of the Insured Certificates. To the extent that
the Policy constitutes a reserve fund for federal income tax purposes, (1) it
shall be an outside credit support agreement and not an asset of any REMIC and
(2) it shall be owned by the Insurer, all within the meaning of Section
1.860G-2(h) of the Treasury Regulations.
Section 12.06. PAYMENT OF INSURER PREMIUM.
Unless otherwise designated in writing by the President or a Managing
Director of the Certificate Insurer to the Trustee, the Insurer Premium to be
paid pursuant to paragraph 1 of clause FIRST of Section 5.04(a) shall be paid by
the Trustee to the Certificate Insurer by wire transfer with the following
details specifically stated in the wire transfer:
Bank:
ABA Number:
For the account of:
Account Number:
Ref:
Attention:
* * *
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer
and the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
NOMURA HOME EQUITY LOAN, INC.,
as Depositor
By:________________________________________
Name:
Title:
NOMURA CREDIT & CAPITAL, INC.,
as a Seller
By:________________________________________
Name:
Title:
[NAME OF SERVICER],
as Servicer
By:________________________________________
Name:
Title:
[NAME OF TRUSTEE],
as Trustee
By:________________________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of ______________, before me, a notary public
in and for said State, appeared _____________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Nomura Home
Equity Loan, Inc., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of such
corporation and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ___________, before me, a notary public in
and for said State, appeared ____________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Nomura Credit &
Capital, Inc., that executed the within instrument, and also known to me to be
the person who executed it on behalf of such corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _____________, before me, a notary public
in and for said State, appeared _________________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of [Name of
Servicer], one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of __________, before me, a notary public in
and for said State, appeared _______________, personally known to me on the
basis of satisfactory evidence to be an authorized representative of [Name of
Trustee] that executed the within instrument, and also known to me to be the
person who executed it on behalf of such corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
